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Determinants of Demand for Technology in Relationships with Complementary Assets among Japanese Firms

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  • Masayo Kani
  • Kazuyuki Motohashi

Abstract

There has been growing interest in open innovation, where firms create value by combining internal and external ideas. Technology insourcing, however, has not been satisfactorily investigated in the empirical literature compared to technology outsourcing. In this paper, we examine the determinants of external technology sourcing by the type of counterpart in the new product development (NPD) process. We use a novel dataset at the product level, compiled by the Research Institute of Economy, Trade and Industry in 2011. We distinguish whether the technology partner is also a business partner, such as a supplier or customer. Our findings show that when the technology partner is not a business partner, patents play an important role in moderating the transaction costs in a partnership. On the other hand, when the technology partner is also a business partner, we find cospecialisation of technology and its complementary assets with the partner firm.

Suggested Citation

  • Masayo Kani & Kazuyuki Motohashi, 2017. "Determinants of Demand for Technology in Relationships with Complementary Assets among Japanese Firms," Working Papers DP-2016-38, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:dp-2016-38
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    References listed on IDEAS

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    1. Daron Acemoglu & Philippe Aghion & Rachel Griffith & Fabrizio Zilibotti, 2010. "Vertical Integration and Technology: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 989-1033, September.
    2. Ashish Arora & Alfonso Gambardella, 2010. "Ideas for rent: an overview of markets for technology," Industrial and Corporate Change, Oxford University Press, vol. 19(3), pages 775-803, June.
    3. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    4. Motohashi, Kazuyuki, 2005. "University-industry collaborations in Japan: The role of new technology-based firms in transforming the National Innovation System," Research Policy, Elsevier, vol. 34(5), pages 583-594, June.
    5. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    6. Marco Ceccagnoli & Stuart J.H. Graham & Matthew J. Higgins & Jeongsik Lee, 2010. "Productivity and the role of complementary assets in firms' demand for technology innovations," Industrial and Corporate Change, Oxford University Press, vol. 19(3), pages 839-869, June.
    7. Ashish Arora & Marco Ceccagnoli, 2006. "Patent Protection, Complementary Assets, and Firms' Incentives for Technology Licensing," Management Science, INFORMS, vol. 52(2), pages 293-308, February.
    8. Arora, Ashish & Gambardella, Alfonso, 1994. "Evaluating technological information and utilizing it : Scientific knowledge, technological capability, and external linkages in biotechnology," Journal of Economic Behavior & Organization, Elsevier, vol. 24(1), pages 91-114, June.
    9. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
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    Cited by:

    1. KANI Masayo & MOTOHASHI Kazuyuki, 2018. "Technology Sourcing in New Product Development Projects: When and how to use external resources?," Discussion papers 18042, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    technology sourcing; co-specialisation; complementary assets; division of innovative labour;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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