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“Influential knowledge and financial performance: The role of time and rivals’ absorptive capacity”
Abstract
There is a general consensus among scholars that knowledge is probably the most important source of competitive advantage. The influential, novel knowledge incorporated in patented inventions can be considered as a valuable resource for firms. The research questions that are at the heart of this work are how long the effect of influential knowledge on financial performance can last and how this effect interacts with rivals' absorptive capacity. We test our hypotheses on longitudinal data from the chemical industry. Our findings suggest that influential patented knowledge has a negative, though weak, effect on financial performance in the first year after patent application, but the effect becomes strongly positive in the second year, even though it lasts only for one year. Moreover, contrary to our expectations, we find that the effect of influential knowledge on financial performance is positively moderated by rivals’ absorptive capacity.
... This definition emphasizes the diversity of individuals in the workplace regarding their ability to comprehend new knowledge, change its meaning, integrate it into the organization, and eventually allocate it for use and application (Zhang et al., 2021). Individual integration occurs due to analyzing and using project information (Flatten et al., 2011;Papazoglou & Spanos, 2021). In the current period of development, there has been a noticeable movement in organizations in which the competencies of individuals in workgroups are seen as one of the most critical factors for increasing creativity, learning lessons, and financial performance (Manik & Lukito-Budi, 2020;Yafi et al., 2021). ...
... When an organization's knowledge-based assets are redefined and skillfully structured, an organization can handle changes in a convenient and sensitive manner. Through its capabilities, it will boost its growth, align the change with activity and other domains, and thus enhance its innovation and financial performance (Murovec & Prodan, 2009;Papazoglou & Spanos, 2021). Based on the competitive view of potential, companies with high absorptive capacity are likely either from rivals, consumers, channel partners, and suppliers to gain new expertise externally. ...
A lack of collaborative innovation and absorptive capacity in firms causes projects to fail. Managers/employees in small and medium enterprises (SMEs) are not sufficiently aware of the practices of intellectual capital and nor do they collect, share, transfer, and utilize knowledge properly. This current study, therefore, focuses on the relationship between collaborative innovation and the financial performance of Portuguese IT sector SMEs, with a mediating role of absorptive capacity and a moderating role of intellectual capital based on three sub-domains (human capital, organizational capital, and social capital). Close-ended questionnaires were used to obtain data from 308 employees and managers. Owing to the COVID-19 pandemic, data were also collected through an online survey method. The simple random sampling technique was used to collect data and analyze it using the PLS-SEM method. The results show that collaborative innovation has a positive and significant impact on the financial performance of IT firms in Portugal. Absorptive capacity is considered a potential mediator between collaborative innovation and financial performance. Moreover, the moderating role of intellectual capital strengthens the relationship between collaborative innovation and absorptive capacity.
... Conversely, a low degree of absorptive capacity signals lesser understanding and obstruction to new technology (Sultana and Turkina 2020). Besides, organisations with strong absorptive capacity can easily understand and transform external knowledge and acquire valuable new knowledge combinations using less human resources and time cost, which will stimulate the search for new knowledge (Papazoglou and Spanos 2021). Similarly, moderate level knowledge flow can reduce knowledge overlap, whereas, the excessive flow would increase it. ...
... Therefore, absorptive capacity could enhance the influence of knowledge stock on technological niche breadth. Similarly, high absorptive capacity offsets the costs of identification and understanding that allow the firm to enter a new technology area ultimately reducing technology niche overlap (Papazoglou and Spanos 2021). On the contrary, weaker absorptive capacity cannot allow the inflow and stocks of more knowledge which will stagnate niche breadth and cause overlap (Sultana and Turkina 2020). ...
The technological niche in an R&D network is a pulse of sustainable innovation for enterprises. Through a knowledge-based view (KBV) lens, this study examines the role of knowledge flow (stock) to elevate technology niche breadth (overlap) with a moderating effect of absorptive capacity. Chinese automobile industry patent data for 2005–2018 have been analysed through STATA 12. The results verify that knowledge flow (stock) has an inverted U-shaped effect on technology niche breadth, whereas, the effect on niche overlap is U-shaped. Furthermore, when absorption capacity is high, a moderate knowledge flow widens the technological niche and shrinks the overlap. But, at higher absorptive capacity knowledge stock widens the technology niche breadth but has no significant influence on niche overlap. This study is one of its types to optimise the technological niche through absorptive capacity and adds to KBV and technology management literature. Practitioners should optimise knowledge stock and knowledge flow to elevate the technological niche.
... Originally defined as "the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends" (Cohen and Levinthal, 1990:128), absorptive capacity has been identified as an essential factor that could explain why and how some firms could be more innovative than others in a given competitive environment. Consequently, scholarly interest in absorptive capacity's antecedents and consequences has maintained momentum (Bedford et al., 2022;Chung et al., 2022;Hurmelinna-Laukkanen and Olander, 2014;Papazoglou and Spanos, 2021;Patterson and Ambrosini, 2015;Santoro et al., 2020;Xia and Roper, 2008). Notwithstanding key nuances in conceptualization and operationalization, studies in this vibrant literature have predominantly considered absorptive capacity as a firm-level construct that is assumed to manifest itself through various organizational phenomena (i.e., routines, capabilities, procedures). ...
While extant literature conceptually recognizes individuals as an integral part of the process with which organizations absorb new knowledge, past research has paid limited attention to the antecedents of individual-level absorptive capacity. In this paper, we address this research gap. We build on the interactionist perspective and propose that individual-level absorptive capacity is shaped by the joint effects of individual employees' dispo-sitions (i.e., need for cognition and proactive personality) and their work context (i.e., time pressure and autonomy). Significantly, we also recognize the multidimensional nature of absorptive capacity, which suggests that individuals need different capabilities to learn and utilize new knowledge in their organizations. We test our predictions using a unique dataset from 646 employees working on knowledge-intensive tasks. Our results show that the joint effects of dispositional and contextual antecedents are not uniform across different dimensions of individual-level absorptive capacity.
... Rungi and Stulova (2013) demonstrate that absorptive capacity entails a direct effect on financial performance. So, the effect of influential knowledge on financial performance is positively moderated by absorptive capacity (Papazoglou & Spanos, 2021). ...
Objective of the study: In this paper, we will analyze the moderating effect of financial performance exerts on the interaction of absorptive capacity and organizational performance. Methodology / approach: A conceptual model was developed to assess the relationship between absorptive capacity, financial performance, and organizational performance in small and medium-sized Brazilian companies. To capture the multidimensional nature of absorptive capacity, this study uses structural equation modelling and measures the meditating effects of financial performance. Main results: The main finding is the moderating effect. The effect of absorptive capacity on organizational performance has a moderating effect of financial performance. Theoretical / methodological contributions: Small businesses ought to recognize and take advantage of the practical benefits of absorptive capacity. However, entrepreneurs should find motivation to develop more formalized absorptive capacities to raise the organizational performance. The results can help companies identify ways to better appropriate external information and knowledge to improve absorptive capacity. Relevance / originality: The research contributes to the proposition and empirical test of a predictive model of organizational performance in small and medium-sized enterprises, which can predict organizational performance in Brazilian´s SMEs. This study represents one of the first attempts to investigate the relationships between absorptive capacity, organizational performance, and financial performance. Social / management contributions: The results can help companies identify ways to better appropriate external information and knowledge to improve absorptive capacity.
... Realized AC includes the routines with which the firm is able to explore the knowledge and apply it into product or service as the capability of transformation. Recently other researchers explore other factors such as the effect of AC on Open Innovation in SMEs (Huber et al., 2020;Lu et al., 2020;Senivongse, 2020), KM (Barakat, 2020;Chichkanov 2020), financial (Papazoglou and Spanos, 2021), organizational structures (García-Sánchez et al. 2018;Siachou, 2021;Saeed, 2021), resources (Bhowmik, 2020), and manufacturing (Rehman et al., 2020;Duran et al., 2020). Most studies grounded in AC reflect the importance of bringing in outside sources of knowledge which is critical for the firm's AC. ...
