Partner Proximity and Relationship-Specific Capital in Joint R&D Ventures

Geographic proximity between parties increases personal interactions and enhances the exchange of tacit information vital to success in collaborative innovation. In a sample of 582 joint R&D ventures, we observe that the distance between partners varies widely. Controlling for the self-selection...

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Bibliographic Details
Published inThe American Economist (New York, N.Y. 1960) Vol. 68; no. 2; pp. 261 - 276
Main Authors Ciccotello, Conrad, Fu, Richard
Format Journal Article
LanguageEnglish
Published Los Angeles, CA SAGE Publications 01.10.2023
SAGE PUBLICATIONS, INC
Subjects
Economic theory
joint R&D
proximity
contracting
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Summary:Geographic proximity between parties increases personal interactions and enhances the exchange of tacit information vital to success in collaborative innovation. In a sample of 582 joint R&D ventures, we observe that the distance between partners varies widely. Controlling for the self-selection among partners, we find that more geographically proximate parties tend to establish longer contract duration ex ante to address contracting risks associated with the increased sharing of tacit information. We argue that partner proximity in joint R&D leads to the creation of relationship-specific capital. Thus, the operative governance mode when partners are geographically proximate is organizational in nature. JEL Classification: D23; L24
ISSN:0569-4345
2328-1235
DOI:10.1177/05694345231172167