Research-intensive Industries Research Articles

Explicating the factors influencing successful implementation and management of sustainable innovation practices in research intensive organizations

Purpose The purpose of this study is to identify the factors that contribute to the successful implementation and management of sustainable innovation in research-intensive sectors such as the life sciences industry. Design/methodology/approach The study was conducted through a combination of two methods. The first was qualitative interviews of 21 sustainability experts and leaders in the life sciences industry who were responsible for implementing sustainable innovation. They were selected through nonprobabilistic purposive sampling. The second method was thematic content analysis using the MAXQDA software. Findings The study identified that successful implementation of sustainable innovation in research-intensive firms begins with the alignment of the executive vision for sustainability with the business objectives of the research-intensive firm. Furthermore, implementation of sustainability practices is identified as a function of organizational reconfigurations that facilitate purposeful inflow and outflow of ideas and knowledge between internal firm resources and external stakeholders, anchored by the objectives of the research-intensive firm. Research limitations/implications The study explicated factors only within life sciences industry based on qualitative interviews. The study offers scope for cross-sector quantitative evaluation. Originality/value To the best of the authors’ knowledge, this study is among the first studies to systematically delineate the underlying factors that govern successful implementation of sustainable innovation in research-intensive industries, through integration of the resource-based view and stakeholder theory and thereby provide a framework for research-intensive organizations to implement sustainable innovation practices.

Does the q theory of investment work well in China?

Evidence from both the US and Chinese firm samples indicate that the R2 coefficient of the investment-q regression increases as the within-firm volatility of q increases and is larger for research-intensive industries. q explains more variations of investments in the US than in China. We find that the relatively low R2 coefficient in China can be explained by the heavy presence of state-owned enterprises and the larger measurement error of q in China.

Why did the q theory of investment start working?

We show that the relation between aggregate investment and Tobin’s q has become remarkably tight in recent years, contrasting with earlier times. We connect this change with the growing empirical dispersion in Tobin’s q, which we show both in the cross-section and the time series. To study the source of this dispersion, we augment a standard investment model with two distinct mechanisms related to firms’ research activities: innovations and learning. Both innovation jumps in cash flows and the frequent updating of beliefs about future cash flows endogenously amplify volatility in the firm’s value function. Perhaps counterintuitively, the investment-q regression works better for research-intensive industries, a growing segment of the economy, despite their greater stock of intangible assets. We confirm the model’s predictions in the data, and we disentangle the results from measurement error in q.

Deriving and Assessing Strategic Priorities for Outsourcing Partner Selection in Pharmaceutical R&D: an Approach Using Analytic Hierarchy Process (AHP) Based on 34 Experts’ Responses From Korean Pharmaceutical Industry

Despite an increasing proportion of activities along the pharmaceutical R&D value chain being outsourced, little attention has been devoted to examine the factors affecting the outsourcing partner selection process. This paper aims to suggest priorities of influencing factors for maximizing the efficiency in governing outsourcing arrangements. This paper adopts the analytic hierarchy process (AHP) based on 34 experts’ responses from Korean pharmaceutical industry to rank a set of different criteria substantial for establishing a new outsourcing relationship. A total of 14 sub-criteria (encompassing a range of task-related and partner-related issues) were identified and used to construct the AHP model. Two different outsourcing scenarios were considered: (1) outsourcing of R&D activities in the early stages of drug discovery and (2) outsourcing of regulatory affairs tasks. In case of R&D outsourcing, the criterion “Cost-saving potentials” was the most dominant factor affecting the partner selection decision followed by “Commitment” and “Partner compatibility.” In case of outsourcing regulatory affairs task, “Reputation” and “Specialized expertise” were perceived as significant selection criteria. The study facilitates the process of assessing factors that have a major impact on the outsourcing partner selection. It further contributes to building consensus within the organization and can serve as a reference point for learning about challenges encountered in outsourcing decision. The findings can also provide lessons for other research-intensive industries that have not yet developed their outsourcing activities to the same extent.

Why Did the Q Theory of Investment Start Working?

