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Technovation,

IO: 1 (1990) 17-30

oorn

Maastricht Economic Research Institute on innovation and Technology (MERIT), Limburg, P.O. Box 616, 6200 MD Maastricht (The Netherlands)

University of

In economic analyses co-operative agreements are occasionally discussed withreference to their dissimilarityin organizational and economic ‘solidity’ and the impact of separate modes of co-operation on economic performance. However, many studies still refer only to joint ventures and apparently assume that other forms of co-operation share identical fenfllres. Nevertheless, it should be clear that co-operative agreements differ with respect to both organizational and economic effects. For example, a joint venture is a new com- pany established by two or more partners and, as such, it introduces a change in an ex- isting market structure; a licensing agreement, which regulates technology transfer in return for a fee, definitely has lessfar-reaching consequences for the companies involved. Knother words, it is important to note that the organization/r1design of co-operation can be expected to be related to the strategies and economic performance of companies, reflecting their ability to model their inter-firm relationships. The major objective of this paper is to present a detailed overview of different modes of inter-firm co-operation. This study shows the variety of inter-firm agreements, reflecting the complexity and dynamics of private governing structures in capitalist economies which are attempting to cope with the present far-reaching consequences of technological development.

1.

larity in organizational

and economic ‘solidity’

and the impact of separate modes of co-opera-

In

economic

analyses

co-operative

agree-

tion on economic performance. However,

ments between distinct companies are occasion-

many studies still refer only to joisit ventures

ally discussed with reference to their

dissimi-

and apparently

assume that other

fortes

of co-

*This

paper

is one

01

a serie\

of

papers

in a research

project

entitled

‘Inter-company

Co-operation

and

TechoGglcal

Development’

at

MERIT.

This

research

focuw,

on

the

empirical

analysis

of

changes

in industry

structures

and

global

trends

in different

modes of inter-

llrm

agreements

m

a large

number

ot

fwlds

ol' technology.

 

It

also

addresses

theoretical

questions

regarding

inter-firm

co-operation

as

well

as methodological

issues on applied

network

and

multivariate

analysis

of strategies

and

industry

structures.

Empirical

analysis

is based

upon

the

Co-operative

Agreements

and

rechnology

indicators

 

(CATI)

data base, which contains information

on several

thousands

of

world-wide

co-operative

apreements

and

the

companies

involved.

 
 

novation,

Volume

I

0166-4972/90/$03.50

(0

1990

Elsevier

Science

Publishers

Ltd

17

J. Hagedoorn

operation

share identical

features.

pirical

studies,

joint

ventures,

In many em- technology

ex-

change

agreements,

licence

agreements

and

a

number

of

other

modes

of

co-operation

are

placed

under

the

same heading

as ‘strategic

partnerships’

or

corporate

ventures.

Never-

theless, it should be clear that such agreements

differ

in both organizational

and economic

ef-

fects.

For example,

a joint

venture

is

a

new

company

established

by two

or more

partners

and, as such, it introduces

a change

in

an

ex-

isting market

structure;

a licensing agreement,

which

regulates

technology

transfer in return

for a fee, definitely

has less far-reaching

conse-

quences

for the companies

involved. In other

words,

it is important

to note that different

forms of organizational

design of co-operation

taxonomies,

we suggest the tentative classifica-

tion of modes of co-operation

in terms

of the

 

extent

of

inter-organizational

dependence,

as

presented in Table 1.

 

In the following

we will present

an overview

of the forms

of co-operation

listed in Table

1.

Our attentior will be focused on those modes

of co-operation

in which

technology

transfer,

technology-sharing, R&D collaboration or,

more generally, innovation-motivated

co-opera-

tion

is an essential

feature

of the agreement.

TABLE I. A classification of modes of co-operative agrec- ments and their organizational interdependence

Mode of co-operation Organizational interdependence

will have divergent

effects on market

structures

Joint ventures and

 

Large

 

and the companies

involved.

