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Transaction costs and capabilities as determinants of the R&D boundaries of the firm: a case study of the ten largest pharmaceutical firms in Japan

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  • Masao Nakamura

    (Faculty of Commerce, Institute of Asian Research and Faculty of Applied Science, University of British Columbia, 2053 Main Mall, Vancouver, BC, Canada, V6 T 1Z2)

  • Hiroyuki Odagiri

Abstract

The boundaries of the firm are an important issue in relation not just with the make-or-buy decision in production but also with research and development (R&D). Firms depend on universities to gain scientific knowledge, outsource some of their R&D works, purchase patented technologies, commission research, and participate in consortia. In this paper, we take the case of the 10 major pharmaceutical companies in Japan and show that they employ various types of research alliances with various partners, domestic or foreign. Two major theories to explain the boundaries, the transaction-cost theory and the capability theory, are discussed and we argue that the observed pattern of research alliance is more consistent with the capability theory. Discussion is also made on the consortia and national projects these firms participate. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Masao Nakamura & Hiroyuki Odagiri, 2003. "Transaction costs and capabilities as determinants of the R&D boundaries of the firm: a case study of the ten largest pharmaceutical firms in Japan," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(2-3), pages 187-211.
    • Handle: RePEc:wly:mgtdec:v:24:y:2003:i:2-3:p:187-211
    DOI: 10.1002/mde.1083
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    References listed on IDEAS

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    Cited by:

    1. Tsutomu Shibata, 2006. "Japan, Moving Toward a More Advanced Knowledge Economy : Volume 1. Assessment and Lessons," World Bank Publications - Books, The World Bank Group, number 7081.
    2. Liza Jabbour & Maria Pluvia Zuniga, 2009. "Drivers of the Offshore Outsourcing of R&D: Empirical Evidence from French Manufacturers," Discussion Papers 09/04, University of Nottingham, GEP.
    3. Hwan Jin Kim, 2016. "The Comparative Effects of Transaction Cost Economics and Resource Based View: A Technological Alliance Motivational Perspective," International Journal of Business and Social Research, LAR Center Press, vol. 6(5), pages 64-75, May.
    4. Spithoven, André & Teirlinck, Peter, 2015. "Internal capabilities, network resources and appropriation mechanisms as determinants of R&D outsourcing," Research Policy, Elsevier, vol. 44(3), pages 711-725.
    5. Jae-Seung Han & Sang-Yong Lee, 2013. "The impact of technology transfer contract on a firm’s market value in Korea," The Journal of Technology Transfer, Springer, vol. 38(5), pages 651-674, October.
    6. Sharda, Kirti, 2011. "Back to the Drawing Board: Exploring Gestalts of Work Design in BPO Firms," IIMA Working Papers WP2011-02-04, Indian Institute of Management Ahmedabad, Research and Publication Department.
    7. Emanuela Todeva & Ruslan Rakhmatullin, 2016. "Industry Global Value Chains, Connectivity and Regional Smart Specialisation in Europe. An Overview of Theoretical Approaches and Mapping Methodologies," JRC Research Reports JRC102801, Joint Research Centre.
    8. Fukuyama, Hirofumi & Matousek, Roman & Tzeremes, Nickolaos G., 2023. "Estimating the degree of firms’ input market power via data envelopment analysis: Evidence from the global biotechnology and pharmaceutical industry," European Journal of Operational Research, Elsevier, vol. 305(2), pages 946-960.
    9. Giacomarra, Marcella & Shams, S.M. Riad & Crescimanno, Maria & Sakka, Georgia & Gregori, Gian Luca & Galati, Antonino, 2021. "Internal vs. external R&D teams: Evidences from the Italian wine industry," Journal of Business Research, Elsevier, vol. 128(C), pages 752-761.
    10. Kenta Nakamura & Hiroyuki Odagiri, 2005. "R&D boundaries of the firm: An estimation of the double-hurdle model on commissioned R&D, joint R&D, and licensing in Japan," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(7), pages 583-615.
    11. Liza Jabbour & Pluvia Zuniga, 2016. "The Outsourcing of Research and Development in Global Markets: Evidence from France," The World Economy, Wiley Blackwell, vol. 39(3), pages 339-368, March.
    12. Steven Globerman & Aidan Vining, 2004. "The Outsourcing Decision: A Strategic Framework," International Trade 0404007, University Library of Munich, Germany.
    13. Clark, Derek J. & Pereau, Jean Christophe, 2009. "Fragmented property rights and royalty bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 546-553, October.
    14. Yumiko Myoken, 2014. "Investigating the Factors Fostering Sustainable Collaboration between Japanese Companies and UK Universities," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(3), pages 108-116, May.
    15. Baldwin, John R. Beckstead, Desmond Gellatly, Guy, 2005. "Canada's Investments in Science and Innovation: Is the Existing Concept of Research and Development Sufficient?," Economic Analysis (EA) Research Paper Series 2005032e, Statistics Canada, Analytical Studies Branch.
    16. Iwasa, Tomoko & Odagiri, Hiroyuki, 2004. "Overseas R&D, knowledge sourcing, and patenting: an empirical study of Japanese R&D investment in the US," Research Policy, Elsevier, vol. 33(5), pages 807-828, July.
    17. Luigi Cantone & Pierpaolo Testa & Svend Hollensen & Giuseppe Fabio Cantone, 2019. "Outsourcing New Product Development Fostered By Disruptive Technological Innovation: A Decision-Making Model," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-45, January.
    18. Sebastien Lechevalier & Yukio Ikeda & Junichi Nishimura, 2006. "Collaborative R&D in the robot technology in Japan: an inquiry based on patent data analysis (1991-2004)," CIRJE F-Series CIRJE-F-453, CIRJE, Faculty of Economics, University of Tokyo.
    19. Clark Derek J & Pereau Jean-Christophe, 2008. "Passing the Buck in Sequential Negotiation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-18, December.
    20. Hwan Jin Kim, 2016. "The Comparative Effects of Transaction Cost Economics and Resource Based View: A Technological Alliance Motivational Perspective," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(5), pages 64-75, May.
    21. Schmiedeberg, Claudia, 2008. "Complementarities of innovation activities: An empirical analysis of the German manufacturing sector," Research Policy, Elsevier, vol. 37(9), pages 1492-1503, October.
    22. Berbegal-Mirabent, Jasmina & Llopis-Albert, Carlos, 2016. "Applications of fuzzy logic for determining the driving forces in collaborative research contracts," Journal of Business Research, Elsevier, vol. 69(4), pages 1446-1451.
    23. Masatoshi Kato, 2016. "Internal R&D and External Knowledge Acquisition of Start-up Firms: Exploring the Role of Entrepreneurial Human Capital," Discussion Paper Series 145, School of Economics, Kwansei Gakuin University, revised Jul 2016.

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