Although digital technologies provide many advantages and opportunities for storing, processing, and sharing information in real-time, disseminating and managing knowledge are critical for value creation. A deeper understanding of the tools and processes as drivers of knowledge creation can also have a significant impact on service quality in the healthcare industry. Knowledge management theories presuppose an essential aspect of knowledge relates to human processing, challenging the technology basis of digital healthcare. Without the ability to leverage digital technologies through knowledge management, the creation of value is minimal. This study provides a conceptual knowledge management digital capability model (KMDCM) in order to enhance digital healthcare performance.
... I employed forward patent citations (i.e., patent citations received) to proxy innovation performance, considering the usefulness of patented inventions and their impact on future patents as a manifestation of the importance of the innovation outcome (Anzenbacher & Wagner, 2020;Onal Vural et al., 2013;Papazoglou & Spanos, 2021). Forward patent citations, compared to a raw count of patents, offer a qualitative measure of innovation output in addition to the quantitative (Magelssen, 2020;Rothaermel & Alexandre, 2009;Rothaermel & Hess, 2007;Yayavaram & Chen, 2015). ...
This study considers the act of entering into new technological domains for R&D purposes as one of the most intense entrepreneurial activities within large established firms, referring to it as R&D entrepreneurship. Attempting to detect factors that could strengthen (or weaken) the impact of R&D entrepreneurship on innovation performance, I examine the moderating role of three important R&D strategies, namely the knowledge plurality, internal focus, and R&D collaboration. I empirically test the hypotheses developed in this study on secondary, longitudinal economic and patent data from a sample of 139 firms from the industries of pharmaceuticals, biotechnology, and chemicals for a 7-year period, using fixed-effects negative binomial regression models. Findings support that the relationship between R&D entrepreneurship and innovation performance is positively moderated by knowledge plurality but negatively by internal focus and R&D collaboration.
... Realized AC includes the routines with which the firm is able to explore the knowledge and apply it into product or service as the capability of transformation. Recently other researchers explore other factors such as the effect of AC on Open Innovation in SMEs (Huber et al., 2020;Lu et al., 2020;Senivongse, 2020), KM (Barakat, 2020;Chichkanov 2020), financial (Papazoglou and Spanos, 2021), organizational structures (García-Sánchez et al. 2018;Siachou, 2021;Saeed, 2021), resources (Bhowmik, 2020), and manufacturing (Rehman et al., 2020;Duran et al., 2020). Most studies grounded in AC reflect the importance of bringing in outside sources of knowledge which is critical for the firm's AC. ...
In order to reduce the growing negative impact of CO2 emissions, manufacturing firms have begun to refocus efforts on energy management. Several studies have focused on drivers and inhibitors of energy management but few regarding manufacturing energy management maturity. This study investigates both drivers and the role of knowledge management on manufacturing energy management maturity. Using multivariate analyses, questionnaire data from manufacturing personnel throughout the United States is utilized to assess these relationships. The results provide the support that economic followed by organizational and corporate social responsibility (CSR) positively impact knowledge management practices within organizations. Additionally, this study provides support that knowledge management practices within U.S. manufacturing organizations have a positive association with environmental management maturity. Findings contribute to theory and practical knowledge by highlighting the configurational effects of knowledge management and energy management maturity.
... Kim et al. (2016) argued that deployment of KM capability facilitates organizations to positively influence performance outcomes through the development and implementation of a broad and deep knowledge base, particularly in contexts that need a large amount of knowledge resources (Mokhtarzadedeh et al., 2022;Oliveira et al., 2020). Unique knowledge regarding novel methods and processes facilitates organizations to leverage innovative techniques to work proficiently and manage and increase customer satisfaction (Brito et al., 2020;Papazoglou and Spanos, 2021). KM capability helps organizations to identify, acquire, and disseminate knowledge regarding customer preferences and marker fluctuations, thereby enabling organizations to (re)configure resources and (re)develop products that are best fit in meeting marketing demands and satisfying customer needs. ...
Purpose
This study examines the relationship between knowledge management (KM) capability and innovation ambidexterity, and their subsequent influence on firm performance. It also investigates whether organizational structure – in terms of connectedness and centralization – helps to develop a suitable context that either hinders or catalyzes the effectiveness of KM capability in predicting innovation ambidexterity.
Design/methodology/approach
Data were collected from 336 manufacturing organizations in Pakistan using a random sampling technique. Partial least square-based structural equation modelling (PLS–SEM) was employed to analyze the data.
Findings
Results reveal that KM capability is positively linked with innovation ambidexterity and firm performance. Innovation ambidexterity positively mediates the link between KM capability and firm performance. Connectedness positively moderates the association between KM capability and innovation ambidexterity. However, centralization negatively moderates the link between KM capability and innovation ambidexterity.
Research limitations/implications
This research offers theoretical insights into when and how KM capability is effective in prompting performance through innovation ambidexterity by creating a suitable context.
Practical implications
The study indicates that innovation may develop in an ambidextrous manner in an organization as long as the organization is proficient in creating a suitable context, i.e. structure to support it. Organizations should strive to develop sustained KM capabilities because these are seminal for enabling the challenging task of exploiting existing resources for innovation while also tapping on new opportunities for explorative breakthroughs.
Originality/value
This research contributes to a novel understanding regarding the importance of KM capability in fostering manufacturing organizations to engage in ambidexterity by creating a suitable context where optimal amount of each form of innovation activities is calibrated using KM capability.
Highlights
Knowledge management capability is crucial for simultaneous exploitation and exploration of innovation
Innovation ambidexterity (i.e. simultaneous exploitation and exploration of innovation) fosters firm performance
Innovation ambidexterity mediates the positive effect of knowledge management capability on firm performance
Connectedness strengthens the relationship between knowledge management capability and innovation ambidexterity
Centralization weakens the effect of knowledge management capability on innovation ambidexterity
Innovation can be developed in an ambidextrous way in organizations as long as organizations have knowledge-based competencies and proficient in creating suitable context
... We introduced absorptive capacity as a moderating variable. In the existing literature, data on research and development expenditures and patents are the most widely used measures of absorptive capacity [71,72]. Similarly, Xie et al. (2016) [59] used total research and development expenditures as a proxy for absorptive. ...
Academia and business alike are paying increasing attention to innovation in green technology due to the potential environmental and financial performance benefits. However, a limited amount of research has been carried out on the effect of proactive green technology innovation on corporate financial performance. This study examines the effects of two dimensions of proactive green technology innovation, namely, proactive green process innovation and proactive green product innovation, on corporate financial performance. Moreover, the moderating role of absorptive capacity on these relationships is introduced. The proposed hypotheses were tested empirically using a dynamic panel dataset of 126 Chinese listed semiconductor concept stocks from 2010 to 2020 and a difference-GMM approach. It was found that proactive green process innovation has a significant positive effect on both short-term and long-term corporate financial performance. Moreover, proactive green product innovation has a significant positive effect on long-term corporate financial performance. However, it does not improve short-term corporate financial performance. In addition, absorptive capacity has a positive moderating effect on the relationship between proactive green process innovation and both short-term and long-term corporate financial performance, and shows a positive moderating effect on the relationship between proactive green product innovation and long-term financial performance. However, it has a significant negative moderating effect on short-term corporate financial performance. Thus, we suggest that firms adopt more supportive proactive green technology innovation practices in order to improve their financial performance.
... More specifically, not all innovations are patentable, not all inventions result in patents, and not all patents represent innovations since some patents are used only for blocking others from using the new knowledge (Capaldo et al., 2017;Rudy & Black, 2018). Additionally, patent citations do not always denote higher quality or importance, because, in some cases, firms develop patents just to build "patent fences" around other patents in order to prevent rivals from inventing around their protected knowledge (Kim, 2016;Papazoglou & Spanos, 2021). Moreover, although recency is measured by the average age of the patents cited in a patent document, the contribution of each cited patent to the creation of the new knowledge is different (Capaldo et al., 2017). ...
