Impact of specific investments, governance mechanisms and behaviors on the performance of cooperative innovation projects

Abstract Inter-organizational collaborative innovation projects are increasingly cited as a “best practice” in R&D activities, this study seeks to understand the factors affecting performance of cooperative innovation projects from a new perspective: specific investments. Specific investments is important to the value creation for inter-organizational projects, however which can induce the “hold-up” problem, formal contracts and relational trust are two typical governance mechanisms employed to safeguard specific investments. This paper tests the effects of both mechanisms simultaneously using empirical studies focused on Chinese cooperative innovation projects, exploring the effects of specific investments, governance mechanisms and behaviors on cooperative innovation projects performance. The findings demonstrate that specific investments favor both, the formation of formal contracts and relational trust, and the effect of specific investments to performance is mainly influenced by relational trust. As such, this study contributes to governance theories in cooperative innovation projects management literature by empirically showing how specific investments affect cooperative innovation projects performance.

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