R&D Strategy, IT Resource, and Radical Innovation Performance

Abstract

How do firms in mature manufacturing industries manage their resources to adjust to the emerging trend of digital transformation and increase radical innovation (RI) performance? We start from Resource Orchestration Theory (ROT) to answer this question. ROT suggests that flexible resource management actions such as resource structuring and resource bundling could significantly contribute to the attainment of firms’ competitive advantages. Based on ROT, this study explores how different knowledge resource structuring strategies (explorative or exploitative R&D strategy) improves firm’s RI performance. In addition, firms could bundle IT resources with the knowledge resources produced by R&D, creating additional value and increasing RI performance. We collect survey data of 288 manufacturing firms in China to empirically investigate how different R&D strategies affect firms’ RI performance, and how IT resources (IT infrastructure and IT usage) moderate above relationships. The empirical results urge practitioners to pay attention to the differential roles of R&D strategies in fostering radical innovation. Bundling different types of IT resources with R&D strategy would also exert different results on firms’ radical innovation performance.