Overcoming the false dichotomy between internal R&D and external knowledge acquisition: absorptive capacity dynamics over time

Tidd, Joe, Ramirez, Matias and Denicolai, Stefano (2016) Overcoming the false dichotomy between internal R&D and external knowledge acquisition: absorptive capacity dynamics over time. Technological Forecasting and Social Change, 104. pp. 57-65. ISSN 0040-1625

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Abstract

An important challenge in open innovation is the capability to absorb and exploit external inbound knowledge, and how internal R&D may facilitate or hinder this. Conventionally, internal R&D expenditure is used as a proxy for absorptive capacity, but in the context of open innovation, this can be problematic. Internal R&D may also constrain present and future absorption, and restrict exploitation for a number of reasons, e.g. degree of development, structural, geographical or relevance to existing business units and markets. Conversely, external sources of innovation can be difficult to identify, evaluate and absorb, but may be more codified, as by definition they are available in the market, and more fully-developed to demonstrate commercial potential. Using panel data of 325 firms over five years, we find that contrary to the prescriptions of transaction cost analysis, externally-sourced knowledge takes less time to absorb and exploit than internally-generated knowledge, but that internal knowledge creates higher returns over the longer term. Significantly, the relationship between internal and external knowledge and performance changes over time, while the ideal strategic balance needs to consider decisions taken at different times.

Item Type: Article
Keywords: innovation absorptive capacity open innovation license knowledge
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > HF Commerce > HF5001 Business > HF5410 Marketing. Distribution of products
T Technology > T Technology (General) > T0173.2 Technological change
T Technology > T Technology (General)
T Technology > T Technology (General) > T0201 Patents. Trademarks
Depositing User: Joseph Tidd
Date Deposited: 04 Jan 2016 13:57
Last Modified: 04 Jan 2016 13:57
URI: http://sro.sussex.ac.uk/id/eprint/58922
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