Do R&D activities foster globalization of young innovative companies? Empirical evidence from the Italian energy industry

Although executives and scholars interested in “globalization” and “R&D activities” mainly focus their attention on corporations, the relevance that young innovative companies – YICs are assuming is compelling them to redefine their focus. With reference to YICs, some scholars investigate the influence of globalization on R&D activities, while others inquire the impact of R&D activities on their globalization. This paper shares the second approach and sets out to investigate whether and to what extent R&D activities managed by YICs affect their globalization.By enacting Law n. 221/2012, the Italian Government has posed particular attention on YICs. Accordingly, primary and second-hand data concerning 2070 Italian YICs with high technological value in the energy industry – YICsei and 12,278 Italian YICs (operating in other industries) are used to carry out stochastic frontier analyses – SFAs. These allow testing whether R&D activities (measured through investments, personnel, and outputs) foster the globalization of these firms. SFAs reveal that none of the three factors affects the globalization of Italian YICsei; instead, R&D personnel and R&D outputs foster the globalization of Italian YICs.Achieved results open new research avenues about the impact of R&D activities on the globalization of YICs.     

How does the combination of R&D and types of knowledge matter for patent propensity?

This paper examines whether the combined effects of R&D efforts and the types of knowledge obtained from the invention process determine patent propensity. With this aim, we investigate a unique, manually collected sample of firms and the Spanish and European Patent Offices to analyze how the combination of R&D and knowledge codifiability, observability and simplicity influence the patent decision. Our results contribute to the literature and assist R&D managers by showing that codified knowledge has a positive impact on patent propensity. Furthermore, we find that knowledge observability and simplicity only influence patent propensity when they are combined with internal R&D expenditures.     

R&D alliance portfolio and innovation in an emerging market: The role of business group affiliation and institutional reforms

The role of institutional factors in shaping the outcomes of research and development (R&D) alliance portfolios (APs) is underexplored in the extant literature. This study examines how institutional contingencies in an emerging market context affect the relationship between R&D AP composition (i.e., size and diversity) and firm innovation performance. This study draws on institutional perspective to suggest that business group affiliation (BGA) and institutional reforms positively moderate the relationship between R&D AP composition and innovation performance. A longitudinal empirical investigation conducted on a sample of 185 firms from Indian high-tech sectors, for the period 2003–2015, broadly supports our arguments. This study contributes to the AP and emerging markets literature by highlighting the effects of institutional contingencies of emerging markets on the outcomes of R&D APs.     

The impact of service R&D on the performance of Korean information communication technology small and medium enterprises

In recent years, research and development (R&D) in the service industry has attracted a great deal of attention from both academia and industrial firms. However, compared to the manufacturing sector, little research exists on the implications of R&D for the financial and/or non-financial performance of firms in the service industry. The purpose of this study is to examine the impact of service R&D on the performance of information communication technology (ICT) firms. We identify five categories of R&D activities and investigate their impact on the financial and non-financial performance of 100 ICT firms, with a focus on small and medium enterprises (SMEs) in South Korea. We postulate positive relationships between R&D efforts and a firm's performance. However, the findings only partially support our hypotheses; unexpected results demonstrate that the presence of R&D management negatively influences a firm's performance. We present detailed statistical results and discuss the implications of the study.     

Global change in agrifood grades and standards: agribusiness strategic responses in developing countries

The role of G&S has shifted from a technical instrument to reduce transaction costs in homogeneous commodity markets to a strategic instrument of competition in differentiated product markets. The nature of G&S has shifted from performance (realized characteristics of the product) to process standards. In developing countries, these changes have tended to exclude small firms and farms from participating in market growth, because of the implied investments. The three strategic responses to G&S change by agribusiness firms and farms include: (1) by large firms and multinationals, to create private G&S and private certification, labeling, and branding systems; (2) by medium-large domestic firms, to lobby governments to adopt public G&S similar to those in export markets in developed regions; (3) by small firms and farms, to ally with public and nonprofit sectors to form G&S and certification systems to access export markets and to bring institutional change to nontradable product markets. Governments should build the capacity of the poor to invest to “make the grade” implied by the new G&S.     

