Productivity and the Role of Complementary Assets in Firms’ Demand for Technology Innovations

Posted: 4 Jun 2010  

Marco Ceccagnoli

Scheller College of Business at Georgia Tech

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business

Matthew John Higgins

Georgia Institute of Technology & NBER; National Bureau of Economic Research (NBER)

Jeongsik Lee

Drexel University - LeBow College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: June 2010

Abstract

This article uses data on transactions in the pharmaceutical industry to examine the demand-side of technology outsourcing. By integrating a transaction-cost economics perspective with the analysis of internal R&D capabilities, we find that firms with relatively more cospecialized complementary assets or relatively strong internal R&D productivity have a lower propensity to source a technology from outside the firm. We show, however, that since downstream capabilities and internal R&D are complementary activities in the presence of asset specificity and transaction costs, a decrease in internal R&D productivity reduces the marginal value of the downstream assets within firm boundaries, thus stimulating the demand for external technology.

Suggested Citation

Ceccagnoli, Marco and Graham, Stuart J.H. and Higgins, Matthew John and Lee, Jeongsik, Productivity and the Role of Complementary Assets in Firms’ Demand for Technology Innovations (June 2010). Industrial and Corporate Change, Vol. 19, Issue 3, pp. 839-869, 2010. Available at SSRN: https://ssrn.com/abstract=1617054 or http://dx.doi.org/dtq033

Marco Ceccagnoli (Contact Author)

Scheller College of Business at Georgia Tech ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Stuart J.H. Graham

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St. NW
Atlanta, GA 30308
United States
404-385-0953 (Phone)
404-894-6030 (Fax)

HOME PAGE: http://https://www.scheller.gatech.edu/graham

Matthew John Higgins

Georgia Institute of Technology & NBER ( email )

800 West Peachtree Street
Atlanta, GA 30308
United States
404-894-4368 (Phone)
404-894-6030 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeongsik Lee

Drexel University - LeBow College of Business ( email )

3141 Chestnut Street
Philadelphia, PA 19104
United States

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