IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v24y2003i2-3p187-211.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/mde.1083
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.1083?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Jean Tirole, 1994. "The Management of Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 1185-1209.
    2. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    3. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    4. Odagiri, Hiroyuki & Nakamura, Yoshiaki & Shibuya, Minoru, 1997. "Research consortia as a vehicle for basic research: The case of a fifth generation computer project in Japan," Research Policy, Elsevier, vol. 26(2), pages 191-207, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Steven Globerman & Aidan Vining, 2004. "The Outsourcing Decision: A Strategic Framework," International Trade 0404007, University Library of Munich, Germany.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. 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.
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    21. 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.
    22. 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.
    23. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Higgins, Matthew J., 2007. "The allocation of control rights in pharmaceutical alliances," Journal of Corporate Finance, Elsevier, vol. 13(1), pages 58-75, March.
    2. Bruce Rasmussen, 2010. "Innovation and Commercialisation in the Biopharmaceutical Industry," Books, Edward Elgar Publishing, number 13680.
    3. Darcy W E Allen, 2020. "When Entrepreneurs Meet:The Collective Governance of New Ideas," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number q0269, August.
    4. Jongwook Kim & Joseph T. Mahoney, 2005. "Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 223-242.
    5. Leiponen, Aija, . "Essays in the Economics of Knowledge: Innovation, Collaboration, and Organizational Complementarities," ETLA A, The Research Institute of the Finnish Economy, number 31, June.
    6. Hansen, Zeynep & Higgins, Matthew, 2007. "The Effect of Contractual Complexity on Technology Sourcing Agreements," MPRA Paper 4979, University Library of Munich, Germany.
    7. Carolin Haeussler & Matthew J. Higgins, 2012. "Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach," NBER Working Papers 18364, National Bureau of Economic Research, Inc.
    8. Schmitz, Patrick W., 2021. "On the optimality of outsourcing when vertical integration can mitigate information asymmetries," Economics Letters, Elsevier, vol. 202(C).
    9. Markus Solf, 2004. "Unternehmenskooperationen als Folge von Informations- und Kommunikations-technologieveränderungen: Eine theoretische Analyse," Schmalenbach Journal of Business Research, Springer, vol. 56(2), pages 146-167, March.
    10. Kim, Jongwook & Mahoney, Joseph T., 2008. "A Strategic Theory of the Firm as a Nexus of Incomplete Contracts: A Property Rights Approach," Working Papers 08-0108, University of Illinois at Urbana-Champaign, College of Business.
    11. Stefan Ambec & Michel Poitevin, 2000. "Organizational Design of R & D Activities," Econometric Society World Congress 2000 Contributed Papers 0190, Econometric Society.
    12. Mathews, Richmond D., 2006. "Strategic alliances, equity stakes, and entry deterrence," Journal of Financial Economics, Elsevier, vol. 80(1), pages 35-79, April.
    13. Dirk Hackbarth & Richmond Mathews & David Robinson, 2014. "Capital Structure, Product Market Dynamics, and the Boundaries of the Firm," Management Science, INFORMS, vol. 60(12), pages 2971-2993, December.
    14. Pascucci, Stefano & Royer, Annie & Bijman, Jos, 2012. "To Make or to Buy: Is this the Question?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(3), pages 1-20, September.
    15. Joshua S. Gans & David B. Ridley, 2013. "Innovation Incentives under Transferable Fast-Track Regulatory Review," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 789-816, September.
    16. Rahul Kapoor & Ron Adner, 2012. "What Firms Make vs. What They Know: How Firms' Production and Knowledge Boundaries Affect Competitive Advantage in the Face of Technological Change," Organization Science, INFORMS, vol. 23(5), pages 1227-1248, October.
    17. Juan Carluccio & Thibault Fally, 2012. "Global Sourcing under Imperfect Capital Markets," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 740-763, August.
    18. Carlos J. Serrano, 2010. "The dynamics of the transfer and renewal of patents," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 686-708, December.
    19. Halonen-Akatwijuka, Maija & Pafilis, Evagelos, 2020. "Common ownership of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 555-578.
    20. Umit Ozmel & Deniz Yavuz & Jeffrey J. Reuer & Todd Zenger, 2017. "Network Prominence, Bargaining Power, and the Allocation of Value Capturing Rights in High-Tech Alliance Contracts," Organization Science, INFORMS, vol. 28(5), pages 947-964, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:24:y:2003:i:2-3:p:187-211. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.