What Is Important for the Growth of Latecomers in the Medical Device Industry?

Abstract

In the medical device industry, which is highly value-added and requires multidisciplinary knowledge, major global firms dominate the market, so it is necessary to establish a growth strategy suitable for latecomers. Through a Korean case, it was confirmed that import, diversification, and R&D activity are distinguishing strategies. The existing literature covers these strategies, but these findings are fragmented and differ from those of latecomers. This study examined the impact of the above factors on corporate growth, based on data of 440 Korean medical device manufacturers from 2011 to 2016. According to the results of panel data regression, diversification and R&D activity have a positive effect on the financial performance of a firm, while the import business model shows a negative effect. These results are expected to provide implications with respect to strategies for the growth of latecomers in the medical device industry. In future research, it is necessary to investigate how detailed strategies in accordance with the growth stages of a firm can be established.

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“…This study examines the role that R&D expenditures play in the profitability of Slovak medical device companies. Rather than arguing that R&D investments have a significant positive or negative impact on the profitability of medical device companies (Luo, Hu & Yu, 2018;Yeom et al, 2021), we show that there is a curvilinear (inverted-U) relationship between the two above-mentioned variables. To be more specific, as a result of panel data regression analysis it has been determined that, while R&D intensity has a significant negative impact on profitability at a 1% level, at the same time R&D intensity squared significantly positively influences profitability at the 1% level.…”

“…The medical device industry is characterized by active R&D investment and a rapid pace of technological innovation. However, in this industry, it takes a long time to launch new products, and there are always regulatory issues due to safety and validity (Yeom et al, 2021). The incurring of R&D costs and registration costs related to intellectual property rights form the basis for competitive advantages for medical device companies, i.e., a fundamental driver of their profitability.…”

How Do Alliance Portfolio Factors Affect a Precision Medicine Firm’s Innovation Performance?

“…Firm's resources are limited. Although corporate diversification can have a positive effect on innovation performance [73], an increase above the critical point of unrelated diversification can cause a shortage of resources and negatively affect innovation performance. Furthermore, as the complexity of the alliance increases, resources must be consumed for more alliance management capabilities.…”

The role of open innovation in addressing resource constraints in healthcare: a systematic literature review

“…Yet, for example, in their summary of the current general evaluation process for medical devices, Park et al . (2019) focussed only on the hospital, government and employer (Park et al ., 2019; Yeom et al ., 2021), with no further focus on other actors. Identifying value for each actor helps secure their participation, a crucial and challenging step in organising open innovation projects (Hennala et al ., 2011).…”