Various modes of

research corporations

 

inter-firm

co-operation

be related to different

can also be expected

to

strategies

and economic

Joint R&l),

such as

research pacts and joint

performances

of

participating

companies,

re-

development agreements

flecting

their

ability

to model

their

inter-firm

 

relationships.2

 

Technology exchange agreements (mutual),

 

To improve

our understanding

of inter-firm

technology sharing,

 

ium

co-operation a number of taxonomies have been introduced. Auster [2] has differentiated

cross-licensing, mutual second-sourcing

 

‘international

corporate

linkages’

into

techno-

Direct investment,

 

logy transfers

and

exchanges,

R&D arrange-

minority and cross-holding

ments

and joint

ventures.

Chesnais

[3,

p.

515

Customer-supplier

 

ff.] presented a taxonomy of types of inter-

relations, R&D

contract,

 

company

agreements

wtii~il are, amongst

other

co-production,

co-makership

 

things,

set

against

government

involvement,

 

technological

characteristics,

ments

and industry

structures.

c,hpital require-

This taxonomy

One-directional

:echnology flow,

second-sourcing,

 

will be discussed more thoroughly

at

a

later

licensing

stage of our research;

at present,

of different

we will refer

 

only to its distinction

modes of co-

operation.

Somewhat different categorizations

are found in refs. 4 (p. 4) and S (p. 6). The

former introduced

a categorization

based

on

the degree of ownership and control, and the

 

latter

proposed

a

classification

of different

t

will

be clear

that

t

types of co-operative

agreements,

leading

from

co-operation

introduced

 

in Table

1

not

only

more extensive to intensive

forms of CO-opera-

represent

divergent

forms of organizational

in-

tion between companies. laborating upon t

 

terdepe~~e~c~~

but

also

t

at their

occurrence

18

Inter- firm co-operation

and public ‘appearance’ can be expected to

vary. In Fig. 1 we present the distribution

of

these modes of co-operation

as relevant

shares

of MERIT’s databank on alliances.3 It is shown

that joint research

pacts (such as joint

develop-

ment agreements and research pacts), and re-

search joint ventures

and research corporations

are important modes of co-operation. The

former represents over 25% of all co-operative agreements, and the latter mode comprises over one-fifth. Technology exchange agreements

(such as technology

sharing,

cross-licensing

and

mutual sourcing) and customer-supplier rela- tionships are the two smallest groups of agree-

ments in our databank. Direct investments and one-directional technology flows each account for about 16% of the agreements.

Technolnyy

exchange npxvnentr

(V.lO’“l

Source:

Fig.

I.

MERIT-CAT].

Distribution

of

modes of co-operative agree-

ments (percentages of N = 3964).

It is important

to note that misrepresentation

might occur to a certain extent, because some

more casual agreements, such as customer-

supplier relationships

and one-directional

tech-

nology

flows, are little reported

publicly,

even

in the professional

literature and press. Further-

more, it should be noted that the present picture

resents a total of many fields of technology, whereas it should be taken into consideration

that the distribution

varies

considerably

for

different fields of technology [61.

Nevertheless,

the relative

importance

of the

different

modes of co-operation

should be kept

in mind

in the discussion

of the particularities

of each mode

in the following

sections.

Before

we

enter

into

the peculiarities

of

specific modes

of co-operation

we will present

some

figures

on

historical

developments

in

inter-firm

co-operation

as they follow from

our

data.

In Table 2 the distribution

of neb agree-

ments

for

various

modes

of

co-operation

is

given,

going

back

as

far

as the

early

1950s. it

can

be seen

that

in

the

number

there has been

a clear growth

c\f agreements

since the

early

1980s. Over 90% of all agreements in our

databank

have been established

since 1980, and

nearly 50% were

formed

in the

past 4 years.

It

is clear that there

has been a growth in absolute

numbers

although

growth

rates

differ

for all modes, substantially.

Consequently,

we

can

observe

some changes in the relative impor-

tance

of different

forms

of co-operation.

