How Funding Matters: Reinitiating of New Product Development and the Moderating Effect of Extramural R&D

• Autorzy: Safi Ullah Khan
• Języki publikacji: EN

Abstrakty

EN

PURPOSE: We examine whether financial obstacles affect the probability of a firm undertaking previously suspended (or abandoned) innovation projects for new product development (NPD), and whether extramural R&D, as well as the breadth of the types of R&D collaboration (i.e., knowledge sources), moderate the relationship between financing constraints and the probability of restarting previously suspended NPD from selected South Asian economies. METHODOLOGY: This study controls for potential endogeneity in innovation propensity and finance access by employing a recursive bivariate probit model. We also adopt an instrumental variable approach by employing a probit model with continuous endogenous regressor to account for the potential endogeneity between the breadth of collaboration partners and innovation propensity. FINDINGS: Financial obstacles significantly impact previously suspended NPD. Furthermore, extramural R&D positively affects the probability of a firm undertaking NPD projects and attenuates the relationship between financing constraints and the likelihood of restarting abandoned/suspended NPD projects, suggesting that extramural R&D alleviates financing constraints, which increases the likelihood of NPD restarts. However, the breadth of collaborating partners is not positively associated with the probability of a firm restarting NPD. This is consistent with the view that extramural R&D with diverse sets of partners is exposed to the risks of the "two worlds paradox" arising from a firm's collaboration with universities, research institutions, and consulting firms. IMPLICATIONS: The findings corroborate the view that firms must maintain a balance between their internal knowledge base and extramural R&D to optimize innovation outcomes. Nevertheless, extramural R&D reduces the reliance of financially constrained firms on resource requirements, improves access to financing, and enhances R&D productivity in NPD. ORIGINALITY AND VALUE: We provide the first firm-level and multi-country evidence of the importance of financial obstacles in the probability of reinitiating previously suspended NPD at the execution phase. Second, to the best of our knowledge, this is the first study to examine the relationship between inter-organizational R&D collaboration diversity and the probability of a firm reinitiating previously abandoned (or suspended) NPD. (original abstract)

CEL: Badamy, czy ograniczenia finansowe wpływają na prawdopodobieństwo podjęcia przez firmę wcześniej zawieszonych (lub porzuconych) projektów innowacyjnych w zakresie rozwoju nowych produktów (NPD) oraz czy niestacjonarne B+R, a także zakres rodzajów współpracy B+R (tj. źródła wiedzy), moderują związek między ograniczeniami finansowania a prawdopodobieństwem ponownego uruchomienia zawieszonych wcześniej NPD z wybranych gospodarek Azji Południowej. METODYKA: Badanie to kontroluje potencjalną endogeniczność skłonności do innowacji i dostępu do finansów poprzez zastosowanie rekurencyjnego dwuwymiarowego modelu probitowego. Przyjmujemy również podejście oparte na zmiennych instrumentalnych, stosując model probitowy z ciągłym endogenicznym regresorem, aby uwzględnić potencjalną endogeniczność między szerokością współpracujących partnerów a skłonnością do innowacji. WYNIKI: Ograniczenia finansowe znacząco wpływają na zawieszone wcześniej NPD. Ponadto niestacjonarne B+R pozytywnie wpływają na prawdopodobieństwo podjęcia przez firmę projektów NPD i łagodzą związek między ograniczeniami finansowymi a prawdopodobieństwem wznowienia porzuconych/zawieszonych projektów NPD, co sugeruje, że niestacjonarne B+R łagodzą ograniczenia finansowe, co zwiększa prawdopodobieństwo wznowienia NPD. Jednak liczba współpracujących partnerów nie jest pozytywnie związana z prawdopodobieństwem wznowienia NPD przez firmę. Jest to zgodne z poglądem, że niestacjonarne B+R z różnymi grupami partnerów są narażone na ryzyko "paradoksu dwóch światów" wynikającego ze współpracy firmy z uniwersytetami, instytucjami badawczymi i firmami konsultingowymi. IMPLIKACJE: Odkrycia potwierdzają pogląd, że firmy muszą zachować równowagę między wewnętrzną bazą wiedzy a zewnętrznymi badaniami i rozwojem, aby zoptymalizować wyniki innowacji. Niemniej jednak zaoczne badania i rozwój zmniejszają zależność firm o ograniczonych finansach od zapotrzebowania na zasoby, poprawiają dostęp do finansowania i zwiększają produktywność badań i rozwoju w NPD. ORYGINALNOŚĆ I WARTOŚĆ: Dostarczamy pierwszy na poziomie firmy i wielu krajów dowód na znaczenie przeszkód finansowych w prawdopodobieństwie ponownego zainicjowania zawieszonych wcześniej NPD na etapie realizacji. Po drugie, zgodnie z naszą najlepszą wiedzą, jest to pierwsze badanie, w którym zbadano związek między różnorodnością współpracy między organizacjami w zakresie B+R a prawdopodobieństwem ponownego zainicjowania przez firmę porzuconych (lub zawieszonych) NPD. (abstrakt oryginalny)

