Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany

This paper analyzes the determinants of R&D co-operation among German manufacturing firms. Using firm level data from the Third Community Innovation Survey from Germany, we focus on the role of spillovers in explaining R&D cooperation. We also investigate firms’ decisions to cooperate with research institutions or with suppliers and customers. Implementing a two-step estimation procedure, we find a significant effect of knowledge flows on the probability of R&D co-operation in most model specifications. Additionally, we show that firms with high intramural R&D budgets are more likely to cooperate with universities and research institutions than with suppliers and customers.