How firms innovate through R&amp;D internationalization? An S-curve hypothesis

Chen, Chung‐Jen; Huang, Yi‐Fen; Lin, Bou‐Wen

doi:10.1016/j.respol.2012.06.008

Cited by 103 publications

(107 citation statements)

References 68 publications

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“…First, we contribute to the overall internationalization‐innovation literature by identifying organizational learning as the underlying mechanism that causes the impact of IE on IP and empirically testing it. Here we show that the relationship between international experience and innovation is not negative at any stage of internationalization, as has been previously suggested (e.g., Chen, Huang, & Lin, ; Hitt, Hoskisson, & Kim, ; Kafouros, Buckley, Sharp, & Wang, 2008). Instead, we show that the impact of internationalization on innovation is positive, however it varies based on the level of international experience because of how firms learn.…”

Section: Introductionsupporting

confidence: 88%

“…In addition, we also show that internationalization by a firm has an impact on innovation, irrespective of the specific kind of international activity undertaken, whether manufacturing, marketing, or research and development (R&D). Prior research has shown that R&D internationalization has a positive impact on innovation (Chen et al, ; Nieto & Rodríguez, ; Penner‐Hahn & Shaver, ). We show, however, that firms do not need to set up R&D‐focused subsidiaries abroad to benefit from internationalization, as organizational learning takes place from any outward foreign direct investment (OFDI).…”

Section: Introductionmentioning

confidence: 99%

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Relationship between international experience and innovation performance: The importance of organizational learning for EMNEs

Thakur‐Wernz

Samant

2017

Global Strategy Journal

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Research Summary This study examines the impact of international experience (IE) on innovation performance (IP) in the context of emerging economy multinational enterprises (EMNEs). EMNE internationalization is often driven by strategic asset‐seeking behavior to improve their knowledge base. But, does internationalization lead to more innovation for these EMNEs? Drawing on organizational learning theory, we find a positive relationship; however, the IE–IP curve is not linear, instead it follows an S–shaped curve. We also introduce the moderating role of the difference in the direct and indirect learning rate, as well as the knowledge distance between an EMNE’s home and host countries, to the IE–IP relationship. Data on 161 Indian biopharmaceutical firms, of which 64 are EMNEs, from 1997 to 2013 were used to empirically test our hypotheses. Managerial Summary Emerging economy multinational enterprises (EMNEs) are expanding to foreign countries to seek new knowledge and improve their ability to compete with more advanced developed country firms. In this article, we examine whether international expansion by EMNEs actually improves their innovation performance. We find that international experience does improve innovation because of organizational learning. Further, we look at whether firms are able to learn faster—both from their own innovation efforts as well as the innovation efforts of their partners. We also look at the difference in the level of knowledge at home versus at the location of the foreign subsidiaries and the impact of this distance on the international experience—innovation performance relationship. We examine EMNEs from the Indian biopharmaceutical industry. Our study provides managerial insights on the international expansion and innovation‐related activities of EMNEs.

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Section: Introductionsupporting

confidence: 88%

Section: Introductionmentioning

confidence: 99%

Relationship between international experience and innovation performance: The importance of organizational learning for EMNEs

Thakur‐Wernz

Samant

2017

Global Strategy Journal

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“…Studies indicate that knowledge sourcing and reverse knowledge transfer through foreign R&D is not a common phenomenon (Gupta & Govindarajan, 2000) and that the effects on innovative performance are subject to a number of contingencies, such as effective cross-border collaboration and knowledge integration (Lahiri, 2010;Singh, 2008), embeddedness of affiliates in local technology and R&D clusters (Griffith, Harrison, & Van Reenen, 2006;Iwasa & Odagiri, 2004), top management team characteristics (Mihalache, Jansen, Van Den Bosch, & Volberda, 2012), organizational slack (Chen, Huang, & Lin, 2012) and the absorptive capacity at home to assimilate and integrate technological knowledge coming from abroad (Penner-Hahn & Shaver, 2005).…”

Section: Introductionmentioning

confidence: 99%

The returns to foreign R&D

2014

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Extant research on research and development (R&D) internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth.

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“…Furthermore, decentralisation enables the firm to carry out more research and consequently contributes to innovation performance (Sheremata, 2000;Laursen and Salter, 2005). The geographic dispersion of technological knowledge, considered a form of knowledge decentralisation (Chen et al, 2012), facilitates access to knowledge spillovers from foreign locations and increases opportunities for innovation performance (Feinberg and Gupta, 2004;Rosenkopf and Nerkar, 2001). …”

Section: Direct Relationmentioning

confidence: 99%

“…While it has been studied in the literature as impacting the learning process, some scholars have recently suggested using it as a moderator of the link between the geographic dispersion of technology and innovation performance. For instance, Chen et al (2012) have found a horizontal S-shaped link with a positive effect during decentralisation time followed by a negative effect in transition time and finally a positive effect in recentralisation time.…”

Section: Organisational Slackmentioning

confidence: 99%

The impact of internal and external technology sourcing on innovation performance: a review and research agenda

Gnekpe

Coeurderoy

2017

IJTM

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Abstract:In seeking to strategically boost their innovation capabilities, technology-driven companies can mobilise internal as well as external sourcing strategies. A number of researchers in the field of technology management have assessed the impact of these two organisational choices on innovation performance. Empirical findings are striking but relatively scattered and give the impression of diverse and sometimes contradictory conclusions. The purpose of this review is therefore to survey and consolidate the key findings we can draw from this stream of empirical research. In particular, we point out the need for moderators in studying the relation between technology sourcing and innovation performance. Going forward from this current state of affairs, we suggest future avenues of research on innovation performance in the field of technology management.

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How firms innovate through R&D internationalization? An S-curve hypothesis

Cited by 103 publications

References 68 publications

Relationship between international experience and innovation performance: The importance of organizational learning for EMNEs

Relationship between international experience and innovation performance: The importance of organizational learning for EMNEs

The returns to foreign R&D

The impact of internal and external technology sourcing on innovation performance: a review and research agenda

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