We show that the relationship between aggregate investment and Tobin’s q has become remarkably tight in recent years, contrasting with earlier times. We connect this change with the growing empirical dispersion in Tobin’s q, which we document both in the cross-section and the time-series. To study the source of this dispersion, we augment a standard investment model with two distinct mechanisms related to firms’ research activities: innovations and learning. Both innovation jumps in cash flows and the frequent updating of beliefs about future cash flows endogenously amplify volatility in the firm’s value function. Perhaps counterintuitively, the investment-q regression works better for research-intensive industries, a growing segment of the economy, despite their greater stock of intangible assets. We confirm the model’s predictions in the data, and we disentangle the results from measurement error in q.

The Impact of R&D Investments on the Profit of Enterprise in Europe and Latvia

For the last 15 years the question about increasing research and development investment level to 3% of the European Union GDP has been included in its highest planning documents, such as Lisbon Strategy and Strategy of Europe 2020, and has been defined as necessary input for further development of countries. But as research and development investment is an input measure not an output measure the real question is whether private entrepreneurs also see increase of research and development expenditures as factor that would influence companies’ profits positively. The aim of this paper is to research and display the impact of research and development investments on the companies’ profits by using econometric methods. The hypothesis that research and development expenditures increase companies’ profits has been approved by the results of panel data analysis, and, moreover, it has showed the influence of research and development expenditures on profit of enterprise in research and development intensive industries (pharmacy/biomedicine and information technologies/computer technologies) of European Union member states and Latvia.

Brexit: A view from the BSI

Brexit: A view from the BSI

OPEN INNOVATION IN FOOD FIRMS: IMPLEMENTATION STRATEGIES, DRIVERS AND ENABLING FACTORS

Open innovation has so far been studied mainly in research-intensive industries, while still little attention has been devoted to the more traditional ones. Our study addresses this gap by focusing on low-tech industries, and on the food one in particular by exploring if and how open innovation is implemented by food companies. Drawing on a database collected from food firms operating in Italy and adopting quantitative techniques, we investigate the implementation strategies of the open innovation paradigm, conscious that food companies are adopting an open approach to innovation. Results show that they mainly implement two different strategies, according to different sets of drivers and enabling factors. These strategies should be referred to with the terms “open market pull” and “open technology push”.

CEO incentive compensation and stock returns: Evidence from Australia

We investigate the relation between CEO compensation and stock returns in Australia and find evidence that firms managed by CEOs with higher incentive pay earn higher returns in a period up to three years. The relation is more pronounced for firms led by younger CEOs and firms operating in research-intensive industries. In addition, we find some evidence indicating that innovation serves as a channel though which incentive pay affects stock returns. In particular, higher incentive pay induces CEOs to take more risk by investing more in risky projects, such as innovative activities which consequently make firms riskier and have higher expected stock returns

Patterns of Convergence Within the Emerging Bioeconomy — The Case of the Agricultural and Energy Sector

In light of an emerging bioeconomy, fading boundaries between the so far distinct agricultural and energy sector indicate a convergence process leading to a new competitive setting between established value chains requiring dynamic capabilities of the affected firms. On the basis of understanding convergence as a process within research-intensive industries, patent analyses can be applied to identify whether there are trends of convergence associated with the emerging bioeconomy. This study focuses on examining the nexus of agricultural and energy sector with regard to German biogas technologies. Although different disciplinary activities within the field of biogas can be confirmed, for now, biogas (as well as other bioenergy) applications rather seem to build a sub-segment within the energy value chain than to form a new inter-industry segment.

