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Core complementarities of the corporation: organization of an innovating firm

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  • Aija Leiponen

    (Department of Applied Economics and Management, Cornell University, USA)

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    Abstract

    Despite the proliferation of arrangements to outsource or cooperate in Research and Development, the benefits and costs of alternative organizational forms are not very well understood. This paper develops a supermodularity model to highlight the conditions under which internal or external modes of organizing innovation activities are likely to occur. The technological and institutional environment drives firms' decisions to organize innovation and invest in learning, which determine firm performance in terms of innovation and growth. Internal organization is beneficial when complementarities among activities are strong. However, independent governance of complementary activities may become optimal when depreciation of knowledge is rapid due to radical technical change. Copyright © 2005 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/mde.1232
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 26 (2005)
    Issue (Month): 6 ()
    Pages: 351-365

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    Handle: RePEc:wly:mgtdec:v:26:y:2005:i:6:p:351-365

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    Cited by:
    1. Martin Woerter, 2011. "Driving forces for research and development strategies: an empirical analysis based on firm-level panel data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(7), pages 611-636, March.
    2. Mata, José & Woerter, Martin, 2013. "Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns," Research Policy, Elsevier, Elsevier, vol. 42(2), pages 495-501.

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