Research into ambidextrous R&D in product development – new product development at a precision device maker: a case study

Through research into new product development processes at a precision device maker, this paper discusses the skilful management of knowledge boundaries that lie between various organisations, and between specialised human skills and functions that make up a project organisation, and presents the ways in which new organisational capabilities are brought about for the development of new products as exploratory activities that dynamically merge and integrated the various knowledge within a company. This paper describes some of the implications derived from analysis and observations of the new organisational forms of the company's ambidextrous R&D management which the company uses to engage in both ‘uncertainty management (exploration)’ and ‘existing product management (exploitation)’, through the partnering of its existing formal organisations and dynamic structuring of diverse multifunctional teams formed as projects spanning different specialisations and capabilities.     

The impact of R&D programme success on the decision to capitalise development expenditures in European firms

The financial reporting treatment of R&D expenditures can have important implications for firms’ strategic investment in R&D. Yet, financial reporting issues have been largely neglected in the R&D management literature. In this study, we first hypothesise that firms’ capitalisation of development expenditures subsequent to the mandatory adoption of IAS 38 (International Accounting Standard 38: Intangible Assets) is positively and significantly impacted by a measure of R&D programme success. Our empirical findings – based on a pan-European sample of firms – reveal strong support for this prediction. Our findings also offer support for our second hypothesis which predicts that capitalisation of development expenditures in conjunction with an evaluation of R&D programme success has a positive and significant impact on growth in shareholder value. Consequently, our work suggests that an important challenge for R&D professionals within firms is to develop improved measures of R&D success and to communicate this information to senior executives.     

Globalization and knowledge spillover: international direct investment,exports and patents

In this study three possible determinants of the increase in the ratio between skilled and unskilled workers are tested together: R&D, organisational change, and foreign direct investment. After analysing the literature, these hypotheses are jointly tested using a SUR estimate. The results – regarding a panel of 488 Italian manufacturing firms over the period 1989–1997 – suggest the statistical significance of the impact of organisational change, while they tend to exclude a direct relation between R&D spending and skill upgrading. With reference to FDIs, the nature of the data and the results do not permit the exclusion of their possible influence.     

The architecture of R&D joint projects: the social network analysis approach

This paper examines the effect of network properties on the performance R&D joint projects. In particular, we examine the impact of network cohesion, diversity and shape on the performance of these of exploration and exploitation R&D projects. We test these measures using data on projects from European R&D networks developed under the framework of Eureka projects. The empirical results indicated some network properties enhance the project’s performance and these differ depending on the kind of technological project developed. Our results suggest a lower heterogeneity, greater cohesion and network centralisation in exploitation than in exploration projects. Our findings show different types of structures depending on the aim of the joint project and that there exist different degrees of cohesion between the partners that comprise the core and the peripheral nodes.     

Trade and the Transmission of Technology

This paper integrates earlier studies on the link of productivity and research and development (R&D) in different industries of a closed economy with the more recent emphasis on R&D-driven growth and international trade in open economies. In this framework, technology in the form of product designs is transmitted to other industries, both domestically as well as internationally, through trade in differentiated intermediate goods. I present empirical results based on a new industry-level data set that covers more than 65 percent of the worlds manufacturing output and most of the worlds R&D expenditures between 1970 and 1991. The analysis considers productivity effects from R&D in the domestic industry itself, from R&D in other domestic industries, as well as in the same and other foreign industries. I estimate strong productivity effects both from own R&D spending and R&D conducted elsewhere. The contribution of R&D in the industry itself is about 50 percent in this sample. Domestic R&D in other industries is the source of 30 percent of the productivity increases, and the remaining 20 percent are due to R&D expenditures in foreign industries.     

Learning from successes and failures in pharmaceutical R&D

In this paper, we build a cumulative innovation model to understand the role of both success and failure in the learning dynamics that characterize pharmaceutical R&D. We test the prediction of our model by means of a unique dataset that combines patent information with R&D projects, thus distinguishing patents related to successfully marketed products from those covering candidate drugs that failed in clinical trials. Results confirm model predictions showing that patents associated with successfully completed projects receive more citations than those associated with failed projects. However, we also show that failed projects can be in turn cited more often than patents lacking clinical or preclinical information. We further explore the ‘black box’ of innovation, providing evidence that both successes and failures contribute to R&D investment decisions and knowledge dynamics in science-driven sectors.     

