Promoting international cooperation among small firms for innovative strategies

This chapter is focused on the analysis of inter-firm cooperation to promote innovative actions. Nowadays the European Commission supports small and medium-sized firm relationships because these firms have insufficient resources and capabilities to implement such relationships otherwise. Innovation activities are crucial elements of small firms’ economic performance and the development of networks among firms to share complementary relations can stimulate the development of less-favored regions. Bernardini Papalia and Bertarelli study theoretically and empirically a small firm’s decision to participate in the initiatives where public authorities or associations of firms promote collaboration with other small firms. Bernardini Papalia and Bertarelli develop a model to analyze the creation of contacts among small firms within a search theory framework. The range of contacts for which the firm accepts to participate to these initiatives is influenced by the probability to contact a firm sharing a common project of collaboration. In line with the theoretical model, the empirical study is concentrated on the estimation of the probability to find contacts for the representative firm. A pseudopanel framework is used to estimate Poisson models from repeated cross-sections. The rareness of contacts between firms in a given instant of time suggests that data may be described by a Poisson model related to different projects and firms’ profiles; the latter ones are modeled through cohort fixed effects.