R&D complementarity and innovation performance – moderating roles of absorptive capacity and government support

Abstract

ABSTRACT Existing research has focused on whether internal and external research and development (R&D) are complementary, but it has ignored the conditions affecting this complementarity in the innovation process. We attempt to fill this gap in the literature by examining how absorptive capacity,government support, and their synergistic effects affect internal and external R&D complementarity in the innovation process. Based on panel data of Chinese industrial enterprises above the scale from 2010-2019, the results show that internal and external R&D complementarity positively affects innovation performance. Government support has a positive moderating effect on them. The relationship between internal and external R&D complementarity and innovation performance is different at different levels of absorptive capacity (high vs. low). In addition, government support and absorptive capacity have a joint effect, i.e. the effect of government support on the relationship between internal and external R&D complementarity and innovation performance varies with the level of absorptive capacity. This study provides theoretical support for the conditions under which internal and external R&D activities are complementary.