Balancing Internal and External R&D Strategies to Improve Innovation and Financial Performance

Journal Title: BAR: Brazilian Administration Review - Year 2018, Vol 15, Issue 2

Abstract

This research investigated the complementarity of internal and external R&D for innovation development and the effect of innovation on the financial performance of European manufacturing firms. Using multigroup structural equation modeling, this study partially supported that internal and external R&D are complementary in firms from high-technology industries, whereas they are not in firms from low-technology industries. For the two groups of firms, both internal and external R&D separately had a positive effect on innovation performance. These results suggested that if low-tech firms, which had lower absorptive capacity than high-tech firms, want to improve their innovation performance in the long term, they should start prioritizing internal R&D to improve their absorptive capacity while achieving a short-term satisfactory innovation outcome. As absorptive capacity rises, more complex strategies balancing internal and external R&D should be adopted. Contrary to expectations, the empirical analysis indicated that innovation performance did not influence short-term financial performance for the whole sample. However, in countries more affected by the 2008 crisis (for instance, Baltic countries, Portugal and Spain), this effect was detected, indicating that innovation helped firms to recover faster.

Authors and Affiliations

Paula, Fábio de Oliveira; Silva, Jorge Ferreira da

Keywords

Related Articles

Co-evolution of Industry Strategies and Government Policies: The Case of the Brazilian Automotive Industry

This study examines the evolution of the automotive industry in Brazil and its key drivers. We argue that the rules of the game – industry policies – are an outcome of exchanges between the host government and industry....

Knowledge Transfer in Product Development: an Analysis of Brazilian Subsidiaries of Multinational Corporations

Several studies about knowledge transfer in multinational corporations have found that the process is influenced by factors such as absorptive capacity, tacit knowledge and power relations, all of which impact knowledge...

Profiling the Buzz Agent: Product Referral and the Study of Social Community and Brand Attachment

The buzz agent is any consumer perceived by others as a source of product referral. Previous literature in word of mouth (WOM) has looked into characteristics of individuals who successfully persuade others to choose a...

Narratives and Sensemaking of an Organizationally-Based Environmental Disaster

This work investigates the narratives of corporations, public agencies, politicians, unions, lawyers, public attorneys and community in different public inquiries undertaken as a response to an organizationally-based e...

Service Providers’ Willingness to Change as Innovation Inductor in Services: Validating a Scale

This study explores the willingness of service providers to incorporate changes suggested by clients altering previously planned services during its delivery, hereby named Willingness to Change in Services [WCS]. We ap...

Download PDF file
  • EP ID EP40666
  • DOI http://dx.doi.org/10.1590/1807-7692bar2018170129
  • Views 263
  • Downloads 0

How To Cite

Paula, Fábio de Oliveira; Silva, Jorge Ferreira da (2018). Balancing Internal and External R&D Strategies to Improve Innovation and Financial Performance. BAR: Brazilian Administration Review, 15(2), -. https://europub.co.uk/articles/-A-40666