R&D spending,strategic position and firm performance

Based on R&D investment data from Chinese listed manufacturing firms, this paper examines the effect of R&D spending on firms’ future performance conditional on their strategic positions. We find that firms pursing a product differentiation strategy have more R&D spending than those with a cost leadership strategy. In addition, we document a positive effect of R&D spending on firms’ future performance if they adopt a product differentiation strategy. Meanwhile, for the firms that adopt a cost leadership strategy, the relationship between R&D spending and firm performance resembles an inversed U-shape. Furthermore, we find this inversed U-shape relationship only exists for non-state-owned firms. Overall, this paper provides guidance and useful suggestions on the efficient allocation of R&D resources for Chinese manufacturing firms.     

R&D expenditures,ultimate ownership and future performance: Evidence from China

This study examines the relationship between R&D expenditures and future performance, as well as the moderating effects of ultimate ownership on the relationship. Using a sample of 772 Chinese listed firms from 2007 to 2012, this study shows that R&D expenditures are positively related to firms' future performance and that the R&D expenditures of SOEs lead to better future performance than those of non-SOEs. In addition, the results also reveal that voting rights of ultimate owners positively moderate the R&D-performance relationship. We also adopt fuzzy-set Qualitative Comparative Analysis (fsQCA) to reveal the interdependent and interrelated nature of the explanatory predictors of future performance. The results of fsQCA further indicate that large-sized SOEs with concentrated ownership could attain higher future performance on R&D investments if there are more patent applications and capital and operating spending. These findings complement the R&D performance literature by simultaneously considering the combinatory effect of ultimate ownership and control ability.     

The timing of version releases: A dynamic duopoly model

In many R&D-intensive consumer product categories, firms deliver value to consumers through the quality enhancements provided by new and improved versions of existing products. Therefore, important marketing decisions relate to a firm’s strategy for developing quality enhancements and releasing new versions. This paper explores this type of product development using a dynamic duopoly model that endogenizes each firm’s decisions over how much to invest in R&D and when to release new versions. Specifically, I explore how two key industry fundamentals—the degree of horizontal differentiation and the cost of releasing a new version—affect firms’ product development strategies and, accordingly, the evolution of industry structure. I find that varying the degree of horizontal differentiation gives rise to three distinctly different types of competitive dynamics: preemption races when the degree of horizontal differentiation is low; phases of accommodation when it is moderate; and asymmetric R&D wars when it is high. Furthermore, I find that an increase in the cost of releasing a new version can induce firms to compete more aggressively for the lead and, in doing so, release new versions more frequently despite the higher cost.     

The impact of international diversification on credit scores: Evidence from the UK

Despite the great deal of previous research into international diversification, we know little about the impact of international diversification on firms’ credit scores. Drawing upon the resource-based view and transaction cost economics, we examine the relationship between international diversification and credit scores by using a large sample of 6,557 UK firms between 2016 and 2017. We find an inverted U-shaped relationship between international diversification and firms’ credit scores, indicating that the effect of international diversification on credit scores is initially positive but becomes negative with over-diversification. In addition, we find that R&D intensity positively moderates the relationship between international diversification and credit score, implying that the credit scores of highly diversified firms improve as they increase their investment in R&D. Further analysis suggests that a firm’s credit score becomes less dependent on international diversification for large firms, firms in concentrated industries, firms in the manufacturing sector, and firms distant from key metropolitan areas, such as London.     

Do Mature Firms Gain Higher Economic Value from R&D Investment?

Despite the significance of economic value indicators in the measurement of firm value, not much attention has been dedicated to how research and development (R&D) influences firms’ economic value. This study examines the relationship between R&D investments and firms’ economic value and considers the moderating role of age in the relationship using a dataset from manufacturing and information and technology firms in China. The results show that R&D investments impact firms’ economic value positively. This suggests that firms that invest in R&D are rewarded with a monopoly, which increases their market shares, thereby increasing economic value. Again, we find that older firms increase their economic value more than younger ones when they both invest in R&D. Thus, younger firms in China suffer from the liability of newness when they invest in R&D. It is recommended that these younger firms should strive to shorten the time to reap the returns from R&D investments.

