This paper analyzes the relationships between firms' external search of knowledge and its role in cooperation strategies for innovation. In particular, this study accounts for differences between public and private external sources of knowledge and between private–private and public–private cooperation arrangements. The empirical model is based on the Fourth Community Innovation Survey statistics for 15 countries and 40 economic branches. Although firms' internal R&D effort and size are important factors explaining engagement in cooperation for innovation, firms' external search of knowledge also plays a role. Among other insights, the results suggest the relevance of firms' absorption of science-based knowledge from public external sources in favoring firms' engagement in cooperation arrangements.
The locus of innovation should be thought of as a network of inter-organizational relations (Arora & Gambardella, 1990). Nowadays, a single organization faces increasing difficulties in innovating in isolation (Hamel and Prahalad, 1994, Shan et al., 1994, Teece, 1986 and Tether, 2002), and the logic that supports a merely internally oriented and centralized approach to research and development (R&D) may be insufficient. Instead, successful innovation increasingly depends on the development and integration of external ideas in the innovation process (Cassiman & Veugelers, 2002). In order to compete in a knowledge-intensive scenario, firms have to engage with different types of partners to acquire resources (Laursen & Salter, 2006) whether they work together with other companies, universities or public research bodies (Coombs et al., 2003, Fritsch and Lukas, 2001, Lai, 2011, Lai and Chang, 2010, Perkmann and Walsh, 2007 and Veugelers, 1997). Accordingly, firms can and should use external ideas as well as internal ideas to advance their technologies (Chesbrough, 2003), concentrating on finding the correct balance between the development of internal knowledge and the incorporation of valuable external knowledge.
In an era of global-scale and the knowledge-based economy, the complex and multifaceted nature of modern innovation developments forces firms to expand and open up their horizons towards becoming involved in collaborative behaviors. Conventional explanatory factors of cooperation on innovation persist and certainly play a key role in favoring the emergence of inter-organizational alliances. On one hand, firms' intensity in internal R&D activities favors their capacity to generate and exploit new knowledge. This increases not only firms' abilities to assimilate, manage and undertake new developments, but also their potential readiness and availability to engage in collaborative agreements with other external innovators within the system, thereby facilitating the emergence of multiple cross-fertilization interactions. On the other hand, the more structured and formalized R&D arrangements of large firms empower their capacity to turn into attractive partners for cooperation.