R&D,productivity, and market value: An empirical study from high-technology firms

Although prior research has addressed the influence of production activity and research and development (R&D) on productivity, it is not clear whether production and R&D affect the market value of a firm. This study proposes and verifies an R&D value chain framework to explore the relationship among productivity, R&D, and firm market values, as measured by Tobin's q theory. By doing so, we attempt to link new theoretical insights and empirical evidence on the effects of R&D efforts and basic production activities to the market valuations of high-technology firms. The value chain data envelopment analysis approach was proposed to estimate parallel-serial processes of basic operations and R&D efforts. This approach can be used to simultaneously estimate the profitability efficiency and marketability efficiency of high-technology firms. This area has rarely been studied, but it is particularly important for high-technology R&D policies and for further industrial development. Using the R&D value chain perspectives of model innovations and extensions proposed in several previous studies, we examined the appropriate levels of intermediate outputs. Production efficiency and R&D were combined to estimate the appropriate levels of intermediate outputs for high-technology firms. Based on the intermediate output analyses, we developed an R&D efforts decision matrix to explore and identify operational and R&D efficiency for high-technology firms. Our sample firms are displayed on a four-quadrant action grid that provides visual information on current short-term operational efficiency and decision making on long-term R&D strategic positions. The empirical findings from the R&D value chain model can provide information for policymakers and managers and suggest the adoption of various policies that place more emphasis on profitability and marketability strategies.     

Gray Markets and Supply Chain Incentives

“Gray markets” are unauthorized channels that distribute a branded product without the manufacturer's permission. Since gray markets are not officially sanctioned by the manufacturer, their existence is assumed to hurt the manufacturer. Yet manufacturers sometimes tolerate or even encourage gray market activities. We investigate the incentives of a manufacturer and its authorized retailer to engage in (or tolerate) gray markets. The firms need to consider the trade‐off between the positive effects of a gray market (price discrimination and cost savings) and the negative effects (cannibalization of sales and a loss in consumer valuation). Generally, gray markets can be categorized into two types: (i) a “local gray market,” where a retailer diverts products to unauthorized sellers operating in the same region as the retailer; and, (ii) “bootlegging,” where the retailer diverts products to unauthorized sellers in another market where the manufacturer sells through a direct channel. We characterize the equilibrium in each type of gray market and identify conditions under which the retailer will divert products to the gray market. Incentive problems are more complicated when the retailer bootlegs and, in this case, we show that conflicting incentives may lead to the emergence of a gray market where both the manufacturer's and retailer's profits decrease.     

Within-cluster determinants of output efficiency of R&D in the space industry

Dynamic slacks-based data envelopment analysis is applied to measure output performance efficiency of space R&D active private firms. Fractional logit panel analysis is used to identify associations between this firm level R&D output efficiency and space industry level R&D specialisation, presence of anchor firms, and public R&D capacity within geographical clusters.Primary data collected for the entire population of space R&D active firms in Belgium for the period 2011–2015 reveals that an environment specialized in the focus firm's space activities exerts a positive influence on R&D output efficiency. The public space R&D capacity and the presence of space anchor firms within the cluster do not influence R&D output efficiency. Firm age, a mixture of space and non-space R&D, and larger amounts of public funding positively affect R&D output efficiency. These findings should be seen in a context of a space industry dominated by SMEs and in a five year time-span.     

Internationalization and Indigenous Technological Efforts of Emerging Economy Firms: The Effect of Multiple Knowledge Sources

Getting engaged in competitive international markets motivates exporting firms to enhance their technological competitiveness and invest in research and development (R&D). While in-house R&D investment is important for getting advanced technologies, the technologies needed by exporters located in emerging economies (EEs) typically readily exist overseas. Drawing on organizational learning literature, we argue that the R&D intensity stimulated by exporting may be reduced when 1) EE exporters are better prepared and motivated to absorb foreign knowledge, 2) foreign sources of knowledge are more available, and/or 3) local technology supply is poor. An analysis on 5592 automobile parts and component manufacturers in China during 2005–2007 supports these arguments. To compete in markets abroad, Chinese firms' R&D intensity increases with export intensity when their export intensity is low. As the export intensity exceeds a certain threshold, their R&D intensity starts to decrease as intensive exporters are better prepared and motivated to acquire knowledge from foreign sources. When substitutive foreign knowledge sources such as foreign parents and FDI spillovers in the local industry is available, firms' R&D intensity stimulated by exporting can be further reduced. Better local technology supply can increase the R&D intensity stimulated by exporting.     

