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Cooperation and competition among firms Professor Alessandro Arrighetti

Università degli studi di Parma Facoltà di Economia Academic year 2013-2014 International business and development. Cooperation and competition among firms Professor Alessandro Arrighetti. Baldini Lisa Ballotta Lucrezia Cenci Chiara. International cooperation on innovation.

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Cooperation and competition among firms Professor Alessandro Arrighetti

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  1. Università degli studi di Parma Facoltà di Economia Academic year 2013-2014 International business and development Cooperation and competition among firmsProfessor Alessandro Arrighetti Baldini Lisa Ballotta Lucrezia Cenci Chiara

  2. International cooperation on innovation

  3. Different types of interactions • Strategic alliance • Competitive relationships • Consortium • Franchising • Joint-venture

  4. Reducing and sharing costs To maintain a good relationship between managers and directors To send back damaged goods Costs of hierarchy Transport costs

  5. It is important to: Stimulate customers’ needs Have a good image of the company Have a common vision Acquire means of distributions Competition differentiation

  6. psychological values • Communication with customers • Attraction of new customers • Earning the loyaltyof customers

  7. But it’s more difficult..To keep customers!

  8. Information revolution • Digitalisation of technologies Digital information is part of ourphysical life!

  9. What 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.

  10. How 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.

  11. Investment in R&D • European countries increased of 50% in the last tenyears (actuallyinvestlessthan 3% of GDP on R&D) • Asian countries +75% in the last tenyears • China +855% • BRIS  +145% • Rest of the World  +100%

  12. Differences 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)

  13. Differences 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

  14. Technology Investments Strategic Alliances 

  15. Link 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.

  16. Patents • 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.

  17. From patents to fusions • Example of Novartis AG • Novartis AG, part of Novartis-Erfindungenand Sandoz Patentare examples of indipendentfirmsthatjoinedtogheterafter the development ofpatents.

  18. Novartis Strategy

  19. Conclusions • 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.

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

  21. 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

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

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

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

  25. 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

  26. In ourexample… GERMANY PORTUGAL • THEY DIFFER FOR: • LEVEL OF EXPORT- ORIENTATION • HIGH- TECH KNOWLEDGE • ECONOMIC SITUATION • SITUATION REGARDING INTERNATIONALIZATION • SIZE AND POWER

  27. GERMANY PORTUGAL HIGH- TECH EXPORTER POSITIVE EFFECT ON THE PROBABILITY OF INNOVATION COOPERATION LOW- TECH NON- EXPORTER FEW OPPORTUNITIES OF INNOVATION COOPERATION

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

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

  30. 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

  31. THE FUTURE… http://www.youtube.com/watch?v=6yWzKvQXsYM

  32. THE END THANK YOU FOR THE ATTENTION

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