The timely disengagement of a firm from its old technological achievements and the update of its core technological competencies are important issues for both management scholars and practitioners. However, a firm is naturally reluctant to abandon or replace technologies created internally and on which a large amount of resources has been spent and with which the firm is to a large extent familiar. Addressing the temporal dimension of knowledge inputs, this study develops two hypotheses that examine the effect of the recency of internal knowledge inputs on innovation performance and how this effect is moderated by internal focus. We test these hypotheses on longitudinal economic and patent data from a sample of 139 firms from the pharmaceuticals, biotechnology, and chemicals industries for a 7-year period, using fixed-effects negative binomial regression models. Findings support that the recency of internal knowledge inputs is a positive predictor of both innovation productivity and impact; however, when the recency interacts with internal focus, both the effects become negative.
... De Silva [14] highlighted that knowledge sharing with collaborators could increase firms' value through innovation. Papazoglou and Spanos [15] researched the length of time that it takes for knowledge convert to gains, and they found that knowledge could positively influence financial performance after patents were applied for one year. Therefore, in light of the existing studies, we intend to explore whether the innovation vouchers could increase knowledge in SMEs and then improve innovation performance and financial performance. ...
Innovation has become an essential source of sustainable growth for most firms, especially small- and medium-sized enterprises (SMEs). Governments around the world widely implement innovation vouchers to promote innovation in SMEs. This study empirically explores the effects of innovation vouchers in stimulating patentable innovation and ultimately enhancing firms’ financial performance. Using a panel of 1274 listed SMEs from the Small and Medium Enterprise Board
(SMEB) and the Growth Enterprise Board (GEB), we find that innovation vouchers lead firms to utilize knowledge-intensive services and significantly increase their financial performance. We further document that patentable innovations mediate the relationship between innovation vouchers and firms’ financial performance. We report that the effects of innovation vouchers on financial performance are more prominent for SMEs with limited external informational resources. We believe that our study yields novel evidence and sheds further light on the important policy implications of innovation vouchers to facilitate the sustainable growth of SMEs.
Background
Export activities represent one of the prerequisites for the growth and development of economies. In combination with new digital technologies, they create a sustainable advantage and competitiveness in the market.
Objectives
The focus of this research was to determine whether there is a significant difference and connection between the absorptive capacity of accepting new technologies and its influence on financial performance in the domestic and foreign markets.
Methods /Approach
The relationship between the absorptive capacity of the application of new technologies and its influence on financial performance was investigated in a sample of Croatian companies. Structural equation modelling was used to investigate the relationship between absorptive capacity and financial performance.
Results
The results of the research confirm a statistically significant relationship between the absorptive capacity of accepting new technologies and its influence on the financial performance of export companies.
Conclusion
The analysis revealed that absorptive capacity significantly impacts the financial performance of Croatian export companies, with a stronger influence observed in foreign markets compared to domestic ones. These findings suggest that investing in the ability to absorb and apply new technologies is crucial for enhancing financial outcomes, particularly in the global marketplace.
This study aims to demonstrate the contribution of qualitative techniques and methods in extending the understanding of coopetition. The study investigates four Indian pharmaceutical organisations using various data collection methodologies, including primary data collection based on the factors of coopetition, semi-structured interviews with middle and senior-level executives within each organisation, and secondary data sources. The triangulation and multiple case study approaches are applied to understand the inter-organisational relationships in the context of competitors’ alliances in the pharmaceutical industry. This case-based approach provided in-depth knowledge about simultaneous competition and cooperation between the rival partners, thus making this study unique in many ways and contributing to the coopetition literature. This study enhances our understanding in several key ways: firstly, it analyzes the influence of various coopetition factors within competitors' alliances; secondly, it leverages this framework to augment our understanding of the interactions between competing partners, leading to the development of a hierarchical conceptual model; thirdly, it delves into the application of triangulation and multiple case study methods, approaches that have been underutilized in the pharmaceutical industry's exploration of coopetition; and finally, it meticulously breaks down the methodologies employed, shedding light on their significant contributions to the study's findings.
Despite the expected positive performance, findings have often been mixed with debate on green certification adoptions under various pressures. A better understanding of these pressures and associated organizational environmental and process management systems can help firms deploy resources appropriately and effectively. Many of these pressures have been referred to as symbolic adoption rather than actual implementation. Using diffusion of innovation and signaling theories, this study argues that process innovation can take an important role in facilitating sustainable performance improvement in both actual and symbolic environmental adoptions. The empirical study from 680 manufacturers in ten different countries showed that pressures on green certification triggered process innovation and eventually enhance firms’ positioning and sustainable measures. However, pursuing green certification did not automatically guarantee all sustainable measures, especially in terms of business performance. This study found that process innovation can mediate this relationship to enhance business and environmental performances. Manufacturers may first see unfavorable benefits from direct implementation of green certification; however, accumulative efforts with process innovation could be paid off. Besides, the environmental symbolic drivers also facilitated the process of innovation and environmental improvement but not business measures. These results enhance the development of organizational processes to accommodate resources for sustainable green supply chain strategies.KeywordsEnvironmental managementProcess innovationManufacturing
Many food processing organizations increasingly apply numerous vendor certification programs (VCP) to ensure quality and sustainable competitive advantage in the sector. However, the impact of such VCP on the performance of the agricultural food supply chain (AFSC) remains debatable among both professional and academic arenas due to numerous factors. This study identified absorptive capability (ABS) as complementary asset which can be used to leverage VCP and AFSC performance. Statistical analysis was carried out using the data collected from 85 organizations involved in the agricultural industry in Vietnam. This research shows that there is a strong relationship between a firm’s VCP and its ABS. Food processing firms first see unfavourable benefits from direct implementation of VCP, however, accumulative efforts with manufacturer’s ABS could be paid off. ABS plays a mediating role in realizing VCP in improving innovation, and operational and financial performance. These results play a significant role in the agricultural sector to improve their performance and to implement sustainable agricultural practices. This paper significantly adds value in expanding the literature in AFSC, especially using VCP and ABS on increasing performance in AFSC. It also recommends new avenues to explore research in areas such as identifying the conditions appropriate to use VCP in agricultural sector to improve the performance.KeywordsVendor certification programAbsorptive capabilityPerformanceAgriculture
It is widely accepted in innovation management literature that a firm can increase its competitive advantage by recombining knowledge and that knowledge recombination requires engagement in external sourcing activities. What is less known, however, is how a firm’s external sourcing strategy – notably its propensity to engage in acquisitions or alliances – is influenced by its internal knowledge base. In this paper, we examine how two critical characteristics of a firm’s knowledge base, namely, scientific orientation and technological diversity, influence the extent to which it engages in alliances or acquisitions. We find that both explanatory variables increase firms’ likelihood of engaging in external technology sourcing and favouring alliances over acquisitions. Our analyses are based on a sample of European firms operating in the biopharmaceutical industry.
External knowledge search is critical for innovation performance and centers on a firm's absorptive capacity. This study investigates whether and how two dimensions of absorptive capacity at the top management team (TMT) level, potential absorptive capacity and realized absorptive capacity, are influenced by two design choices of the performance measurement system (PMS), broad scope PMS and PMS integration, under different conditions of environmental dynamism. Based on cross-sectional survey data from firms in innovative industries, the results of our empirical study indicate that in more dynamic environments, a broader scope PyMS is associated with higher potential absorptive capacity whereas higher PMS integration is associated with lower potential absorptive capacity. These associations are not observable in more stable environments. Moreover, broad scope PMS and PMS integration are both positively associated with realized absorptive capacity, independently of environmental dynamism. These findings highlight the relevance of PMS design choices for absorptive capacity, showing on the one hand the differences between the implications of broad scope PMS and those of PMS integration and, on the other hand, that the implications of PMS design choices for potential absorptive capacity (i.e. acquisition and assimilation of external knowledge) follow different patterns than the implications for realized absorptive capacity (i.e. the transformation and exploitation of such knowledge).
