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Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns

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  • Mata, José
  • Woerter, Martin

Abstract

External innovation increases the profits of the median firm, but also increases dispersion and the kurtosis of the distribution of profits. This means that external strategies are risky and may require a very large number of attempts before average returns are obtained. This puts smaller firms into a position of disproportionately high risk. Despite the earlier evidence that the rewards from innovation are positively skewed, we find no effect of innovation strategies upon the skewness of the distribution of firms’ profits.

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Bibliographic Info

Article provided by Elsevier in its journal Research Policy.

Volume (Year): 42 (2013)
Issue (Month): 2 ()
Pages: 495-501

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Handle: RePEc:eee:respol:v:42:y:2013:i:2:p:495-501

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Web page: http://www.elsevier.com/locate/respol

Related research

Keywords: Risk; Innovation; Research and development; Firm performance;

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References

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Cited by:
  1. Coad, Alex & Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2013. "Innovation and firm growth: Does firm age play a role?," Working Papers 2072/211886, Universitat Rovira i Virgili, Department of Economics.

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