The

relative importance

of joint

ventures

and

research

corporations

has gradually

decreased

from

over 50% of all agreements

in

the

early

period to less than 20% in recent years. The

share of joint

R&D agreements

has risen from

less than

lOolo to almost 34%. Technology

ex-

change agreements have gained some impor- tance in the early 198Os, but we notice a relative

decline in the last period.

The portion

of direct

investment

peaked in the late 197Os, when over

a third

of all new agreements

were established

through

this

mode;

since

then,

the

share

of

this mode

has approached

the

10% level. Both

customer-supplier

relations and one-directional

technalogy

flows show a somewhat

fluctuating

pattern

in their

relative

contribution

to inter-

firm

agreements,

although customer-supplier

 

relations

have

gradually

increased

in relative

importance. Research so far suggests a number of factors which explain this general growth in alliances,

such

as

  • - the internationalization of markets;

  • - the speed, complexity, interrelation and uncertainty of technological development:

19

J. Hagedoorn

TABLE

2.

Increase

n number of inter-firm

 

-

Modes of

 

Before

co-operation

1972

 

-

 

83

research corpory:;ons

53.2”:”

Joint R&D

 

14

 

9.0”!”

Technology exchange

 

h

agreement5

 

3.X”)”

Direct

investtr,ent

 

27

 

17.3”;1,

Customer-supplier

 

5

relationships

3.2”‘”

One-directional

21

technology

flow

13.5%

Total

I56

i(lOo/o

3.g:

Source:

MERIT-C‘ATI.

 

agreements by form of co-operation, 4-year periods, absolute numbers and percenta@

1973-1976

1977-1980

1981-1984

1985-1988

Total

64

112

254

345

8%

41 .81

22.6%

20.8%

17.8%

21.6%

22

65

255

653

1009

14.4oio

13.1~

20.9%

33.7%

25.5%

4

33

I52

I65

360

2.6”10

6.7010

12.4oio

8.5”f”

9.

I “I”

29

I68

170

237

631

l9.W”

33.94r,

13.9%

l2.2”f”

I5

9%

I9

47

123

265

469

12.4”fo

9.5%

IO.9071

13.7%

11.8%

15

71

259

271

637

9.800

14.3%

21.2%

14.Olo

16.1%

I53

496

1223

1936

3964

100%

100%

100””

100%

100%

!.9”10

12.5%

30.9%

48.8%

lOO”l0

  • - increase in costs of R&D;

-. the necessity for large companies

to monitor

a spectrum of technologies (see ref. survey of the literature).

6”

for

a

3.

Organizational

modes of inter-firm

co-operation

 

3.1.

Joint

ventures

and research

corporations

 

We

refer to joint

ventures

and research

cor-

porations

as combinations

of the

economic in-

terests of

at least

two

separate

companies

in a

‘distinct

company’;

profits

and

losses

are

shared according

to

equity

investment.

Joint

vent:lres can be analysed in the context of a

company

strategies

in

number of transitional various market situations.

Some argue that pat-

terns of joint venture formation can be found

in long-term cycles of economic development

20

[7,8].

In

theory,

different market situations

and strategies,

repositioning

such as entry into new markets, and expansion in existing markets

and exit strategies

in declining

markets,

can in-

fluence

the

effectiveness

and

‘popularity’

of

joint ventures [9,10]. Variation in joint venture

strategies

within

such market

situations

can be

explained

in terms of either transaction

cost or

strategic behaviour,

although

a mixture of both

strategies

is possible.

We can expect

that

op-

tions

from

strategic

behaviour

will prevail

in

particular

in entry and repositioning

strategies.

Transaction

cost economizing will influence

joint venture formation negatively in expansion

strategies

and

positively

in pull-back

strategies

where

costs

of transactions

and

other

costs

become decisive

(see also ref.

1 I).

In

our present

research

we consider

as joint

ventures those companies

that

 

have

shared

 

as

a

specific

company

objective in addi-

tion

to

production,

marketing,

sales

etc.