The level of diversity within a company’s technology portfolio is one of the most important factors impacting its long-term adaptability and financial performance. In this study, we investigate how industry conditions, as well as a firm’s market share within the industry, have systematic influences on the profitability of diverse technological portfolios. Using matched patent and performance data across all US manufacturing industries from 1976 to 2006, we show that greater technological diversity increases the firm’s profitability when (1) it has a high market share, (2) there is a low level of industry concentration, or (3) there is a low level of industry dynamism. In contrast, greater technological focus increases the firm’s profitability when it has a low market share, there is a high level of industry concentration, or there is a high level of industry dynamism.
The extant literature has long focused on the causality between the research performance of organisations and their network positions in an inter-organisational research collaboration network. However, we still do not know much about the simultaneous bidirectional relationship between network positions and research performance, or how this bidirectional relationship varies with the difference in the intrinsic cognitive characteristics of network nodes. This paper attempts to fill these research gaps, which helps to reveal the network growth dynamics of an inter-organisational research collaboration system by incorporating the concept of cognitive proximity into a systemic analytical framework where network positions and research performance are considered to be mutually correlated with each other. Based on the research sample of an inter-organisational research collaboration ego-network composed of research institutes subordinated to the Chinese Academy of Sciences (CAS), firms, and universities, the simultaneous bidirectional relationship between network positions and research performance of CAS research institutes is examined by using a simultaneous equation approach, and the moderating effect of cognitive proximity between CAS research institutes and firms (or universities) is further tested. Our results confirm that the collaborative organisations’ network positions and their research performance mutually affect each other in a co-evolutionary process, providing continuous development momentum of an inter-organisational research collaboration system. The simultaneous bidirectional relationship is significantly enhanced by the cognitive proximity between collaborative organisations.
Drawing upon the interfirm absorptive capacity relationship and coopetition theory, this study examines how the congruence between a firm’s own absorptive capability and its rival’s absorptive capability affect the firm’s innovation performance. We propose a theoretical framework embodying the interactive hypotheses and test the extent to which the fit versus non-fit between a firm’s own absorptive capability and its rival’s absorptive capability affect influences the firm’s innovation performance by considering the appropriability as a moderator. A The polynomial regression analysis based on a dyad-style sample consisting of 200 manufacturing firms in China indicates that varying the congruence degrees of a firm’s absorptive capability and its rival’s absorptive capability would affect innovation performance differently. We also discuss some of the implications for firms expecting to enhance their competitiveness in a coopetition environment.
Purpose
Competitor orientation (CO) has been considered as a traditional driver of innovation performance (IP), being an important source of innovative ideas. Nevertheless, the slowness of the analytical information processing implicit in CO has been recently questioned in the literature, given the internal resistance in firms to use knowledge coming from rivals. Hence, the purpose of this study is to analyze the mediating effect of emotional capability (EC), which is believed to help overcome this barrier by improving the use of knowledge from such innovation source.
Design/methodology/approach
Structural equation modeling through the partial least squares method was used to test the research model with survey data from a sample of 123 firms.
Findings
Contrary to what was assumed, EC mediation is partial and CO has a very significant and direct influence on IP. Nonetheless, the fact that EC mediation accounts for 28% of the total effect of CO on IP indicates that EC plays a complementary role in terms of making the information processing on rivals more agile and intuitive, as well as reducing internal resistance.
Practical implications
When competitor information is analyzed and used to improve innovation outcomes, a culture where first impressions or hunches expressed by employees must be encouraged and legitimized.
Originality/value
The development of EC is an alternative way of maximizing the exploitation of the competition as source of innovation. Ignoring its role implies wasting a representative percentage of the benefits of information coming from this external actor, thereby missing the opportunity to capitalize on innovation results.
We study how the timing of information disclosure affects the diffusion of codified technical information. On November 29, 2000, the American Inventors Protection Act (AIPA) reduced the default publication time of patents at the United States Patent and Trademark Office (USPTO) to 18 months. We analyze the effects of this change by means of a regression discontinuity design with time as an assignment variable and a complementary difference-in-differences analysis. Our study shows that information flows from patents measured by forward citations, increased. Interestingly, the degree of localization within geographic boundaries remained unchanged and technological localization even increased moderately. Moreover, the effect of early disclosure on citations from patents filed by patent attorney service firms is particularly strong. These results imply that knowledge diffusion stemming from speedier disclosure of technical information is confined to the existing attention scope and absorptive capacity of specific inventors and organizations.
In this article we analyze the direct effects of the open innovation (OI) processes of acquisition and exploitation on innovation performance (IP), as well as the effects of two antecedents of OI: organizational emotional capability (EC) and rival´s absorptive capacity orientation (RACO). RACO implies processing external information in an analytical manner, whereas an intuitive approach is implicit in EC. The research model was tested in a sample of medium-low-technology Colombian SMEs using structural equations by the consistent partial least squares (PLSc) method. Our results provide evidence on a significant effect of the OI acquisition process on IP, as well as the determining role of RACO for firm-level innovation, in that it functions not only as an informal mechanism for intellectual property rights protection, but also as a knowledge process nourishing the OI exploitation process. Our study contributes to the incipient research field of OI in low and medium-technology SMEs, offering new evidence on the results on the OI-IP relationship in contrast with previous studies conducted in other technological contexts. Furthermore, EC, which has traditionally proven its incidence on internal innovation activities, can have a more powerful and determining role in innovation processes that imply collaborative work with third parties.
We explored the balance between societal benefits that negatively affect firms’ financial performance by eroding their competitive advantage and positive effects that enhanced their reputations as technological leaders to study the effects of forward citations upon firms’ financial performance. Results suggest that the potentially negative effects of receiving forward citations that diffused internally-developed knowledge through users’ subsequent inventions is sometimes offset by potential increases in the reputational effects enjoyed by competitors that persistently produce blockbuster patents (as well as by inventions that prove to be highly basic or “gateway” in their impact upon subsequent technology streams). This positive effect is not universal for all firms as the number of highly cited patents that benefit firms’ abilities to realize higher returns on sales is limited by the speed with which diffusion of knowledge embedded within patented inventions occurs.
The paradox of openness describes the fundamental tension between knowledge sharing and knowledge protection in open innovation. While sharing is vital for value creation, protecting is critical for value appropriation. Prior research has examined this paradox of openness from the perspective of the seeking firm, focusing on the firm-level challenges of inbound open innovation. In this article, we complement that research by illuminating the tensions between sharing and protecting in individual-level outbound open innovation, where we argue that the paradox of openness is most prevalent, yet much less well understood. Drawing on the experience of individual participants, or solvers, in intermediated crowdsourcing contests, we analyze textual data from 2,149 answers to five open-ended narrative questions embedded in a large-scale solver survey, as well as 43 in-depth interviews of solvers. Our findings indicate that individual solvers face fundamental sharing-protecting tensions that carry considerable economic and psychological costs. We also document how solvers attempt to navigate the paradox of openness by employing three formal and four informal value appropriation practices. They build elaborate configurations of these practices, which they tailor to the idiosyncrasies of each contest. They also dynamically adjust these configurations over time, as the contest and the interaction with the seeker unfold. We end by outlining how these findings contribute to a more multifaceted conceptualization and a richer understanding of the paradox of openness.
This paper investigates the link between firm-level innovative performance and innovation prone external environments where knowledgeable individuals tend to cluster. Organizational ambidexterity and absorptive capacities (potential and realized) make it possible for firms to leverage the availability of external knowledge and boost their innovation performance. The empirical analysis focuses on England and is based on a novel combination of Community Innovation Survey (CIS) firm-level data and patent data. The results show that only firms complementing potential and realized absorptive capacities are able to take advantage of favorable external environments by actively combining internal and external sources of knowledge.
Research Summary: To further our understanding of how and why organizations engage in coopetition, we explore cooperative and competitive actions in the craft beer industry. Through an inductive field study, including interviews with craft brewery owners, we propose collective identity and collective norms play a critical role in the persistence of coopetition over time. Our process model suggests that (a) an oppositional collective identity, (b) the shared belief that a rising tide lifts all boats, and (c) the shared belief that advice and assistance should be paid forward, can lead to the persistence of coopetition beyond market category emergence.
