Mining the R&D innovation performance processes for high-tech firms based on rough set theory

The research and development (R&D) innovation of firms continues to be viewed as an important source of competitive advantage to academics and practitioners. To explore and extract the R&D innovation decision rules, it is important to understand how the R&D innovation rule-base works. However, many studies have not yet adequately induced and extracted the decision rule of R&D innovation and performance based on the characteristics and components of the original data rather than on post-determination models. The analysis of this study is grounded in the taxonomy of induction-related activities using a rough set theory approach or rule-based decision-making technique to infer R&D innovation decision rules and models linking R&D innovation to sales growth. The rules developed using rough set theory can be directly translated into a path-dependent flow network to infer decision paths and parameters. The flow network graph and cause-and-effect relationship of decision rules are heavily exploited in R&D innovation characteristics. In addition, an empirical case of R&D innovation performance will be illustrated to show that the rough sets model and the flow network graph are useful and efficient tools for building R&D innovation decision rules and providing predictions. We will then illustrate that integrating the flow network graph with rough set theory can fully reflect the characteristics of R&D innovation, and, through the established model, we can obtain a more reasonable result than with artificial influence.     

Capitalization of R&D and the Informativeness of Stock Prices

Abstract

This paper presents both a new approach to studying the consequences of accounting choice and a unique sample to examine the effects of accounting choice in the R&D context. We investigate the effect of firms' decision to capitalize R&D expenditures on the amount of information about future earnings reflected in current stock returns, as captured by the association between current-year returns and future earnings (FERC). We use a sample of UK firms, which includes both R&D capitalizers and expensers. An important feature of our tests is our use of a two-equation system to control for the endogeneity of the accounting choice (i.e. self-selection). Proponents of capitalization claim that it enables management to better communicate information about the success of projects and their probable future benefits. Consistent with this, we find that capitalization is associated with higher FERC than expensing.     

A micro-econometric analysis of the role of R&D spillovers using a nonlinear translog specification

This paper assesses the impact of Research and Development (R&D) spillovers on production for a panel of 1,203 Italian manufacturing firms over the period 1998–2003.The estimations are based on a nonlinear translog production function augmented by a measure of R&D spillovers which combines the geographical distance between firms, the technological similarity within each pair of firms and the technical efficiency of each firm. The estimation method takes into account the endogeneity of regressors and the potential sample selection issue regarding the decision by firms to invest in R&D. Results show that the translog production function is more suitable than the Cobb-Douglas for modelling firm behaviour and that returns to scale are increasing. Moreover, the internal and external stocks of technology exert a significant impact on firms’ production. Finally, it emerges that, for Italian manufacturing firms, R&D capital and R&D spillovers are highly substitutes.     

MNEs,technological efforts and channels of export spillover: An analysis of Indian manufacturing industries

The present study provides some empirical evidence for the export spillover effect examining the case of an emerging market economy, namely India, using firm level data for the period 1994–2006. We disentangle different spillover channels, namely the demonstration effect, the imitation effect (R&D spillover) and a proxy to measure spillover effects coming from higher MNEs’ skills. We also account for the heterogeneous technological behaviour of local firms considering how in-house R&D efforts and disembodied technological imports may affect the exporting performance. Our findings show how export spillover effects are mainly mediated by an imitation effect, contrary to the case of other emerging market economies like China, where a demonstration effect is evident. We also recognise that both the decision to export and export intensity are influenced most of all by the technological activities of local firms. Moreover, the findings of the analysis suggest that in-house R&D is more relevant than other external sources of technological knowledge such as disembodied technology imports to internalise the positive spillover effect emanating from MNEs.     

Making sense of innovation by R&D and non-R&D innovators in low technology contexts: A forgotten lesson for policymakers

This paper attempts to use an integrated theory based on the framework of a firm's internal and external sources of knowledge to analyze how R&D activities differ in innovation from non-R&D activities, especially in the context of low and medium-low tech (LMT) sectors where most of the firms are SMEs. Simultaneously, the paper also explores the key differences between R&D and non-R&D innovators. The empirical analysis is based on a representative panel of 2023 Spanish manufacturing firms from the Spanish Ministry of Industry for 2005 and 2006. Innovation in product and process is explained using non-R&D variables such as marketing, design or the hiring of tertiary degree employees. Only innovation in product is explained by R&D expenditures. Regarding innovation in process, the R&D variables work in a few specific cases. Therefore, innovation can be explained using non-R&D variables. The firms with more internal resources, those which conduct R&D activities, present a better absorptive capacity (AC) and this leads them to engage in cooperation agreements and to access external flows of knowledge. The paper has important implications for policymakers due to the fact that most policies for R&D are based just on R&D programmes.     

