Exploration and firms’ innovative performance – How does this relationship work?

Abstract

Purpose -The main purpose of this paper is to analyze (1) the relationship between a firm's exploration strategy and its innovative performance, and (2) whether its absorptive capacity (AC) moderates this relationship.Design/methodology/approach -We adopted an econometric approach, using secondary data. We synchronized two databasesCompustat and USPTO -, from which we extracted common data concerning 275 biopharmaceutical firms for the period between 1990 and 2003. We used negative binomial regression to analyze data.Findings -The exploration strategy positively influences firms' innovative performance. However, excessive emphasis on this strategy can diminish its benefits. Moreover, a firm's AC will not positively moderate the curvilinear relationship between exploration and the firm's innovative performance in all contexts, contradicting our theoretical predictions. This is due to the existence of trade-offs between AC characteristics and other organizational factors.Originality/value -This paper extends the understanding of Open Innovation and AC theories. Our results suggest that AC cannot be understood as a one-dimensional and autonomous capacity located exclusively in R&D departments. Aspects such as financial power, the business model and the different dimensions of AC and their respective locations in the firm's value chain should be considered whenever the influence of AC on exploration strategies is analyzed.

Intellectual Capital and Financial Performance of Biotech Companies in the Pharmaceutical Industry

“…3). It is possible therefore that in the case of these companies, the classical performance indicators to be less representative, being necessary an adjustment with the innovative aspects (innovative performance) of the developed activity (Moreira, Torkomian and Soares, 2016;Amin and Aslam, 2017).…”

“…They have to take into account and integrate elements that characterize the innovative character of the companies' activity, their dependence on the highly qualified human resource, the research and development and the technological evolution. The very high innovative degree of biotech companies is determined by constant combinations of new accumulations of knowledge and new technologies (Moreira, Torkomian and Soares, 2016). This makes skills, capacity and research-development infrastructure (R&D), innovation to be primary in determining the performance of this type of companies.…”

“…In the literature, R&D expenses are mainly used as an instrument of innovation and analyzed from this perspective (Madsen and Wu, 2016;Moreira et al, 2016;Schuhmacher Gassmann and Hinder,, 2016;Amin and Aslam, 2017). The quality of R&D influences the accounting and market performance of companies (Huang et al, 2018).…”

Integration mechanisms for different types of innovation: case study in innovative companies

“…Exploration and exploitation may be seen as different strategic views. The exploration strategy aims to create new business opportunities through new products and services that are innovative to the firm, looking for novel technological ideas (Moreira, Torkomian, & Soares, 2016;Sirén et al, 2012). In contrast, the goal of exploitation strategies is to exploit a firm's current competitive advantage by managing the firm's existing resources and capabilities to improve the quality and reliability of current products and services to keep current customers satisfied (Sirén et al, 2012).…”