Managerial Summary: This paper develops a theory of how smaller, craft‐based organizations (i.e., “Davids”) encourage cohesion and cooperation amongst themselves when operating against an incumbent market of mass‐producers (i.e., “Goliaths”). An ideological opposition to existing players can lead to a shared belief that helping organizations like your own benefits everyone—the rising tide lifts all boats mentality. Similarly, when organizations first enter a market and receive help from established members, they can feel compelled to help others who enter the market after—the pay‐it‐forward mentality. Together, these mechanisms offer an explanation as to how and why coopetition might persist in a market category over time.
Prior literature suggests that dynamic capabilities enable, on the one hand, firms to respond successfully to the changes in the markets, and on the other hand, to embrace firms’ ability to shape their business environments. However, existing studies have not fully considered how some firms within the same industry are able to shape markets, and why others need to adapt to these changes in a Kirznerian manner. We make an attempt, based on contemporary literature on the microfoundations of dynamic capabilities, to explain how resource allocation between marketing and R&D function — as one of the microfoundations and as a central contributor to innovation — influences the sustainability of competitive advantage and, consequently, a firm’s ability to create or respond to exogenous shocks. Findings from our multiple-case study on internationalizing SMEs indicate that investments in marketing and R&D functions per se are a necessary though not sufficient condition for building dynamic capabilities and competitive advantage. Rather, the extent to which companies are able to follow their own strategies is closely tied to the microfoundations of dynamic capabilities.
This paper examines the influence of patent citations, a proxy for the quality of firms' innovation outputs, on financial analysts' long-term growth forecasts for firms. We find that financial analysts are more likely to issue long-term forecasts for firms with higher patent citations. In addition, we find that financial analysts' long-term forecasts are more positive for firms with high patent citations. These results imply that patent citations increase financial analysts' coverage, and result in more positive forecasts for firms with impactful patents. Considering that financial analysts play important roles in allocating financial resources in capital markets, our findings suggest that patents are valuable assets for firms in securing capital from capital markets, and are thus essential for the sustainable growth of firms.
Through interviews and a large-scale survey of R&D scientists and engineers, this paper explores individuals’ attempts to absorb external knowledge, focusing on their efforts to identify and assimilate external knowledge and promote its utilization. Extant research does not explicitly address whether individuals should better specialize in certain absorption efforts or rather work as generalists dedicated to a range of efforts. We suggest that assimilation efforts increase the value of individuals’ efforts at external search and at promoting the utilization of external knowledge, which culminates in two main absorption roles that can help individuals achieve greater innovation performance. We argue that gatekeepers who combine external search with assimilation effort help to achieve innovation by contributing to building potential absorptive capacity, while shepherds who combine assimilation with utilization effort aid innovation by building realized absorptive capacity. We find support for these predictions and discuss the implications for research and managerial practice in open innovation.
Patents have long been assumed to provide firms with competitive advantage, but longitudinal results suggest that some types of patent content provide more enduring advantage than others do. The duration of advantage appeared to wane with time in the highly-dynamic U.S. communications-services industry during a period when technological changes occurred rapidly within it (1998–2012). Results suggest patents integrating technology streams that were different from the technologies of focal-patents’ grants contributed more to sustaining firms’ profit margins during this period than did focal patents that exploited extant technological knowledge. We found that firms who continually pushed their organization’s knowledge envelope outward to incorporate more unknown technologies sustained higher profit margins for a longer duration of time than did firms whose patented inventions were predominantlyincremental—even within difficult settings where competition grew so intense that firms’ average operating margins were deteriorating.
Evidence suggests that patents facilitate technology transactions but the reasons for the effect are unclear. Patents may assist trade in technology by either: (i) protecting buyers against the expropriation of the idea (the 'appropriation effect'); or (ii) increasing information sharing during the negotiation phase through publication of technical details contained in the patent document (the 'disclosure effect'). We estimate the strength of both effects using exact matching analysis on a novel dataset of 860 technology transaction negotiations. We find evidence for the appropriation but not the disclosure effect. Technology transaction negotiations involving a granted patent instead of a pending patent (our test for the appropriation effect) are significantly more likely to be successfully completed. The appropriation effect is stronger in technology fields where patent protection is known to be more effective such as biotech, chemicals, drugs and medical.
Evidence suggests that patents facilitate technology transactions but the reasons for the effect are unclear. Patents may assist trade in technology by either: (i) protecting buyers against the expropriation of the idea (the 'appropriation effect'); or (ii) increasing information sharing during the negotiation phase through publication of technical details contained in the patent document (the 'disclosure effect'). We estimate the strength of both effects using exact matching analysis on a novel dataset of 860 technology transaction negotiations. We find evidence for the appropriation but not the disclosure effect. Technology transaction negotiations involving a granted patent instead of a pending patent (our test for the appropriation effect) are significantly more likely to be successfully completed. The appropriation effect is stronger in technology fields where patent protection is known to be more effective such as biotech, chemicals, drugs and medical.
This paper is based upon the assumption that a firm's profitability is determined by its degree of diversification which is, in turn, strongly related to the antecedent decision to carry out diversification activities. This calls for an empirical approach that permits the joint analysis of the three interrelated and consecutive stages of the overall diversification process: diversification decision, degree of diversification and outcome of diversification. We apply parametric and semi-parametric approaches to control for sample selection and the endogeneity of the diversification decision in both static and dynamic models. For the analysis, we use the census dataset on the whole firm population in Vietnam, as a representative of transition countries. After controlling for industry fixed-effects, the empirical evidence from the firm-level data shows that diversification has a curvilinear effect on profitability: it improves firms’ profit up to a point, after which a further increase in diversification is associated with declining performance. This implies that firms should consider optimal levels of product diversification when they expand their product offerings beyond their core business. Other noteworthy findings include the following: (i) the factors that stimulate firms to diversify do not necessarily encourage them to extend their diversification strategy; (ii) firms that are endowed with highly technological resources and innovation investment are likely to successfully exploit diversification as an engine of growth; and (iii) while industry performance does not have a strong influence on the profitability of firms, it impacts their diversification decision as well as the degree of diversification.
Research has suggested that firms engage in a number of different patent strategies to protect and even gain competitive advantage. However, we know less about the strategies firms employ when engaging in patent litigation. Using proprietary and defensive generic patent strategies as a starting point, this paper describes two types of patent litigation strategies, the types of institutional contexts that would be expected to motivate firms to engage in each, and the performance outcomes of firms undertaking such strategies. Analyzing patent litigation activity between 2002 and 2008 in the pharmaceutical and semiconductor industries, we find that firms in the pharmaceutical industry are more likely to follow a proactive proprietary patent litigation strategy, while firms in the semiconductor industry are more likely to engage in a proactive defensive patent litigation strategy. Furthermore, firms in the semiconductor industry that followed a proactive defensive patent litigation strategy enjoyed better performance than firms that did not engage in this strategy.
Together, Penrosean and Barnean resource-based logic make up the dominant theoretical approach to understanding firm growth. While extant literature focuses on a common lineage between Penrosean theory and the Resource-based View (RBV), we explicate divergence at these origins of resource-based theorizing and subject the growth implications of each to meta- analytic testing. RBV ’s central tenets concern resources that meet VRIN criteria while Penrose’s theory discusses the versatility of resources. Theoretically, VRIN resources allow firms to exploit unique opportunities while versatile resources allow firms to recombine resources in novel ways to create growth. Using meta-analytic techniques, we find that versatile resources are associated with higher levels of growth whereas VRIN resources are not. We offer novel insights into alternative characteristics of resources derived from the same conceptualization of the firm, add greater specificity to the performance construct, and open up avenues for new theorizing on firm growth that is more closely aligned with Penrose’s theory.
