School of Business and Economics

TRENDS AND PATTERNS IN (INTERNATIONAL) R&D ALLIANCES, 1970-2006

John Hagedoorn

* Department of Organization & Strategy and UNU-MERIT School of Business and Economics

Maastricht University

Definition

R&D alliances refer to cooperation between two or more firms, that remain independent economic agents and organizational entities, that share some oftheir R&D activities.

As such they represent a part of the value chain in the ‘swollen middle’, in between market transactions and hierarchies.

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20060

100

200

300

400

500

600

700

800

900

1000

Annual growth in number of R&D alliances

source : CATI

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20060%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Share of equity alliances (joint ventures) in R&D al-liances

Advantages and disadvantages of equity alliances (joint ventures) and non-equity (contractual) alliances

Advantages of equity alliances (joint ventures):

• Solid organization (firm)• Intensive cooperation• Control and monitoring (governance)

embedded in organization• Embedded transfer of tacit knowledge and

knowledge accumulation • Long-term perspective

Disadvantages of equity alliances:

• Long and costly implementation process• High switching costs• Complex organization (two-tiered agency

problems)• Inflexibility

Advantages of non-equity (contractual) alliances:

• Short implementation process• Low switching costs• Project-based• Flexibility• Short-term perspective

Disadvantages of non-equity alliances:

• Arm’s length control and monitoring (contracts)

• Fragmented transfer of tacit knowledge and knowledge accumulation

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

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20022004

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10%

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50%

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80%

90%

100%

R&D alliances, sectoral distribution, %

hightech %medtech %lowtech %

Recent trends:

• Growth of R&D alliances• Mainly found in high-tech industries• Growing importance of non-equity R&D alliances• Need for flexibility

• Implications for inter-firm R&D networks:– flexible networks– complex networks

Networks of inter-firm R&D alliances in bio-pharma, 1975-1979

NNetworks of inter-firm R&D alliances bio-pharma, 1980-1984

ch industry, 1985-1989

Networks in the biotech industry, 1995-1999Networks of inter-firm R&D alliances in bio-pharma, 1995-1999

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

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100%

R&D alliances, share of international alliances

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

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10%

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R&D alliances, international distribution

OECDNICLDC

source : CATI

19701972

19741976

19781980

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19861988

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100%

US participation in total R&D alliances

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

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US participation in international R&D alliances

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

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10%

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Share of international US R&D alliances

source : CATI

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20060.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

R&D alliances, share of firms from India and PRC

INDIAPRC

source : CATI

hightech medtech lowtech0

20

40

60

80

100

120

140

160

180

R&D alliances, sectoral distribution, India and PRC, numbers

INDIAPRC

So what have we learned?

• Increase in R&D alliances• More flexible forms of R&D partnering• Concentrated in high-tech industries• Complex network configurations• Share of int. R&D alliances stable (+/- 60%)• Dominance of OECD countries• US has become the main player• Increasing role of NIC, recently China and India

source : CATI

Thank you for your attention

source : CATI