On Managing Research Collaborations: Which Form of Governance?

Managing research collaborations remains challenging in many respects. The research efforts of the parties involved are hardly verifiable, and it is not possible to contract a clearly defined research output in advance. The parties negotiate to allocate potential gains, but the collaboration still is unstable and prone to disintegration. Although contractual forms of collaboration have become increasingly common and sophisticated, formal contracts are incomplete and produce a large variety of governance structures with specified ownership patterns and the configurations of control. In the context of a research collaboration between two parties with asymmetric positions, such as a large pharmaceutical company contracting with a small biotech, the company must decide how to allocate ownership and control rights while considering the effects on the biotech's bargaining position in the negotiation. This study shows that the forms of governance vary with the contractibility of effort and the stability of the collaboration, which suggests novel prescriptions for the management of research collaborations.