Discussion Paper Series Benefits of Co-operation on Innovative Performance: Empirical Evidence from the UK’s Biomedical Sector

The increase of strategic alliance and national or pan-national government collaborative programmes has highlighted the shifting management and policy focus from inducing inhouse R&D to promoting a joint partnership between firms and organisations in the increasingly complex and costly innovation process. Recent outputs from the dynamic capability school and innovation network theorists demonstrate that inter-organisational cooperation has become a crucial mechanism for “collective innovation” between partners and that this complements the internal R&D effort of innovative firms. However, little attempt has been undertaken to examine the relationship between inter-organisational cooperation and innovative performance at the firm level. Questions concerning the important types and locations of co-operation for enhancing a firm’s innovative performance remain unanswered. The innovative activities and inter-organisational co-operation of UK biomedical firms are investigated via a postal questionnaire survey. Using co-operation as a predictive variable, logistic regression models are developed. The result reveals that a firm’s inter-organisational co-operation is positively associated with its innovative performance. This paper argues that the increasingly “distributed” and “collective” innovation process in which a firm’s “networking capability” and its ability to co-operate with buyer firms, supplier firms and knowledge-generating organisations is becoming a key feature in the growth of an alliance-based economy.