Cooperation with public research institutions and success in innovation

We evaluate the impact of cooperation with public research on firms' product and process innovations in France and Germany using Community Innovation Survey data from 2004 and 2008. We find that cooperating with public research increases product innovation, but has no effect on process innovation, which depends more on firms' openness. Our benchmark estimates, which are very similar in 2004 and 2008, suggest that the increase in product innovation is much higher in Germany than in France. Endogeneity tests show that the French benchmark estimate may be somewhat biased in 2004 but not in 2008, which hints at a persistent gap in the effect of cooperation between France and Germany. We derive two important policy implications from our results. First, public-private collaborations in research should not be encouraged at all costs, since they may not sustain all forms of innovation. Second, the changes in the institutional context of public-private partnerships in research which have been implemented between 2004 and 2008 have yet to prove effective in sustaining the innovation impact of cooperation.