SME’s Appropriability Regime for Sustainable Development-the Role of Absorptive Capacity and Inventive Capacity

Abstract

SMEs need to protect their innovation outcomes and increase profits from their innovations in order to make their growth sustainable. The appropriability regime enables SMEs to secure financial returns on their R&D investment so that SMEs can continuously invest in innovation and obtain financial gains. However, the appropriability regime can change the effects of protecting innovation outcomes depending on the capacity of knowledge exploration, especially for SMEs, and previous studies have not discussed these issues. Thus, the main objective of this paper is to explore how the knowledge exploration capacity affects the relationship between different types of appropriability regimes and innovation performance. Multivariate regression is used to analyze the manufacturing SMEs sampled from the Korea Innovation Survey 2007 (KIS 2007). Our results demonstrate that both formal and informal appropriability regimes can improve firm's innovation performance. Furthermore, although both inventive and absorptive capacity have positive moderating effects on the relationship between the informal appropriability regime and innovation performance, the inventive capacity moderates negatively the relationship between the formal appropriability regime and innovation performance. As a whole, the significance of this paper lies in providing further understanding of the different types of appropriability regimes and knowledge exploration capacity in SMEs.

R&D cooperation and unintended innovation performance: Role of appropriability regimes and sectoral characteristics

“…Large firms tend to have advantages to achieve their innovation goals, as they have a large technological knowledge-base and complementary resources to reduce uncertainty (Damanpour, 1992;Stock et al, 2002). In contrast, small firms have a more flexible structure to manage knowledge sharing process and accept the changes across their internal and external boundaries (Damanpour, 1992;Seo et al, 2016), which bring about uncertainty toward their ex-ante expectation. Thus, we use firm size (Size) as a control variable.…”

Absorptive Capacity as Feedback on the Sustainability of Organizations

“…As already mentioned, the evolution of innovations creates -both for the organization and for national and international government policies, in view of the difficulty to manage its impacts on natural resources -a concern about society, about the organization itself and about how to respect and better understand the reproductive capacity of ecosystems. This context encompasses several themes, described below, and is the target of researchers (Hsu & Liao, 2014;Lozano & Huisingh, 2011;Rodriguez & Da Cunha, 2018;Seo, Chung, Woo, Chun, & Jang, 2016).…”

“…For the sustainable growth of small and medium-sized companies, it is necessary to protect their innovations and increase their profit. In this context, Seo et al (2016) investigated the appropriability regime, which are formal mechanisms (such as patents, licenses, and trademarks), and informal ones (such as secrecy and complex design), which allow to guarantee financial returns through investments in research and development. It is also necessary to continuously invest in innovation, but this depends on the ability to explore the acquired knowledge, which is understood in the article as inventive capacity and absorptive capacity.…”

What Should SMEs Consider to Introduce Environmentally Innovative Products to Market?

“…As the data collected through the CIS is used as an official data source for the European Union (EU) to formulate the policies for companies' innovative activities, the KIS data is also utilized by the Korean government as a credible data source to develop the innovation-related policies for companies. Owing to such reliable features, a growing number of recent innovation-related studies have used the KIS data as a main empirical data source [9,[35][36][37][38].…”

“…To cope with the environmental concerns brought by various outside stakeholders such as consumers, established institutions, or other external market audiences, it is inevitable for companies to reach out to external resources and capabilities. More specifically, SMEs, which tend to be structurally limited in their resources and capabilities, should pay more careful attentions to an effective and efficient means of dealing with the environmental innovations [9]. Despite the urgency derived from the rising concerns for environmental innovations, quite a few studies have been so far conducted, even fewer with the focuses on SMEs' environmental innovation.…”