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Research: Joint Ventures that Keep Evolving Perform Better
- Shishir Bhargava
- James Bamford
Market leaders maximize returns by actively shaping — and reshaping — their partnership portfolios.
Partnerships and joint ventures are an important source of revenue and innovation for many large companies, particularly in areas of emerging technology. New research shows that companies that restructure a large percentage of partnerships show better financial returns. Companies creating new partnerships should take steps to allow for future restructuring.
Successful companies actively manage their businesses through periods of economic growth, downturn, and recovery. They do so by innovating, making strategic shifts, rewiring existing operations, reallocating resources, entering new business lines, and restructuring existing ones.
- SB Shishir Bhargava is a Senior Director at Ankura , and a core member of the firm’s joint venture and partnership practice. He serves clients on joint venture transactions and governance matters, with a focus on the energy, industrial, and automotive sectors.
- JB James Bamford ( [email protected] ) is a senior managing director at Ankura, where he serves a global client base across industries on joint venture and partnership issues. He previously founded Water Street Partners and co-led the joint venture and alliance practice at McKinsey & Company.
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R&D Cooperation Facilitates Cartel Formation
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- First Online: 25 February 2020
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- Jacek Prokop 3 &
- Adam Karbowski 3
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The objective of this research is to investigate the impact of R&D cooperation between firms on industry cartel formation. We consider process R&D investments aimed at reduction of the unit costs of manufacturing. These investments create positive externalities for the competitors. We assume that the competition between rival firms in the industry takes place according to the Stackelberg (quantity) leadership model. For simplicity, we focus on the duopoly symmetric case. Numerical analysis shows that closer cooperation between rivals at the R&D stage strengthens the incentives to create a cartel in the final product market, thus serious public policy concerns occur.
The previous version of this paper is available online as the discussion paper: Prokop and Karbowski ( 2013 ) R&D Cooperation and Industry Cartelization. The Economics Discussion Paper Series, 2013–41, The Kiel Institute for the World Economy.
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The models in the form of such games were introduced by d’Aspremont and Jacquemin ( 1988 ) and De Bondt and Veugelers ( 1991 ). They have been further developed by Kamien et al. ( 1992 ), Prokop and Karbowski ( 2018 ), Karbowski and Prokop ( 2018 ). See also our working paper, as a rough version of the present publication, i.e., Prokop and Karbowski ( 2013 ).
The R&D block exemption regulation was further extended in 2010. European Commission has considerably extended the scope of the R&D block exemption regulation, which now not only covers R&D activities carried out jointly but also so - called “paid - for research” agreements where one party finances the R&D activities carried out by the other party (EC Press Release Database, Brussels, 14 December 2010).
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Acknowledgements
This research was supported by National Science Centre, Poland (grant number UMO-2017/25/B/HS4/01632).
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Department of Business Economics, Warsaw School of Economics, Al. Niepodległości 162, 02-554, Warsaw, Poland
Jacek Prokop & Adam Karbowski
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Correspondence to Adam Karbowski .
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Department of Economics, University of Western Macedonia, Kastoria, Greece
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Prokop, J., Karbowski, A. (2020). R&D Cooperation Facilitates Cartel Formation. In: Tsounis, N., Vlachvei, A. (eds) Advances in Cross-Section Data Methods in Applied Economic Research. ICOAE 2019. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-38253-7_7
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A research joint venture (RJV) is an agreement between two or more partners to perform research and development (R&D), where each partner has an active role in the generation of new knowledge and technology. As such, a RJV is distinct from the ex ante or ex post agreement to acquire knowledge or technology as in R&D contracting or the licensing of technology respectively.
This paper empirically analyses the determinants of firm participation in Research Joint Ventures (RJVs). A review of the theoretical literature highlights the difficulty of identifying testable hypotheses. Using a large database of European RJVs, we estimate a participation equation at the firm level using the logit procedure.
An RJV usually involves the formation of a new organization jointly controlled by two or more parent institutions whose purpose is to engage in research and development activities. ... Research joint venture participants Eighty seven percent (7953) of all announced memberships to the 575 RJV have been positively N.S, Vonortas / Research Policy ...
A firm considering a research joint venture with its competitors, balances potential benefits of cooperation with conflicting interests. I model firms as players in a game in coalitional form - the Joint Venture Game, and study asymmetries with respect to ability to fund, market power, and technological capital.In a duopoly between firms that are symmetric in all respects, I show that ...
The literature on research joint ventures (RJVs) has emphasized internalizing spillovers and cost-sharing as motives for RJV formation. In this paper we develop two additional explanations: product market complementarities and firm heterogeneity. We analyze a model of RJVs with asymmetric firms and differentiated products. We then test these various explanations for RJV formation by estimating ...
In this paper we extend the existing literature on research and development (R&D) investments and research joint ventures (RJVs) in two important ways. First, we analyze and compare the case where firms collude in the product market to the benchmark case of competition in the output market.
Intrigued by the rapid growth in research partnerships and concerned for their sustainability, this paper studies the dynamic formation of vertical research joint ventures (RJVs). A vertical RJV is formed when an upstream innovator co-develops her basic research with a downstream rm with bidimensional private values: the development ability and the marketability.
