Technological cooperative agreements and firm's R&D intensity. A note on causality relations

In this paper we apply a recently proposed model of vector autoregression for panel data to analyse the Granger causality relationship between a firm's intramural R&D intensity and technological cooperative agreements. The analysis relies on a sample composed of 95 major US, European and Japanese firms in the semiconductor, data processing and telecommunications industries observed during the period 1980-86. Decisions on interfirm technological collaborations are shown to cause a la Granger decisions on internal R&D investments and vice versa. We thus suggest that, in contrast with the methodological approaches followed by previous empirical works, firms' decisions concerning both intramural innovative effort and technological cooperation are endogenous and have to be jointly studied through a simultaneous two-equation structural model.