Capitalizing Research & Development: Signaling or Earnings Management?

This paper analyzes the capitalization of Research & Development (R&D) expenditures under International Financial Reporting Standards (IFRS). Discretionary R&D capitalization can be exercised by managers to signal private information on future economic benefits to the market. It can, however, also serve as opportunistic earnings management. We analyze a unique, hand-collected sample of highly R&D intensive German IFRS firms during 1998–2012. We find that market values are not associated with capitalized R&D for the overall sample, indicating that earnings management may be a concern. We identify firm-years for which R&D capitalization is possibly used for pushing their earnings above a specific threshold (e.g. analysts' forecasted earnings, prior year's earnings). Our results show that both the decision to capitalize and how much to capitalize are strongly associated with benchmark beating. Consistently, we find that market values are negatively associated with capitalized R&D for firms who are likely to use capitalization for benchmark beating (about one third of the overall sample). On the other hand, the market values R&D capitalization positively for well-performing firms, for which capitalizing does not matter to beat an earnings benchmark (about half of the overall sample). This finding is robust to controls for endogeneity, various deflators, and different measures for earnings management.     

股权激励如何驱动企业研发支出？——基于股权激励异质性的视角

股权激励被视为解决研发支出中代理冲突的重要工具,但现有经验证据并不稳定甚至相互矛盾。基于股权激励异质性的视角,本文引入新的股权激励特征——股权激励价值的股价及股价波动率敏感性,考察股权激励对企业研发支出的驱动机制,并利用2006-2012年我国实施股权激励的上市公司作为样本进行检验。研究发现:股权激励对企业研发支出的驱动机制包含风险规避效应与激励效应两个相反维度,最终驱动方向与强度取决于两类效应的博弈;限制性股票的风险规避效应显著强于股票期权;股票期权的激励效应显著强于限制性股票;市场竞争程度、企业产权性质与授予动机对限制性股票与股票期权的两类效应产生调节作用。     

Performance evaluation of China's high-tech innovation process: Analysis based on the innovation value chain

The Chinese high-tech industry has developed greatly since the beginning of China's “National High-tech R&D (863) Program” and “China Torch Program”. This paper introduces a conceptual model extended from the innovation value chain model to simultaneously estimate the R&D and commercialization efficiencies for the high-tech industries of 29 provincial-level regions in China. To match reality, a network DEA incorporating both shared inputs and additional intermediate inputs is constructed to open the “black box” view of decision making units used in single-stage DEA. This study is the first attempt to link the R&D and commercialization with a solid theoretical foundation and feasible mathematical methods. The empirical findings show that most of the 29 regions have low efficiency in the commercialization sub-process compared to the R&D sub-process, although there are regional differences in China's high-tech industry. Pearson correlation shows that the R&D sub-process is not closely correlated to the commercialization sub-process in terms of efficiency. Our analysis can provide information for the formulation of policies to achieve high innovation efficiency.     

Reprint of "Performance evaluation of China's high-tech innovation process :Analysis based on the innovation value chain"

The Chinese high-tech industry has developed greatly since the beginning of China's “National High-tech R&D (863) Program” and “China Torch Program”. This paper introduces a conceptual model extended from the innovation value chain model to simultaneously estimate the R&D and commercialization efficiencies for the high-tech industries of 29 provincial-level regions in China. To match reality, a network DEA incorporating both shared inputs and additional intermediate inputs is constructed to open the “black box” view of decision making units used in single-stage DEA. This study is the first attempt to link the R&D and commercialization with a solid theoretical foundation and feasible mathematical methods. The empirical findings show that most of the 29 regions have low efficiency in the commercialization sub-process compared to the R&D sub-process, although there are regional differences in China's high-tech industry. Pearson correlation shows that the R&D sub-process is not closely correlated to the commercialization sub-process in terms of efficiency. Our analysis can provide information for the formulation of policies to achieve high innovation efficiency.     

Types of innovation and inter-firm co-operation

The paper presents the results of an empirical study that aims to investigate the impact of interfirm co-operation over innovation on four different types of innovation: product, process, incremental and radical innovation. Drawing on the innovative milieu literature, the impact on the above four types of innovation was tested for both external and internal factors of innovation such as inter-firm co-operation over innovation, production networking, as well as R&D investment and R&D personnel. Four probit models were run by using a unique data set compiled as part of the Regional Innovation Strategy for the West Midlands (UK) Project. The main findings of the paper seem to provide substantial evidence that, for any of the four types of innovation considered, firms' capacity to innovate could greatly improve if they co-operated with other firms over innovation in addition to or instead of investing in R&D. Innovation policy should not overlook, therefore, the systemic component of innovation and ought to attempt to initiate and support inter-firm co-operation. This would mean a renewed and more focused analysis of firms' clusters as part of a multi-faceted approach to innovation policy.     

