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Department of International Economics and Management, Copenhagen Business School Working Paper Series, Department of International Economics and Management, Copenhagen Business School

No 10-1999:
R&D Investments, Information and Strategy

Lee Davis

Abstract: This paper argues that firms can best realize the value of their investments in R&D by exploiting the associated information asymmetries. Attention is directed away from the physical results of R&D and towards the firm’s ability, more generally, to earn rents from the private information emanating from its R&D. Four strategies may be used to exploit the information asymmetries from R&D: (1) publish the details of the innovation in return

for legal protection; (2) keep the information inside the firm; (3) make the information selectively, informally available to others; and (4) disseminate the information as widely and rapidly as possible. To implement these strategies, resources may be allocated both to the commercial development of new technologies, and/or to related market opportunities (investing in other companies, assets and technologies). This perspective should yield new insights to managers in designing strategies (and counter-strategies) to position themselves not only at the technological edge, but more fundamentally, at the ‘information edge’.

Keywords: R&D investments; information; strategy; asymmetric information; international R&D management; (follow links to similar papers)

19 pages, May 30, 1999

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