Recent Research: Why Do Manufacturing Firms Choose to Collaborate on Innovative Projects?

Manufacturing firms come in all shapes and sizes. Little ones. Big ones. Ones that need more labor from their employees to assemble components. Ones that need more R&D from their employees to design products.

 

And, for a variety of reasons, many manufacturing firms decide to collaborate with other entities in order to develop new and improved products. A recent discussion paper from the Center for European Economic Research sheds new light on the motives of these collaborative firms. In Motives for Co-operation: Evidence from the Canadian Survey of Innovation, Tobias Schmidt develops a typology of these firms, differentiated by their reasons to engage in collaboration.

 

What’s new about Schmidt’s research is the tool he uses to explore the relationship between these motives (to share costs or to access external knowledge, for example) and the descriptive factors (size, industry type, educational attainment of employees, for example) of these firms. Much of the previous research in the field has used proxy measures to explore the motives of firms. But Schmidt utilized a direct question about firm motives that was included in Canada’s 2005 Survey of Innovation, a question that has not been featured in many past national innovation surveys from around the globe.

 

Depending on how they answered the specific question concerning motives, firms were placed into one of four categories: those who collaborate to share the cost of developing innovations, those who access external knowledge outside of the firm, those who collaborate to enable the scale-up of production, and those who collaborate to develop commercialization activities. From this mandatory survey of all Canadian manufacturers with 20 or more employees and at least $250,000 in revenues, a random sample of 8,900 firms stratified by type of industry, region of Canada, and firm size were selected for the statistical analysis. A slew of variables, including each firm’s innovative practices, public R&D support, and firm characteristics also were captured by the survey.

 

The study’s findings? Firms whose motives for collaboration are cost-sharing are very similar to firms whose motives are accessing external knowledge. Schmidt speculated this similarity is because their concerns - finance and knowledge - are both inputs at the development stage of the innovation process. These firms are generally large in size and are more research-oriented than other firms. By typology, they are very different than firms that collaborate to scale up production, operating at the diffusion stage of the innovation process. Firms that collaborate for commercialization purposes have characteristics somewhat between these two extremes. This typology may assist TBED organizations to target certain types of firms for their policies to increase commercialization, or to strengthen collaborations with the intention of lowering costs.

 

In addition, a key difference exists between the four grouping of firms based on their collaboration motives. The existence of public R&D funding has a strong effect on the likelihood that a firm collaborates to access external knowledge, but not for the other motives.



A copy of Motives for Co-operation: Evidence from the Canadian Survey of Innovation can be downloaded at: ftp://ftp.zew.de/pub/zew-docs/dp/dp07018.pdf