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This paper aims to provide a new perspective in investigating how internal research and development (R&D) and external knowledge acquisition interact regarding their influence on innovation performance in an emerging market context. Building on an attention-based view (ABV), it argues that internal R&D and external knowledge acquisition can be substitutes for each other in emerging markets. Its contingency factors are also discussed according to the principles of the ABV.

The proposed hypotheses were empirically tested using a Tobit model approach. The data used was from the enterprise survey and the follow-up innovation survey conducted by the World Bank in 10 emerging market countries.

The results indicate that internal R&D and external knowledge acquisition entails a substitute effect among emerging market firms (EMFs). A higher level of manager’s open-mindedness to external knowledge and firm performance and a lower level of firm administrative control help mitigate the substitute effect of internal R&D and external knowledge acquisition. While adequate financial resources may not necessarily mitigate the substitute effect, it is an essential condition for the external knowledge acquisition to play a role in enhancing innovation performance.

The research uses a set of cross-sectional data. A dynamic study will provide a deeper understanding of the long-term effects of innovation investments.

To better use innovation investments, EMFs need to assess their specific conditions and the possible substitute effect of internal R&D and external knowledge acquisition activities.

Previous research discussing the interactive effect of internal R&D and external knowledge acquisition has mostly focused on an absorptive capacity perspective, which represents a firm’s technical ability. This study argues that these investments not only involve in absorbing knowledge technically but also form a challenge for the limited firm resources and can cause cognitive problems in management, especially for EMFs.

The combination of different knowledge sources has been considered conducive for innovation performance. While the literature has advanced regarding the combination of knowledge inputs as in internal and external research and development (R&D), the evolvement of knowledge blend from customers and competitors has also received substantial attention. The purpose of this paper is to delineate the sources of information from the customers into private and public and examine their direct effect on firm-level innovation. While the extant literature is mixed regarding this, no clear-cut results have emerged yet on the effect of knowledge combination from the private and public customers with internal R&D and human capital on innovation activities. This study, however, shed more lights on the inconclusiveness of the effect of knowledge diversity on firm-level innovation.

Using the microdata from the German Community Innovation Survey 2013, the authors employ a binary instrumental variable treatment model with Heckman selection, a suitable strategy to estimate binary variables to cope with a possible endogeneity issue.

The paper demonstrates that knowledge from customers in the private and public sector, and competitors are positively and significantly associated with innovation. The authors find evidence of a positive and significant effect of the combination of firm internal knowledge competencies with information from the public sector. In contrary, the blend of knowledge competencies with information from customers in the private sector and information from the competitors results in decline to innovation. The results also show that the blend of internal R&D with knowledge source from the customers in the public sector appears to have a stronger influence in the manufacturing sector than services. The results offer strong evidence of the positive link between knowledge diversity and firm-level innovation performance.

The results have significant managerial implications on the role of the blend of different sources of information in supporting a compelling internal knowledge development to optimise innovation performance.

This study is foremost to focus on knowledge sources from the customers in the public and private sector and its relationship with R&D and human capital in supporting a successful introduction of innovation.

Countries in Africa have a common goal policy of industrialisation that is expected to be driven by investing in innovation that yields efficiency. The purpose of this paper is to investigate the technical efficiency effects arising from innovation inputs including internal R&D, human capital development (HCD), and foreign technology adoption in manufacturing firms in Africa.

This study uses cross-sectional firm-level survey data from the 2013 World Bank Enterprise Survey and the linked 2013 Innovation Follow-up Survey. A heteroscedastic half-normal stochastic frontier is used for analysing the technical efficiency effects of innovation inputs of 418 firms.

This study reveals that internal R&D, and foreign technology have negative effects on technical efficiency. Notwithstanding, the combination of foreign technology and internal R&D, and foreign technology and HCD reinforce each other’s effects on technical efficiency.

This study provides evidence that whereas individual innovation inputs may not yield positive efficiency outcomes, the combination of absorptive capacity enhancing inputs comprising internal R&D and HCD with foreign technology is vital for enhancing technical efficiency in manufacturing firms in Africa. This study offers important lessons for managers in manufacturing firms in Africa.

