Abstract
We analyze transfer channels of radical innovations launched by small and medium-sized firms (SMEs) using an ego network approach. Based on a unique longitudinal dataset covering the observation period 1996–2016, we identify and trace back radical innovations of SMEs in German Biotech in order to analyze the extent to which SMEs themselves—or eventually also other organizations in their direct cooperation surrounding—benefit from radical innovations in terms of subsequent innovation performance. Results from negative binomial panel regressions indicate that direct cooperation partners of radical innovators show higher innovative performance than partners of the control group, i.e., statistical twin firms without radical innovations. Our results confirm that radical innovations initiate a positive impulse for innovation through direct cooperative relationships. Interestingly, geographical proximity does not play a role, and especially technologically different partners benefit from direct cooperation with radical innovators.Plain English Summary Radical innovations are rare but have a great importance for the economy. Our study shows that not only radically innovating biotech SMEs themselves but also various types of directly linked cooperation partners benefit significantly. We investigate whether directly linked cooperation partners of radically innovating firms benefit from knowledge spillover transferred through formal cooperation. A radical innovation represents a novel and often complex combination of already existing knowledge. Thus, knowledge transfer process differs for radical and non-radical innovations. Project-based formal cooperation can support the transfer of radical knowledge. In this context geographical and technological factors matter. Using the example of German small and medium-sized biotechnology firms, we show that collaboration with radical firms is positively related to innovation performance of directly linked project partners. Interestingly, this effect is higher for partners located in other regions as well as for technologically distant partners. Our study extends the research on knowledge transfer by emphasizing the role of formal collaboration projects, especially in knowledge intensive high-tech industries.
Highlights
Radical innovations are of key importance from an economic point of view since they bear the potential to trigger the emergence of entirely new technological trends, cause far-reaching structural change, and fuel economic prosperity
Out of 35 firms partnering with our radical firms, 21 are dedicated biotech firms (BIOTECH), and 20 are located in the same region their radical collaborator (REGION)
We turn our attention to a topic that is still largely unexplored, namely: how the unique knowledge embodied in radical innovations spreads out across firm boundaries and influences the innovation performance of directly linked cooperation partners
Summary
Radical innovations are of key importance from an economic point of view since they bear the potential to trigger the emergence of entirely new technological trends, cause far-reaching structural change, and fuel economic prosperity. In this paper we turn our attention to the innovation activities of biotechnology-focused small and mediumsized enterprises (SMEs) involved in the application of biotechnology techniques for the production of goods or services, and actively involved in research and development (R&D). These types of firms are typically referred to as dedicated biotech firms (DBFs) (OECD 2005). We know from previous research (Baum et al 2000) that entrepreneurial ventures can initially profit from collaborating with the ‘right’ partners.2 This means that the kind of network composition is crucially important for successful collaboration. It is usually only the radical inventor’s performance that is discussed (e.g., Katila 2000), even though their radical innovation has the potential to affect other actors and/or change the technological landscape in a fundamental way
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