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.     

How do CEOs matter? The moderating effects of CEO compensation and tenure on equity ownership in international joint ventures

We propose that CEO compensation and tenure moderate the relationship between multinational corporations' (MNCs) R&D intensities and their percentages of equity ownership in international joint ventures (IJVs). Transaction cost economics (TCE) suggests a positive relationship between MNC R&D intensity and IJV equity ownership, but this relationship has not been confirmed consistently in prior research. We examine the moderating effects of CEO compensation and tenure on the relationship between MNC R&D intensity and IJV equity ownership, thereby bringing more nuanced explanations from agency theory and upper echelons theory into the discussion. Our proposed relationships were tested using a sample of 202 IJVs formed between U.S. MNCs and foreign partners in high-tech industries for the period 1993 to 2003. We found an overall positive relationship between MNC R&D intensity and the percentage of equity ownership in IJVs. Moreover, CEO tenure and bonus compensation each weaken the positive R&D intensity-equity ownership relationship in our sample, while CEO stock options compensation amplifies it. These findings indicate that CEO compensation and tenure influence decision making about equity ownership in IJVs, suggesting that scholars and boards of directors should consider these CEO-related factors when evaluating strategic decisions regarding IJVs.     

Determinants of foreign ownership in international R&D joint ventures: Transaction costs and national culture

In this study, we integrate the transaction costs economics and national culture perspectives by examining the determinants of foreign equity ownership in international R&D joint ventures. Specifically, we focus on the impact of different uncertainty dimensions–environmental and behavioral–on the share of equity that multinational enterprises take in their overseas R&D joint ventures. We further investigate the roles that two national culture components–power distance and uncertainty avoidance–play in this process. Using 543 international R&D joint venture announcements by foreign enterprises in China, India, Japan, and the United States during the period of 1985 to 2004, our results provide support for both transaction costs economics and the national culture perspectives.     

Disentangling reciprocal relationships between R&D intensity,profitability and capital market performance: A panel VAR analysis

Research and development (R&D) investments are strategic choices that firms make to create and sustain competitive advantage. Extant literature proposes that firms’ R&D investments and their profitability and capital market performance are reciprocally related. However, the direction of these relationships and their temporal nature are unclear. We take a real options perspective to argue that the long-run firm performance effects of R&D investments are better than their short-term ones, and that the initial level of R&D intensity influences the nature of these relationships. We apply panel vector autoregression (P-VAR) to a sample of 6623 U.S. firms over the 1990–2020 period in order to test our hypotheses. Our results indicate that increases in R&D intensity have negative effects on profitability in the short term, yet these effects diminish relatively quickly. The effects of increases in R&D intensity on capital market performance are positive and persist over time. Consistent with our predictions, they are contingent on the initial levels of R&D intensity and performance. The findings are fundamentally in line with the real options perspective employed here, yet they add important nuance to our understanding of when, how, and under which conditions R&D investments and firm performance affect one another.     

Genetic distance,international experience and the performance of cross-border R&D for EMNEs

Cross-border R&D can contribute to the enhancement of independent innovation capabilities of emerging markets multinational enterprises (EMNEs) by benefiting from knowledge management. However, scant research exists examining the location impact of cross-border R&D for EMNEs on performance implications. This paper fills this important theoretical gap by building upon the literature of genetic distance in connection with knowledge management. We use a panel data of Chinese high-tech listed companies to empirically examine the impact of genetic distance on the performance of cross-border R&D and the role played by international experience. Our results reveal a positive relationship between genetic distance and the performance of cross-border R&D. Importantly, we highlight the motivation for cross-border R&D of EMNEs to acquire technical knowledge magnifies the positive effects of genetic distance and performance. Furthermore, our analysis indicates that international experience significantly enhanced the positive effect of genetic distance on cross-border R&D performance. We conclude this paper by discussing theoretical contributions to genetic distance, international management and knowledge management, as well as practical implications for cross-border R&D of EMNEs.     

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.     

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.     

Is advertising for losers? An empirical study from a value creation and value capturing perspective

Does advertising lead to higher profits? This question has preoccupied company executives and academic researchers for many decades. Arguments have been put forth in both directions, and evidence is mixed at best. In this article, we re-examine the question from a value creation and value capturing perspective, which allows us to re-interpret and reconcile the different views and empirically validate the resulting hypotheses. Using a database of the top 500 brands of established companies during the 2008–2015 period, we find that advertising spending has no significant impact on profitability, while both brand value and research and development (R&D) spending have a clearly positive effect. In addition, we observe a positive interaction effect between advertising spending and R&D spending and a negative interaction between brand value and R&D spending on profitability. These findings corroborate the view that advertising in and of itself does not improve profitability; rather, its effect is positive only when it acts in support of customer value creation as a result of R&D.     

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.     

