C OOPERATION AND COMPETITION AMONG FIRMS P ROFESSOR A LESSANDRO A RRIGHETTI Baldini Lisa Ballotta Lucrezia Cenci Chiara Università degli studi di Parma Facoltà di Economia Academic year International business and development

I NTERNATIONAL COOPERATION ON INNOVATION

INTERACTIONS D IFFERENT TYPES OF INTERACTIONS Strategic alliance Strategic alliance Competitive relationships Competitive relationships Consortium Consortium Franchising Franchising Joint-venture Joint-venture

COSTS R EDUCING AND SHARING COSTS I. To maintain a good relationship between managers and directors II. To send back damaged goods III. Costs of hierarchy IV. Transport costs

I T IS IMPORTANT TO : I. Stimulate customers’ needs I. Have a good image of the company II. Have a common vision I. Acquire means of distributions II. Competition differentiation

PSYCHOLOGICAL VALUES Communication with customers Attraction of new customers loyalty Earning the loyalty of customers

T O KEEP CUSTOMERS ! B UT IT ’ S MORE DIFFICULT.. T O KEEP CUSTOMERS !

I NFORMATION REVOLUTION Digitalisation of technologies Digital information is part of our physical life!

W HAT IS R&D? Research and development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge (including knowledge of man, culture and society) and the use of this knowledge to devise new applications.

H OW IS R&D MEASURED ? GERD (Gross Domestic Expenditure on R&D): It’s the main aggregate that is used to compare investments in R&D in different countries. Consists of the total expenditure in R&D carried out by all resident companies, universities, institutes, government labs, and includes also R&D founded from abroad.

I NVESTMENT IN R&D European countries  increased of 50% in the last ten years (actually invest less than 3% of GDP on R&D) Asian countries  +75% in the last ten years China  +855% BRIS  +145% Rest of the World  +100%

D IFFERENCES BETWEEN FIRMS ENGAGED WITH DOMESTIC PARTNERS: Smaller Low tech sector FIRMS ENGAGED WITH INTERNATIONAL PARTNERS: Larger firms Often multinationals High-tech sector Absortive capacity (high engagement in R&D, highly skilled labour)

D IFFERENCES BETWEEN COUNTRIES Portugal: An import country, most of alliances are done to boost sales Germany: An export country, most of alliances are done to exploit innovation technology

Internationalization R&D Innovation  Technology Strategic Alliances  Investments

L INK BETWEEN STRATEGIC ALLIANCES AND INNOVATION VARIABLES OF ANALYSIS: Duration of alliances Innovation of the sector SECTOR OF ANALYSIS: Analysis of the medical sector because it’s easy measurable since every innovation is certified by a PATENT, and registered a huge increase in alliances and joint venture in the last 20 years.

P ATENTS PLACE : usually innovations are patented in countries in which better economic results are possible, taking in account the reputation of the country (some are excluded since less developed in this sector). Slovenia saw an increase in patents from 1995 to 1998 related to the economic development that has occurred.

Example of Novartis AG Novartis AG, part of Novartis-Erfindungen and Sandoz Patent are examples of indipendent firms that joined togheter after the development of patents. F ROM PATENTS TO FUSIONS

N OVARTIS S TRATEGY

C ONCLUSIONS Innovation is effectively linked with collaboration. Firms tend to collaborate with firms to obtain patents in one technological sector, with universities or institutes to obtain patents in more technological fields  research is linked with innovation.

GLOBALIZATION EXPANSION OF FIRMS INTO NEW MARKETS AND COUNTRIES GROWING NUMBER OF INTERNATIONAL R&D AND INNOVATION PARTNERSHIPS

THE PRESENCE OF DIFFERENCES IN INTERNATIONALIZATION OF FIRMS’ ACTIVITIES IN A COUNTRY LEAD TO DIFFERENCES IN THE FACTORS THAT INFLUENCE INNOVATIVE COOPERATIONS WITH FOREIGN PARTNERS

INTERNATIONALIZATION: in economy, the process of increasing involvement of enterprises in international markets THE ENTREPRENEUERS NEED TO POSSESS THE ABILITY TO HAVE AN UNDERSTANDING TO POSSESS THE ABILITY TO HAVE AN UNDERSTANDING OF THINK GLOBALLY OF INTERNATIONAL CULTURES OF THINK GLOBALLY OF INTERNATIONAL CULTURES

TWO MAIN FACTORS TO CAPTURE THE LINK BETWEEN LEVEL OF INTERNATIONALIZATION INNOVATIVE COOPERATION 1- EXPORT STATUS OF THE FIRM 2- FOREIGN INVESTMENTS AND APPARTENENCE TO A MULTINATIONAL GROUP

INTERNATIONALIZATION OF INNOVATION COOPERATION IMPLY SPECIFIC CAPABILITIES: o HIGHER RESOURCE REQUIREMENTS o TO OVERCOME SOCIAL AND CULTURAL BARRIERS o EXPERIENCE IN DEALING WITH FOREIGN ACTORS

EXPORTERS MIGHT BE MORE LIKELY TO COOPERATE WITH FOREIGNERS BECAUSE THEY ARE USED TO:  DEVELOPE MORE INNOVATIVE PRODUCTS TO BE SUCCESSFUL IN FOREIGN MARKETS  FACE GREATER COMPETITION  TREAT WITH FOREIGN PARTNERS

I N OUR EXAMPLE … GERMANY PORTUGAL THEY DIFFER FOR: THEY DIFFER FOR: o LEVEL OF EXPORT- ORIENTATION o HIGH- TECH KNOWLEDGE o ECONOMIC SITUATION o SITUATION REGARDING INTERNATIONALIZATION o SIZE AND POWER

HIGH- TECH EXPORTER POSITIVE EFFECT ON THE PROBABILITY OF INNOVATION COOPERATION LOW- TECH LOW- TECH NON- EXPORTER FEW OPPORTUNITIES OF INNOVATION COOPERATION GERMANYGERMANY PORTUGALPORTUGAL

INNOVATION ENTERPRISES (TOT) INNOVATION ENTERPRISES WITH COOPERATION European Union (15 countries) Belgium Denmark Germany Ireland Spain France Italy Luxembourg8023 Netherlands Austria Portugal Finland Sweden United Kingdom European Economic Area (EU-15 plus IS, LI, NO) Norway

BEING PART OF MULTINATIONALS INFLUENCE THE INTERNATIONAL COOPERATION … IN LOW- TECH COUNTRIES… PORTUGAL  SIGNIFICANT EFFECT GERMANY  NOT RELEVANT

WHY? DIFFERENT INTERESTS FOR MULTINATIONALS GERMANY  TO EXPLOIT THEIR KNOWLEDGE BASE PORTUGAL  BOOST THEIR SALES  BASE FOR INNOVATION ACTIVITIES WITH OTHER EUROPEAN COUNTRIES PORTUGAL  BOOST THEIR SALES  BASE FOR INNOVATION ACTIVITIES WITH OTHER EUROPEAN COUNTRIES

CONCLUSION THE DIFFERENT STRUCTURE OF MULTINATIONALS TOGETHER WITH THE DIFFERENCES IN EXPORT INTENSISTIES BETWEEN COUNTRIES SEEMS TO INFLUENCE THE DECISION TO COOPERATE IN INNOVATION WITH FOREIGN PARTNERS

THE FUTURE…

THANK YOU FOR THE ATTENTION THE END