Abstract
Purpose – The main purpose of this paper is to analyze (1) the relationship between a firm’s exploration strategy and its innovative performance, and (2) whether its absorptive capacity (AC) moderates this relationship. Design/methodology/approach – We adopted an econometric approach, using secondary data. We synchronized two databases – Compustat and USPTO –, from which we extracted common data concerning 275 biopharmaceutical firms for the period between 1990 and 2003. We used negative binomial regression to analyze data. Findings – The exploration strategy positively influences firms’ innovative performance. However, excessive emphasis on this strategy can diminish its benefits. Moreover, a firm’s AC will not positively moderate the curvilinear relationship between exploration and the firm’s innovative performance in all contexts, contradicting our theoretical predictions. This is due to the existence of trade-offs between AC characteristics and other organizational factors. Originality/value – This paper extends the understanding of Open Innovation and AC theories. Our results suggest that AC cannot be understood as a one-dimensional and autonomous capacity located exclusively in R&D departments. Aspects such as financial power, the business model and the different dimensions of AC and their respective locations in the firm’s value chain should be considered whenever the influence of AC on exploration strategies is analyzed.
Highlights
This article investigates the relationship between a firm’s strategy or activity to acquire new knowledge – exploration – and its innovative performance, while analyzing whether the firm’s absorptive capacity moderates this relationship
The focus will be on the exploration strategy, a term coined by March (1991), which refers to the following terms: variation, risk, flexibility, discovery and innovation
This study investigates the role of strategy exploration in the firm’s innovative performance considering its implementation, and its application level
Summary
This article investigates the relationship between a firm’s strategy or activity to acquire new knowledge – exploration – and its innovative performance, while analyzing whether the firm’s absorptive capacity moderates this relationship. This paper suggests that the absorptive capacity (AC) of a firm can moderate the relationship between its exploration strategy and its innovative performance This argument, based on the seminal concept of AC, was coined by Cohen & Levinthal (1990) as the firm’s capacity to recognize the value of new, external information, assimilate it and apply it to commercial ends. It seems appropriate that the American and Canadian biopharmaceutical sectors choose to empirically test the arguments presented above This segment is “characterized as oriented to technology-intensive R&D and technological knowledge is critical for development and sustainable competitive advantage” (Laursen, Moreira & Markus, 2015:15). The regime governing the protection of knowledge created in these countries is strong and encouraging (Tzabbar, Aharonson & Amburgey, 2013)
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