Direct and moderating effects of public R&D support on external knowledge acquisition: the interaction with performance feedback

Abstract

ABSTRACT We argue that public R&D support may not only lead firms to increase their technological cooperation breadth, enhancing knowledge acquisition, but also influence how firms frame and approach R&D alliance decisions in response to their innovation performance feedback. From a behavioural perspective it is firms performing above or below innovation aspirations the ones that are more willing to gain access to new sources of external knowledge. We argue that while public funding of a firm’s R&D activities has a positive direct effect on cooperation breadth, it also exerts a negative moderating influence when firms deviate from their innovation aspirations, because managers’ external knowledge acquisition strategies tend to align with the objectives of subsidised projects. Using a panel of technological-intensive Spanish firms, we find support for our hypotheses, showing the importance of incorporating performance feedback as a key factor when analysing the impact of public R&D instruments on firms’ collaborative behaviour.