Research

corporations

are joint R&D ventures

with

distinctive

research

programmes. those with an impact

Joint

on

ventures,

in particular

joint

R&D, have, according

to many observers,

become

more

popular

in

recent

decades.

A

gradual

growth ir. the number of R&D-related

joint

ventures

has been

 

[12-141.

However,

joint

ventures

reported of the pure

R&D type

are

not

very

common;

manufacturing

and

marketing

are frequently

included

in

the

arrangement

[ 141.

 

As mentioned

earlier and shown

in Table

2,

the

relative

importance

of joint

ventures

and

research corporations

 

mode of inter-

company

techno!ogy

as a major transfer

has

decreased

substantially

despite

their substantial

growth

in

absolute

numbers.

 

It

is clear

that

in

the

past

decade

a number

of other

forms

of co-opera-

tion,

in particular

joint

R&D agreements,

have

become

an alternative

to joint

ventures.

 

Despite

the

still-existing

‘popularity’

of

R&D-related

joint

ventures,

the economic

and

organizational

stability

of

the

joint

venture

mode

as

such

appears

questionable.

Some

experts

estimate

that

about

70%

of

all joint

ventures

fall short

of expectations

or

are dis-

banded.

Major

reasons

for these

failures

are

found

in different

 

views of participating

com-

panies

on

strategy

 

and

lack

of

agreement

in

advance

on how

to

run

the company;

see,

for

instance,

Business

 

Week

(21

July

1986).

Kogut’s research

[ 151 shows that over 45%

of a

sample

of about

150 joint

ventures

 

were ter-

minated

within

5 years,

with instability

rates

for international

joint

ventures

peaking

after

5

and

6 years.

Berg

et

al,

[8,

p.

371 found

that

about

40%

of

50 joint

ventures

in

the

U.S.

chemicals

industry

 

in

the

period

1924-1969

were

terminated

 

within

5 years.

However,

others

doubt

whether

there

is hard

evidence

that

the failure

rate of international

joint

ven-

tures exceeds the normal

corporate

failure

rate

for single-company

ventures [S, p. 251.

 

Sometimes

cost economizing

is introduced

as

the decisive

factor

in explaining

joint

venture

behaviour.

For

example,

Berg et

al.

[S] and

ln ter- firm co-operation

Berg and Hoekman

[9] have introduced

a simple

model

with one large .company

and

one small

company,

in which co-operation

benefit

differentials

is based upon

cost

and

between both

partners.

there

Basic assumptions

are very strong synergies

are no

as

is free access,

and there

or costs

of search.

Their model

boils down

to

the

appropriation

by

 

joint

ventures

of

the

benefits

curve of the larger company

and the

cost curve of the smaller company.

 

Conse-

quently,

the surplus is higher

for the joint

ven-

ture than it would be for both its partners

independently.

In

our

opinion,

it

is obvious

that

such

assumptions

are

too

restrictive

for

understanding

of the actual problems,

benefits

and

complexities

of joint

venture

formation,

 

because

strategically

motivn!,ed

joint

ventures

are

frequently

established

by companies

of

similar size, and costs are n!nl:*one of a number

of factors in explaining joint VI.lture

formation.

 

In

the

literature,

potential

advantages

of

joint

ventures

are associated

with the spreading

of risks,

sharing

of

fixetl costs,

capturing

of

economies

of scale, access to new markets, com-

petitive

repositioning

and

sharing

of research

efforts.

Problems

in maintaining

joint

ventures

derive

from

the

risks

of

sharing

proprietary

know-how,

the desire for control

by individual

partners,

co-ordination

 

of

different

time-

horizons,

disagreement

on

design

specifica-

tions,

government

policies

and

the

effects

of

M.E.S.

in R&D which can make de-centraliza-

tion

of

R&D

both

costly

and difficult

to

control

by partners

[4,14,16,17]. Potential

disadvantages,

from

a general

welfare

econo-

mics

point

of

view,

are

reduction

of

actual

competition,

possibility

of foreclosure

of par-

ticular

markets

and ability

to reduce

potential

competition

 

It

will

not

[14, pp. 22-231. surprise

come

as

a

that

R&D-

related joint ventures appear to be conc:n-

trated in R&D-intensive

industries,

as demon-

str?ted

in

a

study

by Kogut

and

Singfl

[181.

