Complementarities and coopetition in presence of intangible resources : Industrial economic and regulatory implications

Purpose – The purpose of this paper is to develop a model of innovative industries which face coopetition: firms compete while committing at the same time to R&D joint ventures and other cooperative agreements. These joint activities are likely to occur in presence of complementarities on demand or supply sides; they raise specific accounting issues concerned with recognition and measurement of intangible resources committed to, and generated from them. Design/methodology/approach – The paper develops a heuristic industrial economic model characterized by joint utility of outputs for custumers on the demand side, and potential complementarities in R&D activities on the supply side. The authors’ model describes different scenarios generated by alternative corporate pricing strategies. In particular, these strategies (as implemented by firms or imposed by regulators) influence both infrastructure corporate investments and the creation and stability of coopetitive relationships. Findings – The model scenarios show that especially accounting for intangible resources – related to processes of innovation and R&D – should deserve specific attention. Firms and regulators need to properly account for both hard intangibles that have market prices of reference, and soft and ethereal intangibles that factually have not. A stock method of accounting for intangibles results then which is narrow and biased, because of its focus on hard intangibles alone. A flow method of accounting should be preferred, which tracks the cumulated investment flow of direct and indirect expenditures in innovation and development, properly allocated within and between firms. Originality/value – The paper argues for regulatory frameworks that enable increasing the positive effects of cooperation while repressing collusive behaviours (technological standardization, fiscal incentives to welfare‐improving innovation and strategy, public research, costumers’ protection, and so forth). Concerning the overall industrial organization, the paper's theoretical analysis shows the need for better recognition and measurement of intangibles and complementarities in costing and pricing, for both corporate and regulatory purposes.