The objective of this study is to investigate inter-firm technological cooperation through the theoretical lenses of transaction cost, competitive forces, and the resource-based view of the firm. High-tech small and medium-sized enterprises
(SMEs) are targeted for examinations as to why high-tech SMEs initiate cooperation with other firms, how they cooperate with each other, what is the impact on innovation, and what are the critical factors for successful cooperation. This study is based on a comprehensive questionnaire and semi-structured interviews with CEOs or senior managers in SMEs in China. Sample firms are randomly selected from three national high-tech industrial development zones. To control for exogenous industrial variance, sample firms are confined within the information and communications industry that is the fast growing and main export industry in China.
The study concludes that successful cooperative practices do improve firms ' economic performance, which meets primary motives for engaging in cooperation in the first place. However, cooperation does not have significant impact on innovation in smaller firms. High-tech SMEs are primarily motivated to cooperate for new market access, economies of scale or scope, technology transfer, and learning from partners. High-tech SMEs cooperate mainly by means of customer-supplier R&D contracts, joint R&D agreements, and joint ventures. The larger a firm's size is, the more likely the firm engages in cooperation for technology transfer and learning, and the more likely the film cooperates with partnering firms by joint ventures. Firm size is the only influential factor on propensity of firms to cooperate. Resource complementarity, communication and reciprocity based trust, and contributing as promised are considered the fundamental success factors by all surveyed firms. Firms that are successful in their cooperative practices put more emphasis on 'trust, communication and reciprocity' than firms that are not yet.
The findings implicate that compared to their larger counterparts high-tech SMEs have distinctive motives for cooperation which are determined by their resource constrained nature and their particular growth strategy. Managers should consider these factors in formulating an effective cooperation strategy. Simple involvement in inter-firm cooperation does not guarantee improvement in innovation, and only successful cooperative activities make a difference.