This study is virtually the first to investigate the relationship between innovation inputs and efficiency in Africa. This study demonstrates that investing in foreign technology in isolation from absorptive capacity enhancing innovation inputs diminishes efficiency. HCD and internal R&D are imperative for building absorptive capacity that enhances efficiency outcomes arising from foreign technology.

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.

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.

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.

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.

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.

Product innovations are often the result of combinations of internal and external knowledge. A significant amount of open innovation literature has argued that working with external partners can be beneficial, in particular, when this is complemented by internal R&D, yet a wholesale shift to open innovation has not occurred. The purpose of this study is to demonstrate two new limits of openness, grounded in attention-based theory, that help explain why such a shift has not occurred. This study argues that specific combinations of identities a firm collaborates with, that is, whether a partner is classified as a customer, supplier, competitor or university and/or technological center, predictably increase and decrease product innovation.

This study demonstrates these findings using econometric techniques on a large-scale panel data set, comprising 14,682 observations.

The authors observe positive effects of customer collaboration, partner scope (collaboration with other outside identities) and internal R&D when considered separately. Critically, they observe two important situations where these positive effects are reduced. First, they argue and observe that when customers are added to the mix of identities, diminished returns on product innovation result. Second, they argue and observe that technological customer collaboration reduces the benefits from an internal R&D department (more than collaboration with other identities). The findings of this study are robust in that singling out another partner identity does not reveal such patterns.

The findings stress the importance of considering the identity of collaborating parties in studying the impact of openness on innovation success. This study conceptually and empirically rejects the – implicitly held – assumption in the literature that different partners provide similar benefits and are interchangeable.

This study proposes new limits to the “open innovation” literature. As identities are easy to observe by managers and are shown to impact product innovation, this study argues they are highly relevant to managerial decision-making. This study also observes, through counterfactual analysis, that attention limits are critical, as a theoretical setting of no attention limits would significantly lift product innovations.

This study shows important limitations to the open innovation literature by showing that customer collaboration leads to declining rates of product innovation when combined with greater collaboration scope or the internal R&D department. This study adds the novel insight that customer collaboration weakens the positive effect of collaboration scope and internal R&D on product innovations.

We argue that a foreign-based R&D subsidiary of a multinational enterprise (MNE) can potentially source knowledge from three diverse knowledge networks, namely (i) external knowledge network of the home country, (ii) external knowledge network of the host country, and (iii) internal (MNE) knowledge network. Drawing on the relative costs and benefits associated with the process of synergistic knowledge, this study examines whether a substitutive or a complementary relationship exists when two of the aforementioned networks collaborate in order to generate new knowledge at the subsidiary level. Our study’s sample is based on a survey questionnaire addressed to foreign-based R&D subsidiaries of Fortune 500 companies. We assess the existence of complementarity/substitutability using the “production function approach.” Our results indicate that a complementary relationship exists between external knowledge network of the host and the home country, as well as between external knowledge network of the host country and internal knowledge network. On the other hand, external knowledge network of the home country and internal knowledge network form a substitutive relationship. Our study offers a more comprehensive view of the diverse sources/knowledge networks that R&D subsidiaries are sourcing knowledge from when compared to existing research. We also specify and account for the costs/benefits involved in knowledge sourcing and thereby detect possible substitution/complementarity between different sources of knowledge. So far, there has been limited to nonexistent research into the diversity of knowledge networks of R&D subsidiaries and the examination of potential substitutabilities and complementarities. Hence our empirical study contributes to the development of this particular research stream.

Although the theoretical arguments provide several channels through which innovation affects export, empirical validation of this relationship is scarce. Further, the impact of the diverse channels of domestic and foreign research and development (R&D) on export is assessed in isolation by previous studies. This paper empirically investigates the impact of technological innovation on export capacity and intensity of industrial enterprises in emerging countries by considering three channels of domestic innovation and foreign R&D spillovers, namely internal R&D, embodied knowledge and disembodied knowledge in a unified framework.

Data on China's industrial enterprises in the manufacturing sector are extracted from the China National Bureau of Statistics (NBSC), the Ministry of Science and Technology of China (MST) and the UN Comtrade database for the period from 1998 to 2020. The instrumental variables two-stage least squares (IV-2SLS) and three-stage least squares (IV-3SLS) methods are used to control for the possible endogeneity bias and the problem of cross-equation correlation between residuals.

