Purpose – The purpose of this paper is to verify the impacts of the transaction costs rationale on economic agents’ innovative results when they engage in European R&D networks, supplying both firms and policymakers with empirical support for improved decision making toward economic competitiveness and construction of the European research area. Furthermore, unlike many transaction cost economics assessments, the authors evaluate the existence of transaction costs following a dynamic framework of analysis (instead of using solely ex ante governance choice as a driver of inter-firm“friction” management), offering a novel perspective on these phenomena. Design/methodology/approach – Data consist of firm-level information from Eureka’s Final Reports (1995-2006) for Spanish, Italian, French, British and German firms. Empirical assessments were performed through a two-step approach of direct and indirect effects of network management and potential sources of disturbances. Ordinal regressions were applied in order to identify transaction costs’ relevance as drivers of firms’ technological and commercial outcomes, as well as on managerial quality of alliances. Statistical controls include microeconomic and project-specific variables. Findings – Results highlight the role played by transactional aspects as drivers of companies’ outcomes and managerial complexity. Furthermore, the authors find robust evidence that formal ex ante governance structures are incapable of satisfactorily addressing dynamic disturbances that take place within R&D networks. Whereas such findings are directly related to existing transaction costs, the authors find no support for the usual variables attributed to increased complexity in international inter-firm relationships. Research limitations/implications – Self-selection issues are inherently related to the research instrument (i.e. Eureka’s Reports), while further firm-level data could not be obtained since confidentiality issues protected companies’ names and sectors. Also, network-level data are not available, allowing the evaluation of individual perceptions only. Originality/value – While literature addresses the issue of transaction costs in R&D networks via theoretical assumptions and rough proxies, this assessment offers an in-depth evaluation of a set of valuable indicators with direct implications for researchers, managers and policymakers. Main contributions concern the identification of dynamic interactions (and their respective disturbances) as a key feature of the overall performance of R&D networks, stressing the non-linearity of economic processes in these hybrid relationships, an issue that has been poorly tackled by previous empirical investigations. ©Emerald Group Publishing Limited 1460-1060.183330354Adler, P., Shenhar, A., Adapting your technological base: The organizational challenge (1990) Sloan Management Review, 32 (1), pp. 25-37Ahuja, G., The duality of collaboration: Inducements and opportunities in the formation of inter-firm linkages (2000) Strategic Management Journal, 21 (3), pp. 317-343Anderson, M., The role of collaborative integration in industrial organization: Observations from the Canadian aerospace industry (1995) Economic Geography, 71 (1), pp. 55-78Archibugi, D., Iammarino, S., The policy implications of the globalization of innovation (1999) Research Policy, 28 (3), pp. 317-336Arnold, E., Understanding long-term impacts of R&D funding: The EU framework programme (2012) Research Evaluation, 21 (5), pp. 332-343Arranz, N., Arroyabe, J., The choice of partners in R&D cooperation: An empirical analysis of Spanish firms (2008) Technovation, 28 (2), pp. 88-100Bayona-Sáez, C., García-Marco, T., Assessing the effectiveness of the Eureka program (2010) Research Policy, 39 (10), pp. 1375-1386Belderbos, R., Carree, M., Lokshin, B., Cooperative R&D and firm performance (2004) Research Policy, 33 (10), pp. 1477-1492Benfratello, L., Sembenelli, A., Research joint ventures and firm level performance (2002) Research Policy, 31 (4), pp. 493-507Blomqvist, K., Hara, V., Koivuniemi, J., Aijo, T., Towards networked R&D management: The R&D approach of Sonera corporation as an example (2004) R&Amp;D Management, 34 (5), pp. 591-603Bottazzi, L., Peri, G., The international dynamics of R&D and innovation in the long run and in the short run (2007) The Economic Journal, 117 (518), pp. 486-511Caloghirou, Y., Hondroyiannis, G., Vonortas, N., The performance of research partnerships (2003) Managerial and Decision Economics, 24 (2-3), pp. 85-99Cohen, W.M., Levinthal, D.A., Absorptive capacity: A new perspective on learning and innovation (1990) Administrative Science Quarterly, 35 (1), pp. 128-152Cullen, J., Johnson, J., Sakano, T., Success through commitment and trust: The soft side of strategic alliance management (2000) Journal of World Business, 35 (3), pp. 223-240Das, T., Teng, B.S., A resource-based theory of strategic alliances (2000) Journal of Management, 26 (1), pp. 31-61Duarte, V., Sarkar, S., Separating the wheat from the chaff: A taxonomy of open innovation (2011) European Journal of Innovation Management, 14 (4), pp. 435-459Dyer, J., Effective