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.     

An analysis of firm-level innovation strategies in the US biotechnology industry

This study examines factors that may affect innovation strategies and performance of firms in the biotechnology industry. Specifically, differences between factors common to firms with high R&D intensity and those to firms with low R&D intensity are investigated. Biotechnology firms with relatively higher levels of R&D intensity attribute their innovation performance to research-based innovation factors and strategies such as strengthening their own research capabilities, entering into research collaborations with universities, industry leaders and other biotech firms, and licensing their technology. These strategies can be summarized as alignment within the industry. Firms with relatively lower R&D intensity have a hybrid focus—they invest in R&D but may also have products on the market. These firms attribute their innovation performance more so to production-based innovation factors and strategies such as gaining market access and maintaining connections with customers. Their strategy focuses on competitiveness, marketing, and distribution channels, while not ignoring the importance of a strong research base and the need to advance technologically. In a sense, strategies employed to achieve successful innovation reflect the stage of innovation in which a firm is operating for a particular product or process.     

Coordination in global R&D organizations: An examination of the role of subsidiary mandate and modular product architectures in dispersed R&D organizations

International research and development (R&D) operations require a significant amount of coordination between the headquarters and the subsidiaries in order to integrate the dispersed activities in one final product. This article explores what mechanisms multinational companies (MNCs) use to coordinate their overseas R&D units. Based on a multiple case study involving nine MNCs with overseas R&D subsidiaries of varying mandates, we find that R&D sites with high technology and/or market orientation tend to be coordinated by informal mechanisms while sites with little technology and/or market orientation tend to be coordinated by formal mechanisms. Furthermore, it appears that this relationship is strongly affected by the product’s architecture: while rather complex R&D activities are conducted at the systems level and at sites with high technology orientation, less complex R&D activities are conducted at the component level at sites with low technology and market orientation. Finally, the findings suggest that modular product architectures have a coordinating effect in global R&D activities which have the power to lower firms’ overall coordination effort. The findings bear important implications for the effective coordination of MNCs’ international R&D subsidiaries.     

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.     

From mind to market: A global,dynamic analysis of R&D

Existing models of R&D are not easily reconciled with four observable aspects of R&D: initial technologies (ideas) need to be developed further, only a minority of initial ideas are successfully brought to the market, production and process innovations take place simultaneously (whereby, initially, there is no production at all), and process innovations are implemented for technologies that are destined to leave the market. We present a detailed bifurcation analysis for a dynamic model of R&D that captures these observations in one, unifying framework. As we provide a global analysis, we do not limit initial technologies to carry marginal costs that are below the choke price. We show that there always exists a critical value of initial marginal cost above which the firm does not initiate any (R&D) activity; the path to the saddle-point steady state is never globally optimal. We also sketch some tentative policy implications of our analysis.     

Contributions and Channels of Interindustry R&D Spillovers: An Estimation for Japanese High-tech Industries

This paper estimates the contributions of R&D spillovers to four high-tech industries in Japan—general machinery, electrical machinery, transportation machinery and chemicals—by estimating the trans-log cost and share functions that include the R&D stock variables of own and spillover-source industries. The candidates for spillover- source industries are selected on the basis of large R&D flow or R&D proximity. The R&D flow measures the spillover embodied in purchased intermediate goods using input–output coefficients. The R&D proximity measures the extent of similarity between a pair of industries of the distribution of R&D expenditures across research fields, and is expected to show the likelihood of spillover at the R&D stage. The results suggest that electrical machinery benefited from R&D in the chemical industry, through the purchase of intermediate goods, whereas general machinery and transportation machinery benefited from R&D in the metal products industry, through R&D proximity. There was no evidence of the chemical industry benefiting from R&D spillovers. These results clearly imply that the contributions and the channels of R&D spillovers are diverse, casting doubt on earlier studies that used weighted sums of R&D expenditures (or their stocks) of other industries as aggregate spillover variables.     