     

Uncertainty,Flexible Labour Relations and R&D

This paper examines the effects of uncertainty and flexible labour contracts on the Research and Development (R&D) intensity. Using a panel of Italian manufacturing firms, we find a hump‐shaped relationship between workforce flexibility and R&D intensity. Moreover, as predicted by the real options theory, our results suggest that product market uncertainty reduces R&D efforts and that flexible labour contracts countervail the adverse effect of uncertainty on R&D.     

A comparative study of innovation behaviour in Singapore's KIBS and manufacturing firms

While most services innovation studies are concentrated on the OECD or EU countries, research on services innovation in the non-OECD context is still rare. This study investigates innovation behaviour of a certain group of services – knowledge-intensive business services (KIBS), compared with the manufacturing sector in Singapore. The main findings of this study are: (1) KIBS firms have higher innovating ratio than manufacturing firms, but innovating manufacturing firms are more likely to do R&D than innovating KIBS firms; (2) KIBS firms have higher human capital intensity, training spending intensity, innovation spending intensity, and R&D spending intensity than manufacturing firms; (3) KIBS firms and manufacturing firms have similar innovation objectives, although some delicate nuances do exist; (4) KIBS firms are less likely to have overseas partners for innovation collaboration than manufacturing firms; (5) there is a U pattern of innovation collaboration with geographic distance for both KIBS and manufacturing firms; (6) social capitals are important for KIBS firms' successful provision of innovation support to manufacturing clients; (7) the importance of spatial proximity varies over different phases of innovation support.     

Firm R&D,Absorptive Capacity and Learning by Exporting: Firm‐level Evidence from China

The absorptive capacity of firms developed through R&D promotes learning by exporting. In this paper, we estimate the instantaneous and long‐run productivity effects of exporting on the universe of Chinese manufacturing firms. We find that exporting has very different productivity effects for firms with different pre‐export R&D status. It has large and lasting productivity effects for firms with pre‐export R&D, while it has little effects for firms without pre‐export R&D. Furthermore, the effect of exporting increases with the number of years of pre‐export R&D investment.     

What drives new product innovation in China? An integrative strategy tripod approach

This study explores the determinants that drive new product innovation by employing the integrative strategy tripod approach. We analyze data from the World Bank Enterprise Survey on 1,692 manufacturing firms in China using a novel methodological approach (a fuzzy set qualitative comparative analysis) that focuses on multiple conjectural causations. Interestingly, our findings suggest that R&D investment alone is not a sufficient condition to facilitate a firm's product innovation, but stable government policy is a necessary condition for R&D investment. Even with a low level of R&D investments, it can achieve innovation if those investments are made in conjunction with high technology information system investments for supporting customer relationships. Finally, we find that when firms perceive informal competition to be a significant obstacle to their operations and R&D investment, they tend to engage in corrupt actions to create innovation. Implications for research and practice are provided.     

Path dependence and resource availability: Process of innovation activities in Chinese family and non-family firms

Employing a process-based perspective and using a generalized method of moments (GMM) procedure, this paper examines the difference in innovation activities between family firms and non-family firms in China. We find that the level of research and development (R&D) by family firms is dependent on prior R&D spending and more so relative to non-family firms. Next, we find that R&D investment by family firms is more likely to be motivated by the availability of both internal and external cash flows relative to non-family firms. Further analysis suggests that these findings are unlikely to be driven by firm maturity.     

Process innovation strategy in SMEs,organizational innovation and performance: a misleading debate?

