An empirical test of models explaining research expenditures and research cooperation: evidence for the German service sector

Abstract

Key findings of game–theoretic models that describe the effects of spillovers, market size, research productivity and the generality of a firms’ research approach on innovation efforts and on their propensity to form a research joint venture (RJV) are empirically tested using innovation survey data of the German service sector. A simultaneous econometric model for cooperation choice and innovation expenditures and a nesting logit model for the choice of different types of cooperation partners are applied in the empirical analysis. By and large, the predictions of the theoretical models are empirically validated. A central finding of this paper is that cooperating firms invest more in research than non-cooperating firms.