R&D Cuts and Subsequent Reversals: Meeting or Beating Quarterly Analyst Forecasts

Abstract

Among firms that meet or beat earnings expectations, we find that cuts to R&D spending are more prevalent in Q4 relative to other interim quarters. This is consistent with the relative costs of real-activities management (accruals-based earnings management) decreasing (increasing) in Q4 due to the annual audit. More importantly, we find that the subsequent reversal of such R&D cuts is more prevalent and economically more significant following Q4 cuts relative to the reversals that follow cuts in other interim quarters. Our findings suggest that examination at the quarterly level (rather than annual level) lends new insights into the current debate regarding the prevalence of potentially value-destroying R&D cuts that managers make. Indeed, our findings suggest that some cuts may merely be temporary deferrals of R&D outlays.     

Managerial incentives and R&D investments: The moderating effect of the directors’ and officers’ liability insurance

Literature regarding the impact of managerial incentives on firm’s research and development (R&D) investments suggests that due to the riskiness of R&D activities, firms need to provide managerial incentives to encourage managerial discretion on corporate long-term investments of R&D. In spite that managerial incentives influence corporate R&D spending, some also argue corporate R&D spending a function of managerial incentive schemes. This paper applies the simultaneous equation to investigate the association between managerial discretion on R&D investments and the incentive scheme of CEO compensations by using the sample firms listed in Taiwan Security Exchange and Taipei Exchange. The results indicate that the listed firms in Taiwan simultaneously determine corporate R&D investments and CEO compensations. They reward their CEOs in compliance with their efforts on R&D investments and CEO compensation motivates CEOs to align their interests with firms’ long-term investments on R&D. A further analysis of the protection effect from the directors’ and officers’ (D&O) liability insurance suggests that D&O protection intensifies the relationship between R&D investments and CEO compensation. It encourages CEOs to allocate resources on R&D activities and make CEO incentive contracts efficacious on corporate long-term investments. The result is robust in the electronic industry of Taiwan.     

The impact of cluster connectedness on firm innovation: R&D effort and outcomes in the textile industry

Recent research into the clustering effect on firms has moved away from a simplistic view to a more complex approach. More realistic and complex causal relationships are now considered when analysing these territorial networks. Specifically, this paper attempts to analyse how cluster connectedness moderates the relationship of a firm's innovation effort and the results obtained from this effort. We want to question the commonly accepted direct and positive impact of R&D effort, and moreover, we suggest the existence of a saturation effect and that the level of cluster's inter-connectedness in the cluster moderates this effect. We have developed our empirical study focusing on the Spanish textile industrial cluster. This is a complex manufacturing industry that uses relatively low-technology manufacturing and R&D. Our findings suggest that the degree to which a firm is involved with, or connected to, other firms in the cluster can moderate the effect of the R&D effort on its innovation results. More generally, we aim to contribute to the discussion on the degree to which firms should be involved in the cluster network in order to operate efficiently and gain the maximum competitive advantages. Our findings have implications both in recent cluster and network literature as well for institutional policy.     

A performance-oriented risk management framework for innovative R&D projects

Uncertainty is one of the major inherent difficulties in developing innovative products, due to their highly dynamic markets and technologies. The presence of a large degree of uncertainty leads to high R&D risks, resulting in many R&D failures. Therefore, it is important to manage R&D risks through all R&D stages to improve R&D project success rates. This paper proposes a new risk management framework that aligns project risk management with corporate strategy and a performance measurement system to increase success rates of R&D projects and to accomplish corporate strategic goals. The balanced scorecard is used to identify major performance measures of an R&D organization based on the firm vision and strategy. Quality function deployment is adapted to transform organizational performance measures into project performance measures and a systematic procedure is developed for risk identification, assessment, response planning, and control. The proposed risk management framework enables an R&D project to be focused on achieving the corporate goals and provides a more effective way to identify, assess, analyze, and monitor R&D risks along the project cycle. The proposed methodology is illustrated with a drug development project.     