Słowa kluczowe

EN

Product development; New products; Financial limitations; R&D in the enterprise; University-Business Cooperation (UBC)

PL

Rozwój produktu; Nowe produkty; Ograniczenia finansowe; Sfera B+R w przedsiębiorstwie; Współpraca uczelni z przedsiębiorstwami

• Czasopismo: Journal of Entrepreneurship, Management and Innovation (JEMI)
• Rocznik: 2022
• Tom: 18
• Numer: nr 4 Financial Ecologies Framed by Fintech
• Strony: 185--219

Twórcy

autor

Safi Ullah Khan

• Universiti Teknologi Brunei, Brunei Darussalam

Bibliografia

• Abdullah, F., Shah, A., & Khan, S. U. (2012). Firm performance and the nature of agency problems in insiders-controlled firms: Evidence from Pakistan. Pakistan Development Review, 51(4), 161-183. http://dx.doi.org/10.30541/v51i4IIpp.161-183
• Alam, A., Uddin, M., & Yazdifar, H. (2019). Financing behavior of R&D investment in the emerging markets: The role of alliance and financial system. R&D Management, 49(1), 21-32. http://dx.doi.org/10.1111/radm.12303
• Allen, F., Chakrabarti, R., De, S., Qian, J. Q., & Qian, M. (2012). Financing firms in India. Journal of Financial Intermediation, 21(3), 409-445. http://dx.doi.org/10.1016/j.jfi.2012.01.003
• Altenburg, T., Schmitz, H., & Stamm, A. (2008). Breakthrough? China's and India's Transition from production to innovation. World Development, 36(2), 325-344. http://dx.doi.org/10.1016/j.worlddev.2007.06.011
• Amore, M. D., Schneider, C., & Žaldokas, A. (2013). Credit supply and corporate innovation. Journal of Financial Economics, 109, 835-855. http://dx.doi.org/10.1016/j.jfineco.2013.04.006
• Antonioli, D., Marzucchi, A., & Savona, M. (2017). Pain shared, pain halved? Cooperation as a coping strategy for innovation barriers. The Journal of Technology Transfer, 42(4), 841-864. http://dx.doi.org/10.1007/s10961-016-9545-9
• Antolin-Lopez, R., Martinez-del-Rio, J., Cespedes-Lorente, J. J., & Perez-Valls, M. (2015). The choice of suitable cooperation partners for product innovation: Differences between new ventures and established companies. European Management Journal, 33(6), 472-484. http://dx.doi.org/10.1016/j.emj.2015.09.002
• Arena, M. P., & Dewally, M. (2012). Firm location and corporate debt. Journal of Banking & Finance, 36(4), 1079-1092. http://dx.doi.org/10.1016/j.jbankfin.2011.11.003
• Bhaumik, S. K., Das, P. B., & Kumbhakar, S. C. (2012). A stochastic frontier approach to modelling financial constraints in firms: An application to India. Journal of Banking & Finance, 36, 1311-1319. http://dx.doi.org/10.1016/j.jbankfin.2011.11.026
• Beneito, P. (2006). The innovative performance of in-house and contracted R&D in terms of patents and utility models. Research Policy, 35(4), 502-517. http://dx.doi.org/10.1016/j.respol.2006.01.007
• Berkowitz, J., & White, M. J. (2004). Bankruptcy and small firms' access to credit. Rand Journal of Economics, 35(1), 69-84. http://dx.doi.org/10.2307/1593730
• Bas, M., & Paunov, C. (2018). The unequal effect of India's industrial liberalization on firms' decision to innovate: Do business conditions matter? Journal of Industrial Economics, 66(1), 205-238. http://dx.doi.org/10.1111/joie.12163
• Brown, J. R., Martinsson, G., & Petersen, B. C. (2012). Do financing constraints matter for R&D? European Economic Review, 56(8), 1512-1529. http://dx.doi.org/10.1016/j.euroecorev.2012.07.007
