More is not always better: Reconciling the dilemma of R&D collaboration in high-tech industries in transition economies

Abstract

To cope with highly competitive business environments, firms in high-tech industries are increasingly opening up their organizational boundaries and tapping into external resources via research and development (R&D) collaboration. Drawing upon organizational boundary theories, our study indicates that the marginal benefits of R&D collaboration in driving firms' new product innovations decrease while its marginal costs increase. To investigate this subject, we develop a conceptual framework to account for the relationship between R&D collaboration and firms' new product innovations. Further, drawing on both the knowledge-based and institutional perspectives, we examine the moderating effects of absorptive capacity and political ties on the R&D collaboration-new product innovation relationship. Using data from 315 high-tech manufacturing firms in China, we find that R&D collaboration has an inverted U-shaped impact on new product innovation, meaning that the new product innovation of firms initially increases and then decreases as the level of R&D collaboration increases. Further, we find that absorptive capacity (as an internal factor) and political ties (as an external factor) moderate this inverted U-shaped effect such that firms with greater absorptive capacities show a higher peak of maximum innovation performance at higher levels of R&D collaboration than firms with lower absorptive capacities. We also reveal that for firms with stronger political ties, the benefits of R&D collaboration are enhanced while the risks and costs of R&D collaboration are mitigated. Overall, this study contributes to a better understanding of the nonlinear relationship between firms' R&D collaborations and their new product innovation outcomes as well as the contingent conditions in this relationship.