Cooperative Research and Development (R&D) strategies, or R&D alliances, have become a normal and yet strategically important part of business decision making in many industries in recent years. Broadly defined, R&D alliances include any agreed-upon cooperative R&D arrangement between firms, such as joint ventures, consortia, technology partnerships and informal networking arrangements. These days, R&D collaboration is often viewed as essential for creating industry-standard platforms and technological innovations on which new knowledge work can be developed. Important issues for R&D alliances include measurement of the output from R&D alliances and where and how, if at all, government should be involved. Government is typically interested in identifying the important areas of R&D in which firms tend to under-invest and then in taking policy measures to correct the perceived under-investment.
Government plays an essential role in R&D alliances in a number of ways. First of all, government research agencies do their own joint research involving universities, private-sector firms and other organizations. They also provide funding to certain types of research projects, joint or otherwise, in both the private and public sectors. How these government funds are allocated and who gets involved in these research projects may have some impact on a nation's economic performance. Of even greater importance perhaps,