The U-shaped effect of R&D intensity on employee downsizing: evidence from Spanish manufacturing firms (1994–2010)

Abstract

This study explores an empirically untested issue: the relationship between the level of a firm’s R&D intensity and employee downsizing. Basing our conceptual development on the Resource-Based View of the firm, we argue that a linear relationship is a poor approximation of the proposed relationship. Instead, we find theoretical insights supporting the logic that employee downsizing decreases as firms shift from low to moderate levels of R&D intensity but increases as firms change from moderate to high levels. This prediction suggests that a U-shaped link is a better representation of the way in which a firm’s R&D intensity can affect downsizing. This hypothesis is tested and confirmed using a sample of Spanish manufacturing firms during the 1994–2010 period. We also propose a novel empirical tool (i.e. dynamic probit models) that is especially useful for addressing the potential endogeneity and simultaneity problem in studying this relationship. Implications for future research and practice are presented along with the conclusions of our findings.     

Budgeting for research and development: a dynamic financial simulation approach

The research and development (R&D) budgeting decision is crucial for at least two reasons: if too much is spent, short-term financial stability is at risk, while, if the budget is too small, long-term competitiveness is threatened. Nevertheless, many enterprises simply extrapolate the past without further reflection.This paper presents a computer-based dynamic stochastic simulation model that allows one to assess the impact of alternative R&D budgeting policies on corporate development. The core decisions to be evaluated concern timing and funding of investments in R&D. Our approach substantially expands earlier work by Brockhoff (R&D Manage. 19 (1989) 265). In particular, it distinguishes between product and process innovation, considers market dynamics related to technical progress via a modifiable S-curve, integrates marketing, and takes into account essential financial aspects. As a result, our model is closer to reality than previous ones. A sample application with real company data illustrates its potential usage.     

Two managerial economics approaches to the R&D decision process

In this paper we present two different approaches that analyze the effects of rivals on the R&D decision process. The first approach assumes that the introduction time of the new product is uncertain to the manager. Given this assumption, the problem is analyzed in a framework similar to the one suggested by Kamien and Schwartz (1972). The second approch assumes technical certainty to study a set of models that extends and supports different views in the managerial economics literature regarding the properties of the R&D decision process from both private and social points of view.     

Exploring the impact of innovation strategy on R&D employees’ job satisfaction: A mathematical model and empirical research

This study develops a mathematical model to examine the effect of innovation strategy on R&D employee’s job satisfaction and to identify the optimal guidelines of innovation strategy, with conflict and organization performance being treated as the intermediary variables. The study further conducts an empirical survey to illustrate the contributions of this mathematical model. The results indicate that the product innovation has a greater influence on organizational performance, while the process innovation has a greater influence on conflict resolution among R&D employees. The mathematical and empirical results have provided an optimal guideline for determining the allocation of resources, which suggests that firms must focus on product innovation to gain the optimal R&D employee’s job satisfaction. In addition, the types of innovation policies along with rivals’ attitudes influence the advantages to be taken from a firm innovation strategy.     

Effective Control Rights in Vertical R&D Collaboration

Because of increasing technological complexity of new products, the manufacturers of final products more often seek access to external sources of knowledge at the early, market‐distant stages of innovation processes. However, they are confronted with a specifically high danger of moral hazard. Traditional management instruments fail to control that danger mainly for two reasons. First, the supplier activities are not transparent. Second, market‐distant R&D results are credence goods whose quality cannot be evaluated, not even ex post. It is the theory of incomplete contracts that solves the problem by allocating the so‐called control rights to the supplier. These rights primarily regulate the assignment of the intellectual property rights, the control of the R&D process, and the marketing of the final products that are based on the delivered R&D results. To date, we do not have any empirical evidence about the relative effectiveness of these control rights. Moreover, studies on incomplete contracts in R&D alliances only focused on the collaboration between biotechnology and pharmaceutical firms. Our study fills these gaps. On the basis of a sample of French and German R&D suppliers, we find that only enforceable intellectual property rights assigned to the supplier effectively control moral hazard. Copyright © 2011 John Wiley & Sons, Ltd.     

How Does Open Innovation Modify the Relationship between Environmental Regulations and Productivity?