This article contributes to the study of process innovation as a growth strategy for SMEs, enriching and complementing the well-researched debate about product innovation. Thus, under-researched process innovation strategies are analyzed, and their antecedents and innovative performance implications explored. The results show that process innovation strategy is mainly shaped by the acquisition of embodied knowledge, which acts as a key mechanism for countering firms’ weak internal capabilities. As process innovation is mainly production oriented, performance consequences are measured using the production process indicators of cost reduction, flexibility and capacity improvement, avoiding traditional misguided measures based on sales, which are more product oriented. Drawing on information for 2,412 firms taken from Spanish CIS data, our results suggest that R&D efforts are not positively related to production process performance, but that the latter is improved by the synchronous co-adoption of organizational and technological innovation. SMEs conducting a process innovation strategy rely heavily on the acquisition of external sources of knowledge in order to complement their weak internal innovative capabilities, and their pattern of innovation shows clear-cut differences from traditional R&D-based product innovation strategies. The article uses a resource-based view framework to generate hypotheses.     

Industrial firms' new product strategies

This research examines the impact of the firm's product innovation strategy on performance results. A total of 19 strategy dimensions were uncovered, which capture the specific elements of firms innovation strategies. Three dimensions of performance, independent of each other, were also identified and were found to be closely linked to the strategy adopted. For a high-impact new product program, an aggressive strategy emphasizing sophisticated technologies, heavy R&D spending, and a focused program was found appropriate. In contrast, a conservative strategy featuring avoidance of new markets and new product classes and a close synergy with the firm's technological resources resulted in a high success rate program. Finally, a high overall performance was the outcome of a balanced strategy: technologically aggressive, market oriented, and synergistic.     

Organizational Culture,Competitive Strategy,and Performance in Ghana

The influence of competitive strategy on the organizational culture and performance relationship in Ghana is examined in this study using structural equation modeling. Results suggest evidence of both direct and indirect effects of organizational culture on firm performance. Firms with a predominantly clan or market culture were more likely to be directly associated with performance, whereas firms with adhocracy or hierarchy cultures were more likely to be indirectly associated with performance, depending on their alignment with a differentiation strategy or cost leadership strategy. However, only the link with differentiation strategy resulted in market performance. Managerial and theoretical implications are discussed.     

Socially responsible downsizing: Comparing family and non‐family firms

This study seeks to investigate whether family firms are more likely to downsize their workforce than their non‐family counterparts. Drawing on socioemotional wealth approach, we first explore the effect of family presence on workforce downsizing. Furthermore, we examine the moderating role of R&D activity on the family presence–downsizing relationship. Our sample covers a panel of manufacturing SMEs in Spain over the 1993–2014 period. We find that family firms are less likely to downsize than non‐family firms. Our results also reveal a negative association between R&D activity and workforce downsizing. Finally, the relationship between family presence and downsizing is contingent upon R&D activity, that is, family firms engaged in R&D activities are less likely to downsize than non‐innovative family firms.     

What if your owners also own other firms in your industry? The relationship between institutional common ownership,marketing, and firm performance

The growth in institutional holdings of public firms has led to increased interest in the concept of common ownership, in which the same investor owns stakes in multiple firms within the same industry. Economic theory suggests that common ownership could affect firm performance, but little empirical research has examined the nature of this effect or how a firm’s extant marketing potentially relates to this effect. This paper addresses this gap by proposing a relationship between common ownership and firm performance that is moderated by the firm’s extant marketing capabilities and its relative marketing strategic emphasis. Our empirical approach employs data from over 43 million institutional holdings to develop a measure of common ownership and accounts for empirical issues like endogeneity and unobserved heterogeneity. The results document a positive relationship between common ownership and firm performance and provide some evidence that this effect is stronger for firms with lower marketing capabilities and a relative strategic emphasis towards R&D spending. These results suggest that public policymakers should consider the firms’ extant strategic marketing when assessing regulations on common ownership.     

Does ownership type matter for innovation? Evidence from China

According to the institution-based view, ownership type is a key variable affecting environment-strategy configurations. This study configures the mechanism in which ownership types (as an institutional factor) moderate the effect of innovation strategies on firms' innovation performance. An empirical analysis was conducted on Chinese hi-tech manufacturing firms, using information related to the innovation activities of 303 firms. The empirical results suggest that ownership type affects the positive relationship between three sources of innovation (internal R&D activities, partnering with alliance partners, and partnering with universities) and innovation performance, as well as the negative relationship between external contracting and innovation performance (product or process innovation). The results imply that organizations doing business in China must be aware of the business environment that they intend to enter, especially if the intention is to develop new products or innovate current business processes.     

