Agreements between firms and the technological life cycle model: Evidence from information technologies

Abstract

Contrarily to most previous contributions which have addressed the issue of cooperative agreements essentially in a perspective of comparative statics, in this paper a model is proposed that relies on the technological trajectory notion suggested by evolutionary theories and emphasizes the relevance of the technological and market dynamics in explaining why and to what extent firms have recourse to agreements. In particular, it is claimed that the propensity of firms towards collaborative ventures and the characteristics of the cooperation depend upon the phase of the technological life cycle of the industry branch in which the cooperation takes place. Based on a cross-sectional analysis of 45 industry branches in the Information Technology industrial system, the paper also provides empirical evidence supporting the argument that the propensity towards agreements and the nature of the agreements concluded do change during the technological life cycle. To this end, it takes advantage of the ARPA database, developed at the Polytechnic of Milan and containing detailed information on over 2,000 agreements concluded in the 1980–1986 period all over the world in the semiconductor, data processing and telecommunications industries.