The value of board monitoring in promoting R&D: a test of agency-theory in the US context

Prior agency-theory research has presented conflicting findings regarding the importance of board monitoring in motivating R&D. We reinvestigate this literature by examining the value monitoring exerts in abating both the agency costs of underinvestment and overinvestment in R&D. We argue that monitoring that relies on board independence has both benefits and costs associated with promoting R&D. While we assert that intense monitoring by the board heightens underinvestment in the US context, it can also provide discipline over a firms free cash flows. We test our theory using a longitudinal panel data set consisting of a cross-section of S&P 1500 US-firms between 1997 and 2007. On average our study finds inside directors increase overinvestment in R&D, but facilitate better resource allocation when a firm has rich growth opportunities. Also, while too much emphasis on outside directors heightens underinvestment in R&D, a more independent board encourages better resource allocation when firms have high free cash flows that need to be paid back to owners. Thus, our results suggest a more inclusive perspective of agency-theory can help managers make better R&D investment decisions.     

Exploring the impact of sustainable value proposition on firm performance

Considering the immense potential of sustainable business models in tackling the broader challenge of corporate sustainability, this paper integrates the literature streams on sustainability practices and organizational business models to analyze the performance implications of a firm's sustainable value proposition. Based on the analysis of a large panel dataset across different industries, consistent with the proposed theory, a sustainable value proposition has been found to have a positive impact on a firm's market-based financial performance (namely, Tobin's Q). Yet, this impact turns out to be highly context-dependent. In particular, the findings reveal that a firm's R&D capabilities improve the positive effect of a sustainable value proposition on a firm's financial performance. At the same time, the marketing communication capabilities and sustainable practices regarding employee relations reduce the sustainable value proposition's financial performance effect, arguably due to the costs associated with marketing and the loss in employee interest during the process of adopting the sustainable business model elements.     

Research on Markets for Inventions and Implications for R&D Allocation Strategies

Several streams of literature have examined the phenomenon of “markets for inventions”, that is, the trade of elements of knowledge which are “disembodied” from individuals, organizations, and products. The aims of this paper are to bring together the various streams of research in this area and discuss their major assumptions and limitations, in order to provide a comprehensive framework for understanding the phenomenon, and identify promising paths for future research. We start our review by identifying the object of market exchange—that is, an invention whose knowledge has been codified and disembodied from individuals, organizations, or artifacts. We then identify those factors that enable firms to trade inventions, distinguishing between institutional-, firm-, and industry-level factors. We close our analysis of the extant literature by discussing the implications of markets for inventions for firm behavior and performance. Against this background, we highlight an important avenue for future research. A neglected implication of the development of invention markets is that firms are confronted with a wide variety of technological paths from which to choose, because the opportunity to acquire technologies on the market offers them a greater variety that can their internal R&D departments. However, the streams of research on markets for inventions and on R&D allocation strategies have been surprisingly disconnected so far. Hence, in the final section, we start to establish and explore the link between these literatures, and to identify a research agenda in this domain.     

The Processes of New Product Development Recentralization towards a Transnational Emphasis in Multinational Corporations

Studies on R&D internationalization have identified the decentralization-recentralization pattern of many multinational corporations (MNCs). Studies have also indicated that MNCs tend to pursue a transnational emphasis during R&D recentralization. This research focuses on recentralization of new product development (NPD) in MNCs and aims to reveal different processes of it towards a transnational emphasis. Through a qualitative case study of four MNCs, the NPD recentralization process was explored in two important dimensions – power centralization and pluralistic input. Four process variants were discovered, showing different approaches to power centralization and pluralistic input. The processes of recentralization are novel to the area of R&D internationalization. This study also advances our understanding of R&D recentralization with a focus on NPD fulfilling market demand, which has not been well addressed in prior studies. In addition, this study generates some insights into transnational management.     

Product innovation input and outcome: moderating effects of the innovation process

In this research, we propose and examine the proposition that product innovation process is a moderator in the “innovation input–outcome” relationship. Innovation input involves R&D spending in relation to sales or R&D intensity. Innovation outcome involves innovation frequency or the number of new products developed and marketed. Innovation process involves the level of integration in organizational mechanisms: functional coordination, tool arrangement, and external relationship. Data from 45 medical and surgical device makers suggest that functional integration is a significant moderator in the innovation input–outcome relationship. External integration has only main effects whereas tool integration has neither main nor interaction effects on innovation frequency. Results could, however, be industry and sample specific. We discuss the implications of these findings for product innovation theory and research.     

The antecedents of new R&D collaborations with different partner types: On the dynamics of past R&D collaboration and innovative performance

We examine firms' propensity to adapt their R&D collaboration portfolio by establishing new types of R&D collaboration with different kinds of partners (suppliers, customers, competitors and universities & public research institutions). We argue that existing R&D collaboration with one of the two value chain partners (suppliers or customers) is associated with the formation of new R&D collaboration with the other value chain partner to ensure temporal alignment in innovation within the value chain. In contrast, issues related to governance and unintended knowledge spillovers suggest that ‘horizontal’ R&D collaboration with competitors only spurs R&D collaboration with other partner types if such competitor R&D collaboration has been discontinued earlier (‘delayed temporal alignment’). We posit that persistent prior R&D collaboration with institutional partners is an antecedent to the establishment of new R&D collaboration with industrial partners, and that discontinuation of a particular type of R&D collaboration is likely to lead to a restart of such R&D collaborative effort. Strong prior innovative performance is expected to increase the probability that firms establish R&D collaborations with new partner types, except for R&D collaboration with competitors, since the most innovative firms may fear leakage of proprietary knowledge to rivals. We find broad support for these predictions in a large panel of Spanish innovating firms (2004–2011). Our findings highlight that it is not just the configuration of R&D collaborations with existing partner types that predicts tie formation with new partner types, but also the intertemporal pattern of prior R&D collaboration and managerial discretion provided by past innovation success.     

