Internal Innovation Activities Research Articles

In Search of Complementarity in Innovation Strategy: Internal R&D and External Knowledge Acquisition

Empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity. In this paper, we take a broader approach to the issue, combining a “productivity” and an “adoption” approach, while including a search for contextual variables in the firm’s strategy that affects complementarity. Analysis of contextual variables is not only interesting per se, but also improves the productivity test for the existence of complementarity. We use our empirical methodology to analyze complementarity between innovation activities: internal research and development (R&D) and external knowledge acquisition. Our results suggest that internal R&D and external knowledge acquisition are complementary innovation activities, but that the degree of complementarity is sensitive to other elements of the firm’s strategic environment. We identify reliance on basic R&D—the importance of universities and research centers as an information source for the innovation process—as an important contextual variable affecting complementarity between internal and external innovation activities.

Knowledge‐processing capabilities and innovative performance: an empirical study

PurposeKnowledge‐based assets and organizational learning capabilities are recognized to be critical for firm's innovation activities. The process of creating new knowledge requires acquiring useful data and information, and utilizing it effectively in its internal innovation activities. To manage external knowledge, firms need absorptive capacity. The purpose of this study is to present the concept of the firm's absorptive capacity as a multidimensional, dynamic construct consisting of capabilities for organizational knowledge processing.Design/methodology/approachThe paper draws on results from a large‐scale survey. The empirical data used in the study comprises of 217 Finnish firms from seven different industry sectors. The hypotheses were tested by means of hierarchical linear regression analysis.FindingsThe results of the empirical tests give some support to the view that it is not only the firm's knowledge stock but also its knowledge flows that are crucial for sustaining innovative performance. The regression estimation shows that knowledge‐utilization capabilities were reflected in the firm's innovative performance.Research limitations/implicationsAs the data used in the study was cross‐sectional, the causal relationships and the sustainability of innovative performance cannot be captured. Avenues for further research include the interaction between the firm's knowledge base, knowledge processes and innovativeness.Practical implicationsThis study emphasizes the importance of the firm's ability to utilize and renew its knowledge base effectively. In order to utilize externally generated knowledge, firms need an ability to internalize it and then combine the information and new insights with the existing knowledge base.Originality/valueAs only little empirical research has been conducted on the impact of knowledge‐processing capabilities on the firm's innovative performance, the empirical evidence reported here makes a valuable contribution in this highly important area.