With increasingly severe environmental regulations, a pressing issue has been the need for firms to develop efficient strategies to achieve environmental protection and high productivity. Several environmental experts argue that firms can respond to environmental regulations through innovation; however, the question of how to innovate is unanswered in the environmental literature. Therefore, this study focuses on the open innovation strategy approach to respond to environmental regulations and maintain high productivity by incorporating the idea of innovation management. We first divide open innovation strategy into two modes of external technology acquisition: foreign and domestic. Next, we examine these modes' mediation effects on environmental regulations and productivity. In addition, we test the moderating effect of internal R&D on the relationship between external technology acquisition and productivity. Using data on 35 Chinese industrial sectors from 2001 to 2010, the empirical findings show that foreign technology significantly and positively mediates the link between environmental regulations and productivity, while domestic technology does not. Internal R&D investment, as an absorptive capacity, positively moderates the effect of foreign technology; however, it negatively moderates the effect of domestic technology on productivity. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

A conceptual framework for R&D strategic alliance assessment for Taiwan’s biotechnology industry

With the rapid development of technology, technology advancement is harder and harder with more and more risks in technology innovation, thus enterprises can’t carry out technology innovation program alone. The development of the emergence of the biotechnology industries provides valuable insights into the role of strategic alliances and networking that shaped the synergy between both industries. This paper provides a step by step methodology to evaluate R&D strategic alliances problem in Taiwan biotechnology Industry. The purpose of this paper is to formalize the choice of R&D strategic alliance modes for an individual multinational enterprise among Joint Venture, Franchise agreement, Licensing Agreement, Subcontract and Merger/acquisition. An illustrative example is presented to demonstrate the applicability of the proposed methodology. The proposed approach also provides a relatively simple and well suited decision making tool for this type of strategic decision making problem. This evaluation mode was identified as a workable method.     

Research collaboration and R&D outsourcing: Different R&D personnel requirements in SMEs

The literature on ‘open’ innovation emphasises the need to engage in external knowledge relations in order to innovate. Particularly for SMEs, research cooperation and R&D outsourcing can offer possibilities to complement the often limited internal research resources. However, they also bring in their wake requirements in terms of absorptive capacity and managerial skills of the internal R&D personnel.The paper focuses on the different requirements in terms of availability and training of research managers and R&D experts for research cooperation versus R&D outsourcing in SMEs. An empirical analysis of micro-level data provided by the OECD business R&D survey for Belgium reveals that the relation between R&D personnel requirements and research collaboration and R&D outsourcing depends upon the SME size. Therefore, to study this subject appropriately a distinction between very small, small, and medium-sized firms is relevant. Very small firms engage significantly less in research cooperation than medium-sized firms and the propensity to engage in research cooperation is positively associated with the share of PhD holders among the research managers and R&D experts. For R&D outsourcing a lower involvement is noted in medium-sized firms, and the propensity to outsource increases with the formal qualification level of the R&D personnel and with R&D training. Among the SME, small firms are most engaged in research cooperation and in R&D outsourcing. In the case of research cooperation they rely on highly qualified experts. For R&D outsourcing activities both the presence of research managers and R&D experts is important.     

Learning from R&D outsourcing vs. learning by R&D outsourcing

We analyze how research and development (R&D) outsourcing influences product innovation. We propose a separation between learning from R&D outsourcing, whereby the firm improves its ability to innovate by using outsourced R&D directly in new products, from learning by R&D outsourcing, whereby the firm indirectly uses outsourced R&D by integrating it with internal R&D to create new products. Building on the knowledge-based view, we argue that learning from R&D outsourcing is likely to have an inverse U-shaped relationship with product innovation, because the initial benefits of using outsourced component R&D knowledge to innovate products is eventually outweighed by the hollowing out of the firm's ability to innovate. In contrast, we propose that learning by R&D outsourcing is likely to have a U-shaped relationship with product innovation, because the initial challenges of integrating internal and external R&D are eventually overcome, resulting in more innovations. Finally, we distinguish between domestic and foreign R&D outsourcing and propose a liability of foreignness in R&D outsourcing as it has a lower impact on new products than domestic R&D outsourcing. The empirical analysis shows that outsourced R&D has an inverted U-shaped relationship with the number of new products, while the interaction between outsourced R&D and internal R&D has a U-shaped relationship with the number of new products. It also shows that domestic outsourced R&D has a higher positive impact on the number of new products than foreign outsourced R&D.     

Alternative sources of technology: An analysis of induced innovations

This paper considers why firms differ in the degree to which they rely on their internal R&D organization for generating new technologies (induced innovations) rather than on existing external technology markets (purchased innovations). An empirical model is suggested to explan inter-firm differences in the percentage of new technology induced through R&D efforts. The analysis suggests that such differences are systematically related to the firm's size, its competative environment, and its degree of diversification.