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INNOVATION AND COMPETITIVE ADVANTAGE

Q: What is the main focus of Cassiman and Veugelers' 2006 paper on innovation strategy?

- Focus on complementarity between internal R&D and external knowledge acquisition - Broad approach analyzing both 'productivity' and 'adoption' approaches - Consideration of contextual variables affecting complementarity

Q: What concept, introduced by Cohen and Levinthal in 1989, emphasizes the importance of prior knowledge in absorbing external knowledge effectively?

- Absorptive capacity is the concept that highlights the significance of a stock of prior knowledge - This capacity aids in scanning, screening, and absorbing external know-how efficiently

45 important questions on INNOVATION AND COMPETITIVE ADVANTAGE

What is the main focus of Cassiman and Veugelers' 2006 paper on innovation strategy?

- Focus on complementarity between internal R&D and external knowledge acquisition
- Broad approach analyzing both "productivity" and "adoption" approaches
- Consideration of contextual variables affecting complementarity

What did the empirical research by Cassiman and Veugelers suggest regarding internal R&D and external knowledge acquisition?

- Suggested that internal R&D and external knowledge acquisition are complementary
- Degree of complementarity is influenced by elements of the firm’s strategic environment
- Identified reliance on basic R&D as an important contextual variable influencing complementarity

How does Cassiman and Veugelers' paper contribute to the analysis of complementarity between innovation activities?

- Presents empirical methodology analyzing complementarity between internal R&D and external knowledge acquisition
- Identifies contextual variables in the firm’s strategy affecting complementarity
- Offers insights on the effects of internal and external innovation activities

Why do firms typically engage in both internal and external knowledge acquisition activities according to Cassiman and Veugelers?

- Both activities are complementary, leading to increased marginal return for each activity
- Internal know-how boosts returns from external knowledge acquisition
- External knowledge enhances efficiency of internal R&D activities by leveraging external ideas

What concept, introduced by Cohen and Levinthal in 1989, emphasizes the importance of prior knowledge in absorbing external knowledge effectively?

- Absorptive capacity is the concept that highlights the significance of a stock of prior knowledge
- This capacity aids in scanning, screening, and absorbing external know-how efficiently

What does the simultaneous conduct of internal R&D and external knowledge acquisition activities by firms suggest according to Cassiman and Veugelers?

- Suggests that these activities are complementary, with a marginal return increasing as the intensity of the other activity increases
- Implies a synergistic effect where internal know-how boosts the returns from external knowledge acquisition

How does reliance on basic R&D impact complementarity between internal and external innovation activities as identified by Cassiman and Veugelers?

- Reliance on basic R&D influences the degree of complementarity between these activities
- Importance of universities and research centers as an information source affects the interplay of internal R&D and external knowledge acquisition

What does Cassiman and Veugelers' paper suggest concerning the impact of a firm's strategic environment on complementarity between internal and external innovation activities?

- The degree of complementarity between internal R&D and external knowledge acquisition is sensitive to other elements of the firm’s strategic environment
- Contextual variables can affect the synergistic effects of the two innovation activities within a firm

How does the "adoption" approach in Cassiman and Veugelers' paper contribute to understanding complementarity between innovation activities?

- The adoption approach complements the traditional productivity approach in analyzing complementarity
- It broadens the analysis by considering how firms adopt external knowledge in addition to their internal R&D activities

What does empirical research and anecdotal evidence suggest about the relationship between in-house R&D and external know-how?

- Anecdotal evidence and empirical research suggest that in-house R&D and external know-how are complementary.

According to the Sappho study, what allows successful innovative firms to efficiently use external know-how?

- Successful innovative firms develop better internal and external communication networks.

What did Freeman (1991) emphasize as crucial in explaining successful innovation?

- External sources of technical expertise combined with in-house basic research to facilitate external linkages.

What term did Rigby and Zook (2002) use to describe the benefits of incorporating external knowledge into the innovation process?

- They referred to this as “open-market” innovation.