• Brown, J. R. S., Fazzari, M., & Petersen, B. C. (2009). Financing innovation and growth: Cash flow, external equity, and the 1990 R&D boom. The Journal of FINANCE, 64, 141-185. http://dx.doi.org/10.1111/j.1540-6261.2008.01431.x
• Dhanora, M., Sharma, R., & Khachoo, Q. (2018). Non-linear impact of product and process innovations on market power: A theoretical and empirical investigation. Economic Modeling, 70, 67-77. http://dx.doi.org/10.1016/j.econmod.2017.10.010
• Canepa, A., & Stoneman, P. (2008). Financial constraints to innovation in the UK: Evidence from CIS2 and CIS3. Oxford Economic Papers, 60(4), 711-730. http://dx.doi.org/10.1093/oep/gpm044
• Canepa, A., & Stoneman, P. (2003). Do financial factors constrain innovation?: A European cross country study. In K. Cowling M. Waterson (Eds.), Competition, Monopoly and Corporate Governance: Essays in Honour of Keith Cowling (pp. 42-67). Cheltenham: Edward Elgar. http://dx.doi.org/10.4337/9781781951361.00009
• Caggese, A., & Cuñat, V. (2008). Financing constraints and fixed-term employment contracts. The Economic Journal, 118(533), 2013-2046. http://dx.doi.org/10.1111/j.1468-0297.2008.02200.x
• Coad, A., Segarra, A., & Teruel, M. (2016). Innovation and firm growth: Does firm age play a role? Research Policy, 45(2), 387-400. http://dx.doi.org/10.1016/j.respol.2015.10.015
• Cohen, W. M., Nelson, R. R., & Walsh, J. P. (2002). Links and impacts: The influence of public research on industrial R&D. Management Science, 48(1), 1-23. http://dx.doi.org/10.1287/mnsc.48.1.1.14273
• Czarnitzki, D., & Hottenrott, H. (2017). Inter-organizational collaboration and financing constraints for R&D. Economics Letters, 161, 15-18. http://dx.doi.org/10.1016/j.econlet.2017.09.008
• D'Este, P., Iammarino, S., Savona, M., & Von Tunzelmann, N. (2012). What hampers innovation? Revealed barriers versus deterring barriers. Research Policy, 41(2), 482-488. http://dx.doi.org/10.1016/j.respol.2011.09.008
• García-Quevedo, J., Segarra-Blasco, A., & Teruel, M. (2018). Financial constraints and the failure of innovation projects. Technological Forecasting and Social Change, 127, 127-140. http://dx.doi.org/10.1016/j.techfore.2017.05.029
• Girma S., & Vencappa, D. (2015). Financing sources and firm level productivity growth: evidence from Indian manufacturing. Journal of Productivity Analaysis, 44, 283-292. https://doi.org/10.1007/s11123-014-0418-7
• George, R., Kabir, R., & Qian, J. (2011). Investment-cash flow sensitivity and financing constraints: New evidence from Indian business group firms. Journal of Multinational Financial Management, 21, 69-88. http://dx.doi.org/10.1016/j.mulfin.2010.12.003
• González-Moreno, Á., Triguero, Á., & Sáez-Martínez, F. J. (2019). Many or trusted partners for eco-innovation? The influence of breadth and depth of firms' knowledge network in the food sector. Technological Forecasting and Social Change, 147, 51-62. http://dx.doi.org/10.1016/j.techfore.2019.06.011
• Greco, M., Grimaldi, M., & Cricelli, C. (2020). Interorganizational collaboration strategies and innovation abandonment: The more the merrier? Industrial Marketing Management, 90, 679-692. http://dx.doi.org/10.1016/j.indmarman.2020.03.029
• Greco, M., Grimaldi, M., & Cricelli, L. (2017). Hitting the nail on the head: Exploring the relationship between public subsidies and open innovation efficiency. Technological Forecasting and Social Change, 118, 213-225. http://dx.doi.org/10.1016/j.techfore.2017.02.022