Collaboration experience in the supply chain of knowledge and patent development

Abstract

In this paper, we aim at understanding the role of collaboration experience in supply chains of knowledge (SCoK). The SCoK of a company is its supply chain not related to the flow of physical goods but to the flow of R&D commodities. R&D commodities are for example patents, technologies, research services, studies, and projects, and, in high-tech industries, their development and commercialisation are considered as important as real products. To accomplish our aim in this paper, we fulfil the following research objectives: (1) investigate the relationship between the collaboration experience in SCoK and the propensity of the firm to develop new patents; (2) examine how the structural embeddedness of the firm within its SCoK mediates this relationship. We ground our conceptual model on the supply chain, open innovation and social capital literatures and empirically test our hypotheses on a cross-sectional data-set of 208 biotech companies that have signed 612 SCoK agreements in the years 2006–2010. The key findings of this study are: first, accumulating experience in SCoK collaborations facilitates the development of new patents; second, being central and bridging structural holes within the SCoK are two means by which the experience in SCoK collaborations is translated into new patents.     

Organizational structure and success of international joint ventures in emerging economies: the case of Spanish–Moroccan SMEs

One of the most common ways in which SMEs internationalize their business is through the creation of joint ventures; nevertheless, many of these fail. To avoid this risk, it is important to identify the factors that favour the continuity of such enterprises. The aim of this paper is to analyse the factors related to organizational structure that determine the success of international joint ventures between SMEs in emerging economies, taking as the particular area of study the question of joint ventures between Spanish and Moroccan firms, located in Morocco. The research hypotheses were tested using a linear regression model applied to a sample of 210 international joint ventures. The results obtained from a structured survey show that, with respect to the success of the partnership, significant factors include the existence of majority ownership by the foreign partner, management by a local CEO and the effort made by each party to adapt to the management style of the other. This research contributes to the knowledge of the main factors related to the organizational structure of joint ventures that influence the level of success achieved. The value provided by this research lies in the breadth of the sample examined, in its focus on a very common type of partnership between SMEs, on which very little has been previously studied, and in the fact that the results obtained are extensible to other realities, such as partnerships between European companies and those from countries with similar characteristics (located in Africa or in countries where an Arab culture prevails).     

The integration of TQM and technology/R&D management in determining quality and innovation performance

This paper presents an empirical study which examines the co-alignment between Total Quality Management (TQM) and technology/research and development (R&D) management in predicting organizational performance in terms of quality and innovation. This study improves our understanding of the relationship between TQM and innovation based on the following two major issues. First, this study contributes to the understanding of the co-alignment between TQM and technology management along with R&D management by bridging the gap between the two areas which are often addressed in a separate fashion. Second, this study also examines the impact of the integration between TQM and technology/R&D on quality and innovation performance which have been considered as the primary sources of a competitive advantage. The empirical data was drawn from 194 Australian organizations and analyzed using the Structural Equation Modeling (SEM) technique. The findings indicate that TQM shows a strong predictive power against quality performance but no significant relationship against innovation performance. On the other hand, technology and R&D management shows a significant relationship with quality performance but at a lower level than that of TQM, and shows much stronger relationship with innovation performance. In addition, there is strong and positive correlation between TQM and technology/R&D management. The major implication of this study is that technology/R&D management is an appropriate resource to be used in harmony with TQM to enhance organizational performance, particularly innovation.     

Development of absorptive capacity over time and across boundaries: The case of R&D consortia

Absorptive capacity (AC) has been identified as the ability of firms to acquire, assimilate, and apply external knowledge, and thus as a pre-condition for learning from knowledge environment. However, extant literature has focused on AC as (1) a static and (2) a firm-centred concept. In particular, there is little conceptual framing and empirical evidence of how AC develops over time and across boundaries. Taking R&D consortia as the unit of analysis and based on insights from three in-depth case studies of collaborative R&D, our contribution is a framework for AC development over time and across inter-organizational, intra-organizational, and practice boundaries at different stages of collaboration in R&D consortia. Using this framework, we identify a set of mechanisms which enable the development of AC and we discuss the preconditions for these mechanisms. For R&D managers, our research implies that in order to enhance effectiveness of knowledge transfer and learning in R&D consortia they need to develop a strategy that (1) supports learning and AC development throughout the whole cycle of the collaboration, not only by focusing on intra-firm capabilities, but in particular by providing flexible interfaces for overcoming a variety of interaction and learning boundaries between heterogeneous R&D partners, and (2) enables the integration of created and acquired knowledge within the organization once the collaboration is over.