dustry and water engineering) and industry-related services such as the credit
and insurance business and transport-, communication and advisory services
(without trade, catering and health services). The questionnaire was sent by
mail to companies of all sizes and located all over the country. 957 out of
10.000 companies which were asked to participate answered the question-
naire. 886 of the firms provided information about their attitude towards inter-
firm co-operation. They form the sample now being analysed.
3. Characteristics of the German innovation system with special regards
to the innovation performance of East German companies
Before we take a closer look at regional patterns of R&D co-operation activities
and analyse the strategic function of such partnerships, the circumstances in
which they take place will be briefly described. The following issues will be dis-
cussed:
• Do companies in Eastern and Western Germany differ in their R&D capac-
ity?
• How can the competitive position of companies in Eastern Germany be de-
termined in comparison to their counterparts in Western Germany?
In order to gain insight into the innovative potential of companies in the Eastern
and Western part of Germany their R&D capacities can be analysed. Compar-
ing the companies according to their R&D facilities regional differences can be
observed: On average, the share of R&D personnel as a percentage of the to-
tal number of employees is higher within the observed companies in Eastern
Germany (5.8 %) than within their counterparts in Western Germany (3.2 %).
This result conforms with the findings recently presented by the STIFTER-
VERBAND (2002, p. 23). It can be assumed that the R&D capacities built up in
Eastern Germany come about to a certain extent as a result of governmental
subsidies (BMBF/BMWi 2001).
Eastern German companies are not only better equipped with regard to their
R&D personnel - they are also more willing to spend a higher share of their an-
nual return on sales in R&D (table 1). While almost one third of the companies
in Eastern Germany covered by the inquiry spent more then ten percent of their
return on sales in 2000 on R&D, only approximately one out of seven compa-
nies in Western Germany did likewise. This indicates that the companies in
Eastern Germany are aware that they have to create new products and ser-
vices in order to catch up with their competitors in Western Germany.