We propose that searching for and transferring knowledge across divisions in a diversified firm can cultivate innovation. Using a sample of 211,636 patents from 1,644 companies during the period 1985-96, we find that the use of interdivisional knowledge positively affects the impact of an invention on subsequent technological developments. Furthermore, the positive effect of the use of interdivisional knowledge on the impact of an invention is stronger than the effect of using knowledge from within divisional boundaries or from outside firm boundaries. Our empirical findings have significant implications for the management of knowledge in diversified firms.
The degree to which inter-firm research and development (R&D) networks benefit a firm's exploitative and exploratory innovation depends on two factors: (1) the kind of knowledge that the firm can access from networks and (2) how the firm acquire these knowledge resources through its connections. Utilizing a knowledge-based view of the firm, we argue that related and unrelated network knowledge diversity differ in their effect on a company's innovation outcomes and that the existence of structural holes in an inter-firm R&D network has a discrepant, moderating effect on performance. Empirical analyses based on archival data from 158 Chinese automobile companies from 1996 to 2010 indicate that the inter-firm R&D network that emphasizes diversified unrelated knowledge is more beneficial for enhancing a firm's exploratory innovation outcomes. Conversely, the inter-firm R&D network that relies on diversified related knowledge can be more helpful for companies that engage in exploitative innovation. Further, structural holes are expected to be complementary to unrelated network knowledge diversity while a dense neighborhood is complementary to related network knowledge diversity in improving firm exploitative and exploratory innovation outcomes.
Innovation output is key to the long run business success in high-technology markets. Since research is costly, the absorption of external knowledge might be a powerful device for improving innovation processes. Considering four high-technology sectors in Europe, we examine to what extent local networking, competitive spillovers, or (unobserved) locational advantages influence innovation processes at the firm level. Since high-technology markets require strong innovative capacity, we specifically investigate the effectiveness of patent blocking as a promising strategy to exclude competition and to improve own competitiveness. We model innovation processes empirically by means of a recent Bayesian stochastic frontier approach that allows for spatial dependence and spillover effects. Our results indicate that growing pressures to innovate could create vicious levels of innovation competition. Moreover, the access to local networks boosts the pursuit of innovation and enhances innovativeness.
Innovative entrepreneurship is at the heart of economic development in all modern economic systems. However, we observe in several developed countries - especially Europe - a languishing in the capacity to foster creative destruction (i.e. Schumpeter Mark 1, SM1) dynamics and to create young innovative companies (YICs), capable to establish themselves as leaders in markets or become successful innovators. One key issue that is often advocated in this respect is the deficit suffered from YICs in fully protecting their innovations and appropriating (at least in part) returns from them. The usage of formal (e.g., intellectual property rights) and informal (e.g., secrecy, lead time, access to complementary assets) instruments to protect intellectual property assets has the potential to overcome this difficulty. Different types of policy mechanisms have been put in place to help YICs. However, high implicit and explicit costs and barriers prevent YICs’ use of protection strategies, limiting the ability to generate SM1 dynamics or accessing market for ideas, even upon policy support. By relying on the resource-based view of the firm, our paper investigates to what extent a comprehensive set of policy measures recently introduced in the Italian context and focused on alleviating the hurdles suffered by YICs is associated with the choice of YICs to protect their innovations. The econometric analyses based on more than 1,600 Italian YICs show how the use of financial policy measures are associated to both formal and informal instruments, while labour policy measures are only related to formal ones.
The relationship between patent portfolio diversity and firm
profitability is conceptually opaque and empirically equivocal. We
contribute to the literature with a systematic analysis of this relationship by carrying out an empirical investigation based on a sample of 391 international firms. We generate data for patent portfolio diversity at the level of sections, classes, and sub-classes of the International Patent Classification. As moderators of this relationship, we test non-self forward citations (revealing a stream of knowledge between the firm and the outside) and non-self backward citations (assessing the firm's absorptive capacity). Findings highlight how the relationship between patent portfolio diversity and profitability is nonlinear and differentially moderated by both the level of non-self forward and backward citations. Accordingly, implications for theory development and managerial decision making are discussed.
Causal ambiguity relates to ambiguity as to how organizational actions and results, inputs and outcomes, or competencies and advantage are linked. Causal ambiguity is important because of its organizational performance implications. Over the last 25 years, research has analyzed the concept from various theoretical angles. As a result, the literature is fragmented and presents different, and sometimes contradictory, views on the concept. In this article, we systematically review the literature on causal ambiguity and develop a framework incorporating the types, antecedents, and consequences of causal ambiguity for both organizational performance and organizational learning. We disentangle the arrays of conceptualizations and operationalizations present in the literature, and we isolate distinct streams in causal ambiguity research. One stream of research concentrates on causal ambiguity as an interfirm barrier to imitation, a second relates to causal ambiguity as an intrafirm barrier to factor mobility, and a third focuses on causal ambiguity as a potential trigger for intrafirm learning. Our review also helps to consolidate research on the substitution dilemma, the causal ambiguity paradox, and the challenge of learning under causal ambiguity. Finally, we develop a coherent set of implications for management practice, and we provide an agenda for further research.
Research Summary
Behavioral theory examines how the intensity of underperformance influences firms’ strategic decisions; yet, it largely fails to consider the effect of underperformance duration. Drawing on behavioral theory and organizational learning, we argue that the length of time that a firm has been underperforming contributes to shaping firms’ innovative search patterns. We test our theory merging COMPUSTAT and NBER patent data for 1,610 high‐tech manufacturing companies between 1986 and 2006. Our results largely support our predicted curvilinear relationships. We find that innovative search magnitude and scope each first decreases and then increases with underperformance duration. In addition, we find marginal evidence that innovative search depth first increases and then decreases with underperformance duration. The statistical and practical significance of the results is also discussed.
Managerial Summary
Innovation is vital for a firm's survival and competitive advantage and requires a search for knowledge. Previous research suggests that the gap between current performance and desired performance is an important trigger for firms' innovative action. We suggest that how long the firm has been underperforming also plays an important role in firm innovation. Using financial and patent data on public high technology manufacturing firms, we show that there are non‐linear relationships between the duration of a firm's underperformance and its innovative activities. We find that underperforming firms first decrease and then increase R&D spending and the use of new knowledge as underperformance prolongs. Our results imply that underperforming firms face competing short and long term pressures that influence the nature of its innovative activities.
Does heightened employer‐friendly trade secrecy protection help or hinder innovation? By examining U.S. state‐level legal adoption of a doctrine allowing employers to curtail inventor mobility if the employee would “inevitably disclose” trade secrets, we investigate the impact of a shifting trade secrecy regime on individual‐level patenting outcomes. Using a difference‐in‐differences design taking un‐affected U.S. inventors as the comparison group, we find strengthening employer‐friendly trade secrecy adversely affects innovation. We then investigate why. We do not find empirical support for diminished idea recombination from suppressed inventor mobility as the operative mechanism. While shifting intellectual property protection away from patenting into trade secrecy has some explanatory power, our results are consistent with reduced individual‐level incentives to signaling quality to the external labor market.
Managerial summary
While managers often list trade secrecy protection as their most important appropriation mechanism form and basis of competitive advantage (even more often than formal intellectual property protection), researchers have a hard time studying the effect of such secrets. We use a changing trade secrecy legal environment in some U.S. states (the introduction of the inevitable disclosure doctrine) to study its effect on inventor‐level innovation. We find that a strengthened employer‐friendly trade secrecy regime adversely affects inventor‐level innovation. While part of the effect is due to substituting trade secrecy protection for patents, we also find that inventors’ diminished external labor market prospects may dampen their innovation output. Consequently, while employers may wish for strengthened trade secrecy protections, the results may paradoxically be against their innovation interests.
This paper investigates the fragmentation of the EU innovation system in the field of renewable energy sources (RES) by estimating the intensity and direction of knowledge spillovers over the years 1985–2010. We modify the original double exponential knowledge diffusion model proposed by Caballero and Jaffe (1993) to provide information on the degree of integration of EU countries’ RES knowledge bases and to assess how citation patterns changed over time. We show that EU RES inventors have increasingly built “on the shoulders of the other EU giants” intensifying their citations to other member countries and decreasing those to domestic inventors. Furthermore, the EU strengthened its position as source of RES knowledge for the US. Finally, we show that this pattern is peculiar to RES, with other traditional (i.e. fossil-based) energy technologies and other radically new technologies behaving differently. Our results provide suggestive, but convincing evidence that the reduction in fragmentation emerged as a result of the EU support for RES taking mainly the form of demand-pull policies.
