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Intra-organizational integration and innovation: organizational structure, environmental contingency and R&D performance

  • You-Na Lee


  • John P. Walsh


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    It is widely thought that intra-firm integration has a positive effect on organizational performance, especially in environments characterized by complex and uncertain information. However, counter arguments suggest that integration may limit flexibility and thereby reduce performance in the face of uncertainty. Research and development activities of a firm are especially likely to face complex and uncertain information environments. Following prior work in contingency theory, this paper analyzes the effects of intra-organizational integration on manufacturing firms’ innovative performance. Based on a survey of R&D units in US manufacturing firms and patent data from the NBER patent database, we examine the relation between mechanisms for linking R&D to other units of the firm and the relative innovativeness of the firm. Furthermore, we argue that the impact of integration may vary by the importance of secrecy in protecting firms’ innovation advantages. We find that intra-firm integration is associated with higher self-reported innovativeness and more patents. We also find some evidence that this effect is moderated by the appropriability regime the firm faces, with the benefits of cross-functional integration being weaker in industries where secrecy is especially important. These results both support and develop the contingency model of organizational performance.

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    Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 20-2011.

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    Length: 40 pages
    Date of creation: Feb 2012
    Date of revision:
    Handle: RePEc:icr:wpicer:20-2011
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    10. Xing Zhong & Salih Zeki Ozdemir, 2010. "Structure, learning, and the speed of innovating: a two-phase model of collective innovation using agent based modeling," Industrial and Corporate Change, Oxford University Press, vol. 19(5), pages 1459-1492, October.
    11. Fosfuri, Andrea & Rønde, Thomas, 2009. "Leveraging resistance to change and the skunk works model of innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 274-289, October.
    12. Manuel Trajtenberg & Adam B. Jaffe & Michael S. Fogarty, 2000. "Knowledge Spillovers and Patent Citations: Evidence from a Survey of Inventors," American Economic Review, American Economic Association, vol. 90(2), pages 215-218, May.
    13. Chuma, Hiroyuki, 2006. "Increasing complexity and limits of organization in the microlithography industry: implications for science-based industries," Research Policy, Elsevier, vol. 35(3), pages 394-411, April.
    14. Richard R. Nelson, 2003. "On the Uneven Evolution of Human Know-How," LEM Papers Series 2003/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    15. Foss, Kirsten, 2001. "Organizing Technological Interdependencies: A Coordination Perspective on the Firm," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 151-78, March.
    16. Herbert A. Simon, 2002. "Organizing and coordinating talk and silence in organizations," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 611-618, June.
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