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The impact of R&D workforce diversity on firm’s performance in internal and external R&D

Sung Joo Bae (School of Business, Yonsei University, Seoul, Republic of Korea)
Sangyun Han (Department of International Commerce, Daejeon University, Daejeon, Republic of Korea)

European Journal of Innovation Management

ISSN: 1460-1060

Publication date: 3 July 2019

Abstract

Purpose

How should managers organize their R&D workforce in order to maximize the benefit of internal R&D and R&D outsourcing strategy? The purpose of this paper is to examine the effects of R&D workforce diversity on firms’ performance when the firms use internal and external knowledge acquired from R&D outsourcing. Diversity of R&D employees as R&D workforce can enable firms to utilize the knowledge of internal R&D and internalize the external knowledge.

Design/methodology/approach

Panel data analysis with fixed effects is used. The authors conduct hierarchical multiple regression analyses to test the moderating effect of R&D workforce diversity with 10,401 data from Korean manufacturing firms.

Findings

This study finds out that age and education diversity of R&D workforce have positive moderating effects on the relationship between the R&D outsourcing and firm performance. In contrast, internal R&D is negatively associated with firm performance when the age diversity of R&D workforce increases. The results point to the significant role of R&D workforce diversity in R&D unit since firms often use both internal R&D and external R&D.

Practical implications

For practical implications to be more effective, CEOs and managers of firms should employ differentiated approaches to manage the diversity of R&D workforce based on whether they primarily focus on their internal R&D or utilize external R&D.

Originality/value

This research extends recent efforts to better understand the effect of organizational diversity on the firms’ performance when firms use internal R&D and R&D outsourcing strategy.

Keywords

Citation

Bae, S.J. and Han, S. (2019), "The impact of R&D workforce diversity on firm’s performance in internal and external R&D", European Journal of Innovation Management, Vol. 23 No. 3, pp. 454-473. https://doi.org/10.1108/EJIM-09-2018-0204

Publisher

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Emerald Publishing Limited

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