Trust Relationships within R&D Networks: A Case Study from the Biotechnological Industry

Abstract

Industrial globalization is spurring the development of linkages among manufacturers. Research and development cooperation becomes increasingly valuable as it allows manufacturers to share the costs and risks of pursuing innovation and developing new technologies. However, as R&D cooperation involves knowledge exchange and resource sharing, cooperative firms may face the risk of confidential information leakage and of misappropriation hazards. Trust among partners, therefore, is critical to the performance of R&D cooperation and network. This paper aims to identify the relationship between trust and firm performance in R&D cooperation. Questionnaires and Structural Equation Modeling are used to untangle this relationship among biotechnology manufacturers in Taiwan. Our results show that specific assets, formal contracts and informal exchanges among R&D cooperative partners all affect inter-organizational trust. More precisely, R&D assets created from combining the above three factors also have a positive relationship with inter-organizational trust, which could further promote firm performance.