Abstract

The type of R&D that is best suited to collaborative development has been a hot topic for several years. This paper develops a method to characterize R&D and collaborative groups that results in a simple analysis of collaboration decisions. The key descriptive parameter, for a particular company, for R&D is the ratio of internal to external potential benefits from the R&D if it is successful. This ratio is a function of the type of industry, the company's willingness and ability to achieve internal and external benefits and the nature of the R&D itself. The key parameters describing the collaborative group are the size of the group, the relative ability of an individual member to achieve external benefits in competition with his collaborators and the effectiveness of the group in conducting a R&D program.

Conditions for collaboration are developed based on decision-tree analysis. The key requirement for effective R&D collaboration is that a company is capable of internalizing a Significant portion of the benefits. This determines good collaborators and good industries for collaboration.

Collaboration benefits can also be improved by R&D exchanges in collaborative associations such as CONRAD. However, simple decision-tree analysis understates the advantages of collaboration. Portfolio risk reduction and inter-project synergies are significant additional advantages.

R&D collaboration is the preferred route for development of a broad base of petroleum-related technologies.

Introduction

I have often heard that collaboration to develop new technology is only worthwhile for companies if the R&D is ‘pre-competitive’, with no end-use device or process in sight. Not only is the definition of ‘pre-competitive’ R&D vague and subjective, but the concept of limiting collaboration to this arena may be too restrictive. In fact, the incentive to collaborate is for much broader-based R&D, as will be described in this paper.

In a general sense, there are a series of four logical, connected questions that are important for decisions oncorporate MD investments:

  1. Does the R&D prefect fit within the constraints of corporate strategy﹖ Do we want to invest in this area﹖

  2. Is the risk low enough and the potential benefit great enough to economically justify an investment in an R&D prefect﹖ In other words, does the risk-weighted benefit/cost ratio pass the corporate investment hurdle test﹖

  3. In the portfolio of potential investments, is the benefit/cost high enough so that budget funds are available? Does our budget prevent us from doing this prefect﹖

  4. Given that the investment is justified, funds are available, and the prefect is of strategic interest, is it better to do the prefect oneself (go-it-alone) or to collaborate with peers, competitors and others to jointly develop the technology﹖

The purpose of this paper is to characterize R&D in a useful system for corporations so that the last question can be analyzed and the pros/cons of R&D collaboration can be discussed. Throughout the text it is assumed that:

  1. The R&D investment is attractive, funds are available, and it is of strategic interest

  2. Collaboration is not impeded by any legal or regulatory constraints.

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