The diffusion of innovations is identified as an important aspect of technological and social change. Innovations diffuse through segmented networks of knowledge that limit the flow of knowledge from any one technological domain to any other. Despite this segmentation, some organizations are capable of developing pieces of knowledge that overcome these limitations. Within this context, we develop four hypotheses regarding specific R&D strategies that affect a firm's ability to develop inventions that diffuse beyond the firm's technological boundaries. Specifically, we examine how a firm's scientific intensity, technological collaborations, technological diversity, and internal focus impact breadth of innovation diffusion. We use two of the main determinants of innovation diffusion, namely, the relative advantage and the observability, as theoretical mechanisms to build our arguments. We empirically test our hypotheses on longitudinal data from the industries of pharmaceuticals, biotechnology, and chemicals. Our findings show that the extent to which the knowledge embedded in a firm's inventions diffuses in distant technological areas is positively related to the firm's scientific intensity and to its extent of collaboration, but it is negatively related to its technological diversity.
This study investigates the performance effect of scientific knowledge in the context of highly science‐dependent industry. Given the popularity of sourcing scientific knowledge from science community, the purpose of this study is to investigate which firms gain greater benefits from scientific knowledge. From the perspective of absorptive capacity and combinative capability, we argue that both knowledge accumulation and knowledge combination moderate a firm's ability to capture value from scientific knowledge. Empirical data come from paper and patent citations and financial information in biotechnology and pharmaceutical firms. Results show that scientific knowledge alone has a positive effect on firms' financial performance. A firm's tendency to combination familiar and older technological knowledge amplifies the positive effect of scientific knowledge. However, knowledge accumulation, including R&D investment and patent stock, does not boost the positive effect.
The value-capture problem for innovators in the digital economy involves some different challenges from those in the industrial economy. It inevitably requires understanding the dynamics of platforms and ecosystems. These challenges are amplified for enabling technologies, which are the central focus of this article. The innovator of an enabling technology has a special business model challenge because the applicability to many downstream verticals forecloses, as a practical matter, ownership of all the relevant complements. Complementary assets (vertical and lateral) in the digital context are no longer just potential value-capture mechanisms (through asset price appreciation or through preventing exposure to monopolistic bottleneck pricing by others); they may well be needed simply for the technology to function. Technological and innovational complementors present both coordination and market design challenges to the innovator that generally lead to market failure in the form of an excess of social over private returns. The low private return leads to socially sub-optimal underinvestment in future R&D that can be addressed to some extent by better strategic decision-making by the innovator and/or by far-sighted policies from government and the judiciary.
The default value-capture mechanism for many enabling technologies is the licensing of trade secrets and/or patents. Licensing is shown to be a difficult business model to implement from a value-capture perspective. When injunctions for intellectual property infringement are hard to win, or even to be considered, the incentives for free riding by potential licensees are considerable. Licensing is further complicated if it involves standard essential patents, as both courts and policy makers may fail to understand that development of a standard involves components of both interoperability and technology development. If a technology standard is not treated as the embodiment of significant R&D efforts enabling substantial new downstream economic activity, then rewards are likely to be calibrated too low to support appropriate levels of future innovation.
In modern times, it has come to the realization of organizations that acquiring knowledge and using it in an effective manner is the only way to have a sustainable competitive advantage (SCA) in the marketplace. This means that the resources of an organization must include knowledge, which should always be cared for and developed upon. When it comes to private colleges and universities, these are really just investments for the future businesspeople of the world. Through knowledge management processes (KMP), the knowledge they end up processing from these educational institutions will help them decide the direction in which they go in the future and how competitive they will be in the business world. But when it comes to knowledge-based view (KBV) and resource-based view (RBV), there is no clear explanation between them and how much the competitive advantage that KMP provides can be sustained. In this study, we will look at how and why SCA can be created by KMP from the educational environment's KBV and RBV. In order to achieve the objective, a hypothesis was created along with a quantitative survey method of design. The initiation of the structural equation modelling (SEM) method helped determine the relationship between the study variables through deductive approach. The respondents of this study are comprised of 525 academic leaders with varying positions from 44 private Iraqi universities. The results show a significant relationship between KMP and SCA. To attain a better SCA, private universities must generate knowledge, store knowledge, share knowledge and apply knowledge that is backed by identify of knowledge and formulating of its goals throughout every aspect of the organization. The research adds to the active group of knowledge that is currently available in the area of strategic knowledge management.
Prior studies of coopetition have explained the what, how and why of firms cooperating with competitors. Among these, examining the how question as to the stream of coopetition dynamics is the most challenging theme. Previous research has focused much more on the cooperation side. Less attention has been paid to the competition side to reveal what happens to competition after the competitors have collaborated. This study sheds light on the issue of cooperation-based competition by answering the question: while cooperating with competitors, how do rival partners compete based on cooperation? Linking the competitive dynamics perspective to coopetition, we conducted a single-case study to analyse the competition between two leading competitors in the Taiwanese bicycle industry. We collected the reported issues pertaining to the competition in the European market and supported by in-depth interviews. The analysis leads us to develop three propositions and a conceptual framework for illustrating the cooperation-based competition and addressing how cooperation may influence competition in a coopetition relationship. This study provides new insights into a theoretical issue of cooperation-based competition. The case also provides management implications while taking a coopetition strategy.
Research Summary : This article proposes a formal organizational economics approach to strategic management. Using a Property Rights Theory (PRT) framework, it rationalizes and provides a constructive contribution to two of the main strategy theories: the Resource‐Based View (RBV) and Porter Generic Strategies (PGS). The article shows that the welfare maximizing PRT conditions that characterize the existence and boundaries of a firm parallel both the RBV and Porter conditions for a sustainable competitive advantage, and provides a formal rationalization of Barney’s categorization of resources and Porter’s generic strategies. The article reveals some underexplored aspects of current informal theories, and extends their scope with the integration of strategic networks of complementors and social welfare considerations, opening up new avenues for research.
Managerial Summary : This article brings two new insights for managers. First, showing that a firm can garner rents when it is a socially optimal form of organization for the assets it controls, it rationalizes the importance of control and adds a social welfare perspective to strategy. The Resource‐Based View (RBV) and Porter Generic Strategies (PGS), besides theories of competitive advantage, can also be viewed as theories of control. Second, taking into consideration the growing importance of networks and complementors in the knowledge economy, this article highlights the strategic importance of two resource characteristics—collaborative and easy to combine—and opens up new doors for the consideration of two business strategies for managers—platform and coordination—in addition to the traditional cost, differentiation, and focus strategies.
The purpose of this work is to investigate relationships between knowledge and opportunities in new ventures. More specifically, this work proposes and empirically tests how potential absorptive capacity is related with the identification of opportunities in new technology-based firms (NTBFs). To take into account the unique nature of NTBFs we divide potential absorptive capacity into problem absorptive capacity, i.e. the ability to identify and acquire knowledge of the goals, aspirations and needs of current and potential customers, and solution absorptive capacity, i.e. the ability to identify and acquire external knowledge of solutions to fulfill them. We develop three hypotheses, which predict that both problem absorptive capacity and solution absorptive capacity will be positively related with the identification of opportunities in NTBFs and that they will reinforce each other. The findings support the importance of making a distinction between the two proposed dimensions of potential absorptive capacity and shed light on their effectiveness and interaction for the identification of opportunities.