Synergizing independent and cooperative R&D activities: the effects of organisational slack and absorptive capacity

Firms undertaking independent and cooperative research and development (R&D) activities simultaneously often have difficulties to realise their synergistic effects. This study contends that such difficulties are caused by tensions between two types of R&D activities in terms of resource competition and knowledge leakage. Moreover, organisational slack and absorptive capacity may affect these tensions and thereby play important role in synergizing independent and cooperative R&D activities. Based on a survey data of 286 firms, this study finds that such two types of R&D activities jointly have a negative impact on firm performance. Furthermore, organisational slack aids in synergizing them, while absorptive capacity has an adverse impact. These findings enrich our knowledge on the interrelation of independent and cooperative R&D activities and shed light on how firms can synergize them.     

Nonlinear influence on R&D project performance

This study applies artificial neural network (ANN) to explore the relationships between the performance of R&D projects and its determinants. The results indicate that the quality of project environment has an inverse U-shaped effect on the performance of R&D projects, and both project managers' skills and the effectiveness of teamwork have monotonic positive influences on it. Besides, this study utilizes self-organizing map (SOM) to classify the Taiwanese information and electronics companies into three groups and further provides some suggestions. In addition, this paper uses an in-depth interview of qualitative research to explore why the quality of project environment has an inverse U-shaped effect on the R&D project performance, and finds out the main reason. There are two managerial implications in this study. First, the relationships between the performance of R&D projects and its determinants are not always linear in the complex and uncertain environment nowadays. Second, companies must care about the inverse U-shaped effect of the quality of project environment on the performance of R&D projects, although they can enhance the extent of project managers' skills and the effectiveness of their teamwork as much as possible.     

The effect of risk-sharing government subsidy on corporate R&D investment: Empirical evidence from Korea

Despite the wide belief that the high social rates of returns to R&D investment justify government subsidy policy in advanced countries, there are only limited studies about whether the R&D subsidy as a means of risk-sharing stimulates R&D investment of small and medium sized enterprises (SMEs) in developing countries. This paper empirically investigates the issue, using a unique data set on government subsidy for new technology development of Korean manufacturing firms, listed and non-listed, for the period from 2000 to 2007. The paper employs the DID estimation procedure and controls for simultaneity of the subsidy for new technology development using 2SLS and two step Tobit procedure. Our empirical results show that there is no solid evidence for crowding-out effects of the government subsidy. These results suggest that government subsidies could help SMEs to overcome the barriers to risky R&D projects through sharing R&D failure risk with government and by reducing capital costs to undertake new technology development projects, and thus the subsidy policy for new technology development seems to be partly successful in promoting the R&D investment of the Korean SMEs.     

Productivity and R&D sources: evidence for Catalan firms

This paper draws on a sample of innovative Catalan firms to identify how two main sources of innovation – internal R&D and external R&D acquisition – affect productivity in the manufacturing and service industries. The sample comprises 1612 innovative firms from the fourth European Community Innovation Survey (CIS-4) during the period 2002–2004. We compare empirical results when applying the usual OLS and quantile regression techniques controlling with a non-parametric sample selection. Our results indicate the different patterns that are attributable to the two sources of innovation as we move up from lower to higher conditional quantiles. First, the marginal effect of internal R&D on productivity decreased as we moved up to higher productivity levels. Second, the marginal effect of external R&D acquisition increased as we moved up to higher productivity levels. Finally, empirical results show significant complementarities between internal and external R&D, which are higher for knowledge-intensive service sectors.     

An investigation over inbound open innovation in SMEs: insights from an Italian manufacturing sample

ABSTRACT

Building on the Open Innovation (OI) framework, the purpose of this paper is to examine the R&D inbound model of small and medium enterprises (SMEs). Specifically, we focus on the impact of different horizontal R&D collaborations on product innovation and innovation performance. Hypotheses are tested using a Probit/Tobit regression on an Italian sample of 2591 manufacturing SMEs. Our analysis shows that collaborating with different horizontal R&D partners brings to different innovation outcomes. In particular, R&D collaboration with universities has a positive impact on product innovation, but not on innovation performance. Whereas, R&D collaboration with research centres and other private companies has a positive impact on both product innovation and innovation performance. Our findings provide implications for SMEs managers and entrepreneurs who have to decide between R&D partners for their innovation strategy. Avenues for future research are discussed.     

