Research joint ventures of three heterogeneous firms

Abstract

Research joint ventures (RJVs) have been viewed as one of the solutions to overcome the externality problem of the innovation process and the duplication of the research effort. Theoretical researches show that market structure would affect the performance of RJV. However, the researchers either apply an identical oligopolistic framework or an asymmetric duopoly framework in order to investigate the membership of RJV. The paper aims to combine both frameworks by considering three asymmetric firms in the market. We assume that only two out of the three firms will form a RJV so that we can investigate the outsider effect on the incentive for forming an asymmetric RJV. Three compositions of RJV are then considered. Besides, three organizational modes of RJV will be discussed. The paper shows that firms prefer forming a RJV with an advantaged firm when they tend to gain research information while firms prefer forming a RJV with a disadvantaged firm when internalization of spillover effect is their main concern.

Date of Award	2005
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology