Product Development via Industry-University Joint R&D Ventures: What Makes a “Win-Win” Partnership?

There are substantial benefits for both industry and universities from performing joint R&D projects. Given the significant potential benefits, both tangible and intangible, the level of such activity, however, seems surprisingly low. One reason hypothesized for this discrepancy is that the potential partners are motivated towards opposite goals: industry wishes to limit publication of research results due to fears of loss of competitive advantage in their markets as competitors obtain the benefits of the research at no cost, while academia is motivated to maximize publication. Intuitively, this would seem to be a fundamental difference between the potential partners. This paper studies this issue through the use of insights gained by a new analytic model of the profitability of such collaborations. First amongst these is that given the typical speed of product innovation and the typical publishing delay found in archival journals, little or no competitive advantage is expected to be lost by the industrial partner by allowing unrestricted publication freedom to the university partner. A second interesting insight occurs in the situation where a firm’s competitor forms the collaboration with the university partner. In general, if it is profitable for one industry partner to join the collaboration, the most beneficial decision for other firms in that market is to also join the collaboration.