ABSTRACT
Determinants of and Returns to Innovation Activities which Span Organizational Boundaries: Empirical Studies on a Panel of Spanish Firms
PhD Dissertation
Sean Kask

Firms interact increasingly with agents that are external to their organizational boundaries in order to create new product and process innovations. The three empirical studies comprising this dissertation explore the determinants of and returns to externally-oriented innovation activities. All three studies estimate econometric models on a panel survey of Spanish firms.

Study 1 investigates the determinants that predict whether manufacturing firms use internal means, collaboration, or external development as the main mode of new product development. Drawing from constructs based in transaction cost theory, the resource-based view, and industrial organization theory, the results illuminate the nature of collaboration and contracting and differences in the governance of innovation. First, market uncertainty tends to lead firms into collaborative but not external development, while firms are more likely to collaborate under conditions of technological uncertainty. Second, we find an inverted u-shaped relationship with the likelihood of collaborative development and a negative relationship with external acquisition as a function of internal R&D capacity, and therefore of firm resources. This reflects a tension between the ‘need’ (or lack thereof) to find external sources of innovation and the search for ‘complementary’ sources of innovation afforded by higher internal research capacities. Finally, contrary to theory the importance of spillovers at the industry level has no predictive power while higher use of appropriability mechanisms favours internal development.

Study 2 examines the firm-level innovation performance effects of R&D cooperation and contracting with universities. We find that both interaction mechanisms are important for new product development in a sample of manufacturing firms. However, the results indicate that R&D cooperation with universities predicts product innovation with a high degree of novelty, whereas R&D contracting with universities predicts product innovation that is less novel. These results shed light on the nature of R&D cooperation and contracting and contribute to a growing literature on the role of university interactions in commercial product innovation.

Study 3, set in the context of low-tech sectors, consists of a comparative analysis that hypothesizes how the returns to pecuniary and non-pecuniary external sourcing activities differ along two dimensions: (1) product and process innovation and (2) manufacturing and service industries. It finds that the pecuniary acquisition of intangible intellectual property is more important for product innovation, while the acquisition of knowledge embodied in artefacts is a stronger predictor for process innovation. Likewise, the ‘breadth’ of non-pecuniary sourcing is more important for product innovation, but returns to the ‘depth’ of external sourcing are higher for process innovation; further, the analysis reveals that this positive effect of external sourcing is subject to decreasing returns when the firm overextends external search. Overall, returns to external innovation activities are higher for firms in service industries than for firms in manufacturing.