Novelty of innovation and the effect of existing and recently hired R&D human resources
Nieves L Díaz-Díaz
Departamento de Economía Financiera y Contabilidad
Facultad Economía, Empresa y Turismo, Campus de Tafira, Universidad de Las Palmas de Gran Canaria, Las Palmas, Spain
Petra De Saá-Pérez
Departamento de Economía y Dirección de Empresas, Facultad de Economía, Empresa y Turismo, Campus de Tafira, Universidad de Las Palmas de Gran Canaria, Las Palmas, Spain
PP: 74 - 89
Abstract
The decision taken by firms to invest in innovation oriented activities is an important strategic issue closely linked to their knowledge management process, especially when that decision involves the renewal of the necessary knowledge to protect themselves from obsolescence and imitation by competitors. This paper aims to analyse the effect of existing and recently hired R&D human resources on product innovation as well as their interaction, focusing on the degree of novelty of innovation. The results of an empirical research among 965 Spanish firms show that, although existing and recently hired R&D human resources have a positive individual effect on innovation, their interaction has a negative effect on the firm's product innovations. However, the results also highlight that the greatest likelihood of achieving product innovations with a higher degree of novelty occurs when the firm has a solid internal base of R&D human resources complemented by the hiring of R&D personnel.
Keywords
Innovation, novelty of innovation, existing R&D human resources, hired R&D personnel, non-listed firms, human capital
Article Text
Firms' decisions to invest in innovation oriented activities have become a strategic issue that is closely linked to their knowledge management process. That decision assumes paramount importance when firms wish to protect themselves from technological obsolescence and imitation by competitors by renewing their knowledge with the aim of updating their capacity for innovation (e.g., Teece, 1998; Nonaka et al., 2000; Díaz-Díaz et al., 2006; Al-Laham et al., 2011).
Recent research into knowledge management indicates that firms that do not possess all the knowledge inputs necessary for continuous successful innovation can turn to external sources to obtain them (Howells et al., 2003; Cassiman & Veugelers, 2006; Schmiedeberg, 2008; Zhou & Wu, 2010). This process entails the use of mechanisms to identify, locate, acquire and assimilate external knowledge (Zack, 1999). On that line, Song et al. (2003) define "learning by hiring" as the acquisition of knowledge from other firms by hiring their experts. The advantage of this learning is that it enables the transfer of individual knowledge, thus permitting the creation of a broader knowledge base. In general, learning by hiring is used to generate tacit internal knowledge from external knowledge, especially in industries where the value of key competitive knowledge is embedded in the experience of individuals (Rosenkopf & Almeida, 2003) and to favour a higher degree of novelty of innovation (Dewar & Dutton, 1986; McDermott & Handfield, 2000; Tsai, 2009; Schoenmakers & Duysters, 2010).
However, for the new knowledge to materialise in a greater innovation capacity, it must first be transferred to and integrated among the units that possess it. That transfer and integration constitutes a highly complex process because of the number of factors that influence it: the type of knowledge to be transferred, the motivations of the sender and recipient, the recipient's absorptive capability, etc. (e.g., Szulanski, 2000; Davenport & Prusak, 2001; Goh, 2002; Husted & Michailova, 2002). That complexity is even greater if the knowledge is being shared with recently hired personnel, the knowledge is mostly tacit and complex and the firm lacks experience in the area (De Long & Seemann, 2000; Szulanski, 2000; Al-Laham et al. 2011).Thus, there seems to be agreement in the literature that the efficient use of external knowledge requires an internal knowledge base that permits acquired knowledge to be absorbed and implemented (Cohen & Levinthal, 1990; Howells et al., 2003; Laursen & Salter, 2006).
In that respect, although recent years have seen an increase in the number of papers analysing the role of R&D personnel in innovation, those studies focus more on the human resources practices and their relationship with innovation (e.g., Leede & Looise, 2005; Pérez et al., 2005; Shipton et al., 2006; Akhtar et al., 2008) than on the combination of internal and external R&D personnel in order to innovate. More specifically, the possible impact of that combination on the degree of novelty of achieved innovations has not been analysed to date. Therefore, this paper studies the effect of existing and recently hired R&D human resources on firm innovation as well as their interaction effect, focusing on the degree of novelty of that innovation, in line with the authors who argue the need to consider the complementary of the different strategies for obtaining knowledge (Zack, 1999; Cassiman & Veugelers, 2006; Schmiedeberg, 2008; Zhou and Wu, 2010). As Amara et al. (2008) highlighted, this approach is implemented in two stages. Firstly, we study the presence/absence of product innovations, and secondly, we adopt the firm's perspective to analyse the degree of novelty of innovation of the sub-sample of those firms that have developed product innovations.
The rest of this paper is organised as follow. Based on the literature reviewed, the next section presents the theoretical arguments to assess the interaction effect of existing and recently hired R&D human resources on innovation. After that, we describe our data and the methodology used to conduct the empirical research. Section four presents the main results of the analyses as well as a discussion of those results. The final section contains the conclusions of the study together with the implications and future lines of research.
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