According to Arora and Gambardella, why may companies need internal know-how to use external know-how effectively?

- Companies may need internal know-how to screen possible projects and to use external know-how effectively.

What did Cohen and Levinthal (1989) find regarding the association between a firm's R&D efforts and external sources of knowledge?

- They found a strong association between the industry’s reliance on more basic fields of science and external sources associated with more basic science, suggesting a complementarity between internal and external technology acquisition.

What characteristic, according to Veugelers and Cassiman (1999), makes firms more likely to be involved in internal knowledge sourcing?

- Firms with effective strategic protection mechanisms such as secrecy, lead time, or complexity are more likely to be involved in internal knowledge sourcing.

What did Veugelers (1997) find regarding the relationship between external sourcing and internal R&D expenditure?

- External sourcing stimulates internal R&D expenditure, at least for firms with internal R&D departments.

What is supermodularity theory and how does it relate to performance when combining activities?

Supermodularity theory states that adding an activity while another is performed has a higher incremental effect on performance than adding the activity alone:
- Performance (A&B) – Performance (0&B) ≥ Performance (A&0) – Performance (0&0)

What are the two approaches used to test complementarity in activities?

Productivity (Direct) Approach:
- Measures innovation performance using exclusive combinations of innovation activities (MAKE and BUY).
Adoption (Indirect) Approach:
- Tests complementarity indirectly using a bivariate probit model to look at the correlation between two innovation activities.

What is the proposed combined two-step procedure to address biases in testing for complementarity in activities?

- A combined two-step procedure integrates insights from both approaches:

Productivity (Direct) Approach
Adoption (Indirect) Approach

- This procedure aims to provide a more comprehensive assessment of complementarity between activities.

What type of data was used for the research on complementarity in activities in the Belgian manufacturing industry?

The data used for the research were from the Community Innovation Survey conducted by Eurostat in 1993.
A representative sample of 1,335 Belgian manufacturing firms was selected, with 714 usable questionnaires collected.

How do firms typically make decisions regarding their innovation activities?

Conduct R&D in-house to develop own technology (MAKE decision)
Acquire technology externally (BUY decision)

What does the direct test for complementarity involve in an analysis of innovation performance?

Regressing innovation performance measure on exclusive combinations of innovation activities, firm characteristics, and industry dummies
Accepting complementarity test at a 5% level of significance

How does absorptive capacity influence the complementarity between internal and external sourcing in innovation?

Having in-house basic R&D capabilities is important for exploiting complementarity
Absorptive capacity creates an environment to benefit from both internal and external sourcing

What factors influence a firm's decision to engage in different innovation strategies according to the multinomial logit analysis?

In-house basic R&D capability (absorptive capacity)
Firm size
Effectiveness of IP Protection
Effectiveness of Strategic Protection
Resource Limitations
Competitor information importance

What are some factors that suggest why small firms may be more successful in terms of innovation performance?

Small firms are less stuck in bureaucracy compared to larger firms
They have to disrupt fewer processes
More intensive innovation spenders are typically more successful in innovation performance

How does export intensity impact a firm's innovation productivity according to the provided information?

More export-oriented firms are more innovation productive
Competitive environment faced by export-oriented firms leads to higher innovation productivity

What influence does the effectiveness of strategic protection have on a firm's decision to engage in internal R&D?

Tight legal protections may encourage firms to buy technology externally and develop it internally
Strategic protection measures, like secrecy or product complexity, may lead firms to prioritize internal R&D

Why might firms facing resource constraints engage more in internal R&D activities according to the information provided?

Firms facing resource constraints might be more driven towards internal R&D
Internal R&D activities may help mitigate resource limitations and overcome obstacles such as lack of technical personnel

What is the bivariate probit model used for?

To study the relationship between two binary outcomes
To analyze the decisions to "MAKE" and "BUY"
To segment data into subsets "MAKE" and "BUY" based on influencing variables
To determine where complementarity is most relevant in innovation strategies, specifically Make & Buy.

