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Behind the Scenes: Sources of Complementarity in R&D

Author

Listed:
  • Marco Ceccagnoli
  • Matthew J. Higgins
  • Vincenzo Palermo

Abstract

type="main"> Management consultants increasingly recommend that internal R&D be outsourced; however, little is known about the substitution or complementarity between internal and external R&D. Through structural estimation of a flexible innovation production function we provide a deeper understanding of firm-level drivers of complementarity between these two types of investments. Our analysis is based on a unique panel data set on the R&D and in-licensing expenditures of pharmaceutical firms. Our results suggest that internal R&D and in-licensing are neither complements nor substitutes. We find that the degree of complementarity is enhanced for firms with stronger absorptive capacity, economies of scope, and licensing experience.

Suggested Citation

  • Marco Ceccagnoli & Matthew J. Higgins & Vincenzo Palermo, 2014. "Behind the Scenes: Sources of Complementarity in R&D," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 125-148, March.
  • Handle: RePEc:bla:jemstr:v:23:y:2014:i:1:p:125-148
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    File URL: http://hdl.handle.net/10.1111/jems.12048
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    Citations

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    Cited by:

    1. Billette de Villemeur, Etienne & Versaevel, Bruno, 2017. "One Lab, Two Firms, Many Possibilities: on R&D outsourcing in the biopharmaceutical industry," MPRA Paper 76903, University Library of Munich, Germany.
    2. Spyros Arvanitis & Boris Lokshin & Pierre Mohnen & Martin Woerter, 2015. "Impact of External Knowledge Acquisition Strategies on Innovation: A Comparative Study Based on Dutch and Swiss Panel Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(4), pages 359-382, June.
    3. Rehman, Naqeeb Ur, 2015. "Does Internal and External R&D Affect SMEs Innovation Performance? Micro Level Evidence from India and Pakistan," EconStor Preprints 113229, ZBW - Leibniz Information Centre for Economics.
    4. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Denisa Mindruta & Mahka Moeen & Rajshree Agarwal, 2016. "A two-sided matching approach for partner selection and assessing complementarities in partners' attributes in inter-firm alliances," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 206-231, January.
    5. repec:eee:tefoso:v:135:y:2018:i:c:p:51-63 is not listed on IDEAS
    6. María García-Vega & Elena Huergo, 2018. "The role of international and domestic R&D outsourcing for firm innovation," Discussion Papers 2018-10, University of Nottingham, GEP.
    7. Rehman, Naqeeb Ur, 2016. "Does Internal and External Research and Development Affect Innovation of Small and Medium-Sized Enterprises? Evidence from India and Pakistan," ADBI Working Papers 577, Asian Development Bank Institute.
    8. repec:eee:techno:v:72-73:y:2018:i::p:24-33 is not listed on IDEAS

    More about this item

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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