Knowledge Spillovers and R&D Cooperation: Evidence from Korean ICT Manufacturing Firms

Abstract

In this paper, we investigate the determinants of R&D cooperation in Korean information and communications technology (ICT) manufacturing firms. In particular, we focus on the differing role of determinants in R&D cooperation between ICT firms and non-ICT firms. Using data from the 2005 Korean Innovation Survey, we employ a probit model with sample selection to correct a possible sample selection problem arising from firms' decisions on R&D cooperation and innovation. Since non-innovative firms which make up almost half of the sample firms in the Korean Innovation Survey, results based on a probit model utilizing only innovative firms could be biased. As expected, we find positive correlations between the decisions of firms' R&D cooperation and innovation. Based on estimation results, we find that incoming spillovers of knowledge have a positive and significant effect on the probability of ICT firms' engaging in R&D cooperation. In contrast, the incoming spillovers do not have a significant effect on the R&D cooperation of low-tech firms. The results suggest that the role of incoming spillovers in R&D cooperation could be different among firms according to their technology characteristics. Our results also indicate that the firms' absorptive capacity positively influences the likelihood of cooperating in R&D. On the other hand, appropriability turns out to be not an important factor for R&D cooperation. Constraints on innovation such as innovation cost, uncertainty, and the lack of information on technology seem to be not significantly related with the probability of R&D cooperation.

Keywords: R&D cooperation, knowledge spillovers, appropriability, absorptive capacity, ICT firms

JEL Classification: O31, O32