The dark side of R&D collaborations

Collaboration with firms and public research institutions (PRI) is expected to raise the innovative performance of firms. Collaboration is also likely to increase the cost of innovation because of leakages of strategic information, appropriability and coordination problems. When collaborating with PRI the latter problem is expected to be stronger thus raising the probability of project failure. The aim of this paper is to investigate if and to what extent collaboration in R&D projects raises the probability of failure: i.e. abandoning or delaying innovative projects. It also aims at verifying if and to what extent the collaboration with PRI increases the likelihood of failure. We use data from the fourth Italian Community Innovation Survey (CIS 4) which collected data for the three-year period 2002-2004. The empirical results support the hypothesis that collaboration significantly impacts the probability of abandoning or delaying innovative projects, thus raising the cost of innovation. Collaboration with PRI does not raise the likelihood of failure more than what observed for the collaboration with other partners. Moreover, delaying is influenced by cost factors (such as the lack of financial resources) and knowledge factors (such as the lack of qualified personnel); abandonment is significantly associated with market factors (such as uncertain demand).