Innovation and competitive advantage - cassiman and veugelers 2006
22 important questions on Innovation and competitive advantage - cassiman and veugelers 2006
What are the key conclusions of Cassiman & Veugelers (2006) on complementarity in innovation strategy?
What factors positively influence a firm's innovation activities according to the results?
- Firm size positively correlates with innovation activity engagement.
- Higher innovation intensity leads to better performance in new product sales.
- Export intensity enhances innovation productivity due to competitive pressure.
What contextual variables affect the complementarity of internal and external innovation activities?
- In-house basic R&D capability is crucial for exploiting complementarity.
- Strategic protection effectiveness impacts decisions for internal R&D involvement.
- Resource limitations might drive firms to prioritize internal R&D despite constraints.
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What does the bivariate probit model reveal about innovation strategies?
- The decisions to "MAKE" (internal R&D) and "BUY" (external sourcing).
- It identifies where complementarity is most significant, particularly in joint “Make & Buy” strategies.
- Corrects for endogeneity to yield accurate estimates on innovation strategies.
What conclusion can be drawn regarding the relationship between internal and external innovation activities?
- There is a clear complementarity between internal and external innovation activities.
- Innovation management should tightly integrate these diverse knowledge sources.
- The reliance on basic R&D significantly influences the strength of this complementarity, emphasizing context-specific decision-making.
What traditional focus has empirical research on organizational design decisions had regarding complementarity?
- Productivity Approach
- Adoption Approach
How does the productivity test improve in the analysis of complementarity?
- Providing deeper insights into the innovation process
- Identifying key strategic elements that may influence the complementarity
- Enhancing the understanding of how internal and external activities interact
What are the two main types of innovation activities discussed in the research?
- Internal Research and Development (R&D): Conducting R&D in-house
- External Knowledge Acquisition: Gaining knowledge from outsiders via various methods
What suggests that internal R&D and external knowledge acquisition are complementary activities?
- An increase in marginal return when both are utilized
- Support from the concept of absorptive capacity developed by Cohen and Levinthal
- Reduction of the “not invented here” syndrome within firms
What evidence supports the notion that successful innovative firms develop both internal and external networks?
- Freeman (1991): Effective communication networks enhance innovation
- Rigby and Zook (2002): External knowledge flows help maintain competitive advantage
- Arora and Gambardella: Internal know-how is vital for harnessing external knowledge effectively
What methodology is proposed to test for the existence of complementarity in innovation activities?
- Productivity (Direct) Approach: Measures performance via combinations of innovation activities
- Adoption (Indirect) Approach: Tests for correlation between innovation actions
What variables were identified as important in determining innovation performance?
- Firm size: Smaller firms may excel due to reduced bureaucracy
- Innovation intensity: Higher spending in innovation correlates with better performance
- Export intensity: More export-oriented firms may have greater innovation productivity
How do strategic protection mechanisms influence internal and external knowledge sourcing?
- Effective strategic protection like secrecy boosts internal R&D reliance
- Companies with legal protections may prefer external acquisitions
- These mechanisms shape the choice between developing knowledge internally or externally
What characteristics may affect a firm's decision to engage in internal R&D?
- Basic R&D Capability: Essential for leveraging complementarity
- Resource Limitations: Firms may turn to internal projects amidst constraints
- Competitor Information: The necessity to keep up can drive firms towards external sourcing
What role does the bivariate probit model play in analyzing innovation strategies?
- Segmenting data into relevant subsets
- Correcting for possible endogeneity in innovation strategy
- Determining levels of complementarity in specific strategies like Make & Buy
What does the study conclude about the relationship between internal and external innovation activities?
- There is a complementarity between these activities, supporting innovative success
- The reliance on basic R&D significantly affects the strength of this complementarity
- Organizations must manage both types of knowledge to optimize returns on innovation activities
What are the implications of this research for future studies?
- Identifying firm characteristics affecting innovation complementarity
- Investigating productivity drivers in innovation management
- Exploring both theoretical and empirical dimensions of innovation processes
How do small firms compare to larger firms in terms of innovation performance?
- Reduced bureaucracy, allowing for quicker decision-making
- Less complexity in management structures
- Higher adaptability to innovative practices compared to larger firms
What is the significance of relying on basic R&D in a firm's strategy?
- Enhances the firm's absorptive capacity
- Encourages effective integration of external knowledge
- Strengthens the overall effectiveness of both internal and external innovation activities
What should organizations manage to secure a sustainable competitive advantage?
- Integrate internal and external knowledge thoroughly
- Foster an environment that supports complementarity in innovation efforts
- Adjust their innovation strategies based on contextual variables in their operational landscape
What are the two distinct decisions firms can make regarding technology input into innovation?
- Make: Conduct R&D internally and develop proprietary technology
- Buy: Acquire technology from external sources to enhance innovation
What main approach does the paper take regarding innovation activities and complementarity?
- Analysis of contextual variables affecting complementarity.
- Improvement of productivity tests for complementarity.
- Examination of internal R&D and external knowledge acquisition as complementary activities.
- Insights on the firm's strategic environment's influence on complementarity.
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