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How do internal capabilities and external partnerships affect innovativeness?

Abstract

How do a firm’s internal capabilities and external partnerships contribute to its product and process innovativeness? How do their impacts differ? Based on the theoretical framework of exploitation and exploration, we develop an integrative model linking the impact of both internal capabilities and external partnerships on product and process innovativeness. Survey responses from Taiwanese biotechnology firms indicate that research and development (R&D), marketing, and manufacturing capabilities have different effects on product and process innovativeness. Of the four types of external partnerships, only partnerships with universities and research institutes seem to add value, whereas partnerships with suppliers, customers, and competitors do not contribute to innovativeness. Moreover, marketing capability and customer partnerships have a positive interaction effect on product innovativeness, while manufacturing capability and supplier partnerships have a positive interaction effect on process innovativeness.

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Notes

  1. In 2007, we mailed the same questionnaires to the 74 firms that provided one response to our 2003 survey, and received 15 returned questionnaires. The respondents included three CEOs and 12 managers. We analyzed the correlation between the 15 pairs of 2003 and 2007 responses, and found that eight of the correlation coefficients were above 0.6 and only two were slightly negative (-0.10 and -0.16). Again, this suggests that the responses of the 2003 survey were rather reliable. We averaged the responses for each of the 15 pairs and compiled a new dataset by substituting these averages for the corresponding observations collected in the 2003 survey. That is, the dataset consisted of 79 observations, 20 of which were averages. We re-ran our regression analysis with this new dataset and found that the results were qualitatively similar to those reported in the next section.

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Correspondence to Yu-Shan Su.

Additional information

We thank Chia-Shen Chen, Weiru Chen, Hong-Jen Chiu, Irem Demirkan, Greg Dess, Michael Hitt, Chung-Ming Lau, Seung-Hyun Lee, Shige Makino, and Wenpin Tsai for helpful comments on earlier drafts. This research is supported in part by the Fulbright Association, the Taiwan Ministry of Education, and the National Science Foundation (CAREER 0552089). An earlier version of this paper was presented at the Academy of Management (New Orleans, 2004), the AIB/JIBS Research Frontiers Conference (Rotterdam, 2005), Academy of International Business (Indianapolis, 2007), National Taiwan University (2003, 2004), Chinese University of Hong Kong (2006), and University of Texas at Dallas (2007). All views expressed are those of the authors and do not represent those of the sponsoring organizations.

Appendices

Appendix 1

Table 3 Questionnaire itemsa.

Appendix 2

Table 4 Factor analysis.

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Su, YS., Tsang, E.W.K. & Peng, M.W. How do internal capabilities and external partnerships affect innovativeness?. Asia Pac J Manag 26, 309–331 (2009). https://doi.org/10.1007/s10490-008-9114-3

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Keywords

  • Product innovation
  • Process innovation
  • Internal capability
  • External partnership
  • Biotechnology industry