Harrigan

[IO] also found

 

that

R&D joint

ven-

tures

are

particularly

established

in high-tech

industries,

such as a wide array of information

21

J. Hagedoorn

 

technology-related

sectors

in

elecrroAics

aAd

communications,

and

pharmaceuticals.

SORE-

what similar

results

have been

fouAd by Berg

and Friedman

[ 121.

However,

this

does

not

suggest that

WkD

joint

ventures

are COAcerAed With the Core of

research a;:ivities

or major

strategic

activities

of their parent companies. Harrigan

(4, p.

326)

found that

 

‘WE higher a product

line

or area

of

technology

was in s?tategic

importance.

the mote reluctant firms were to use co-

operative sttutegieS to leverage t4eit com-

petitive positims.

Joint

veniures

were

formed to suppiement some existing strengths; but ot4er forms of co-opeta?ion were used in those areas that constituted firms’ strategic cores. ”

She also found

few joint

ventures with basic

research,

but the number

of joint ventures

with

development

activities

demonstrated

a growth.

These

technologically

inspired

joint

 

ventures

were applied by some partners

for leapfroggirrg

and

to

overcome

shortcomings

of

in-house

R&D. Then,

firms

with

distribution

strexlgths

would

choose

partners

with

techn~]ogica]

strength

to compensate

for the lack of in-house

capabilities

[4, p.

339 ff.;

14,191.

Research by Hladik [13,16] and Harrigaa

[4, lo] indicates

that

successful

co-operation

iA

‘joint

ventures

is affected

by

the

similarity

of

partners

in terms

of

size,

financial

resources

and

technical

assets,

which

we would

like

to

understand

as

similarity

balanced by com-

plementarity.

Also,

previous

relationships

and

the

phenomenon

of

‘hostages’

in continlring

collaboration

reduce

the

likelihood

of

joint

venture

termination

[4,10,13,16;

15,

p.

ISO].

Kogut also found that increasing

concentratioan

in

industries

influences

the

probability

of

termination.

 
 

Some authors

argue

that

it can be expected

that upstream innovative activities within the

firm,

which are not

too close to core techA&-

 

gies, are more

likely to be subject

to .joiAt ven-

tures than product-related

development

work,

because

of competitive

pressures

14,203. How-

ever, empirical

research on co-operative

agree-

ments

so far

has not

been able to identify

a clear

relationship

between

joint

venture

formation

and stages of inrnovative activity [6*].

 
 

Our

previous

research

[6*]

indicates

that

many

companies

consider joint

veAtures

and

research corporations

as relevant

forms

of

organization

of

joint

research

in

new

areas

of research,

in particular

after

a first phase

of

joint experimenting

with technology

exchange

agreements.

!f

the

R&D

involved

is

more

crucial to one company,

we

can

expect

this

partner

to attempt

to achieve 8 majority

stake

or disproportionate

influence

in the joint

ven-

ture’s

management,

Sorhetimes joint

ventures

are

established

with

smaller,

but

promis,iAg,

companies

at

the

fringes

of

the

larger

com-

panies’

fields of interest.

A take-over

pr~bab]y

remains

a ‘hiddera’ option

activities of the joint

vealture become

strategy iA case the

more im-

 

portant

to the larger partner.

 

3.2.

Joint

R&D and technalegy

exchange

 

agraenwm

 
 

Both

these

categories

of

inter-firm

agree-

ments

refer

to

a large number

of co-operative

arrangements

which

Cover a substantial

share

of all technological

alliances.

