Public-Private and Private-Private Collaboration as Pathways for Socially Beneficial Innovation: Evidence from Antimicrobial Drug Development Tasks

Although public-private collaboration abounds in addressing societal grand challenges, little is known about its performance relative to private sector collaboration.Drawing from the innovation collaboration literature, and qualitative insights from interviews and contracts, we argue that collaboration risk impairs task performance of public-private relative to privateprivate collaboration.We attribute this lower task performance to two collaboration risk mechanisms: cooperation problems arising from misaligned social versus economic incentives, and coordination problems due to differences in organizational governance and processes.We test our hypotheses using the development history of 2496 antimicrobial drugs in the period 1995-2019.After accounting for endogenous selection into collaboration, we find that in general, public-private collaboration is less effective than private-private collaboration.However, this performance gap reduces for innovation tasks under high technological uncertainty, i.e., in the discovery stage and for developing new mechanisms of drug action.To probe the distinctive cooperation and coordination mechanisms, we also examine innovation task efficiency.Our findings reveal a wider gap in task effectiveness but not efficiency between public-private and private-private collaboration, suggesting more significant cooperation than coordination problems.Our theoretical and practical insights pertain to whether, when and how public-private and private-private collaboration offer viable pathways for socially beneficial innovation tasks. * Percentage of row total