Knowledge Sharing and Cumulative Innovation in Business Networks

Gilles Saint-Paul

Research output: Contribution to journalArticlepeer-review

Abstract

How can we explain the success of cooperative networks of firms which share innovations, such as Silicon Valley or the Open Source community? This paper shows that if innovations are cumulative, making an invention publicly available to a network of firms may be valuable if the firm expects to benefit from future improvements made by other firms. A cooperative equilibrium where all innovations are made public is shown to exist under certain conditions. Furthermore, such an equilibrium does not rest on punishment strategies being followed after a deviation: it is optimal not to deviate regardless of another firm’s actions following a deviation. A cooperative equilibrium is more likely to arise the greater the number of firms in the network. When R&D effort is endogenous, cooperative equilibria are associated with strategic complementarities between firms’ research effort, which may lead to multiple equilibria.

Original languageEnglish (US)
Article number137
JournalJournal of Risk and Financial Management
Volume17
Issue number4
DOIs
StatePublished - Apr 2024

Keywords

  • cooperation
  • cumulative knowledge
  • growth
  • information sharing
  • innovation
  • open source
  • R&D
  • Silicon Valley
  • technical progress

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance
  • Economics and Econometrics

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