@inbook{f5dbd0c5a3ec4e4b865edf3b0cc2e678,
title = "Absorptive Capacity and Innovation: When Is It Better to Cooperate?",
abstract = "Cooperation can benefit and hurt firms at the same time. An important question then is: when is it better to cooperate? And, once the decision to cooperate is made, how can an appropriate partner be selected? In this paper we present a model of inter-firm cooperation driven by cognitive distance, appropriability conditions and external knowledge. Absorptive capacity of firms develops as an outcome of the interaction between absorptive R&D and cognitive distance from voluntary and involuntary knowledge spillovers. Thus, we offer a revision of the original model by Cohen and Levinthal (Econ J 99(397):569–596, 1989), accounting for recent empirical findings and explicitly modeling absorptive capacity within the framework of interactive learning. We apply that to the analysis of firms{\textquoteright} cooperation and R&D investment preferences. The results show that cognitive distance and appropriability conditions between a firm and its cooperation partner have an ambiguous effect on the profit generated by the firm. Thus, a firm chooses to cooperate and selects a partner conditional on the investments in absorptive capacity it is willing to make to solve the understandability/novelty trade-off.",
keywords = "Absorptive Capacity, External Knowledge, Knowledge Spillover, Knowledge Stock, Potential Partner",
author = "Abiodun Egbetokun and Ivan Savin",
note = "Funding Information: Acknowledgements Financial support from the German Science Foundation (DFG RTG 1411) is gratefully acknowledged. Thanks are due to very helpful comments and suggestions from Uwe Cantner and Robin Cowan as well as from participants at the SPRU 18th DPhil Day in Brighton, 14th International J. A. Schumpeter Society Conference in Brisbane and 6th Summer Academy on Innovation and Uncertainty in Jena. The usual disclaimers apply. Publisher Copyright: {\textcopyright} 2015, Springer International Publishing Switzerland.",
year = "2015",
doi = "10.1007/978-3-319-13299-0_16",
language = "English",
series = "Economic Complexity and Evolution",
publisher = "Springer Science and Business Media Deutschland GmbH",
pages = "373--399",
booktitle = "Economic Complexity and Evolution",
}