A growing empirical literature uses patent citations as a quality-adjusted measure for innovation, despite concerns about the validity of this measure. This paper links patents with objective measures of improvements in the quality of patented inventions—measured through performance in field trials for hybrid corn—to examine three potential factors that influence citations: (1) improvements in performance, (2) citing practices of patent attorneys, and (3) citing practices of patent examiners. This analysis reveals that citations are robustly correlated with performance, which confirms that citations are a useful quality-adjusted measure for innovation. The citing practices of patent attorneys and examiners, however, also influence citations. Patent attorneys cite early patents, which help establish the patentability of an invention; this practice may inflate citation counts for early patents, particularly for inventions that have only recently become patentable. Attorneys also add self-citations; our analysis indicates that self-citations are an indicator of follow-on invention. By comparison, examiner-added citations are typically unrelated to improvements in performance or follow-on invention.
Data and the online appendix are available at https://doi.org/10.1287/mnsc.2016.2688.
This paper was accepted by Lee Fleming, entrepreneurship and innovation.
I find that a firm's innovation output increases with the number of collaborative linkages maintained by it, the number of structural holes it spans, and the number of partners of its partners. However, innovation is negatively related to the interaction between spanning many structural holes and having partners with many partners.
We build on the awareness-motivation-capability (AMC) framework of competitive dynamics research to examine how a signal of a rival's innovation, in the form of research and development (R&D) intensity, may influence a focal firm's product actions. We argue that a rival's R&D intensity increases a focal firm's awareness of a competitive threat and thus its motivation to react by increasing its product actions. However, this competitive impact is conditional on the focal firm's size and performance relative to the rival, as well as the strategic homogeneity of the two. We use the AMC framework to analyze such moderating effects.
While recent studies shed some light on the performance implications of open innovation, there is a gap in understanding how firms can translate their openness into innovation outcomes. In particular, it is unclear whether—and if so, how—firms can create a competitive advantage in product innovation by tapping into external sources of innovation. To address this gap, this study conceptualizes multidimensional components of absorptive capacity and develops a nomological network that explicates relationships between these components and competitive advantage in product innovation. By marrying the open innovation and absorptive capacity perspectives, higher-order models of absorptive capacity are proposed which delineate the underlying processes to recognize, assimilate, and exploit external sources of innovation. The empirical analysis of the nomological network based on original survey data reveals important findings. First, there is a positive indirect baseline association between external technological resource access and competitive advantage in product innovation, mediated by the firm's technology-related capabilities. Second, components of absorptive capacity modify this indirect baseline relationship. Recognition capacity is positively associated with external technological resource access and therefore, operates as an antecedent to the proposed baseline relationship. Assimilation capacity constitutes a relevant condition to the proposed baseline relationship. The indirect association between external technological resource access and competitive advantage in product innovation is dependent on the level of assimilation capacity. Exploitation capacity has an additional and independent direct positive association with competitive advantage in product innovation. This study contributes to the open innovation literature by delineating organizational processes that help to explain interfirm differences in benefiting from external sources of innovation. In addition, this study adds to the absorptive capacity literature by developing and validating a set of measures that captures, individually and in concert, three components of absorptive capacity.
This paper analyses how firms’ degree of openness and innovativeness influence their use of formal and informal appropriation mechanisms. Patents, trademarks, copyrights, and design rights are formal appropriation mechanisms. Secrecy, lead-time, and complexity are examples of informal appropriation mechanisms. Both external search breadth and depth are positively associated with firms’ use of informal appropriation mechanisms, while only external search breadth is positively associated with formal appropriation mechanisms. Firms’ degree of radical (incremental) innovation orientation is negatively (positively) associated with their use of formal appropriation mechanisms. Analysis of the joint impact of openness and innovativeness, suggests that for radical innovators it is external search breadth (rather than depth) that has a positive association with the use of informal appropriation mechanisms. In contrast, for radical innovators external search depth (rather than breadth) is associated with the use of formal appropriation mechanisms. For incremental innovators, external search breadth (rather than depth) is associated with the use of both formal and informal appropriation mechanisms.
In any investigation of a causal relationship between an X and a Y, the time when X and Y are measured is crucial for determining whether X causes Y, as well as the true strength of that relationship. Using past research and a review of current research, we develop a set of XY configurations that describe the main ways that causal relationships are represented in theory and tested in research. We discuss the theoretical. methodological, and analytical issues pertaining to when we measure X and Y and discuss the implications of this analysis for constructing better organizational theories.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
The question whether patenting impacts patenting firms' subsequent financial performance is important for technology-oriented companies. However, relevant research has led to contradictory results. We strive to overcome this impasse by introducing innovation competition and patent age as moderators of patents' performance contribution into the discourse. Based on a sample of 975 cases from diverse industries, we find strong support for our arguments. In line with our expectations, the results show that the number of patents granted, the degree of patent competition, and the timeliness of a patent contribute positively to financial performance. Moderation analysis nuances our findings by showing that the impact of patent protection on financial performance is stronger when the patent competition is stronger and the patents are younger.These findings provide insights into the conditions under which patenting leads to higher financial performance. Our findings highlight the importance of innovation competition and patent age for innovation research. The empirical results show firms that patenting pays and that, in order to tap the full potential of patents, they need to focus on emerging competing industries and reduce the time to market. Policy makers learn that patenting is a successful approach to foster innovation at limited social costs.
This paper examines the effects of a firm's intangible resources in mediating the relationship between corporate responsibility and financial performance. We hypothesize that previous empirical findings of a positive relationship between social and financial performance may be spurious because the researchers failed to account for the mediating effects of intangible resources. Our results indicate that there is no direct relationship between corporate responsibility and financial performance—merely an indirect relationship that relies on the mediating effect of a firm's intangible resources. We demonstrate our theoretical contention with the use of a database comprising 599 companies from 28 countries.
To understand how firms facing technological discontinuities utilize knowledge from alliance portfolios, we unpack absorptive capacity into "latitudinal" and "longitudinal" components, corresponding to use of diverse and distant knowledge, respectively. We find that a moderate burden on firms' latitudinal absorptive capacity, corresponding to medium diversity in their portfolios, contributes to optimal knowledge utilization. Simultaneously increasing the demand on firms' longitudinal absorptive capacity affects this relationship negatively. Highlighting important trade-offs between latitudinal and longitudinal absorptive capacities, our findings reveal two portfolio strategies, "telescopic" and "panoptic" searches, that optimize knowledge utilization. We address important dialectics concerning absorptive capacity constraints and knowledge utilization.
Increasingly, strategy scholars are exploring the relationships between innovation, competition, and the persistence of superior profits. Sustained high profitability may result when a firm repeatedly introduces valuable innovations that service previously unmet consumer demands. While the returns to the firm from each innovation may erode over time, innovation ensures that, overall, the firm maintains a high performance position. At the same time, sustained high profitability may also accrue to firms that innovate less often, but effectively avoid the competition that otherwise erodes high returns. This paper elaborates these relationships before presenting an empirical analysis of the effects of differential innovative propensities and differential rates of competition on pharmaceutical firms' abilities to sustain profit outcomes that are above those earned by competing firms. The analysis, which is situated within the U.S. pharmaceutical industry, finds support for the expected relationship between high innovative propensity and sustained superior profitability, but no support for a link between persistence and the ability to avoid competition.
This article addresses the issues of competitive advantage and competitor imitation. It is argued that tacitness, complexity, and specificity in a firm's skills and resources can generate causal ambiguity in competency-based advantage, and thus raise barriers to imitation. Reinvestment in causally ambiguous competencies is necessary to protect the advantage. Without reinvestment, attritional effects of continued competitive action will cause decay in the barriers to imitation. From this theorizing, research propositions are suggested, which, ultimately, will lead to an improved understanding of competitive advantage sustainability.
We posit that a firm's resource configuration constitutes a critical context for various corporate governance mechanisms. Although innovative knowledge assets are generally a key determinant of a firm's economic performance, they also lead to greater information asymmetry among managers and owners and to the need to grant managers more discretion in making resource deployment decisions. This weakens the role of monitoring but increases the effectiveness of incentive mechanisms. Therefore, we hypothesize asymmetric moderating effects of monitoring- and incentive-based governance mechanisms on the relationship between innovative knowledge assets and economic performance. Our empirical analyses provide support for the key arguments.
