Balancing Internal and External R&D Strategies to Improve Innovation and Financial Performance

BAR - Brazilian Administration Review

Avenida Pedro Taques - 294 - Zona Armazém
Maringá / PR
Telefone: (44) 9882-6246
ISSN: 1807-7692
Editor Chefe: Carlo Gabriel Porto Bellini
Início Publicação: 30/06/2004
Periodicidade: Trimestral
Área de Estudo: Ciências Sociais Aplicadas, Área de Estudo: Administração

Balancing Internal and External R&D Strategies to Improve Innovation and Financial Performance

Ano: 2018 | Volume: 15 | Número: 2
Autores: F. de O. Paula, J. F. da Silva
Autor Correspondente: F. de O. Paula | [email protected]

Palavras-chave: innovation performance, internal R&D, external R&D, financial performance, manufacturing firms

Resumos Cadastrados

Resumo Inglês:

This research investigated the complementarity of internal and external R&D for innovation development and the effect of innovation on the financial performance of European manufacturing firms. Using multigroup structural equation modeling, this study partially supported that internal and external R&D are complementary in firms from high-technology industries, whereas they are not in firms from low-technology industries. For the two groups of firms, both internal and external R&D separately had a positive effect on innovation performance. These results suggested that if low-tech firms, which had lower absorptive capacity than high-tech firms, want to improve their innovation performance in the long term, they should start prioritizing internal R&D to improve their absorptive capacity while achieving a short-term satisfactory innovation outcome. As absorptive capacity rises, more complex strategies balancing internal and external R&D should be adopted. Contrary to expectations, the empirical analysis indicated that innovation performance did not influence short-term financial performance for the whole sample. However, in countries more affected by the 2008 crisis (for instance, Baltic countries, Portugal and Spain), this effect was detected, indicating that innovation helped firms to recover faster.