Multinationals, technology, and the introduction of varieties of goods

Multiproduct firms and product turnover are widespread phenomena. This paper develops a theoretical framework that links advantages in R&D and variable costs with firm's ability to expand its portfolio of products. The framework is then applied to explain systematic differences in product introduction by affiliates of multinationals and firms that only operate domestically. Using firm-level data for the Chinese manufacturing sector during 1998-2000, I compare the performance of foreign and domestic firms in terms of the new varieties that they introduce and I estimate the quantitative relevance of technological factors as a determinant.I find that firms with more than 50% of foreign ownership introduce on average more than twice as many more new varieties of goods as private domestic firms. Advantages in productivity account for 32 to 62% of the difference in the number and sales of new varieties, while advantages in the cost of development account for 3 to 6% of these differences.     

The Effect of R&D Services Offshoring on Skilled Employment: Firm Evidence

The offshoring of high‐tech services has greatly increased in recent years, with consequences for firms demand for skilled employment in firms. This paper specifically analyses the relationship between R&D offshoring and the demand for R&D employment using firm‐level data for Spanish manufacturing and services companies during the period 2004–11. Estimating different specifications with panel data techniques, we find that this association is statistically positive. In particular, for services firms a 1 percentage point increase in R&D offshoring raises the demand for researchers by about 11 per cent.     

Age,order of entry,strategic orientation,and organizational performance

This paper proposes an empirical test of several hypotheses linking age, order of entry, and strategic orientations to a firm's performance. Three strategies are defined: cost-leadership strategy, innovative differentiation, and marketing differentiation. The aim is to show that the impact on performance of both age and each of the three strategic orientations may differ according to a firm's order of entry into an industry.Following Lieberman and Montgomery's (1998) evaluation of their major contribution on first mover advantage, we emphasize three points. First, we develop and test hypotheses related to early and late followers' strategic orientations, broadening the scope of traditional studies on pioneers. Second, the model combines the dimensions of a firm's age, order of entry, and strategic orientations, as well as industry conditions (stage of the industry, environmental unpredictability, and technology diffusion), to establish a contingent model of performance analysis. Finally, the empirical study deals chiefly with organizational performance and not market share, which is considered a typical advantage accruing to pioneers.In addition, the scope of the study (582 French manufacturing firms) provides the means to fill a void in empirical studies because it is a broad cross-sectional test on non-U.S. data. The firms are mainly private, small to medium-sized, and single or dominant business firms. Therefore, our assumptions must be understood as particularly applicable to this type of firm.The results reveal important lessons for practitioners. First, we did not find a first-mover advantage in terms of organizational performance. In addition, pioneers' organizational performance is enhanced by the cost leader strategy—contrary to our assumption emphasizing innovative differentiation for these firms. Second, early followers' performance benefits from innovative differentiation and marketing differentiation. Finally, late entrants developing a cost leader strategy have a significantly higher performance. All groups considered, late followers are the firms most sensitive to environmental uncertainty and age effects.Our study clarifies the impact of a firm's age and strategic orientations on its performance depending on the firm's order of entry. The implications of these results are particularly relevant for practitioners and entrepreneurs. First, a cost leadership strategy seems to be a guarantee for a pioneer to increase its organizational performance. New ventures should therefore take into consideration the fact that newness and innovative differentiation might not be the best strategic orientations for high performance in the long run. Second, as a second mover, however, developing a superior product and being able to market it efficiently appear to be the enhancing factors of firm performance. Third, for both pioneers and early followers, age does not significantly reduce their performance. However, the longer a firm waits before entering, the greater is the negative effect of age on its performance. This is due to the difficulty of resisting competitive erosion, because pioneers and early followers drive the changes in the industry. The identification of these effects should help managers and stakeholders to make more effective entry decisions to sustain a firm's advantage, leading to better performance and higher probability of survival.