Do science parks promote research and technology? A scientometric analysis of the UK

This study investigates whether scientific publications can give plausible suggestions about whether R&D support infrastructures in the UK successfully foster scientific activity and cooperation. For this, research publications associated with UK SPs were identified from Scopus for the years 1975---2010 and analysed by region, infrastructure type and organisation type. There was apparently a systematic intensification of R&D from the 90s as evidenced by the publications of on-park firms and research institutions. Science Parks and Research Parks were the most successful infrastructures in fostering cooperation and research production, in comparison to Science and Innovation centres, Technology parks, Incubators and other parks, and HEIs were the major off-park partners for the on-park businesses. The East of England, the South East, and Scotland concentrate the highest proportion of parks, each of these three major geographical agglomerations exhibit distinct areas of scientific specialisation. Parks seem to have a positive impact on the overall level of collaboration and production of science and technology, which are highly concentrated in competitive regions. Nevertheless, industry-academia collaborations show that on-park firms tend to collaborate with partners beyond their local region rather than the local HEI. Support infrastructures may therefore not help to reduce the uneven development and geographic distribution of research-intensive industries in the UK.

Do High-Powered Incentives for Knowledge and Creative Workers Work?

This symposium proposal is for a conversation between scholars from different disciplines on the effect of providing strong financial incentives for knowledge and creative workers (in research-intensive industries, health, education, and the arts). Different approaches and empirical studies have made very different conclusions as of whether standard, high-powered economic incentives enhance the performance of these activities or, conversely, inhibit them leading to crowding-out effects). Current theories and empirical evidence will be discussed, with the aim of advancing a common framework and set of methodologies to further our understanding of the motivations for complex activities.

Parallel trade, product quality, and welfare

We study the welfare effects of parallel trade (PT) considering investment in quality. We thus revisit the case for PT in research-intensive industries. We find that PT may raise quality, depending on how preferences for quality differ across countries. Conditional on quality, consumer surplus may rise (fall) in the PT-source (PT-recipient) country. While PT reduces ex post welfare, improving quality is a necessary condition for PT to increase welfare ex ante.

Economic Growth and Inflation in Argentina under Kirchner’s Government

Since 2003, the growth rate of the GDP has been higher in Argentina than in Brazil. Argentina re-established sustained industrialisation, while in Brazil the trend is towards deindustrialisation. Investment rates grew, but not enough, and pressures on production capacity remain high. Income distribution is less unequal. Poverty has decreased, its depth has strongly declined, and inequalities among the poor have also declined. Employment is growing – including in the industrial sector; informal jobs, whether salaried or not, are loosing ground; while the balance of trade shows a strong surplus and the dept ratio is not overly high. Real inflation is high, far higher than announced by the government, and it curtails any rise in buying power, particularly among the poorest. Distributional conflicts between farmers and government, between wage earners and managers, illustrate both governance problems and questions of societal options. The recent rise in effective exchange rates, the rise in the share of raw materials in exports, the fact that these are needed for subsidies paid mainly to energy consuming sectors, the shortage of subsidies to research intensive industries could tomorrow turn what is currently a virtuous circle into a vicious circle.

Innovation risks of outsourcing in pharmaceutical new product development

New product development, which until relatively recently was a core activity within the pharmaceutical industry, is increasingly being outsourced ( Howells et al., 2008). This is symptomatic of the transformation of product development towards a more decentralised, network-based and alliance-rich function. We have selected the pharmaceutical industry for this paper because it offers an excellent example of a research and technology intensive industry where outsourcing has led to problems in the innovation and new product development process. We examine the impact of the increase in outsourcing on the way firms manage the clinical trials process. The increasing role of Clinical Research Organisations (CROs) has dramatically changed the nature of the innovation process. CROs initially provided a limited service in clinical trials management, but have gradually evolved into organisations that have expertise across a much wider spectrum of the clinical development process. The fragmentation of the innovation process, which has arisen from the increased role of CROs, creates innovation risks for the pharmaceutical companies. In this paper we discuss the risks associated with knowledge losses for research and technology intensive industries that may arise from lack of integration of new product development activities and develop a number of propositions for further research.