Radical innovations as drivers of breakthroughs: characteristics and properties of the management of technology leading to superior organisational performance in the discovery process of R&D labs

An interesting problem in management of technology and economics of innovation is how to explain the sources of some breakthroughs in research organisations. The present study confronts this problem by analysing the main determinant of the discovery of quasi-periodic materials that has generated a scientific paradigm shift in crystallography. The inductive study shows that radical innovations adopted in research labs, used by high-skilled adopters (called lab-oriented radical innovations; e.g. the Transmission Electron Microscopy), support breakthroughs and enhance discovery processes. This evidence substantiates a theoretical framework, which explains the main relations, characteristics, and properties of lab-oriented radical innovations that improve discovery processes and induce the superior organisational performance in advanced scientific fields. R&D management implications are discussed.     

Cooperative R&D and Commitment to A Policy of Know-how Trading

In this paper, we develop a theoretical framework to investigate the impact of adopting a strategy of know-how trading on the degree of research and development (R&D) cooperation. We show that the consequences of cooperation in know-how sharing under the conditions of the model are similar to a policy of cooperation in R&D investments in areas with large spillovers. An industry-wide policy of cooperation among competitors with respect to R&D investment and sharing would simply result in maximal joint profits. This cooperative R&D outcome could be generalized to any degree of spillover other than 100%. In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firm’s attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants.     

The internationalisation of R&D by multinationals: a trade-off between external and internal proximity

Overseas production is frequently seen as a force inducing thedecentralisation of R&D. A complementary explanation canbe provided if we admit that the acquisition of knowledge isone of the key factors behind the internationalisation of R&D.Multinational firms which adopt such a technology-oriented posturemust create an external organisation that is designed to scanand absorb external scientific and technological capabilities,a process which we refer to as a quest for 'external proximity'.However, the multinational firm's external organisation shouldnot be constituted to the detriment of its organisational coherence;it should, on the contrary, be completed by the implementationof relations of proximity internal to the firm, which we referto as 'internal proximity'. From this perspective, the multinationalfirm that manages dispersed R&D units is seen as facinga tension - an organisational trade-off - between external proximityand internal proximity.     

Firm's objective function and product and process R&D

Firms undertake different kinds of R&D activities. They do product R&D (R&D aimed at improving the quality of existing products, and creating new products). They also do process R&D (R&D aimed at lowering the cost of making existing and new products). Moreover, firms often do both product and process R&D simultaneously. As far as the objective of firms is concerned, this need not be limited to profit-maximization only. Rather, firms may have a broader objective, where they care about profits as well as consumer surplus. This paper studies effects of a firm having a general objective function (that takes into consideration both profits and consumer surplus) on its product and process R&D choices, and corresponding implications.I consider product and process R&D choices of firms in an infinite horizon set-up with discrete time. Firms in my framework can simultaneously do both product and process R&D in every period, face a discrete-choice model of consumer demand with vertical product differentiation, and maximize a discounted, weighted sum of their profits and consumer surplus over the infinite time horizon.I show how process and product R&D differ from each other in my framework, and the role of a firm's objective function in this regard. I compare process and product R&D choices across firms that differ in their objective function, and illustrate effects of providing general R&D subsidies (subsidies given for any R&D, regardless of whether it is product or process R&D) to firms. I also characterize how in my framework, the choice of process R&D in total R&D — R&D composition — by an individual firm varies over time, and how process and product R&D choices, process and product R&D productivity, and the choice of R&D composition vary across firms that differ in size but are otherwise similar.     

