Antecedents of Collaborative Arrangements in the Innovation and Production System

Antecedents of Collaborative Arrangements in the Innovation and Production System

Yongyi Shou (Zhejiang University, China), Ying Li (Zhejiang University, China) and Lubin Wu (Zhejiang University, China)
DOI: 10.4018/978-1-5225-0135-0.ch022
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R&D cooperation and production cooperation are regarded as two key dimensions of collaborative arrangements in the innovation and production system. Different from prior studies focusing on performance outcomes, this study emphasizes the antecedents which have impacts on firms' decisions of R&D cooperation and production cooperation. The antecedents are identified and categorized into organizational characteristics (market orientation and technological capability), technical characteristics (technology clockspeed and technology-production fit), and relational characteristics (asset specificity). Through statistical analyses on survey data of Chinese manufacturing firms, this study finds that two factors including technology clockspeed and asset specificity have significant effects on firms' decisions of R&D cooperation, while technological capability, technology clockspeed, and technology-production fit are confirmed to have significant effects on decisions of production cooperation.
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Technology-driven companies now engage more and more in inter-organizational collaborative arrangements especially in the innovation and production system. In this fast-paced and constantly changing market, it is hard to succeed by relying only on internal knowledge and resources for technology development and production. The increasing requirements for product diversification, the compression of product life cycles and the intense competition environment force the companies to seek external complementary resources from their partners and relocate all the internal and external resources to facilitate technological innovation and improve operational efficiency (Tyler & Kevin Steensma, 1995). As Chesbrough (2003) points out, companies are now shifting from traditional closed innovation to open innovation by breaking down the boundaries of organizations. Meanwhile, cooperative production are encouraged to support the output of innovation achievements (Marxt & Link, 2002). Until now, the cooperative relationships across organizations have been recognized to be an effective way to achieve competitive advantages (Dyer & Singh, 1998).

As a continuum between outsourcing and vertical integration, scholars and practitioners have seen various forms of inter-organizational cooperation. Many terms including partnering (Hagedoorn, 1993), alliance (Eisenhardt & Schoonhoven, 1996), collaboration and integration (Teece, 1986) are used to describe the cooperative relationships. In this research, we divide collaborative arrangements into two categories: cooperative R&D and cooperative production. In the system of technology development, several organizational modes like joint ventures with equity involvement, and alliances with formal or informal agreements are identified, of which the main focus is to attain common or complementary knowledge of innovation (Chiesa & Manzini, 1998; Wu, 2012). Since production is always aligned with technology development in the area of innovation management (Hacklin, Marxt, & Fahrni, 2006), the research also pays attention to the cooperative relationships in the production system. Just-in-time (JIT) exchanges (Frazier, Spekman, & O'Neal, 1988), original equipment manufacturing (Lin, 2004) and original design manufacturing (Lin, Ou-Yang, & Juan, 2009) are the common forms of cooperative production which aim at successful implementation of technical innovation achievements.

While the benefits of cooperative relationships have been widely discussed in the strategic management literature (Doz & Hamel, 1998; Dyer & Singh, 1998), researchers ignore the determinants or the contexts to build and keep the relationships. Cooperative relationships are not always beneficial for the innovation performance for the reason of coordination difficulties and transactional hazards (Williamson, 1981), which finally makes managers confused about “when to collaborate with external organizations”. To deal with this problem, Miotti & Sachwald (2003) analyze the factors affecting R&D cooperation in the perspective of partners based on resource-based view, and Mora-Valentin, Montoro-Sanchez, & Guerras-Martin (2004) conduct an empirical research on the determining factors in the success of R&D cooperative agreements. Veugelers & Cassiman (2005) also test other factors like cost and risk, appropriability and internal capacities. However, the understandings on the collaborative arrangement are still not comprehensive and clear.

Key Terms in this Chapter

Technology-Production Fit: Technology-production fit is defined as the extent to which new introduced or developed technologies are applied into production activities easily and rapidly. For a specific production activity or process, the easier it is to apply one new technology, the better the technology is matched with production.

Production Cooperation: Production cooperation is defined as joint actions with supply chain partners in the manufacturing of products based on the principles of cost and revenue sharing to achieve operational efficiency.

R&D Cooperation: R&D cooperation is defined as joint actions among different organizations in the innovation activities and processes based on the principles of cost and revenue sharing to facilitate technology development and product innovation.

Innovation and Production System: The innovation and production system is encompassed by a set of products and agents. In the system, the agents are working together to carry out the research and development (R&D), production and sale of those products. If those agents are from diverse functional departments in one organization, the arrangements for the R&D and production activities are called internalization. Otherwise, it is named collaboration when agents from different organizations jointly complete the specific activities.

Asset Specificity: Asset specificity is defined as the extent to which the investments of one firm are specific to a particular transaction and thus have little or no value in an alternative use.

Market Orientation: Market orientation is one kind of strategy that focuses on customers’ changing needs and competitors’ movements. Firms with the market orientation strategy are urged to keep close to their customers and make every effort to satisfy customers’ requirements.

Technology Clockspeed: Technology clockspeed is defined as the extent to which technologies in a specific industry change rapidly. Fast technology clockspeed reflects the rapid change, upgrading and renovation of technology.

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