Research Paper

Firms’ innovation objectives and knowledge acquisition strategies. Research Paper No 27

External partnerships play an important role in firms’ acquisition of the knowledge inputs to innovation. Such partnerships may be interactive – involving exploration and mutual learning by both parties – or non-interactive – involving exploitative activity and learning by only one party. Examples of non-interactive partnerships are copying or imitation. Here, we consider how firms’ innovation objectives influence their choice of interactive and/or non-interactive connections. Four empirical results emerge. First, we find strong and consistent support for complementarity between non-interactive and interactive connections across firms in all sectors and sizebands. Second, we find that innovation objectives related to new products and services are linked only to non-interactive connections. Third, we find tentative evidence that where firms have innovation objectives which relate to product or service improvement they are more likely to establish non-interactive rather than interactive connections. Fourth, the extent of firms’ interactive and non-interactive connections are strongly related firms’ human capital endowments. These latter results suggest interesting second-order innovation effects from human capital improvements.

Associated Themes
  • Innovation