inter-firm collaboration: How firms minimize transaction costs and maximize transaction value (1997) Strategic Management Journal, 18 (7), pp. 535-556Dyer, J., Singh, H., The relational view: Cooperative strategy and sources of interorganizational competitive advantage (1998) The Academy of Management Review, 23 (4), pp. 660-679Faems, D., De Visser, M., Ries, P., Van Looy, B., Technology alliance portfolios and financial performance: Value-enhancing and cost-increasing effects of open innovation (2010) Journal of Product Innovation Management, 27 (6), pp. 785-796Fernández-Ribas, A., Shapira, P., The role of national and regional innovation programmes in stimulating international cooperation in innovation (2009) International Journal of Technology Management, 48 (4), pp. 473-498Frenz, M., Ietto-Gillies, G., The impact on innovation performance of different sources of knowledge: Evidence from the UK community innovation survey (2009) Research Policy, 38 (7), pp. 1125-1135Georghiou, L., Evolving frameworks for European collaboration in research and technology (2001) Research Policy, 30 (6), pp. 891-903Georghiou, L., Van Batenburg, O., Chevillot, J.P., Kuhlman, S., Oral, M., Reeve, N., (1999) Strategic Review of Eureka: Building Europe’s Innovation Network, , Eureka Secretariat, BrusselsGulati, R., Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances (1995) Academy of Management Journal, 38 (1), pp. 85-112Gulati, R., Alliances and networks (1998) Strategicmanagement Journal, 19 (4), pp. 293-317Gulati, R., Singh, H., The architecture of cooperation: Managing coordination costs and appropriation concerns in strategic alliances (1998) Administrative Science Quarterly, 43 (4), pp. 781-814Gulati, R., Lavie, D., Madhavan, R., How do networks matter? The performance effects of interorganizational networks (2011) Research in Organizational Behavior, 31 (1), pp. 207-224Hagedoorn, J., Inter-firm R&D partnerships: An overview of major trends and patterns since 1960 (2002) Research Policy, 31 (4), pp. 477-492Hagedoorn, J., Link, A., Vonortas, N., Research partnerships (2000) Research Policy, 29 (4-5), pp. 567-586Hardwick, J., Erson, A., Cruickshank, D., Trust formation processes in innovative collaborations: Networking as knowledge building practices (2013) European Journal of Innovation Management, 16 (1), pp. 4-21Helm, R., Kloyer, M., Controlling contractual exchange risks in R&D inter-firm cooperation: An empirical study (2004) Research Policy, 33 (8), pp. 1103-1122Hennart, J.F., A transaction costs theory of equity joint ventures (1988) Strategic Management Journal, 9 (4), pp. 361-374Husted, K., Michailova, S., Dual allegiance and knowledge sharing in inter-firm R&D collaborations (2010) Organizational Dynamics, 39 (1), pp. 37-47Ireland, R., Hitt, M., Vaidyanath, D., Alliance management as a source of competitive advantage (2002) Journal of Management, 28 (3), pp. 413-446Jarvenpaa, S., Wernick, A., Paradoxical tensions in open innovation networks (2011) European Journal of Innovation Management, 14 (4), pp. 521-548Jones, C., Hesterly, W., Borgatti, S., A general theory of network governance: Exchange conditions and social mechanisms (1997) The Academy of Management Review, 22 (4), pp. 911-945Kamien, M.I., Schwartz, N.L., On the degree of rivalry for maximum innovative activity (1976) The Quarterly Journal of Economics, 90 (2), pp. 245-260Katz, J.S., Martin, B.R., What is research collaboration? (1997) Research Policy, 26 (1), pp. 1-18Keil, T., Maula, M., Schildt, H., Zahra, S., The effect of governance modes and relatedness of external business development activities on innovation performance (2008) Strategic Management Journal, 29 (8), pp. 895-907Kreiner, K., Schultz, M., Informal collaboration in R&D: The formation of networks across organizations (1993) Organization Studies, 14 (2), pp. 189-209Kuhlman, S., Edler, J., Scenarios of technology and innovation policies in Europe: Investigating future governance (2003) Technological Forecasting and Social Change, 70 (7), pp. 619-637Lhuillery, S., Pfister, E., R&D cooperation and failures in innovation projects: Empirical evidence from French CIS data (2009) Research Policy, 38 (1), pp. 45-57Lorenzoni, G., Lipparini, A., The leveraging of inter-firm relationships as a distinctive organizational capability: A longitudinal study (1999) Strategic Management Journal, 20 (4), pp. 317-338Luo, Y., Building trust in cross-cultural collaborations: Toward a contingency perspective (2002) Journal of Management, 25 (5), pp. 669-694Madhok, A., Tallman, S., Resources, transactions and rents: Managing value through inter-firm collaborative relationships (1998) Organization Science, 9 (3), pp. 326-339Marín, P.L., Siotis, G., Public policies towards research joint venture: Institutional design and participants characteristics” (2008) Research Policy, 37 (6-7), pp. 1057-1065Molas-Gallart, J., Davies, A., Toward theory-led evaluation: The experience of European science, technology, and innovation policies (2006) American Journal of Evaluation, 27 (1), pp. 64-82Motta, M., Cooperative R&D and vertical product differentiation (1992) International Journal of Industrial