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Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation

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  • Cassiman, Bruno
  • Veugelers, Reinhilde

Abstract

Successful innovation depends on the development and integration of new knowledge in the innovation process. In order to innovate successfully, 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 provide evidence on complementarity between different innovation activities. 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 or 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. Furthermore, 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 capacity to strategically protect intellectual property and a more basic R&D base which may serve as an absorptive capacity, are important common drivers for the different innovation activities.

Suggested Citation

  • Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3284
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Panayotis Dessyllas & Alan Hughes, 2005. "R&D and Patenting Activity and the Propensity to Acquire in High Technology Industries," Industrial Organization 0507008, University Library of Munich, Germany.
    2. M. Pilar Socorro, 2009. "R&D investment as a signal in corporate takeovers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 335-350.
    3. Claudio A . Piga & Marco Vivarelli, 2004. "Internal and External R&D: A Sample Selection Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 457-482, September.
    4. Catozzella, Alessandra & Vivarelli, Marco, 2007. "The Catalysing Role of In-House R&D in Fostering the Complementarity of Innovative Inputs," IZA Discussion Papers 3126, Institute for the Study of Labor (IZA).
    5. Marco Da Rin & María Fabiana Penas, 2007. "The Effect of Venture Capital on Innovation Strategies," NBER Working Papers 13636, National Bureau of Economic Research, Inc.
    6. Narula, Rajneesh & Santangelo, Grazia D., 2007. "Location and R&D alliances in the European ICT industry," MERIT Working Papers 008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Lööf, Hans, 2007. "Technology Spillovers and Innovation - the importance of domestic and foreign sources," Working Paper Series in Economics and Institutions of Innovation 83, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 29 Jun 2007.
    8. Ulrich Witt & Christian Zellner, 2009. "How firm organizations adapt to secure a sustained knowledge transfer," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(7), pages 647-661.
    9. Martin Woerter, 2011. "Driving forces for research and development strategies: an empirical analysis based on firm-level panel data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(7), pages 611-636, March.
    10. repec:eee:tefoso:v:122:y:2017:i:c:p:12-23 is not listed on IDEAS
    11. Woerter, Martin & Roper, Stephen, 2010. "Openness and innovation--Home and export demand effects on manufacturing innovation: Panel data evidence for Ireland and Switzerland," Research Policy, Elsevier, vol. 39(1), pages 155-164, February.
    12. Mohnen, Pierre & Roller, Lars-Hendrik, 2005. "Complementarities in innovation policy," European Economic Review, Elsevier, vol. 49(6), pages 1431-1450, August.
    13. Chia-Lin CHANG & Stéphane ROBIN, 2006. "Knowledge sourcing and firm performance in an industrializing economy: the case of Taiwan in the 1990s," Working Papers of BETA 2006-33, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    14. Stephen Roper, 2005. "Cross-Border and Local Cooperation on the island of Ireland - A Behavioural Perspective," ERSA conference papers ersa05p475, European Regional Science Association.
    15. Arbussà, Anna & Coenders, Germà, 2005. "Innovation strategies in the presence of technology markets: evidence from Spanish innovative firms," Working Papers of the Department of Economics, University of Girona 15, Department of Economics, University of Girona.
    16. Stephen Roper & Nola Hewitt-Dundas & James H Love, 2003. "An Ex Ante Evaluation Framework for the Regional Impact of Publicly Supported R&D Projects," ERSA conference papers ersa03p100, European Regional Science Association.
    17. Paija, Laura, 2003. "Distribution of Intellectual Property Rights and the Development of Technology Suppliers," Discussion Papers 844, The Research Institute of the Finnish Economy.
    18. Cassiman, Bruno & Veugelers, Rainhilde, 2003. "Which firms have cooperative R&D agreements with universities? Some empirical evidence from Belgian manufacturing," IESE Research Papers D/502, IESE Business School.
    19. Kaiser, Ulrich, 2003. "Strategic complementarities between different types of ICT-expenditures," ZEW Discussion Papers 03-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    20. Masao Nakamura & Pierre Mohnen & Cathy Hoareau, 2003. "What type of enterprise forges close links with universities and government labs? Evidence from CIS 2," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(2-3), pages 133-145.
    21. Veugelers, Reinhilde & Cassiman, Bruno, 2005. "R&D cooperation between firms and universities. Some empirical evidence from Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 23(5-6), pages 355-379, June.
    22. Chia Lin, CHANG & Stephane, ROBIN, 2004. "Innovation Strategy and Total Factor Productivity Growth : Micro Evidence from Taiwanese Manufacturing Firms," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    23. Cassiman, Bruno & Veugelers, Reinhilde, 2007. "Are external technology sourcing strategies substitutes or complements? The case of embodied versus disembodied technology acquisition," IESE Research Papers D/672, IESE Business School.
    24. David Aristei & Michela Vecchi & Francesco Venturini, 2016. "University and inter-firm R&D collaborations: propensity and intensity of cooperation in Europe," The Journal of Technology Transfer, Springer, vol. 41(4), pages 841-871, August.
    25. repec:krk:eberjl:v:3:y:2015:i:4:p:123-138 is not listed on IDEAS

    More about this item

    Keywords

    complementarity; innovation; R&D; Technology acquisition;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • 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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