Supply chain environmental R&D cooperation and product performance: Exploring the network dynamics of positional embeddedness

Companies increasingly need to work with their partners to address sustainability issues, but benefits from environmental R&D cooperation can be limited by the complexity of its management. This paper examines how the interplay between dyadic and network relationships can contribute to increase the success of environmental R&D cooperation. Using secondary data, we examine whether the positional embeddedness in the supply network structure of partners engaged in environmental R&D cooperation amplifies the effects of cooperation on product performance. Non-monotonic effects of environmental R&D cooperation and embeddedness are also tested. The results indicate that the positional embeddedness of partners triggered by multiple sourcing strategy amplifies the effects of environmental R&D cooperation on product environmental performance. The interaction effects become however insignificant in the presence of increasing complexity and excessive environmental R&D cooperation.     

Finland and the mobile phone industry: A case study of the return on investment from government-funded research and development

The sudden and dramatic growth of the mobile phone manufacturing sector in Finland is an interesting case study for science and technology (S&T) policy analysts. Mostly on account of the rapidity of this growth against a relatively static situation for the other sub-sectors, the Finnish economic data over the period 1990–2001 can be used without ambiguity to quantify the return of an initial public sector research and development (R&D) expenditure on the growth of a sectoral economy. Although it is apparent from the data that this economic success story is to some extent now running out of steam, the returns to date for all the participants have been astonishing. Using the Patterson–Hartmann model, which has been developed to link company-level R&D expenditure with product revenue, it is shown that government has managed to achieve a multiplier effect of about 66 on its initial R&D expenditure through initially a leveraging of business R&D expenditure (at a level of 1:3) and then the translation of the latter into an increase in gross domestic product (GDP) (at a level of 1:22). These figures are extraordinarily high, even in comparison to the multipliers obtained by large private sector companies.The keys to the success were both the vision and foresight of the Finnish R&D community, who identified cell phones as a major growth opportunity, the sharing of risk by the various role players (government, universities and industry) as can happen in an efficient national system of innovation, and finally a sustained commitment to R&D by the industry leaders. The latter has now reached a level of 3.5% of GDP (2005), which makes Finland a global leader in R&D expenditure (as a percentage of GDP). The lessons for developing countries such as South Africa, which are moving towards higher levels of R&D expenditure but within a resource constrained context, are apparent.     

Incentives to innovate in response to competition: The role of agency costs

This paper investigates the role of managerial ownership and incentive payment as potential drivers of innovation decisions by firms and as shifters of the competition-innovation link in the Russian manufacturing industry, where poorly protected property rights and a path-dependent market structure (typical for many transition economies) lead to a variety of outcomes. We use recent survey-based microdata for nearly 2000 non-listed companies in Russia. Our results suggest that managerial ownership, which initially evolved as a means of protecting against and resisting dysfunctional institutions, may stimulate decisions to undertake R&D and risky product innovations. Further, managerial ownership and competition are complementary motivations for R&D and innovation. Incentive payment to hired managers is a positive commitment instrument but has no impact on the competition-innovation link.     

The effect of researchers' interdisciplinary characteristics on team innovation performance: evidence from university R&D teams in China

This study examines the effect of researchers' characteristics on the performance of R&D teams. Based on the multi-perspective of organization behavior and knowledge management, the authors adopt the framework of ‘Input-Process-Output’ regarding the process of the R&D team as knowledge creation. The theoretical model and corresponding hypotheses were tested empirically, drawing on a sample of 80 R&D teams from four universities in China. We concluded that knowledge communication, sharing, and integration play very important mediated roles in the knowledge creation process of the R&D team. Though researchers might have differing opinions on interdisciplinary research, they still tend toward communication and sharing their knowledge, experience, and viewpoints in the R&D process; this is an essential means for the achievement of knowledge integration. In order to achieve high innovation performance, management should pay attention to the process of knowledge communication, sharing, and integration.     

