Reliance of R&D partnerships

The influence of short-term R&D bias and the nature of competition

Alan S. Dunk*, Alan Kilgore

*Corresponding author for this work

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Reports indicate that capital markets frequently focus on short-term corporate financial performance. Arguments suggest that the R&D projects of many firms are skewed towards short-term, low-risk projects with relatively modest expected benefits, reflecting both a response by companies to financial market pressure to maintain short-term returns and a short-term R&D bias. Anecdotal evidence suggests that one response to short-term R&D bias by firms is for them to seek R&D partnerships with customers and suppliers. A theory is developed which suggests that when firms compete on the basis of product costs, they are likely to seek partnerships with customers and suppliers in order to respond to short-term R&D pressures. In contrast, when competition is innovation-based, firms are unlikely to pursue R&D partnerships in response to short-term R&D bias. The results of an empirical study provide support for this proposition.

Original languageEnglish
Pages (from-to)507-522
Number of pages16
JournalBritish Accounting Review
Volume33
Issue number4
DOIs
Publication statusPublished - 2001

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