Inside the black box: incentive regulation and incentive channeling on energy markets

This paper aims to achieve more insight into the complex interplay between the “external” market regulations and “internal” regulations (corporate governance) of energy firms. In recent years, many countries have deregulated the incumbent energy monopolies and have introduced new modes of regulation. However, the new incentive schemes do not represent an unmitigated success story. A major problem seems to be the neoclassical framework that is used for the analysis of energy markets. Therefore, an important goal of this paper is to clarify the boundaries of neoclassical regulation theory. There are two restrictions that hamper the neoclassical analysis of energy markets. The first is the difficulty of overcoming the widely held “black box” view of firms. The second is the idea that agents always make rational choices. The paper proposes a kind of theoretical division of labor for understanding the effectiveness of regulatory schemes in energy markets. Neoclassical economics points out to the sources of market failure, and helps to identify where in particular on the supply chain one is likely to observe natural monopolies. Transaction cost economics explains appropriate governance of vertical relations along the supply chain. And organizational theories can elucidate what happens within firms: their response to regulation, competition, and relations with suppliers. A research agenda for the third component is proposed, drawing on insights from New Sociological Institutionalism and organizational behavior.     

Globalisation and trends in international R&D alliances

The growth of collaborative activity is greatly influenced by the process of globalisation. This paper focuses on the narrow area of collaborative R&D activity, and takes a ‘macro,’ as well as a firm perspective of the effects of these developments. Globalisation has affected the need of firms to collaborate, in that firms now seek opportunities to cooperate, rather than identify situations where they can achieve majority control. The use of collaboration is particularly acute in capital- and knowledge-intensive sectors. These are also the sectors where firms have expanded internationally fastest, as they need to compete in various markets simultaneously, but also to exploit and acquire assets and technology that may be specific to particular locations. The increasing similarity of technologies across countries and cross-fertilisation of technology between sectors, coupled with the increasing costs and risks associated with innovation has led firms to consider R&D alliances as a first-best option in many instances.     

The role of firm ownership on internationalization: evidence from two transition economies

This paper investigates how different types of owners influence the extent of firm internationalization, measured by the share of firm exports in total sales. The results of the analysis carried out using firm level data of Estonian and Slovenian firms, show that the firms under the control of the insider owners are, on average, more internationalized. State control, on the other hand, hampers internationalization efforts. Further, more productive firms, larger firms, more capital-intensive firms and those with high level of investment in both fixed capital and R&D are more successful in internationalization process. Finally, high market share also leads to increased internationalization through exports as firms seek to expand in foreign markets after having dominated the domestic ones.     

Wisdom of the crowd and capabilities of a few: internal success factors of crowdsourcing for innovation

Crowdsourcing has been demonstrated to be an effective strategy to enhance the efficiency of a firm’s innovation process. In this paper, we focus on tournament-based crowdsourcing (also referred to as “broadcast search”), a method to solve technical problems in form of an open call for solutions to a large network of experts. Based on a longitudinal study of six companies piloting this application of crowdsourcing, we identify barriers and sources of resistance that hinder its implementation in firms. Our paper contributes to the state of research by analyzing crowdsourcing on the level of pilot projects, hence providing a workflow perspective that considers the creation of dedicated processes and operations of crowdsourcing. This project level analysis enables the identification of specific challenges managers face when implementing crowdsourcing within an established R&D organization. Following a design science approach, we derive suggestions for organizational interventions to overcome these barriers. We find that dedicated promoter roles strongly contribute to a successful implementation of crowdsourcing, turning pilot projects into an organizational routine.     

