Background and problem: There are a number of benefits that can be gained from an inter-firm R&D collaboration, however it is at the same time a challenging task. An important factor to achieve a sucessful R&D collaboration is the knowledge integration between the companies. Handling the two problems of cooperation and coordination are key to this success and can be done by using different mechanisms. These mechanisms suggest that the increasing degree of problems with cooperation and coordination requires increased control. As a result, an interesting aspect is how to manage the contradiction between control of knowledge integration and the need for flexibility which are both necessary for the explorative phase of an innovation process. Objective: The purpose of this thesis is to explore how an inter-firm R&D collaboration in the explortive phase of innovation can manage the knowledge integration contradiction of flexibility and control. Method: To fulfill our purpose we have made a ethnographically inspired case study on an inter-firm R&D collaboration in the explorative phase of innovation. Definitions: Knowledge integration: Taking advantage of specialists’ knowledge that exists in collaboration. Inter-firm R&D collaboration: A partnership between external companies undertaking research and developing something together. The explorative phase of innovation: The early phase before the architecture of the innovation has been set. Conclusion: Our results indicate that a loose structure, high trust, bigness as a source of power, vertical collaboration, close collaboration and limited size of the collaboration are mechanisms that the collaborators use to manage the contradiction between flexibility and control in the explorative phase of innovation.

The dissertation consists of three chapters examining U.S. public firms' innovation and patenting activities and their relationship with patent policy and economic growth. In the first chapter, I empirically study the effect of patent publications on firm-level innovation and patenting. Previous works have studied the effect of patent monopoly rights and knowledge disclosure on innovations. The proposed chapter supplements these studies by analyzing the disincentive effect of patent publications on firm innovations through costly knowledge disclosure. Exploiting the American Inventors’ Protection Act of 1999 as a natural experiment that shortened the time it took for patents to get published, I show the negative effect of earlier patent publications on manufacturing firms' patenting and innovation activities. The benchmark analysis shows that the average decline of 10 months in patent publication lag resulted in 13 percentage points lower firm-level patent growth rate during 2001-2005. In the second chapter, I build an endogenous growth model with a patent system. By modeling patenting decisions endogenously, I also introduce patent protection and information disclosure mechanisms through patents. Traditional innovation and growth models assume that innovators patent whenever they innovate and consider patenting and innovating as the same. However, this assumption is no longer innocuous if patenting has an implicit cost to the innovator e.g., the cost of disclosing valuable information. Therefore, to analyze the impact of the patent system’s disclosure mechanism on firm innovation, one must at a minimum work with a model distinguishing between the two concepts. Using my model, I show that a higher patent disclosure policy reduces firm patenting intensity as firms strategically opt out of patenting. In the absence of patents, there is less knowledge diffusion in the economy, which leads to less industry competition and growth. The third chapter studies the effect of firms' ability to build on their previous innovation on firm growth. While innovating, firms can either develop fully novel exploratory ideas or exploit their existing ideas. Using firm patent data, I document that U.S. manufacturing firms' innovation became more exploitative and that their patent growth rate simultaneously declined after 2000. To rationalize these changes in firm innovation, I build a firm-level endogenous growth model with both initial exploratory and subsequent exploitative innovations. Estimating my model using 1990-2000 microdata, I show that a decline in the usefulness of exploratory innovations as a foundation for future exploitation can match a shift in the composition of innovation we saw over this period, resulting in a 0.8 percentage point decline in firm average growth and a 9% decline in firm market value post-2000.