Complementarity Between Innovation Knowledge Sources in Small Manufacturing Sector Firms: Evidence From the South African Business Innovation Survey

Abstract

In this paper, empirical research on complementarity between organizational design decisions has traditionally focused on the question of the existence of complementarity or complementarity between innovation knowledge sources in small manufacturing sector firms – limited to South Africa. The purpose of this study is to identify the impact of different knowledge sources on business performance through the different links in the innovation value chain. This study uses 138 responses from small South African firms as contained in the Community Innovation Surveys styled fifth national South African innovation survey, conducted between 2010 and 2012. Appropriate hypotheses were derived and tested by multivariate probit regression analysis in order to analyze complementarity between innovation activities, internal research and development (R&D) and external knowledge acquisition. Our results suggest that internal R&D and external knowledge acquisition are complementary innovation activities, but that the degree of complementarity is sensitive to other elements of the firm’s strategic environment. We identify the ‘lack of importance’ of public universities and publicly-funded research centres as an information source for the innovation process. In addition, firms are less likely to rely on knowledge utilisation variables such as skilled labour, dedicated teams for innovation activities, and R&D investment. The findings of this study offer a more recent insight in innovation strategies in small firms.