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Openness and Innovation Performance: Are Small Firms Different?

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  • Priit Vahter
  • James H. Love
  • Stephen Roper

Abstract

We explore whether and how the benefits of openness in innovation are different for small plants (less than 50 employees) compared to medium and large plants. Using panel data from Irish manufacturing we find that the contribution of the "breadth" of openness (i.e., the variety of plants' innovation linkages) on innovation performance is stronger for small plants than for larger plants. Both small and larger plants face diminishing returns as the breadth of openness increases, but small plants experience negative returns at lower level of the breadth of openness than larger plants. Our results suggest that small plants can gain significantly from using wider set of innovation linkages, but for such plants appropriate partner choice is a particularly important issue. Small plants also gain significantly more than larger ones from investing in the linkages within the supply chain.

Suggested Citation

  • Priit Vahter & James H. Love & Stephen Roper, 2014. "Openness and Innovation Performance: Are Small Firms Different?," Industry and Innovation, Taylor & Francis Journals, vol. 21(7-8), pages 553-573, November.
    • Handle: RePEc:taf:indinn:v:21:y:2014:i:7-8:p:553-573
    DOI: 10.1080/13662716.2015.1012825
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    More about this item

    JEL classification:

    • 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
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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