R&D Collaborations: Is Diversity Enhancing Innovation Performance?

Abstract

The diversity of external knowledge sourced via collaboration is associated to search, monitoring, coordination and transaction costs, but also to the firms’ resources invested in internal innovation efforts. These costs and investments are of major importance especially for firms of small size, financially constrained, with low absorptive capacity and technological capabilities which, in addition, operate in economies of low innovation dynamism. Considering an endogenous relationship of the internal innovation efforts and the diversity of external knowledge sources, allowing for feedback loops, we develop a theoretical framework which allows direct and indirect effects on innovation performance to be identified and estimated. The model is estimated employing a unique dataset of 300 Greek R&D active manufacturing firms drawn from a nationwide survey conducted in 2010. Empirical findings confirm the expected feedback loop relationship and also show that internal innovation efforts positively influence firm...