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On Cooperation and Invention

WiSo Study on research and development alliances.

A man and a woman work together on a paper with technical drawings on a desk

"Biontech/Pfizer" has become an established term in the German public debate. It not only refers to the Covid 19 vaccine, which is actually named „Comirnaty“. It almost automatically evokes the image of a successful cooperation between two companies in research and development (R&D).

WiSo Professor Christian Schwens, holder of the Endowed Chair for Interdisciplinary Management Science has now taken a closer look at R&D alliances. Together with Dr Matthias Schulz and Steffen Runge he has investigated how technological, geographical, and product market overlaps between a firm and its alliance partner influences the firm's invention performance by shaping the learning and competitive tension in a research and development alliance.

Technological overlap thus increases a firm's invention performance, whilst product market overlap decreases it.

Moreover, the researchers argue that product market overlap negatively moderates the positive relationships between technological and geographical overlaps and the firm's invention performance.

Based on empirical results, they found out, that product market overlap is distinct from the other types of overlap: it changes the focus of the alliance from joint value creation towards private value appropriation. This way, product market overlap not only decreases a firm's invention performance, but also weakens the positive impacts of technological and geographical overlaps on a firm's invention performance.

“Technological overlap tends to foster the firm's ability to learn, as the firm and its partner increasingly share a common framework, which facilitates interfirm learning and knowledge transfer. Such common framework enables the firm to recognize, assimilate, and apply valuable knowledge from its partner, which increases its absorptive capacity,” says Dr Schwens.

The research was carried out by testing the hypotheses on a dataset of 215 R&D alliances formed by 94 U.S. pharmaceutical firms over 17 years.