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Advantages of Collaborating

colabCollaborating on development projects can offer a firm a number of advantages. First, collaborating can enable a firm to obtain necessary skills or resources more quickly than developing them in-house.6 It is not unusual for a company to lack some of the complementary assets required to transform a body of technological knowledge into a commercial product. Given time, the company can develop such complementary assets internally. However, doing so extends cycle time. Instead, a company may be able to gain rapid access to important complementary assets by entering into strategic alliances or licensing arrangements.7 For example, when Apple was developing its Laser Writer, a high-resolution laser printer, it did not possess the technological expertise to produce the printer’s engine, and developing such capabilities in-house would have taken a long time. Apple persuaded Canon, the market leader in printer engines, to collaborate on the project.8

With Canon’s help, Apple was able to bring the high-quality printer to market quickly.Second, obtaining some of the necessary capabilities or resources from a partner rather than building them in-house can help a firm reduce its asset commitment and enhance its flexibility. This can be particularly important in markets characterized by rapid technological change. High-speed technological change causes product markets to rapidly transform. Product life cycles shorten, and innovation becomes the primary driver of competition. When technology is progressing rapidly, firms may seek to avoid committing themselves to fixed assets that may rapidly become obsolete. They may choose to become more narrowly specialized and to use linkages with other specialized firms to access resources they do not possess in-house.Third, collaboration with partners can be an important source of learning for the firm. Close contact with other firms can facilitate both the transfer of knowledge between firms and the creation of new knowledge that individual firms could not have created alone.9By pooling their technological resources and capabilities, firms may be able to expand their knowledge bases and do so more quickly than they could without collaboration.Fourth, one primary reason firms collaborate on a development project is to share the costs and risks of the project. This can be particularly important when a project is very expensive or its outcome highly uncertain.10Finally, firms may also collaborate on a development project when such collaboration would facilitate the creation of a shared standard. Collaboration at the development stage can be an important way of ensuring cooperation in the commercialization stage of a technology, and such cooperation may be crucial for technologies in which compatibility and complementary goods are important. For example, in 1997 Nokia, Motorola, and Ericsson formed a nonprofit corporation called the WAP Forum to establish a common wireless telecommunication format. WAP stands for Wireless Application Protocol. It is an open, global communication standard that is intended to enable users of mobile devices such as cell phones, pagers, and smart phones to easily and quickly access information from the Internet. By establishing the WAP Forum, the companies hoped to prevent the emergence of multiple competing standards. In 2002, the WAP Forum merged with the Open Mobile Architecture initiative to form the Open Mobile Alliance (OMA). By early 2003, more than 200 mobile operators, equipment producers, and software developers had signed on to the standard.1

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