Hold the Line: An Examination of Line vs. Staff Differences

Despite common perceptions about the differences between line and staff personnel, few studies have provided answers as to which group is more effective. This study explores in detail key differences in managerial strengths between 46 line managers and 52 staff professionals in one of the fastest growing, highly service‐oriented retail organizations in the United States. Using behavioral data from a developmental multirater feedback effort, results suggest that staff personnel were more modest and accurate in their self‐assessments, while line managers were more service‐oriented but significantly weaker at relationships, openness to new ideas, demonstrating respect, and adaptability to change. © 2001 John Wiley & Sons, Inc.     

What governs firm-level R&D: Internal or external factors?

Two parallel streams of research investigating the determinants of corporate R&D exist: one from economics and the other from management. The economists’ variables tend to reflect the firm’s external environment while the explanatory variables used by management scientists are commonly internal to the firm. This paper combines both approaches to test for the relative importance of each type of factor using firm-level data on large Australian companies from 1990 to 2005. Our evidence suggests that most of a firm’s R&D activity can be explained by time-invariant factors which we believe relate to internal and specific characteristics such as the firm’s managerial dimensions, competitive strategy and how it communicates with employees. Of the remaining time-varying portion, we find that past profits, the rate of growth of the industry and the level of R&D activity over the firm’s industry is pertinent. These results are suggestive since we cannot clearly identify the extent to which the firm’s internal behaviour is conditioned by its external environment.     

Equilibrium Principal‐Agent Contracts: Competition and R&D Incentives

We analyze competition between firms engaged in R&D activities and market competition to study the choice of the incentive contracts for managers with hidden productivity. Oligopolistic screening requires extra effort/investment from the most productive managers: under additional assumptions on the hazard rate of the distribution of types we obtain no distortion in the middle rather than at the top. The equilibrium contracts are characterized by effort differentials between (any) two types always increasing with the number of firms, suggesting a positive relation between competition and high‐powered incentives. An inverted U curve between competition and absolute investments can emerge for the most productive managers.     

Real options game models of R&D competition between asymmetric firms with spillovers

Using real options game models, we consider the characterization of strategic equilibria associated with an asymmetric Research and Development (R&D) race between an incumbent firm and an entrant firm in the development of a new innovative product under market and technological uncertainties. The random arrival time of the discovery of the patent protected innovative product is modeled as a Poisson process. Input spillovers on the R&D effort are modeled by the change in the leader’s hazard rate of success of innovation upon the follower’s entry into the R&D race. Asymmetry between the two competing firms include sunk costs of investment, stochastic revenue flow rates generated from the product, and hazard rates of arrival of success of R&D efforts of the two firms. Under asymmetric duopoly, we obtain the complete characterization of the three types of Markov perfect equilibria (sequential leader–follower, preemption and simultaneous entry) of the firms’ optimal R&D entry decisions with respect to various sets of model parameters. Our model shows that under positive input spillover, preemptive equilibrium does not occur in the R&D race due to the presence of dominant second mover advantage. The two firms choose optimally to enter simultaneously if the sunk cost asymmetry is relatively small; otherwise, sequential equilibrium would occur. When the initial hazard rate is low relative to the level of input spillover, simultaneous entry would occur as an optimal decision, signifying another scenario of dominant second mover advantage. On the other hand, when the initial hazard rate is sufficiently high so that the first mover advantage becomes more significant, simultaneous equilibrium does not occur even under high level of positive input spillover.     

医药行业变革下医药代表及团队管理

近年来,随着我国现代医疗环境的不断改革,我国的药品营销工作以及整个医药行业呈现快速变革的趋势,尤其是在现代化的医改方案不断发展的背景下,医药企业在发展过程中受到了现代相关工作人员的高度重视。相关工作人员需要了解,在医药行业变革下,医药行业内的医药代表及医药行业管理者应当如何在充满不确定性的职业环境内开展人员以及团队管理,这样才能使医药企业在现代医疗环境的背景下不断发展。     

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.