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

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Author Info
Cassiman, Bruno () (IESE Business School)
Veugelers, Reinhilde (IESE Business School)

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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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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
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Handle: RePEc:ebg:iesewp:d-0457

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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Related research
Keywords: Management Innovation strategy

Find related papers by JEL classification:
M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  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, vol. 24(1), pages 91-114, June. [Downloadable!] (restricted)
  2. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June. [Downloadable!] (restricted)
  3. Susan Athey & Scott Stern, 1998. "An Empirical Framework for Testing Theories About Complimentarity in Organizational Design," NBER Working Papers 6600, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Blackwell Publishing, vol. 38(4), pages 361-79, June. [Downloadable!] (restricted)
  5. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April. [Downloadable!] (restricted)
  6. Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(2), pages 387-409, October.
  7. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June. [Downloadable!] (restricted)
  8. Veugelers, Reinhilde & Cassiman, Bruno, 1999. "Make and buy in innovation strategies: evidence from Belgian manufacturing firms," Research Policy, Elsevier, vol. 28(1), pages 63-80, January. [Downloadable!] (restricted)
  9. Ghemawat, Pankaj, 1995. "Competitive Advantage and Internal Organization: Nucor Revisited," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(4), pages 685-717, Winter.
  10. Granstrand, Ove & Sjolander, Soren, 1990. "The acquisition of technology and small firms by large firms," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 367-386, June. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mohnen,Pierre & Roeller,Lars-Hendrik, 2003. "Complementarities in Innovation Policy," Research Memoranda 025, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
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