Abstract
The various strands of extant empirical research are inconclusive about the complementarity or substitutability between different innovation mechanisms, such as internal and external R&D. Using a panel sample of 83 incumbent pharmaceutical firms covering the period 1986-2000, our empirical analysis suggests that, instead of a clear-cut answer to the question of whether internal and external R&D are complementary or substitutive innovation activities, there appears to be a contingent relationship between internal and external R&D strategies in shaping a firm's innovative output. The results from our study indicate that the level of in-house R&D investments, which is characterized by decreasing marginal returns, is a contingency variable that critically influences the association between internal and external R&D strategies. In particular, internal R&D and external R&D, through either R&D alliances or R&D acquisitions. are complementary innovation activities at higher levels of in-house R&D investments, whereas at lower levels of in-house R&D efforts, internal and external R&D turn out to be substitutive strategic options.
Original language | English |
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Pages (from-to) | 1072-1083 |
Number of pages | 12 |
Journal | Research Policy |
Volume | 41 |
Issue number | 6 |
DOIs | |
Publication status | Published - Jul 2012 |
Keywords
- Complementarity
- Substitutability
- Internal R&D
- External R&D
- Innovative output
- Pharmaceutical industry
- Biotechnology patents
- COUNT-PANEL-DATA
- INNOVATIVE PERFORMANCE
- MANUFACTURING FIRMS
- DATA MODELS
- ENTREPRENEURIAL VENTURES
- TECHNOLOGICAL-INNOVATION
- DEVELOPMENT PARTNERSHIPS
- PHARMACEUTICAL-INDUSTRY
- DYNAMIC CAPABILITIES
- ABSORPTIVE-CAPACITY