How does the multinomial logit and bivariate probit models help with endogeneity in the innovation strategy?

Both can correct for endogeneity
They offer more accurate estimates in the innovation strategy
Provide insights into the relationship between variables influencing complementary strategies

What do the results indicate about firms with high reliance on Basic R&D?

They show stronger evidence of complementarity in their innovation strategies
The impact of complementarity is more prominent for firms with high Basic R&D reliance

How does the impact of complementarity differ for firms with low Basic R&D reliance?

The impact isn't as strong compared to firms with high Basic R&D reliance
Complementarity cannot be ruled out even for firms with low Basic R&D reliance
Evidence still suggests some level of complementarity in innovation strategies for these firms

What is the key conclusion drawn from the study regarding complementarity between internal and external innovation activities?

Innovation management requires integration of internal and external knowledge to enhance each other's impact
The extent of reliance on basic R&D influences the strength of complementarity
Complementarity is context specific and success in innovation depends on combining activities and creating the right context.

What is emphasized as crucial for sustainable competitive advantage in the context of innovation management according to the analysis?

Careful management of the innovation process is vital
Creating the right context based on understanding of principles is essential
Success in innovation depends on both combining various innovation activities and creating the right context.

What area does the study suggest future research should focus on in relation to innovation management and strategy?

Future research should explore firm characteristics that influence complementarity
Calls for theoretical and empirical work in the area of innovation management and strategy

What is the focus of the study by Klingebiel and Joseph (2016) in the mobile handset industry?

Examining decisions about entry timing for innovations
Exploring influence of portfolio-level timing preference
Revealing how timing preference affects innovation strategy

How do early movers and late movers differ in their approach to innovation strategy in the feature phone era?

Early movers target greater, more uncertain revenue opportunities
They have broader, less selective innovation portfolios
Late movers target lower, more certain revenue opportunities
They have narrower, more selective innovation portfolios

What is the significance of the timing-strategy alignment in relation to performance in the study by Klingebiel and Joseph (2016)?

Timing per se is unrelated to performance
However, a timing-strategy alignment affects performance
The alignment focuses on early movers having broad/nonselective strategies and late movers having narrow/selective strategies

How do early movers and late movers differ in their innovation portfolios according to the managerial summary of the study by Klingebiel and Joseph (2016)?

Early movers launch broader sets of features
They exert less selective pressure on the development portfolio
Late movers launch fewer features
They emphasize selectiveness and invest in learning from uncertainty resolution

What are the two main contributions of the study by Klingebiel and Joseph (2016) on entry timing and innovation strategy?

Providing insight into strategic differences based on entry timing
Uncovering the relationship between entry timing and innovation strategy
Offering a better understanding of achieving high performance through equifinality
Emphasizing the need for a contingency view of entry timing’s performance advantages

How does the study by Klingebiel and Joseph (2016) explain the different strategic approaches of firms with varied entry timing?

Firms self-select into early or late moving based on investment uncertainty
Early movers emphasize breadth in innovation portfolios
Late movers prioritize selectiveness in innovation portfolios

What does the study by Klingebiel and Joseph (2016) reveal about the link between timing and performance in innovation strategies?

Timing itself does not have a significant effect on performance
The alignment of timing with feature breadth and selectiveness does influence performance
It highlights the importance of matching timing with specific strategic elements

How do early movers and late movers differ in their innovation strategies concerning features and uncertainty resolution according to Klingebiel and Joseph's study (2016)?

Early movers focus on addressing greater, more uncertain revenue opportunities
Late movers target lower, more certain revenue opportunities
Early movers launch a broader set of features with less selective pressure
Late movers launch fewer features and emphasize selectiveness to learn from uncertainty resolution

Why does the study by Klingebiel and Joseph (2016) advocate for a contingency view of entry timing’s performance advantages in innovation?

To explain equifinal configurations in achieving high performance
To address systematic strategic differences among firms based on entry timing
To underscore the significance of aligning innovation strategy with entry timing choices

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Summary business level strategy

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