IDEAS home Printed from https://ideas.repec.org/p/upf/upfgen/264.html
   My bibliography  Save this paper

Influence activity and the organization of research and development

Author

Listed:
  • Bruno Cassiman

Abstract

The organizational design of research and development conditions the incentives of the researchers of the research project. In particular, the organizational form determines the allocation of effort of the researcher between time spent on research and time spent lobbying m anagement. Researchers prefer to spend their time on research. However, the researchers only get utility from performing research if the project is approved for its full duration. Spending time lobbying management for the continuation of the researcher’s project increases the probability that the management observes a favorable signal about the project. Organizing a research joint venture increases the flexibility of the organizational form with respect to the continuation decision. For low correlation between the signals of the partners about the expected profitability of the project, we find that the organization of a research joint venture reduces influence activity by the researchers and increases expected profits of the partners. For high correlation between the signals, internal research projects lower influence activity by the researchers. We try to relate the correlation of the partners signals to the characteristics of basic research versus more applied research projects, and find that the model is consistent with the observation that research joint ventures seem involved in more basic research projects compared to internal R&D departments, which concentrate on more applied research.

Suggested Citation

  • Bruno Cassiman, 1996. "Influence activity and the organization of research and development," Economics Working Papers 264, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1997.
  • Handle: RePEc:upf:upfgen:264
    as

    Download full text from publisher

    File URL: https://econ-papers.upf.edu/papers/264.pdf
    File Function: Whole Paper
    Download Restriction: no

    References listed on IDEAS

    as
    1. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
    2. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    3. Aghion, P. & Tirole, J., 1993. "On the Management of Innovation," Working papers 93-12, Massachusetts Institute of Technology (MIT), Department of Economics.
    4. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    5. Seung Ho Park & Michael V. Russo, 1996. "When Competition Eclipses Cooperation: An Event History Analysis of Joint Venture Failure," Management Science, INFORMS, vol. 42(6), pages 875-890, June.
    6. Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
    7. J Michael Geringer & Louis Hebert, 1989. "Control and Performance of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(2), pages 235-254, June.
    8. Philippe Aghion & Patrick Bolton, 1992. "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies, Oxford University Press, vol. 59(3), pages 473-494.
    9. Zender, Jaime F, 1991. " Optimal Financial Instruments," Journal of Finance, American Finance Association, vol. 46(5), pages 1645-1663, December.
    10. Nathan ROSENBERG, 2009. "Why do firms do basic research (with their own money)?," World Scientific Book Chapters,in: Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 11, pages 225-234 World Scientific Publishing Co. Pte. Ltd..
    11. Philippe Aghion & Jean Tirole, 1994. "The Management of Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1185-1209.
    12. Jacques Crémer, 1995. "Arm's Length Relationships," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 275-295.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Research joint ventures; influence activity; signal jamming; incomplete contracts;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:264. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://www.econ.upf.edu/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.