Mediating Role of Firm R&amp;D in Creating Product and Process Innovation: Empirical Evidence from Norway

Yee Yee Sein,Viktor Prokop

doi:10.3390/economies9020056

Abstract

Government funding actively engages in private R&D investment to enhance firm innovation. At the same time, firms are forced to find additional sources of competitive advantage, e.g., through cooperation based on the triple- or quadruple-helix principles. This paper analyses whether government funding and cooperation based on the triple-helix and quadruple-helix principles spur firms’ product and process innovation rather directly or indirectly, taking into account the role of firms R&D. For this purpose, we collect data from the Community Innovation Survey and analyse 5045 Norwegian firms by using partial least squares structural equation modelling. Our results confirm hypotheses that public funding and both triple-helix and quadruple-helix cooperation significantly influence firms’ research and development activities. Surprisingly, on the one hand, we showed that neither public funding nor triple- and quadruple-helix cooperation affect firms’ product innovation directly. Moreover, the results show a negative influence of government funding and triple- and quadruple-helix cooperation on Norwegian firms’ product innovation. On the other hand, process innovation is influenced positively and directly by firms’ cooperation based on the triple- and quadruple-helix principles. The results of our analyses clearly show the key role of firm’s R&D, which has proven to be a mediator of the effects of public funding and triple- and quadruple-helix cooperation on the product and process innovation activities of Norwegian firms.

Highlights

Nowadays, economic growth much rely more on innovation, which has become the core of socio-economic progress in regions (Juknevičienė 2017)
Our result corroborates that of Zhang et al (2020), which revealed that government funding has an indirect influence on the firm process and product innovation
Triple and quadruple helix collaborations directly affect the R&D of firms; both have a significant negative direct effect on product innovation and a significant positive direct impact on a firm’s process and product innovation in Norway

Summary

Introduction

Economic growth much rely more on innovation, which has become the core of socio-economic progress in regions (Juknevičienė 2017). New knowledge generation is important in order to develop improved products and processes (Abbas et al 2019; Prokop and Stejskal 2019). Innovation needs greater collaboration between businesses and external partners and when they have variety of innovation resources, more R&D activities can be carried out (Stejskal et al 2018; Sein and Vavra 2020). Government funding for corporative R&D is a main practice to enhance innovation. This policy is to correct the market failure by enhancing incentives through the reduction of the cost of R&D activities. A number of studies have analysed the influence of public funding and cooperation on the firm innovation performance (e.g., Kotkova Striteska and Prokop 2020). The importance of collaboration between higher education institutions and the non-academic sphere

Objectives

Results

Discussion

Conclusion