Information sharing, research co-ordination and membership of research joint ventures

This paper examines which firms from a heterogeneous pool are more likely to join together and form a research joint venture (RJV). It differs from previous contributions as it introduces a set of realistic hypotheses on the characteristics of research co-operation and information sharing. Research paths can be substitute or complementary. This affects the nature of and consequently the gains from co-operation. The model shows that gains from co-operation are likely to be larger in the second case, as the probability of making a discovery is higher. This paper also assumes that firms do not share information voluntarily if they do not co-operate only when the firms' products are substitute. If the firms' products are complementary there may be gains in sharing information also under non co-operation. This eliminates the gains from co-operation arising from information sharing. If this is the case, RJVs are more likely to be formed between firms producing substitute products. If we combine these two results we have the prediction that firms co-operate in research when they produce substitute products and when they follow complementary research paths. The empirical analysis carried out on a sample of European RJVs confirms and supports this prediction. The model also carefully explores the role of asymmetries in costs between the two firms. It shows that it is not possible to derive clear-cut predictions. Under some circumstances larger asymmetries increase the gains from co-operation and under other circumstances they reduce them. Also this result is supported by the empirical analysis.