Discouraging opportunistic behavior in collaborative R & D: A new role for government

Abstract

The traditional role attributed to government in collaborative R & D has been one of funding. This paper explores a new role for government in facilitating collaborative R & D, one of discouraging opportunistic behavior. Given the nature of R & D, concerns about opportunistic behavior can serve as a major barrier to the formation and effective operation of collaborative R & D. Using a transaction cost framework, we identify mechanisms by which the government can help to discourage such behavior. Specifically, we examine the Italian Società di Ricerca program where the government appears to be performing this role. Our findings demonstrate that not only can government help to control opportunistic behavior in collaborative R & D, but firms recognize and value that role. Overall, Italian firms participating in a Società di Ricerca valued government assistance in establishing long-term relationships and facilitating networking as much as they valued funding. In addition, whether or not a firm had prior experience in collaborative R & D affected its valuation of government involvement. Firms with prior experience in collaborations placed less value on government frameworks for cooperation, implying that they had learned to manage some ex-ante considerations on their own. Ex-post opportunism, however, was still a concern, and thus experienced firms continued to value government's contributions in this area.