Organizational Diversity and Internalization of External Knowledge in R&D Organization

Abstract

While prior studies provide mixed results on the effects of diversity on firm performance, there is a void of research on the effects of diversity in open innovation setting in which firms internalize the external ideas and findings. Our motivation of this study is also stem from the need for research on the role of diversity in inter-firm collaboration. In this study, we develop and test hypotheses on the direct and moderating effects of social-categorical diversity and task diversity on overall firm performance in the R&D outsourcing situation. By combing national R&D survey (2004 - 2007) and information on firms, we analyze an unbalanced panel dataset of 10,401 Korean firms in manufacturing to test the hypotheses. In addition to the full sample analysis, split sample analyses were also conducted to examine whether results are different depending on the level of technological sophistication. The results show that while direct effects of diversity on firm performance still show mixed results, the moderat...