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Sitting on the Fence: Integrating the two worlds of scientific discovery and invention within the firm

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  • Sheer, Lia

Abstract

Applying a within-firm perspective to the topic of the division of innovative labor, I explore the organization of scientific discovery at the firm level — specialized or integrated with invention. Using data on inventors and authors related to U.S. publicly-traded science-performing firms for the period 1980–2015, the paper deepens our understanding of the determinants and the tradeoffs associated with the strategic choice of scientific discovery organization. I show that integration is related to a tradeoff between short-term applied R&D and long-term fundamental R&D; while integration is beneficial for invention, it has adverse effects on its scientific output, which decrease invention in the long run. The negative relationship between integration and publication reduces the direct increase in patents due to integration by approximately 90%. To better understand firms’ R&D organizational choice, I present internal and external factors that have implications on the benefits and costs associated with integration: reliance on science, stage of technology, external market for technology, and R&D spillins. Finally, I present consistent implications in terms of market value and show that value creation is related to organizational structure.

Suggested Citation

  • Sheer, Lia, 2022. "Sitting on the Fence: Integrating the two worlds of scientific discovery and invention within the firm," Research Policy, Elsevier, vol. 51(7).
  • Handle: RePEc:eee:respol:v:51:y:2022:i:7:s0048733322000750
    DOI: 10.1016/j.respol.2022.104550
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    2. Kox, Henk L.M., 2022. "Testing the knowledge-capital model of foreign direct investment: New evidence," MPRA Paper 114177, University Library of Munich, Germany.
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    4. Kox, Henk L.M., 2023. "Testing an extended knowledge-capital model of foreign direct investment," MPRA Paper 117266, University Library of Munich, Germany.
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    More about this item

    Keywords

    Corporate research; Division of labor; Innovation; Patents; R&D organizational structure;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • 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
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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