Teaming up with Large R&D Investors: Good or Bad for Knowledge Production and Diffusion?

The participation of top R&D investors in publicly funded research collaborations is a common, yet largely unexplored phenomenon. It creates opportunities for knowledge spillovers and may increase the chance for a project to be funded. At the same time, the unbalanced nature of such partnerships could exacerbate power asymmetries and hinder the overall performance of such collaborations. In this paper, we examine whether cooperating with top R&D companies affects the innovative performance of publicly funded research consortia. We build a fit-for-purpose dataset that matches information from the European Union's Seventh Framework Programme (FP7) on R&D collaborative projects and proposals with data on the world's top 2,500 companies with the highest R&D investment (R&D Scoreboard). Accounting for both sample selection and endogeneity in the participation of top R&D investors in a two-part count model framework, we find that teaming up with leading R&D companies increases the probability of obtaining funds. However, this comes at the cost of hindering the innovative performance of the funded projects, both in terms of patents and publications. In light of this evidence, the tradeoffs of mobilizing top R&D players should be carefully leveraged in the evaluation and design of innovation policies aimed at R&D collaboration and technology diffusion.