Career orientations and career success among research,and development and engineering professionals

Managing the careers of research, development and engineering (RD&E) professionals is important to the strategic use of RD&E in the economy. Appropriate mechanisms for motivating RD&E professionals will probably emerge as a critical success factor for organizations that want to compete in world markets. This study examines dimensions and levels of career orientation and their correlations with individual and work-related outcome variables among 78 RD&E professionals. The findings reveal a rich diversity of career orientation in RD&E professionals. The data strongly suggest that RD&E professionals are service, lifestyle and security oriented. However, they scored low on technical orientation and entrepreneurship. This paper suggests that the dual career ladder is not an effective device for managing RD&E professionals. Organizations must be careful to provide career paths that retain and motivate workers and, more importantly, find matches between organizational needs and individuals' needs, and restructure jobs accordingly. The authors offer suggestions for future research and identify implications for management.     

Acquisition as a means for external technology sourcing: Complementary, substitutive or both?

This paper addresses the question of how a target firm's innovation activities relate to the acquiring firm's R&D characteristics, and more specifically, if the former substitute for, or complement the acquirer's activities. It investigates this question in three narrowly defined high technology industries by analysing the association of three R&D characteristics of acquiring firms with different measures of acquisition extent and content. The R&D characteristics referred to are: addressing R&D efforts, R&D outputs and absorptive capacity. Data was collected in each case for those firms whose combined sales revenue makes up 80% of the industry total and is used to test a set of hypotheses derived from extant literature. The findings confirm a substitutive relationship between acquisitions and acquirer research efforts as well as between acquirer and target patent output, whereas absorptive capacity is complementary to acquisition activities. The results reveal that acquirers target firms that hold a large number of patents in the fields where acquirer patenting is weak, and so address weaknesses in their own R&D output. This finding extends the extant literature on the role of external technology sourcing in the high technology context. Research findings are presented along with their implications and directions for future research.     

Local and Global Knowledge Complementarity: R&D Collaborations and Innovation of Foreign and Domestic Firms

We analyze how research and development (R&D) collaborations affect product innovation for subsidiaries of foreign multinational firms and domestic firms. We build on the knowledge-based view to propose that subsidiaries and domestic firms differ in their ability to benefit from alternative R&D partners as a result of the variation in their knowledge complementarities. Specifically, we propose that subsidiaries may benefit more from undertaking R&D collaborations with customers and competitors, whose deeper knowledge of local conditions better complements the more global knowledge base of subsidiaries. In contrast, we argue that domestic firms may benefit more from engaging in R&D collaborations with suppliers and universities, whose more global nature of knowledge better complement the deeper local knowledge base of domestic firms.     

Startups internationalizing in quest of a business model: The global prospecting of process niche firms

This paper examines technology startups whose initial offering is not a tangible product or service, but rather a technology used in the production process of goods and services of other firms. These “process niche firms,” as we call them, represent an emerging and increasingly common feature of the digitized economy. As part of their search for a suitable business model – be it products, services, and/or outright licensing of intellectual property – process niche firms engage in early internationalization in order to gain relevant market knowledge and identify possible business partners. A framework is derived to examine the internationalization pattern of such firms. The paper draws on four illustrative case studies providing insight into how such process niche firms “prospect” in foreign markets prior to deciding on the business model that suits them best. Early in their life cycle, process niche firms may decide to locate their headquarters in a different country in closer proximity to relevant markets and partners, as their high knowledge intensity and dearth of tangible assets makes them highly movable. Later in their development, process niche firms will likely evolve into other types of firms, depending on the business model they ultimately choose and the process that they follow.     

Sequencing of emphases on technology alliances and internal R&D: The effects of the market cycle

How does the market reward technological firms' emphases on alliancing and R&D strategies depending on the phase in the market cycle? I use the 1990s’ “dot-com bubble” cycle and its burst after 2000 to look for joint effects of technology alliances and internal R&D investments on firm market valuations. I show that the existing theory is incomplete without considering (1) the temporal sequencing of emphases on technology alliances and R&D, and (2) the phase in the market cycle. I show that different phases of the market cycle reward different temporal sequences of emphases on technology alliances and internal R&D. This paper contributes to the theory of complementarity of alliances and R&D by pointing out previously unexplored factors that make technology alliances and R&D investments either complements or substitutes.