Chapter 5: The Effect of Knowledge Flows on the Decision to Cooperate: Differences for Sector and Firm Size

The goal of this chapter is to determine the effects of internal and external knowledge flows on the propensity of firms to enter into R&D alliances. Specifically, this chapter examines these effects by distinguishing between industrial and service firms and between large, small, and medium-sized firms. To achieve this aim, a large sample of small, medium, and large firms in the industrial and service sectors is analyzed. The data come from the Technological Innovation Survey, which is part of the General Plan for Statistics on Science and Technology approved by Eurostat. The results highlight the importance of knowledge flows for R&D alliances, confirming that internal and external knowledge flows have a positive effect on the decision to cooperate on R&D.