Joint

R&B and

technology

exchange

agreemeAts

cover

agree-

ments that regulate techrrelogy

and

R&D

sharing and/or

transfer

between

twn

or more

companies, such as:

joiAt research pacts which establish joint

undertaking of research projects with shared resources;

joint

development

agreements;

technology sharing agreements; cross-licensing; mutual second-sourcirsg.

These

categories

of

co-operation

cover

e

range

of

legal

aAd

organizati~Aa~

22

Inter-firm co-operation

 

arrangements

and

also

a substantial

share

of

licensing for reciprocity and cross-licensing

are

the total of all agreements

between companies.

combined in our understanding of co-operative

 

In particular,

large

companies

seem

to apply

agreements

cross-licences. Strictly, both forms

many of thz ag,,reements mentioned

above

to

of licensing should be distinguished. With

explore possible benefits

of co-operation

before

licensing for reciprocity, companies exchange

entering

into

more

far-reaching

agreements

licences to supplement

their own research with

such as joint ventures [6*].

licensed technology or to avoid patent protec-

The

first

two

forms

of

co-operation

men-

tion. Cross-licensing

refers

to

agreements

in

tioned above govern agreements where two or

which the value of both licences or packages

of

more companies

organize

joint

R&D activities

licences is calculated

[23, pp.

60-641. In parti-

%a reduce costs,minimize risk, and allow

titular,

large companies

appear

to apply these

synergy among firms pursuing similar

agreements

for ‘swapping’ packages of patents

innovations” [a, pm4].

to avoid patent infringements,

from

which

it

can be concluded

that, compared

with unilateral

From

‘Table 2 we learn

that

this mode

of

co-

licensing,

this bilateral form of technology

operation

overtook

the

joint

venture

as

the

transfer regulates the relocation of more

most

important

form

of partnership

in the

sec-

advanced technology.

 

ond

half

of

the

19803. In recent

years

over

a

As with licensing and cross-licensing, mutual

t.!+d

of

alj

agreements

have

been

in

this

second-sourcing

is

the

bilateral

form

of

the

category.

technology

more

general

second-sourcing

agreement.

Qr-

The other mode of co-operation,

dinary

second-soursing

agreemeats

are typical

excharmg~ agreements,

consists

of a number

of

of

industries

involved

in

information

tech-

ments,

agreements

With

technology-sharing

.. which rem.ains a rather ‘vague’ category

agree-

nology;

applied

in

by

particular,

companies

these

which

agreements

are

produce

micro-

of co-operation,

companies

negotiate

the allo-

electronic components

[ 11.

The

OECD

[24,

cation

OF estabiisbed

knowted.ge or artefacts

p,

SZ] has

described

normal

second-sourcing

generated

either by on,t partner or through

contracts as fQblOW%

 

collective efforts,

$~ch

agreements

cam take

 

such a large number

of organizational

and lega!

forms

that

it

is diffilcult

to

present

general

features of t.hose agreements,

apart

from those

 

briefly mentioned above.

The other two sub-categories of technology

exchange agreements are

th,e more

extended

of what

are usudly

and specific mutual forms

unilateral organizations of technology flow.

Both cross-llcenning and mutual second-sourc-

ing are those i*orms elf agreements

shag have

develr~ped from single-source technology trans-

fer mechanisms. Stand%d licensing agreements

are contracts whereby one company,

which has

proprietary

rights,

gives another

comparly

khe

hi

of

use

in

return

for

payments.

Single

licensing usually c0ncern.s the transfer to gart-

ners of somewhat older technologies

and

pro-

ducts @I, pp. 88-89; 22, lip_76]. So-called

23

J. Hagedoorn

It

will be clear

that

mutual

second-sourcing

reflects

the

preference

of companies

to mini-

mize the risk of opportunistic

behaviour

by

its

second-sourcing

partner

through

a reciprocal

arrangement.

 

As shown

in Table

2,

such

technology

ex-

change agreements play a moderate

role

in

inter-firm

co-operation;

they

account

for

less

than

10% of all agreements

in our databank.

