The Innovation Value Chain in New Technology‐Based Firms: Evidence from theU.K.

Abstract

Innovation is central to the survival and growth of firms, and ultimately to the health of the economies of which they are part. A clear understanding both of the processes by which firms perform innovation and the benefits which flow from innovation in terms of productivity and growth is therefore essential. This paper demonstrates the use of a conceptual framework and modeling tool, the innovation value chain (IVC), and shows how the IVC approach helps to highlight strengths and weaknesses in the innovation performance of a key group of firms—new technology‐based firms. The value of the IVC is demonstrated in showing the key interrelationships in the whole process of innovation from sourcing knowledge through product and process innovation to performance in terms of the growth and productivity outcomes of different types of innovation. The use of the IVC highlights key complementarities, such as that between internal R&D, external R&D, and other external sources of knowledge. Other important relationships are also highlighted. Skill resources matter throughout the IVC, being positively associated with external knowledge linkages and innovation success, and also having a direct influence on growth independent of the effect on innovation. A key benefit of the IVC approach is therefore its ability to highlight the roles of different factors at various stages of the knowledge–innovation–performance nexus, and to show their indirect as well as direct impact. This in turn permits both managerial and policy implications to be drawn.

Exploring the Effect of Product Type Differences on R&D Outsourcing and Knowledge Sharing in High-Tech Industry

“…Product managers could accumulate numerous opinions and information related to technology, and they used high levels of R&D outsourcing because the technology was stable. This result is consistent with NPD literature, which indicated that external R&D resources complement internal R&D knowledge sources (Ganotakis & Love, 2012). In addition, the contract manufacturers designed new products for other competitors, and the brand owner attempted to obtain market knowledge of other competitors through the contract manufacturers.…”

“…This is consistent with the view that internal R&D resources increase the success of innovative products in the market (Roper et al, 2008). In addition, the knowledge regarding new product innovation is derived from in-house R&D (Ganotakis & Love, 2012). The brand owner also sought to create new and first-class product specification ideas to meet customer demands.…”

“…Therefore, firms must consider the challenge of developing technology internally (Venkatesan, 1992). An empirical analysis suggested that external R&D resources complement internal R&D knowledge sources, and that the knowledge of new product innovation is derived from in-house R&D and external partners (Ganotakis & Love, 2012). Therefore, the major concern involved in new product development (NPD) is determining whether to use internal R&D or to rely on external R&D sources by using several knowledge-sharing strategies.…”

“…In-house R&D was deemed essential to improve products, and it is also required for successfully combining the necessary knowledge to introduce new products (Zahra & George, 2002). Therefore, distinct products exist because firms apply various associated knowledge resources (Ganotakis & Love, 2012). An empirical analysis suggested that external R&D resources complement internal R&D knowledge sources, and that knowledge of new product innovation is derived from both in-house and external R&D sources (Ganotakis & Love, 2012).…”

“…Therefore, distinct products exist because firms apply various associated knowledge resources (Ganotakis & Love, 2012). An empirical analysis suggested that external R&D resources complement internal R&D knowledge sources, and that knowledge of new product innovation is derived from both in-house and external R&D sources (Ganotakis & Love, 2012). Therefore, the main consideration of firms is to either use in-house R&D or to outsource R&D by using various knowledge-sharing strategies depending on the product type.…”