Organization, 10 (4), pp. 643-661Mowery, D., Oxley, J., Silverman, B., Strategic alliances and inter-firm knowledge transfer (1996) Strategic Management Journal, 17 (S2), pp. 77-91Mowery, D.C., Collaborative ventures between US and foreign manufacturing firms (1989) Research Policy, 18 (1), pp. 19-33Narula, R., Choosing between internal and non-internal R&D activities: Some technological and economic factors (2001) Technology Analysis and Strategic Management, 13 (3), pp. 365-387Nishimura, J., Okamuro, H., (2013) Knowledge and Rent Spillovers through Governmentsponsored R&Amp;D Consortia, , Working Paper Series No. 24, Research Center for Interfirm Network, Hitotsubashi University, TokyoOkamuro, H., Determinants of successful R&D cooperation in Japanese small businesses: The impact of organizational and contractual characteristics (2007) Research Policy, 36 (10), pp. 1529-1544Oxley, J., Institutional environment and the mechanisms of governance: The impact of intellectual property protection on the structure of inter-firm alliances (1999) Journal of Economic Behavior and Organization, 38 (3), pp. 283-309Oxley, J., Sampson, R., The scope and governance of international R&D alliances (2004) Strategic Management Journal, 25 (89), pp. 723-749Paier, M., Scherngell, T., Determinants of collaboration in European R&D networks: Empirical evidence from a discrete choice model (2011) Industry and Innovation, 18 (1), pp. 89-104Parisi, M.L., Schiantarelli, F., Sembenelli, A., Productivity, innovation and R&D: Micro evidence for Italy (2006) European Economic Review, 50 (8), pp. 2037-2061Park, S., Ungson, G., The effect of national culture, organizational complementarity, and economic motivation on joint venture dissolution (1997) The Academy of Management Journal, 40 (2), pp. 279-307Parkhe, A., Strategic alliance structuring: A game theoretic and transaction cost examination of inter-firm cooperation (1993) The Academy of Management Journal, 36 (4), pp. 794-829Pavitt, K., Innovating routines in the business firm: What corporate tasks should they be accomplishing? (2002) Industrial and Corporate Change, 11 (1), pp. 117-133Rammer, C., Czarnitzki, D., Spielkamp, A., Innovation success of non-R&Dperformers: Substituting technology by management in SMEs (2009) Small Business Economics, 33 (1), pp. 35-58Rese, A., Baier, D., Success factors for innovation management in networks of small and medium enterprises (2011) R&Amp;D Management, 41 (2), pp. 138-155Ring, P., Van De Ven, A., Developmental processes of cooperative interorganizational relationships (1994) The Academy of Management Review, 19 (1), pp. 90-118Ritala, P., Hurmelinna-Laukkanen, P., Whats in it for me? Creating and appropriating value in innovation-related coopetition” (2009) Technovation, 29 (12), pp. 819-828Robertson, T., Gatignon, H., Technology development mode: A transaction cost conceptualization (1998) Strategic Management Journal, 19 (6), pp. 515-531Sakakibara, M., Heterogeneity of firm capabilities and cooperative research and development: An empirical examination of motives (1997) Strategic Management Journal, 18 (S1), pp. 143-164Sampson, R., The cost of misaligned governance in R&D alliances (2004) The Journal of Law, Economics &AmpOrganization, 20 (2), pp. 484-526Sampson, R., Experience effects and collaborative returns in R&D alliances (2005) Strategic Management Journal, 26 (11), pp. 1009-1031Shenkar, O., Cultural distances revisited: Towards a more rigorous conceptualization and measurement of cultural differences (2001) Journal of International Business Studies, 32 (3), pp. 519-535Silipo, D.B., Incentives and forms of cooperation in research and development (2008) Research in Economics, 62 (2), pp. 101-119Teece, D.J., Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy (1986) Research Policy, 15 (6), pp. 285-305Tello-Gamarra, J., Zawislak, P., Transactional capability: Innovations missing link” (2013) Journal of Economics, Finance and Administrative Science, 18 (34), pp. 2-8Tripsas, M., Schrader, S., Sobrero, M., Discouraging opportunistic behavior in collaborative R&D: A new role for government (1995) Research Policy, 24 (3), pp. 367-389Veugelers, R., Internal R&D expenditures and external technology sourcing (1997) Research Policy, 26 (3), pp. 303-315Veugelers, R., Cassiman, B., R&D cooperation between firms and universities: Some empirical evidence from Belgian manufacturing (2005) International Journal of Industrial Organization, 23, pp. 355-379Williamson, O., The economics of organization: The transaction cost approach (1981) American Journal of Sociology, 87 (3), pp. 548-577Williamson, O., (1985) The Economic Institutions of Capitalism, , Free Press, NewYork, NYWilliamson, O., Strategy research: Governance and competence perspectives (1999) Strategic Management Journal, 20 (12), pp. 1087-1108Williamson, O., The theory of the firm as governance structure: From choice to contract (2002) Journal of Economic Perspectives, 16 (3), pp. 171-195Zajac, E., Olsen, C., From transaction cost to transactional value analysis: Implications for the study of interorganizational strategies (1993) Journal of Management Studies, 30 (1), pp. 131-145