Cooperation Strategies and Knowledge Spillovers. Evidence from the Fourth Italian Community Innovation Survey

This paper examines the determinants of R&D cooperation focusing on the relationship between firms R&D cooperation and knowledge spillovers on a sample of Italian innovative firms drawn from the Italian Fourth Community Innovation Survey. I explore this relationships taking into account different types of R&D cooperations and the endogeneity problems which arise from the likely mutual dependence between R&D cooperation and knowledge spillovers and the fact that determinants potentially driving firms’ choice to engage in R&D cooperation could simultaneously affect incoming knowledge spillovers . Applying the Newey’s minimum chi-squared two-step estimator I estimate an instrumental variable probit model in order to control for endogeneity and I find a significant and positive effect of knowledge spillovers on firms’ decision to engage in R&D cooperations. Moreover, I find a non linear effect of technology advancement of firms on the propensity to cooperate in R&D while firms’ absorptive capacity and European Union support on innovation activities seems to be very effective to increase both R&D cooperations and the level of knowledge spillovers. Finally, foreign multinational companies which invested in Italy have been less eager to engage in R&D co-operative agreements than domestic firms, suggesting that these firms’ deciding motives to invest in Italy are more likely to be asset-exploiting than asset-seeking. JEL Classification: O31; O32; L22