Cooperation in R&D: Effects for Domestic and Internationalized Companies

With the increasing attention towards the significance of partnership trust networks factors that affect the individual and joint intensity of innovations should be taken into serious consideration. This study explores how the different types of cooperation in innovation affect the intensity of innovation of exporting and domestic firms. Determining the theoretical model of the vertically-related market, we find that there are differences in the incentives of exporting and domestic firms to innovate depending on the cooperation type. Besides, the results vary within different market specifications (innovation size, the share of the domestic market, the extent of product differentiation). We find that cooperation with universities and cooperation with clients in most of the cases stimulate innovation activities of domestic firms, whereas cooperation with competitors and cooperation with suppliers - exporting firms. We empirically test this hypothesis on German firms from Manheim Innovation Panel (MIP) from 2003 to 2016. We use two-stage approach to explain the effect of cooperation on the incentives to innovate of exporters and domestic companies. We model a bivariate probit estimation of the status of exporting and domestic activities and a linear model of innovation intensity with multi-levels of fixed effects. Our two-stage estimation (based on certain market specifications) shows that each type of cooperation stimulates exporting firms to invest in innovation more than domestic firms, which can illustrate the case of a low degree of product differentiation in the theoretical model.