Collaborative Innovation and R&D Disclosures: Evidence From Co‐Patents

ABSTRACT

As firms increasingly rely on collaborative innovation to develop new technologies, they face a growing tension between signaling their technological capabilities and protecting sensitive information. This tension is especially important in co‐patenting settings, where firms jointly develop innovations and operate in a more interconnected information environment. We examine how firms' narrative R&D disclosures are associated with collaborative innovation, measured by firm‐level co‐patents (i.e., patents jointly owned by multiple entities). Using data for US public firms from 1996 to 2017, we find that firms with more co‐patents tend to disclose less R&D information in 10‐K filings, consistent with heightened proprietary cost and negative externality concerns. This negative relationship is stronger with greater competition, weaker intellectual property protection, a greater number of partners, or repeated collaborations with the same partners. However, the relation between co‐patenting and R&D disclosures becomes positive when firms collaborate with universities, consistent with signaling incentives. We also find that firms are more likely to highlight collaborations in their 10‐Ks when forming new partnerships, working with universities or public firms, or leveraging partners' complementary assets. Overall, our results suggest that firms' R&D disclosure choices are influenced not only by their own proprietary concerns but also by partner‐related disclosure externalities and signaling incentives. Our findings highlight the importance of considering collaborative innovation arrangements when interpreting firms' R&D disclosures. They also suggest that managers should tailor R&D disclosure strategies to the characteristics of their collaborations.