Knowledge Intensity and Risk Sharing
It is often necessary to combine formal knowledge (written down, blueprints) with informal knowledge (rules of thumb and heuristic adaptations required to scale up technology) to “work a patent.” Informal knowledge must be provided by the inventor through his participation. Adverse selection of partners and their personal interests (moral hazard) may create risks. These problems have been highlighted in the context of biotechnology in particular. An attempt has been made to model the sharing of knowledge, costs, and returns. R&D, that creates external effects, is generally entrusted to public scientific organizations and transferred to private firms for its adoption. The similarity of issues is highlighted. The advantages of risk sharing have been juxtaposed with dimensions of risk spreading that they involve.
KeywordsRisk Aversion Large Firm Private Firm Formal Knowledge Incentive Constraint
- Fischer K, Byerlee D (2002) Managing intellectual property and commercialization in public research organizationms. In: Byerlee D, Ecaverria RG (eds) Agricultural research policy in the era of privatization. Inter-American Development Bank, Washington, DCGoogle Scholar
- Kawasaki S, Mcmillan J (1987) The design of contracts: evidence from Japanese subcontracting. J Jpn Int Econ 3:1–30Google Scholar
- Powell WW, Koput KW, Smith-Doerr L, Owen-Smith J (1999) Network position and firm performance: organizational returns to collaboration in biotechnology industry. In: Andrews S, Knoke D (eds) Networks in and around organizations. JAI Press, GreenwichGoogle Scholar
- Schimmelpfenning DE, Gray CE, Brennan MF (2004) The impact of seed industry concentration on innovation: a study of the US biotechnology market leaders. Agric Econ 30:57–167Google Scholar
- Sinka S, Pueppke S (1999) Exploring the public’s role in agricultural biotechnology research. AgBioforum 2:33–36Google Scholar