Venture Formation: Designs and Outcomes* We use a large firm - le vel dataset on Research Joint Ventures (RJVs) formed under the umbrella of the Eureka and European Union's Framework
In this paper, we present several insights regarding the influence of institutional design on the process of Research Joint Venture (RJV) formation. Our results are obtained with a firm-level dataset on RJVs formed under the umbrella of the Eureka initiative and of the European Union's Framework Programmes (EU-FPs) for science and technology.
In this paper we examine empirically covariates with the trend in the formation of research joint ventures (RJVs) promulgated by the NCRA and with the probability that a RJV will have an international research partner. We find that RJV formations seem to increase in times when industrial investments in research and development (R&D) decrease ...
We use a large firm-level data-set on Research Joint Ventures (RJVs) formed under the umbrella of the Eureka and European Union?s Framework Programmes for Science and Technology (EU-FP). Based on the results presented in Hernán, Marin, and Siotis (2003), we focus on firms that are known to have a high probability of forming RJVs, with the latter identified as firms with a previous experience ...
This paper empirically analyses the determinants of firm participation in Research Joint Ventures (RJVs). A review of the theoretical literature highlights the difficulty of identifying testable hypotheses. Using a large database of European RJVs, we estimate a participation equation at the firm level using the logit procedure.
joint ventures, we add a coalition formation stage before firms make research investment and output decisions. When joint ventures provide incentives for firms to coordinate investment, we find that in the presence of at least one non-degenerate RJV, two or more isolated firms find it profitable to establish a competing joint venture. This result
Research: Joint Ventures that Keep Evolving Perform Better. by. Shishir Bhargava. and. James Bamford. April 12, 2021. Per Breiehagen/Getty Images. Summary. Partnerships and joint ventures are an ...
On October 27, 2022, the FASB issued a proposed ASU 1 that would establish a new basis of accounting for most entities that meet the definition of a corporate joint venture in ASC 3232 or a joint venture in the ASC master glossary. Upon the formation date,3 the joint venture's assets and liabilities would be initially measured at fair value.
The truth is that research joint ventures (RJVs) used to be taboo in US competition policy until the US government enacted the National Cooperative Research Act ... This paper presents an examination of the question of whether environmental research joint venture (ERJV) formation within a symmetric R&D/Cournot model improves social welfare.
The objective of this research is to investigate the impact of R&D cooperation between firms on industry cartel formation. We consider process R&D investments aimed at reduction of the unit costs of manufacturing. ... Research joint ventures and optimal R&D policy with asymmetric information. International Journal of Industrial Organization, 18 ...
The other days surrounding joint venture formation exhibit no significant positive or negative abnormal returns. The evidence of a positive shareholder wealth effect adds further support to research showing positive returns to joint venture formation and other strategic alliances, see Lai et al. and Lee and Wyatt .
This fact made it increasingly tough to 'go alone' into the international projects. As a consequence, companies with diverse strengths and weaknesses cooperatively bid for joint ventures (JV) formation. Joint venture is also a well-established aspect of the crude oil industry, specifically in the upstream segment.
This paper empirically analyses the determinants of firm participation in Research Joint Ventures (RJVs). A review of the theoretical literature highlights the difficulty of identifying a set of testable hypotheses. Using a large database of European RJVs, we estimate two participation equations at the firm level using the logit procedure. We find that sectoral R&D intensity positively ...
Coordination costs in research joint ventures are rather well documented in the managerial and business literature. 5 There is thus a clear need to provide a theoretical explanation and understanding of their effects. ... As the formation of an RJV can be detrimental for welfare, policy measures that are intended to deter/encourage RJVs should ...
The formation of a joint venture results in the "creation of a new reporting entity," and no accounting acquirer is identified under ASC 805. Accordingly, a new basis of accounting is established on the formation date. ... The treatment of in-process research and development (IPR&D) contributed to a joint venture at formation is aligned ...
Three large Japanese firms are forming a joint venture to jumpstart drug research in their home country and stem a recent decline in the development of innovative medicines there. On Monday, Takeda Pharmaceutical, Astellas Pharma and Sumitomo Mitsui Banking announced they've signed a deal to establish the as-yet unnamed joint venture, which ...
A small business joint venture entity must submit, with its proposal, the representation required in paragraph (c) of FAR solicitation provision 52.212-3, Offeror Representations and Certifications- Commercial Products and Commercial Services, and paragraph (c) of FAR solicitation provision 52.219-
Since the analogy between joint ventures and options to expand was first proposed (Kogut, 1991), a number of papers have enriched this stream of research, also focusing on TJVs (e.g. Folta, 1998). ROA offers a dynamic perspective which is useful for explaining all the stages of the joint venture's lifecycle (Cuypers and Martin, 2007).
GREENWICH, Conn., April 15, 2024 (GLOBE NEWSWIRE) -- Regeneron Ventures announces its formation as a venture capital fund focused on promising biopharmaceutical, health care and health technology ...