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Complementarity in the innovation strategy: Internal R&D, external technology acquisition, and cooperation in R&D

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  • Cassiman, Bruno

    ()
    (IESE Business School)

  • Veugelers, Reinhilde

    (IESE Business School)

Abstract

Successful innovation depends on the development and integration of new knowledge in the innovation process. In order to successfully innovate, the firm will combine different innovation activities. In addition to doing own research and development, firms typically are engaged in the acquisition of knowledge on the technology market and cooperate actively in R&D with other firms and research organizations. In this paper we show that there exist important complementarities between the different innovation activities. We test complementarity between the innovation activities both directly, through the productivity approach, and indirectly, through the adoption approach. Using data from the Community Innovation Survey on Belgian manufacturing firms, we show that firms that are only engaged in a single innovation strategy, either internal R&D activities or sourcing technology externally, introduced fewer new and substantially improved products compared to firms which combine internal and external sourcing. This result is consistent with complementarity between own R&D and external technology sourcing activities. In the adoption approach we show that the different innovation activities are strongly positively correlated and identify common drivers, resulting in the perceived complementarity between these innovation activities. An important finding is that a more basic R&D base which may serve as an absorptive capacity and a capacity to strategically protect intellectual property are important common drivers for the different innovation activities

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Bibliographic Info

Paper provided by IESE Business School in its series IESE Research Papers with number D/457.

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Length: 23 pages
Date of creation: 01 Jan 2002
Date of revision:
Handle: RePEc:ebg:iesewp:d-0457

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Keywords: Management; Innovation strategy;

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References

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  1. Arora, Ashish & Gambardella, Alfonso, 1994. "Evaluating technological information and utilizing it : Scientific knowledge, technological capability, and external linkages in biotechnology," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 24(1), pages 91-114, June.
  2. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, American Economic Association, vol. 80(3), pages 511-28, June.
  3. Miravete, Eugenio J & Pernias, Jose C, 2004. "Innovation Complimentarity and Scale of Production," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4483, C.E.P.R. Discussion Papers.
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  6. Granstrand, Ove & Sjölander, Sören, 1990. "The Acquisition of Technology and Small Firms by Large Firms," Working Paper Series, Research Institute of Industrial Economics 213, Research Institute of Industrial Economics.
  7. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, Elsevier, vol. 28(1), pages 63-80, January.
  8. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 19(2-3), pages 179-208, April.
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  10. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 1169-1184, September.
  11. Teece, David J., 1993. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, Elsevier, vol. 22(2), pages 112-113, April.
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  14. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 38(4), pages 361-79, June.
  15. Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 13(2), pages 387-409, October.
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  17. Veugelers, Reinhilde, 1997. "Internal R & D expenditures and external technology sourcing," Research Policy, Elsevier, Elsevier, vol. 26(3), pages 303-315, October.
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Cited by:
  1. Pierre Mohnen & Lars-Hendrick Röller, 2003. "Complementarities in Innovation Policy," CIRANO Working Papers, CIRANO 2003s-60, CIRANO.
  2. Liza Jabbour & Maria Pluvia Zuniga, . "Drivers of the Offshore Outsourcing of R&D: Empirical Evidence from French Manufacturers," Discussion Papers 09/04, University of Nottingham, GEP.
  3. Vermeire, Bert & Gellynck, Xavier, 2007. "Contribution of Cluster Relations to Food Competitiveness in the EU," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria, International European Forum on Innovation and System Dynamics in Food Networks 6583, International European Forum on Innovation and System Dynamics in Food Networks.
  4. Sanjeev Goyal & Alexander Konovalov & Jose Luis Moraga, 2003. "Hybrid R&D," Tinbergen Institute Discussion Papers 03-041/1, Tinbergen Institute.
  5. Gellynck, Xavier & Kuhne, Bianka, 2008. "Innovation in Traditional Food Networks," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria, European Association of Agricultural Economists 49847, European Association of Agricultural Economists.
  6. Kuhne, Bianka & Gellynck, Xavier & Vermeire, Bert & Molnar, Adrienn, 2007. "Barriers and Drivers of Innovation in Traditional Food Networks," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria, International European Forum on Innovation and System Dynamics in Food Networks 6617, International European Forum on Innovation and System Dynamics in Food Networks.

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