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| Search Frictions, Ownership Relations, and Innovation Collaboration:An Analysis Based on Selection Mechanism |
| LIU Bocong, XU Wan, LI Lei
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| School of Economics, Nankai University; Institute of New Structural Economics, Peking University; Center for Transnationals' Studies / The Laboratory for Economic Behaviors and Policy Simulation, Nankai University |
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Abstract As a critical component of the innovation system, collaborative innovation serves as a common approach to improving innovation efficiency and driving economic growth. However, this topic has received relatively limited attention in the academic literature. This study develops a two-sided random search-and-matching model with firm heterogeneity to examine the determinants of innovation-output quality and partner selection in collaborative R&D, focusing on search frictions and equity linkages. Based on the model, three hypotheses are proposed. First, due to the presence of search frictions, the “productivity threshold” required for an innovating firm to collaborate with a non-equity-affiliated firm is higher than that for collaborating with an equity-affiliated partner. This selection mechanism implies that although innovating firms engage in a larger number of collaborative R&D projects with equity-affiliated firms, the innovation outcomes generated from collaborations with non-equity-affiliated partners tend to be of higher quality. Second, regardless of whether the partner is equity-affiliated, innovating firms consistently select collaborators with similar innovation capabilities. Third, innovating firms prefer non-equity-affiliated partners of comparable firm size, whereas firm size does not influence partner choice when collaboration occurs within equity-affiliated relationships.
Empirically, the study tests these hypotheses using collaborative patent data from Chinese industrial enterprises. Equity affiliations are identified via the “relationship mapping” function of Qichacha (a Chinese enterprise information platform); firms' innovation capabilities are measured by their patent application counts in the collaboration field; and firm size is proxied by the percentile rank of their main business revenue within the industry. The empirical results strongly support the theoretical predictions concerning the role of search frictions in shaping partner selection and collaborative outcomes.
Furthermore, the analysis extends the research framework by examining the economic consequences of collaborative innovation from the perspective of firms' operational decisions. The findings reveal that collaborative R&D generates substantial knowledge spillovers, guiding firms' subsequent innovation trajectories toward the technological fields associated with their joint patents. At the same time, collaborative innovation enhances firms' innovation performance, production efficiency, and operating outcomes. After participating in collaborative projects, firms exhibit higher total patent application counts, increased total factor productivity, and larger main business revenue compared with independent-innovation firms in the control group. Finally, the paper investigates the sources of post-collaboration growth in firms' patenting activities. The results show that the improvement in innovation performance is primarily driven by an increase in jointly filed patents, while the number of independently filed patents declines. This pattern is particularly pronounced in collaborations with equity-affiliated firms.
The potential contributions of this study are as follows. From a research perspective, this paper is the first to introduce the concept of equity affiliation into the analysis of inter-firm patent collaboration. By integrating a theoretical model with empirical evidence, it offers an in-depth examination of search-matching patterns in collaborative innovation, the quality of collaborative outcomes, and the extent to which such collaborations achieve the social optimum. Regarding the theoretical model, this paper embeds equity affiliation into a random search-and-matching framework and demonstrates how such affiliations generate heterogeneous sorting patterns across firms with respect to technological accumulation and firm size. The model further shows that these observed collaboration patterns are endogenously driven by firms' bargaining power and search costs, thereby offering a novel theoretical explanation for the differential probabilities of collaboration and heterogeneous quality of innovation outcomes between equity-affiliated and non-affiliated firms. Empirically, this study is the first to investigate, using Chinese micro-level enterprise data, how participation in collaborative innovation projects influences firms' subsequent innovation trajectories and overall performance. It also innovatively measures knowledge spillovers arising from collaboration by analyzing patent abstract texts. This approach provides stronger and more credible empirical evidence on whether collaborative innovation truly generates knowledge spillovers that enhance firms' innovative capabilities, thereby deepening our understanding of the strategic importance of collaboration in corporate innovation and business operations.
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Received: 07 July 2025
Published: 27 February 2026
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