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Absorptive Capacity and Innovation: When Is It Better to Cooperate?

  • Abiodun Egbetokun


    (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena)

  • Ivan Savin


    (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena)

Cooperation can benefit and hurt firms at the same time. An important question then is: when is it better to cooperate. And how can an appropriate partner be selected? In this paper we present a model of inter-firm cooperation driven by cognitive distance, appropriability conditions and external knowledge. Absorptive capacity of firms develops as an outcome of the interaction between absorptive R&D and cognitive distance from voluntary and involuntary knowledge spillovers. Thus, we offer a revision of the original model by Cohen and Levinthal (1989) accounting for recent empirical findings and explicitly modeling absorptive capacity within the framework of interactive learning. We apply that to the analysis of firms' cooperation and R&D investment preferences. While the focus of this paper is limited to a static scenario, where the cognitive distance between cooperating firms is fixed and given exogenously, in Savin and Egbetokun (2012) we address the dynamic approach and provide more extensive simulation results.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2012-056.

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Date of creation: 15 Oct 2012
Date of revision:
Handle: RePEc:jrp:jrpwrp:2012-056
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  6. Abiodun Egbetokun & Ivan Savin, 2012. "Absorptive Capacity and Innovation: When Is It Better to Cooperate?," Jena Economic Research Papers 2012-056, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  7. Anja Dettmann & Sidonia von Proff, 2010. "Inventor collaboration over distance – a comparison of academic and corporate patents," Working Papers on Innovation and Space 2010-01, Philipps University Marburg, Department of Geography.
  8. Robin Cowan & Nicolas Jonard & Jean-Benoit Zimmermann, 2007. "Bilateral Collaboration and the Emergence of Innovation Networks," Management Science, INFORMS, vol. 53(7), pages 1051-1067, July.
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  10. Baum, Joel & Cowan, Robin & Jonard, Nicolas, 2009. "Network-independent partner selection and the evolution of innovation networks," MERIT Working Papers 022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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  14. Flatten, Tessa C. & Engelen, Andreas & Zahra, Shaker A. & Brettel, Malte, 2011. "A measure of absorptive capacity: Scale development and validation," European Management Journal, Elsevier, vol. 29(2), pages 98-116, April.
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