Types of cooperation partners as determinants of innovation failures

In this paper we analyse if specific R&D cooperation partners are related to an increase in the probability of innovation failures in terms discontinuing innovation projects. We distinguish between seven different R&D cooperation partner types, and we discriminate between product innovation failures and process innovation failures. Using German Community Innovation Survey data we find that, firstly, each type of R&D cooperation partner has a different effect on innovation failures. Secondly, we show that product innovation failures and process innovation failures are not affected in equal measure by the same type of R&D cooperation partner. Our results suggest that while R&D cooperation with public research institutes is significantly and negatively related to the probability to cancel a process innovation project, the coefficient is positive but insignificant for product innovation failures. Firms conducting partnerships with suppliers, however, run the risk of both product and process innovation failures. In turn, cooperation with competitors is positively correlated only to process innovation failures.     

Public Technology Infrastructure,R&D Sourcing,and Research Joint Ventures

In this paper, we define public technology infrastructure to mean public resources that bring new R&D into existence. Examples are public research that yields knowledge spillovers and government contracts that broker new research. Using this definition we explore the effect of public infrastructure on cooperative R&D, especially R&D sourcing and research joint ventures (RJVs). Our findings strongly suggest that public infrastructure promotes cooperative R&D. We begin by studying the role of federal laboratories in R&D sourcing by private laboratories, finding that sourcing increases as a result. Then we examine patents arising from RJVs sponsored by the Advanced Technology Program (ATP). We find that R&D subsidies as well as difficulty and novelty increase patents produced by the RJVs. Contractual oversight by ATP has no direct effect but an indirect effect appears to exist, since firms value ATP oversight more highly for more difficult and novel projects, and these produce more patents.     

An empirical analysis of patents flows and R&D flows around the world

In this article, we empirically investigate the effect of Research and Development (R&D) flows on patent flows around the world. We do this using an unbalanced panel consisting primarily of Organization for Economic Co-operation and Development (OECD) countries that have both patent and R&D expenditure information broken down by domestic and foreign sources. Our analysis shows that even among a fairly homogeneous group of countries, the sources of patents and R&D differ substantially. Using a dynamic panel framework, we find that domestic R&D per capita increases domestic patents per capita only for the European Patent Convention (EPC) countries that already have a decentralized approach to innovation. Foreign R&D per capita increases foreign patents per capita in all countries even though foreign R&D constitutes a very small fraction of total R&D. We find that some of these differences can be attributed to the locations of the patent applications, including those to the European Patent Office (EPO), United States Patent and Trademark Office (USPTO) and triadic patent applications to the EPO, USPTO and Japan Patent Office (JPO) simultaneously.     

R&D and productivity growth: Evidence from the UK

Although the econometric evaluation of R&D has attracted wide interest in many countries, it has not attracted much in the UK. The main objective of this paper is to fill this void, i.e., to estimate the impact of R&D on productivity growth of the UK manufacturing sector. However, there are some additional objectives. Firstly, we estimate the impact of R&D on productivity growth of large and small firms and we discuss a number of theoretical arguments regarding the role of firm size. Secondly, given that the technological infrastructure influences the innovative capacity of a firm, we compare the impact of R&D on productivity growth of high-tech firms with the corresponding impact on productivity growth of low-tech firms. Thirdly, we investigate whether the contribution of R&D to productivity growth has changed over time.

Based on firm-level data (78 firms, 1989–2002), we find that the contribution of R&D is approximately 0.04. Although the R&D-elasticity of large firms (0.044) is higher than the corresponding elasticity of small firms (0.035), the difference is small. In contrast, the R&D-elasticity is considerably high for high-tech sectors (0.11), but statistically insignificant for low-tech sectors. Finally, the investigation of the elasticity of R&D over time revealed an interesting discontinuity showing that although until 1995 the R&D-elasticity was approximately zero, after 1995 it increased dramatically to 0.09. We investigate the potential causes of such non-linearity and we suggest a number of possible explanations.     

The Social Value of Biodiversity for R&D

The value of genetic resources for use in research and development (R&D)activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search. Here we develop a moregeneralised framework in which genetic resources are used in R&D at thebase of an industry that addresses recurring problems of resistance, as inthe pharmaceutical or plant breeding industries. The R&D process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction (Schumpeterian competition) andadaptive destruction (natural selection and adaptation). This frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena. We then demonstrate the important differences between firm-based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation. There are six externalitiesin private patent-based genetic resource valuation, and five of theseindicate that private valuations will under-estimate social values.