Heterogeneity in R&D Cooperation Strategies

We explore heterogeneities in the determinants of innovating firms’ decisions to engage in R&D cooperation, differentiating between three types of cooperation partners: suppliers and customers (vertical cooperation), competitors (horizontal cooperation), and universities and research laboratories (institutional cooperation). We use panel data on innovating firms drawn from two Dutch Community Innovation Surveys in 1996 and 1998. Applying a system method estimator for probit equations shows significantly positive correlations between the different cooperation decisions, suggesting that R&D cooperation strategies are complements rather than substitutes. We find that the determinants of R&D cooperation differ significantly and substantially across cooperation types. As suggested by industrial organization theory of R&D cooperation, the effects of spillovers depend on their source: while horizontal spillovers have ambiguous effects on horizontal cooperation, vertical spillover positively impact vertical cooperation and institutional spillovers significantly impact all types of cooperation. The results are largely robust to correction for potential simultaneity bias.