Innovation Through Vertical Relations Between Firms, Suppliers And Customers: A Study Of German Firms

Interfirm cooperative R&D agreements are becoming more frequent, as firms seek to avoid market failures and exploit the competitive advantages of collaborating vertically with suppliers on the one hand and customers on the other. This paper investigates the phenomenon of vertical R&D linkages in the context of German manufacturing firms, based on a survey conducted at the Centre for European Economic Research, Mannheim. The major finding is that vertical linkages have high prevalence, and that the most common mode of linkage involves informal exchange of technical knowledge, with formal linkages such as joint development teams and contractual R&D cooperation being less common.

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