Innovation, regional development and relations between high- and low-tech industries

The current European policy agenda strongly accentuates the importance of research and development (R&D) as a driver of economic growth. The basic assumption is that high European wage levels make it unlikely that less research-intensive parts of the economy can withstand competition from low-wage countries with increasingly skilled labour forces. Thus, the inferior growth of the European Union (EU) in the 1990s compared with the USA has been explained by the latter’s higher rate of R&D investments. The paper challenges this rather simplistic view of innovation and examines the regional consequences of such policies. EU growth has caught up with that of the USA during recent years and low-tech industries continue to have considerable economic importance in Europe in terms of jobs and value added, especially outside the main growth regions, but also in the major urban regions. Empirical evidence from Denmark and the UK provided in the paper suggests that low- and high-tech industries are closely interconnected because low-tech firms play important roles both as partners in the innovation processes of high-tech firms and as buyers of high-tech products. Therefore, EU industrial policy is not appropriate because it overlooks the continuing significance of low-tech industries. Furthermore, the rather uniform focus on R&D is associated with a strong emphasis on large city-regions where research-intensive industries are concentrated and, thus, increasing regional inequality in Europe is being produced.

Convergence and reorientation via open innovation: the emergence of nutraceuticals

The use of networked organisational arrangements to conduct exchanges is one of the most distinctive features of high-tech research-intensive industries. Advances in biotechnology and genomics research have enabled a generic technology platform that has fuelled a more ‘open’ approach to innovation and learning. This relies on collaborations between networked partners and allows for the convergence and reorientation of traditional sectors. This paper lends support to the view that some technologies can trigger a higher system level innovation, that is, in addition to the inter-firm level, an inter-industrial and inter-institutional level convergence and re-orientation process. This paper explores how this phenomenon is being witnessed in the pharmaceutical and food sectors and fast becoming a dominant logic in the emerging nutraceuticals industry.

The Relation Among Targets’ R&D Activities, Acquirers’ Returns, and In‐Process R&D in the US

Abstract: Using a sample of 129 mergers and acquisitions (M&As) in the US between publicly traded acquirers and targets in research and development (R&D) intensive industries over the period of 1994‐2004 and a size‐ and industry‐matched sample, we examine the relation among targets’ R&D activities, the probability of acquirers’ writing‐off in‐process R&D (IPRD), and acquirers’ returns around the time of M&A announcements. We find that firms acquiring targets with higher R&D investments tend to write off some of the acquired R&D assets upon the completion of the M&As. We also find that the median cumulative abnormal return during the three days around M&A announcements for acquirers with subsequent IPRD write‐offs is −2.73% while the return for acquirers without IPRD write‐offs is −0.60%. This suggests that acquirers’ stock returns around M&A announcements are much lower when investors expect acquirers to expense IPRD. The results are consistent with our conjecture that acquirers tend to write‐off IPRD when they acquire overvalued targets. We also find that IPRD write‐offs do not increase earnings or stock returns of acquirers after M&As, which is inconsistent with an earnings management hypothesis.

R&D and manufacturing production specialization in developed economies

A study of the relation between technology and manufacturing production specialization in a series of developed economies is performed by means of models relating indicators of revealed symmetric comparative advantage of value added and exports to similar measures of comparative performance of R&D expenditure, capital intensity, total factor productivity and wage costs. The production and R&D specialization are shown to be substantial and sticky. This contrasts with the evidence of a substantial degree of convergence in the patterns of the other variables. Regression estimates show that, although all variables play their part, the impact of comparative R&D efforts on production specialization is by far the strongest. This impact is found to be stronger in the smaller economies and it is especially important in research-intensive industries. The influence of comparative wages is, moreover, found to be positive here, suggesting the dominance of a labour skill and efficiency wage effect over a wage cost competitiveness effect. These findings are shown to conform quite well with the predictions of Schumpeterian theory and of certain contributions to ‘new trade theory’ that have stressed the importance of dynamic economies of scale.

Capability development and the geographic destination of outbound FDI by developing country firms

This paper uses UNCTAD data to relate the destination of FDI from developing countries to their capability development. It expands the Investment Development Path (IDP) and the flying geese model to include the destination of outward FDI. Investments from developing into developed countries are predominantly in low and medium research-intensive (often considered 'sunset') industries where investors have established strengths in their home base. Developing countries play an active role in knowledge-intensive services in especially the developing world. Even though the developing-country knowledge-intensive firms are not global leaders, their intra-regional FDI enables capability development in emerging industries.