International innovation collaboration, intramural R&D and innovation performance

Sverre J. Herstad’s and my short piece on the “The relationship between international innovation collaboration, intramural R&D and SMEs’ innovation performance: A quantile regression approach” is now published by Applied Economics Letters

We argue that in the current global economic landscape it is virtually impossible for any single firm to stay abreast of all relevant technological advances. Therefore integration in global innovation networks is crucial for innovation-based competitiveness. This is particularly so for SMEs due to their more narrow internal knowledge bases. However, the fact that international collaboration is organizationally demanding raises important questions about the relative importance of international collaboration and intramural R&D for innovation performance, and how they interact in determining it. We investigate these questions using Norwegian innovation survey data and quantile regression. The results show that firms in the upper quantile of the innovation performance distribution face a trade-off between engaging in global innovation collaboration, and engaging in systematic R&D, where both individually have a positive effect. This is consistent with baseline OLS findings. By contrast, firms in the lower quantiles of the distribution are found to strengthen their performance by means of R&D only. Consequently, the baseline OLS regression results fail to capture the determinants of innovation performance for the population of SMEs which are not already strong innovation performers. This leads to a risk of excessive SME innovation policy emphasis on inducing international collaboration.

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