The results show that internal R&D is a critical factor to enhance the export performance of enterprises in emerging countries, while the effect of embodied spillovers and public–private collaboration on export capacity and intensity of industrial enterprises is substantial. Further, disembodied knowledge that is acquired through licensing of technology from advanced countries does not directly contribute to the export performance of enterprises but requires a threshold level of internal R&D capability. This study’s results also report a greater effect of embodied knowledge spillovers on export capacity and export intensity than internal R&D in emerging countries. The results are consistent to changes in the sample period and the estimation methods. The findings of the paper suggest that developing countries can speed up the process of export upgrading by relying on both domestic and foreign R&D efforts.

The findings would help policymakers to keep in mind the relative importance of internal R&D and embodied and disembodied knowledge spillovers for export performance before formulating a catch-up strategy and the outcome would encourage them to consider prior related knowledge in terms of internal R&D capability while acquiring external technology.

This study fills the gap in the existing literature by providing empirical validation of the innovation–export interplay and simultaneously assessing the effect of three diverse channels of technological innovation on the export performance of industrial enterprises. This paper enunciates important policy lessons for emerging countries' smooth transition to a knowledge-based economy.

The relevance of finance for strategy is probably never greater than during a recession. We argue that the strategy literature has been virtually silent on the issue of recessions, and that this constitutes a regrettable sin of omission. Recessions are also periods when the commonly held view of financial markets in the strategy literature – efficient, and therefore strategically irrelevant – is particularly misplaced. A key route to rectify this omission is to focus on how recessions affect investment behavior, and thereby firms’ stocks of assets and capabilities which ultimately will affect competitive outcomes. In the present chapter, we aim to contribute by analyzing how two key aspects of recessions, demand reductions and reductions in credit availability, affect three different types of investments: physical capital, R&D and innovation, and human- and organizational capital. We synthesize and conceptualize insights from finance- and macroeconomics about how recessions affect different types of investments and find that recessions not only affect the level of investment, but also the composition of investments. Some of these effects are quite counterintuitive. For example, investments in R&D are both more and less sensitive to credit constraints than physical capital is, depending on available internal finance. Investments in human capital grow as demand falls, and both R&D and human capital investments show important nonlinearities with respect to changes in demand.

The purpose of this paper is to assess the impact of open innovation practices on the innovation capability and export performance of UK small and medium‐sized enterprises (SMEs).

The empirical (quantitative) investigation is based on a sample of 64 SMEs in the UK – 33 “open” innovation firms and 31 “closed” innovation firms.

The overall results demonstrate that the international competitiveness of SMEs is highly dependent on the cumulative effects and interrelationship between two key internal components, i.e. R&D capacity and managerial structure and competencies, coupled with two external factors, i.e. open innovation practices and the ability of the firm to attract government grants for R&D and technological development.

Owing to the size of the sample, it has not been possible to undertake research within the context of specific regional disparities and/or sectoral characteristics.

In order to achieve and sustain competitive advantage in today's global market, SMEs need to collaborate with universities and other firms to advance and commercialise their technologies through “open innovation”.

Results show that open innovation activities and their impact on the international competitiveness of SMEs are complex and multi‐faceted. Essentially, they are highly related to and dependent upon the cumulative effects of, and interrelationship between, several key internal and external factors. Such factors cannot be fully explored through qualitative approaches as they require more complex and rigorous statistical analyses.

Chinese firms were operating within a closed economic environment before the “opening up” in the late 1970s, but it has only been in the late 1990s that China has recognized the importance of innovation. The Chinese government has attempted to rectify this liability by providing funding to assist Chinese firms in developing innovation capability by increasing R&D collaborations and employing external experts. The purpose of this paper is to study the innovation of Chinese firms by examining how internal and external resources interactively impact the innovation capability.

Panel data collected from Chinese manufacturers are used to test the hypothesized relationships.

The results have shown that the interplay between internal and external resources exhibits differential patterns of impact on innovation capability. The authors discover different moderating patterns of the two types of external resources: visiting experts are helpful in enhancing the effects of internal human resources, while R&D collaborations are useful in exploiting internal financial and physical resources, even when the main effect of financial resources on innovation capability is not significant.

The study contributes to the literature by providing empirical evidences on the roles of absorbed external resources and knowledge to catalyze internal resources in building up innovation capability in an emerging economy.