Abstract: Abstract: Based on the theory of transaction cost and evolutionary game, this study explores the induced mechanism of research and development for local enterprises and multinational companies. We use the micro-survey data of World Bank in 2012, which investigate the operating environment of Chinese enterprises and using a linear probability model to explore the specific role of cost factor in cooperative research and development. After collecting data from 1491 manufacturing enterprises, this study examines the effect of the two cost factors in the R & D cooperation of local enterprises and multinational companies for empirical test, the empirical results show that both default costs and communication costs have a negative impact on cooperative R & D. The higher the loss of the multinational company and the local enterprise due to the breach of each other, the lower the probability of the cooperative research and development. The higher the cost of the communication between the multinational company and the local enterprise, the lower the probability of the cooperative research and development. The conclusion not only enriches the theory of cooperative R & D, but also helps to guide local enterprises to cooperate with multinational companies in response to the complex and volatile market demand.

Key words: multinational companies, cooperative research and development, local enterprises, evolutionary game, survey data