Exploring and exploiting external knowledge: the effect of sector and firm technological intensity
Mercedes Segarra-Ciprés
Department of Business Administration and Marketing, University Jaume I, Castellón, Spain
Juan Carlos Bou-Llusar
Department of Business Administration and Marketing, University Jaume I, Castellón, Spain
Vicente Roca-Puig
Department of Business Administration and Marketing, University Jaume I, Castellón, Spain
PP: 203 - 217
Abstract
This paper analyses whether the technological environment in which firms operate conditions the opening up of the innovation process, or whether it is the firm's R&D efforts, regardless of the sector it operates in, that determine to a greater extent the firm's capacity to explore and exploit external knowledge. Using negative binomial models, the paper analyses the effect of external sources of knowledge on innovation outputs, and the moderator effect of technological intensity of the sector and firm. Results show that the most R&D intensive firms and sectors explore external sources of knowledge to a greater extent than those which are less R&D intensive. In contrast, no substantial differences emerge with regard to the exploitation of these sources. Results also show that opening up the innovation process is not a sectoral phenomenon, since there are significant differences in the use of external sources within the industry itself. Highly open, dynamic and innovative firms can be found in low technology-intensive sectors, indicating that heterogeneity in intra-industrial innovative behaviour should be taken into account when formulating sector-based policies to support the opening up of the innovation process.
Keywords
External knowledge; knowledge exploration; knowledge exploitation; technological intensity of the sector and the firm; technological cooperation; hiring R&D employees; R&D outputs
Article Text
Market dynamism, the increase in human mobility and rapid changes in information technologies have led to a situation in which the knowledge a firm needs to innovate may be available and spread across different countries, organisations and people. Competitive advantage in innovation is not based so much on an organisation's internal resources as on its capacity to detect valuable external knowledge and integrate it into its own innovation process. This is one of the premises of the open innovation paradigm, which understands innovation as an interactive process grounded in a network of relationships among various agents (Chesbrough, 2003b, 2006; Leiponen & Helfat, 2010), which in turn is an extension of the firm's own innovative activity. In contrast to the traditional closed innovation model, based on the idea that innovation occurs within a single firm or research group and that protection of the innovation is a key factor, the open innovation model is grounded on the use of various external sources of knowledge, such as universities, clients, suppliers and other firms, as part of the innovation process (Chesbrough, 2003a,b). The benefits for an organisation that chooses to open up its innovation process will depend on its capacity to explore and exploit external sources of knowledge (von Hippel, 1988, 2005; Chesbrough, 2003a, 2003b, 2006; Leiponen & Helfat, 2010; Fey & Birkinshaw, 2005).
The opening up of the innovation process is associated in particular with leading innovative firms and those operating in high technology-intensive sectors (von Hippel, 1988, 2005; Klevorick, Levin, Nelson, & Winter, 1995; Chesbrough, 2003a, 2006; Leiponen & Helfat, 2010). Examples are Nokia, Phillips, Cisco or IBM, which turn to a wide range of external actors to attain and maintain innovation. However, little evidence has been published on the adoption of these models in other less technologically dynamic contexts (Chesbrough & Crowther, 2006; Tsai & Wang, 2009; Santamaría, Nieto, & Barge-Gil, 2010; Spithoven, Clarysse, & Knockaert, 2010; Huizingh 2011). In light of this scarcity, the present study has two aims related to the importance of sector when adopting an open innovation strategy. The first aim is to explore whether this open approach to the innovation process is a model that can be generalised to lower technology-intensive sectors. To this end, we analyse whether high intensity sectors are more likely to explore and exploit knowledge from external sources than low technological intensity sectors. Furthermore, the study of innovative behaviour in low technology-intensive sectors is relevant due to the impact these sectors have on the economy, since they represent a significant proportion of a country's employment, economic growth and knowledge creation. This is illustrated by the 90-97% of the GDP in European countries generated by activities that are not classified as high technology sectors (Potters, 2009).
The second aim is to further knowledge on the extent to which open innovation behaviour is industry or firm specific. In particular, we explore whether industry limits also actually determine firms' innovative behaviour, such that belonging to a particular industry might condition a firm's choice of an open innovation strategy. This question has received scant attention in the open innovation literature. Authors such as Laursen and Salter (2006) point to the need for more research on the sources and determinants of external search at the firm and sectoral level to better understand the complex relationship among innovativeness, search, and R&D intensity. At the sectoral level we aim to discover whether external sources of innovation are more valuable in industries with high levels of R&D, or whether external R&D is more likely to be used in low R&D intensive industries where firms' internal R&D capabilities are scarcer. At the firm level, we will examine whether innovative behaviour is heterogeneous within the same industry, by differentiating between firms with higher and lower degrees of technological intensity. Through this analysis we hope to show whether the technological environment in which firms operate conditions the opening up of the innovation process, or whether it is the firm's R&D efforts, regardless of the sector it operates in, that determine to a greater extent the firm's capacity to acquire, assimilate and exploit external knowledge.
The rest of the paper is structured as follows. The second section presents the theoretical foundations for studying how external sources of knowledge contribute to innovation outputs and highlight the differences in levels of exploration and exploitation of external sources of knowledge according to the technological intensity of the sector and the firm. The next section describes the methodological aspects of the research and presents the results. The main conclusions, implications and limitations of the study are discussed in the final section.
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