Understanding when universities and firms form RJVs: the importance of intellectual property protection

During the past 20 years we have witnessed an increase in joint research between universities and firms. Nevertheless, this increase, which is largely attributed to the Bayh-Dole Act, has fallen short of expectations. This paper examines the conditions under which a firm will find it profitable to form a Research Joint Venture (RJV) with a university. My results indicate that firms which work on new-technologies, are more likely to form such partnerships. The reason is that these firms optimally choose minimal IP protection (lower profits), in effect sharing their innovation, so as to benefit from increased knowledge spillovers. Thereby, the opportunity cost of joining an RJV for firms (and universities) working on mature technologies is greater, making such partners unlikely candidates for RJVs. (C) 2003 Elsevier B.V. All rights reserved.