When Can Firms Capture Value from Collaborating with Research Consortia?

In this paper we examine how firms can benefit from linking to science through collaborating and co-patenting with research organizations. We compare patents developed solely by the firm with very similar co-patents developed by that firm in collaboration with the German research organization, the Fraunhofer- Gesellschaft. We find that firms develop higher quality technologies when they collaborate with a research organization while building upon technological prior- art developed by that research organization. Additionally, when firms collaborate with a research organization while recombining their own technological prior-art with the technological prior-art of that research organization, we find the firm to be more likely to develop these technologies more intensely internally, resulting in higher quality technologies with higher quality follow-up technologies.