There

has

been

a substantial

increase

in

ab-

solute

numbers

in

the

past

decade,

but

on

the

whole this mode of co-operation

is of relatively

minor importance compared with the other forms discussed here.

3.3. Direct investment and co-operation

In particular

conditions,

equity

investments

 

can

be seen

as a form

of co-operation

between

companies

which in the long run could affect

the technological

performance

of

at

least one

‘partner’.

There are a number

of advantages

in

such equity

investments,

which

can,

to

a

cer-

tain

extent,

be

strategically

motivated.

One

company

could

achieve

some control

over

another

company,

although

the active. involve-

ment

of the management

of the partner

com-

pany is retained and the assessment

of expertise

of the company

can

be made

without

a com-

plete integration

[17]. Such minority

stakes,

in

particular

those

by

a

large

company

 

in

a

smaller

‘high-tech’

company,

can

be under-

stood

as a case of co-operation,

in particular

if

such minority

sharing

is coupled

with research

contracts.

This practice has become well known

specifically

in

the

field

of biotechnology

 

[25,

p. 311.

 

In spite of the attention being paid to minority sharing, its achievements and present popu-

larity could be relatively

small.

From Table

2 it

follows that direct investment

reached a peak in

its relative contribution

to inter-firm co-opera-

tion during

the second

half

of the

1970s. Since

then, the number of agreements

has

risen

moderately, but its relative contribution dropped below that in earlier periods.

has

In our opinion,

whether

large-

scale entry

into

it is doubtful technological

achievements

of

another

company

and its strategic

options

are

acquired

in

this

way.

Because

of limited

par-

ticipation,

the

access

to

exclusive

rights

or

decision-making

will frequently

remain

small.

If a smaller ‘high-tech’ company is of any in-

terest to a larger company,

the more favourable

options

are

probably

either

majority

sharing

(integration),

joint

ventures,

technology

ex-

change agreements

or research

contracts.

 

In

the

case

of

cross-holding,

the

relations

between two companies

 

could

be

of

a

more

equal character.

Although

some of the reserva-

tions

made

with

reference

to minority-sharing

apply to cross-holding

as well,

it can

very well

step towards

integration

 

or closer co-

be a first operation

between

the companies

involved.

3.4. Customer-supplier relations and one- directional technology flows

 

In

the

first of these

modes

of inter-firm

co-

operation we have combined those categories

of agreements

through

which contract-mediated

collaboration

in either

production

or research

is established. We expect that this form of

co-operation

is underestimated

in our

figures

because this form of agreement

is little reported

publicly.

Despite such distortion

Table 2 shows

a substantial growth in recent years, when the

number of cuseomer-supplier

agreements

have

doubled

and its relative contribution

has

im-

proved considerably.

 

These

customer-supplier

relations

can

be

divided

into a number

of forms of partnership:

(1)

Co-production

contracts

 

confirm

the

agreement

between

companies

to

produce

a

commodity;

usually

the

‘leading’

company

supplies

the

technology

and

critical

compo-

nents,

and

other

companies

manufacture

less

critical

components

and

assemble

 

final

products.

 

(2) Co-makership

relations

establish

long-

term

contracts

between

users

and

suppliers,

24

Technovation,

Inter- firm co-operation

with users out-sourcing

 

a part

of

their

produc-

tion process to suppliers

of sub-assemblies.

Co-

operation

is found

in close contacts

on quality

control,

and

planning

of supply

according

to

standards

which

are

usually

set

by

the

user-

companies.

 

(3)

Research

contracts

regulate

R&D

co-

operation

in which one partner,

usually a large

company, contracts another company,

fre-

quently a small one, lo perform particular

research projects.

 

In

the

literature,

some

advantages

and disadvantages

of this

mode

of

co-operation

are

discussed.

For

the

contract-

initiating

party,

advantages

can be found

in the

possibility

to

focus

on

particular

areas

of