What are the factors which affect the propensity of firms to innovate Essay

What are the factors which affect the propensity of firms to innovate through collaboration with other firms and which affect the outcomes of such interaction - Essay Example Various factors that are perceived to be beneficial to partnering firms cause them to come together and innovate together. Some of the factors that cause firms to collaborate in innovation include reducing the cost of development of the technology, reducing the potential risks that are involved in technological development or entering the market, to achieve the economies of scale, which reduce the cost of production, promoting shared learning between the firms involved, and reducing the time taken to produce and market new products (Tidd, Bessant and Pavitt, 2005, p25-78). The results of the collaborative invention vary significantly according to different companies, and these factors may be beyond or within the abilities of the partnering firms. Some factors that influence the results of a collaborative interaction between firms include: the competitiveness of the partners, the transparency issues, receptivity of ideas, the rate of learning and bargaining power of partners, the intention of the firms when they accepted to enter into collaboration, and sustainability of the deal (Hamel, 1991, p.83-101). These factors determine whether or not the collaboration will continue in order to develop technologies together. If the factors are favourable to the collaborating firms, they continue to develop technologies together. Different companies collaborate in innovation according to different interaction policies. These interactions are determined by conditions that are set by those partners, when joining together as well as those that are related to sustai nability. In order to understand the issues that are related to the collaborative innovation, there is need to explore the factors that influence firms to come together as well as those that influence the sustainability of collaborative innovation interactions. In events where firms collaborate to innovate, they need to put into consideration all the issues that can arise