Understanding the heterogeneity of cooperation on innovation: Firm-level evidence from Europe

Innovation is new combination of productive means that are internal or external to a firm. Arrangements to cooperate on innovation facilitate access to these external sources of knowledge. Using large micro datasets from the Third and Fourth Community Innovation Surveys in sixteen European countries, including nine new EU members, we examine the heterogeneity of relationships between various characteristics of firms, given by size, ownership or capabilities, and their propensity to cooperate on innovation with domestic as compared to foreign partners, with different types of organizations and how these patterns differ across countries. Econometric estimates of univariate, multivariate and multinomial probit (or logit) models indicate differences between domestic and foreign cooperation, but not between the various types of partners. Strong differences have been found along the level of economic development. Size of the country and openness to globalization proved relevant for explaining cooperation of firms on innovation abroad. Nevertheless, the results reveal that the context matters for interpretation of the cooperation variables themselves, because some of these arrangements may signal limited internal capabilities of firms, rather than virtuous systemic interactions, which complicates comparative studies of this data.