Battle royal in biotechnology: R&D vs. product vs. process innovations |
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Authors: | Juan Luis Nicolau María Jesús Santa-María |
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Affiliation: | 1. Department of Marketing, Faculty of Economics, University of Alicante, PO Box 99, 03080 Alicante, Spainjl.nicolau@ua.es;3. Department of Applied Economics and Economic Policy, Faculty of Economics, University of Alicante, PO Box 99, 03080 Alicante, Spain |
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Abstract: | Companies regard innovation as a central element of their business. However, as not all innovation types are the same, the central question is: should their announcements bring about the same effect on performance? This article analyses potential differences in firm value derived from the innovation-type announcements ‘R&;D’, ‘product’, and ‘process’, made by intensive news-generating firms such as biotech companies. The empirical application shows a significantly positive reaction to innovation announcements, with the prospect of future innovation (‘R&;D’ investment announcements) having greater impact on firm value than ‘product’ and ‘process’ innovations. Firm experience also acts as a moderator in this innovation–performance relationship, which is particularly relevant for entrepreneurs who need to develop and send credible signals indicating the value of the firm's intangible assets to the market. |
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Keywords: | biotechnology innovation R& D firm age firm value |
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