Dynamic Cooperation in R&D

It has long been recognized that dynamic processes underlie technical advance.1 Moreover, common economic parlance has it that firms in industries considered ‘strategic’ by developed countries engage in technology-based competition. What we have additionally come to realize, however, is that the structure of the ‘technical enterprise’ as a whole may be both more complex than earlier economic accounts led us believe and changing fast (e.g., Fusfeld, 1986, 1994). Gone is the conceptualization of the individual firm marshalling its own technological capabilities in order to gain over its rivals. The spread of technological capabilities around the world and the intensifying competition have obliged even the largest firms to look further and beyond their internal research and development (R&D) laboratories in order to keep up with the latest developments of rapidly evolving technologies as well as ease the excessive burden of exploding R&D expenditures on their budgets. Thus, in addition to direct competition, firms have increasingly utilized various forms of vertical and horizontal cooperative agreements (strategic alliances) to pursue their competitive objectives.