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Firm capabilities, technological dynamism and the internationalisation of innovation: A behavioural approach

Abstract

We develop a behavioural framework of bounded rational decision-making under uncertainty to analyse the role of technological dynamism in the firm’s environment for its decision to internationalise innovation. Applying prospect theory, we argue that technological uncertainty in the firm’s environment affects its risk preferences differently depending on its technological capabilities. A key prediction is that firms with low capabilities will internationalise innovation when faced by technological uncertainty while firms with high capabilities will concentrate their innovation at the home-base. We also argue that our behavioural approach based on prospect theory is not a stand-alone programme but benefits from the integration with traditional concepts in IB. In particular, we make a case that organisational measures fostering absorptive capacity, such as intensive personnel exchange between headquarters and subsidiaries, can help to attenuate the high-capability firms’ tendency to concentrate innovation at the home-base when faced by high uncertainty. We corroborate the predictions of our framework based on data from the German part of the Community Innovation Survey.

Résumé

Nous développons un cadre conceptuel comportemental concernant la prise de décision fondée sur la rationalité limitée dans un contexte d’incertitude pour analyser le rôle du dynamisme technologique dans l’environnement de la firme pour sa décision d’internationaliser l’innovation. En utilisant la théorie prospective, nous avançons que l’incertitude technologique dans l’environnement de la firme influence ses préférences en matière de risque différemment selon ses capacités technologiques. Une prédiction clé est que les firmes avec des capacités technologiques limitées vont internationaliser l’innovation lorsqu’elles font face à l’incertitude technologique tandis que les firmes avec des capacités élevées vont concentrer leur innovation dans leur pays d’origine. Nous avançons aussi que notre approche comportementale fondée sur la théorie prospective n’est pas un cadre indépendant, mais qu’il bénéficie de l’intégration de concepts traditionnels en international business. En particulier, nous montrons que les mesures organisationnelles qui favorisent la capacité d’absorption, telles que l’échange intensif de personnel entre le siège et les filiales, peuvent aider à réduire la tendance des firmes dotées de capacités élevées à concentrer l’innovation dans leur pays d’origine lorsqu’elles font face à une forte incertitude. Nous corroborons les prédictions de notre cadre conceptuel en utilisant des données de la partie allemande de l’enquête sur les Communautés d’innovation.

Resumen

Desarrollamos un marco comportamental de toma de decisiones racionales limitada bajo la incertidumbre para analizar el rol del dinamismo tecnológico en el entorno de la empresa para su decisión de internacionalizar la innovación. Aplicando la teoría prospectiva, argumentamos que la incertidumbre tecnológica en el entorno de la empresa afecta sus preferencias de riesgos de manera diferente dependiendo de sus capacidades tecnológicas. Una predicción clave es que las empresas con bajas capacidades tecnológicas internacionalizarán la innovación cuando se enfrenten a incertidumbre tecnológica mientras que las empresas con altas capacidades concentrarán su innovación en su base doméstica. También sostenemos que nuestro marco comportamental basado en la teoría prospectiva no es un programa independiente, pero se beneficia de la integración con los conceptos tradicionales de negocios internacionales. En particular, argumentamos que las medidas organizacionales que promueven la capacidad de absorción, como el intercambio intensivo de personal entre la casa matriz y las subsidiarias, puede ayudar a atenuar la tendencia de las empresas con altas capacidades a concentrar la innovación en la base doméstica cuando enfrentan alta incertidumbre. Corroboramos las predicciones de nuestro marco en los datos de la parte alemana de la Encuesta Comunitaria sobre Innovación.

Resumo

Desenvolvemos um quadro comportamental de decisões racionais limitadas sob incerteza para analisar o papel do dinamismo tecnológico no ambiente da empresa para sua decisão de internacionalizar a inovação. Aplicando a teoria da perspectiva, argumentamos que a incerteza tecnológica no ambiente da empresa afeta suas preferências de risco de forma diferente dependendo de suas capacidades tecnológicas. Uma previsão fundamental é que as empresas com reduzidas capacidades tecnológicas irão internacionalizar a inovação quando enfrentarem a incerteza tecnológica, enquanto as empresas com altas capacidades concentrarão sua inovação na sua base doméstica. Também argumentamos que nossa abordagem comportamental baseada na teoria da perspectiva não é um programa autônomo, mas se beneficia da integração com conceitos tradicionais de IB. Em particular, argumentamos que as medidas organizacionais que promovem a capacidade de absorção, como o intercâmbio intensivo de pessoal entre a sede e as subsidiárias, podem ajudar a atenuar a tendência de firmas de alta capacidade de concentrar a inovação na base doméstica diante de grande incerteza. Nós corroboramos as previsões de nosso modelo com base em dados da porção alemã da Community Innovation Survey.

摘要

我们开发在不确定性情况下有限理性决策的行为框架,分析在做创新国际化决策的公司环境中技术动态性的作用。运用前景理论,我们认为公司环境下的技术不确定性取决于其技术能力影响其风险偏好。一个关键预测是,在面临技术不确定性的情况下,技术能力低的公司将进行创新国际化,而能力高的公司则将创新集中在自家基地。我们还认为,我们基于前景理论的行为方法不是一个独立的计划,而是受益于与IB中的传统概念的整合。特别是我们指出,培育吸收能力的组织措施,如总部和子公司之间密集的人员交流,有助于减弱高能力公司在面临高度不确定性的情况下将创新集中在自家基地的倾向。我们根据社区创新调查德国部分的数据确认了我们框架的预测。

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Acknowledgements

Torben Schubert acknowledges financial support from the Swedish Research Council (Linnaeus Grant No. 349200680) and the Swedish Governmental Agency for Innovation Systems (Grant Agreement 2010-07370). We would like to thank three anonymous reviewers whose valuable comments have helped to make the contribution of this article much richer and clearer. We would also like to thank the editors of this journal, in particular Rajneesh Narula, for additional comments and continuous encouragement throughout the review process.

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Supplementary information accompanies this article on the Journal of International Business Studies website (www.palgrave-journals.com/jibs).

Accepted by Rajneesh Narula, Area Editor, 16 July 2017. This article has been with the authors for three revisions.

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Schubert, T., Baier, E. & Rammer, C. Firm capabilities, technological dynamism and the internationalisation of innovation: A behavioural approach. J Int Bus Stud 49, 70–95 (2018). https://doi.org/10.1057/s41267-017-0101-0

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  • DOI: https://doi.org/10.1057/s41267-017-0101-0

Keywords

  • internationalisation of innovation
  • speed of technological change
  • bounded rationality
  • prospect theory
  • uncertainty
  • technological capabilities
  • limited dependent variable regression