R&D investments and spillovers under endogenous absorptive capacity: Competitive R&D cannot take full-advantage of complementarity in absorptive capacity while cooperative R&D can

We show that the setting up of general conditions on complementarity in absorptive capacity gives rise to different, if not opposite Nash equilibrium outcomes to those found when absorptive capacity is assumed to be determined only by the similarity of R&D orientations. Firms that cooperate in R&D can take full advantage of complementarity in R&D by adopting firm-specific R&D paths, which appears to contradict Kamien and Zang’s (2000) findings, and so would contradict Weithaus’ (2005) predictions. Oddly, firms competing in R&D cannot gain the most from the potential of complementarity in knowledge by not choosing firm-specific R&D approaches in equilibrium under even milder conditions, which is contrary to another prediction of the Kamien and Zang’s and Weithaus’ models.