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Impact of domestic and foreign knowledge mechanisms on the innovation performance of Indian firms
Institution:1. School of Management, Politecnico Milano, Milan, Italy;2. Department of Business Administration, The Williams School of Commerce, Economics and Politics, Washington and Lee University, Lexington, VA, USA;1. University of Essex Business School, University of Essex, Southend on Sea, SS1 1LW Essex, United Kingdom;2. Vienna University of Economics and Business, Welthandelsplatz 1, Building D1, 1020 Vienna, Austria;1. Northeastern University, 215F Renaissance Park, Boston, MA 02115, USA;2. Northeastern University, 309 Hayden Hall, Boston, MA 02115, USA;1. New Jersey City University, 200 Hudson, St. Jersey City, NJ 07302, United States;2. University of Arkansas Fort Smith, 5210 Grand Ave, Fort Smith, AR 72908, United States;3. Washington State University, 377 Todd Hall Addition, Pullman, WA 99164, United States;4. Rutgers University, 100 Rockafeller Road, Piscataway, NJ 08854, United States;1. Graduate School of Future Strategy, KAIST, Daejeon 34141, Republic of Korea;2. Ministry of SMEs & Start-ups, Sejong 30121, Republic of Korea
Abstract:Research on emerging market firms (EMFs) has acknowledged the role of innovation in catching-up with advanced economies. Although we know that EMFs’ innovation increasingly depends on collaborations and cross-border knowledge flows, less has been said about the effectiveness of foreign and domestic knowledge mechanisms adopted to improve EMFs’ innovation performance. We hypothesize that foreign mechanisms rely on diverse knowledge and foster explorative innovation (i.e. innovation that extends the existing local competencies), while domestic mechanisms are more likely to be associated with the exploitation of the local existing competencies. Additionally, we claim that the breadth of EMFs’ absorptive capacity strengthens the impact of foreign knowledge mechanisms on explorative innovation, while depth increases the impact of domestic knowledge mechanisms on EMFs’ exploitative innovation, thus highlighting that the interplay of knowledge resources internal and external to the firm involve different levels of recombination. Our empirical analyses conducted on a sample of 161 Indian bio-pharmaceutical firms observed from 1997 to 2018 confirm our hypotheses, thus contributing to the literature on EMFs’ catching up via internationalization and innovation.
Keywords:Emerging market firms  Knowledge mechanisms  Absorptive capacity  Innovation performance  India  Bio-pharmaceutical industry
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