• Griffith, R., Huergo, E., Mairesse, J., & Peters, B. (2006). Innovation and productivity across four European countries. Oxford Review of Economic Policy, 22(4), 483-498. http://dx.doi.org/10.1093/oxrep/grj028
• Gkypali, A., Filiou, D., & Tsekouras, K. (2017). R&D collaborations: Is diversity enhancing innovation performance? Technological Forecasting and Social Change, 118, 143-152. http://dx.doi.org/10.1016/j.techfore.2017.02.015
• Hall, H., & Sena, V. (2017). Appropriability mechanisms, innovation, and productivity: Evidence from the UK. Economics of Innovation and New Technology, 26(1-2), 42-62. http://dx.doi.org/10.1080/10438599.2016.1202513
• Hewitt-Dundas, N. (2006) Resource and capability constraints to innovation in small and large plants. Small Business Economics, 26(3), 257-277. http://dx.doi.org/10.1007/s11187-005-2140-3
• Hewitt-Dundas, N., Gkypali, A., & Roper, S. (2019). Does learning from prior collaboration help firms to overcome the 'two-worlds' paradox in university-business collaboration. Research Policy, 48(5), 1310-1322. http://dx.doi.org/10.1016/j.respol.2019.01.016
• Howell, A. (2016). Firm R&D, innovation and easing financial constraints in China: Does corporate tax reform matter? Research Policy, 45, 1996-2007. http://dx.doi.org/10.1016/j.respol.2016.07.002
• Hu, Y., McNamara, P., & Piaskowska, D. (2016). Project suspensions and failures in new product development: Returns for entrepreneurial firms in co-development alliances. Journal of Product Innovation Management, 34(1), 35-59. http://dx.doi.org/10.1111/jpim.12322
• Ivus, O., Jose, M., & Sharma, R. (2021). R&D tax credit and innovation: Evidence from private firms in India. Research Policy, 50(1), 104128. https://doi.org/10.1016/j.respol.2020.104128
• Kafouros, M., Love, J. H., Ganotakis, P., & Konara, P. (2020). Experience in R&D collaborations, innovative performance and the moderating effect of different dimensions of absorptive capacity. Technological Forecasting & Social Change, 150, 119757. http://dx.doi.org/10.1016/j.techfore.2019.119757
• Khan, S. U., & Hijazi, S. T. (2009). Single stock futures trading and stock price volatility: Empirical analysis. Pakistan Development Review, 48(4), 553-563. http://dx.doi.org/10.30541/v48i4IIpp.553-563
• Khan, S. U., Shah, A., & Rizwan, M. F. (2021). Do financing constraints matter for technological and non-technological innovation? A (Re)examination of developing markets. Emerging Markets Finance and Trade, 57(9), 2739-2766. http://dx.doi.org/10.1080/1540496X.2019.1695593
• Khan, S. U. (2022). Financing constraints and firm-level responses to the COVID-19 pandemic: International evidence. Research in International Business and Finance, 59, 101545. https://doi.org/10.1016/j.ribaf.2021.101545
• Khan, S. U., Khan, N. U., & Ullah, A. (2021). The ex-ante effect of law and judicial efficiency on borrower discouragement: An international evidence. Asia-Pacific Journal of Financial Studies, 50(2), 176-209. https://doi.org/10.1111/ajfs.12334.
• Khan, S. U., & Rizwan, M. F. (2020). Ownership concentration, owner identity and technological innovation propensity: Moderating role of corporate diversification. Pakistan Journal of Commerce and Social Science, 14(4), 913-961.
• Koch, T., & Windsperger, J. (2017). Seeing through the network: Competitive advantage in the digital economy. Journal of Organization Design, 6(1), 1-30. http://dx.doi.org/10.1186/s41469-017-0016-z
• Knott, A. M. & Vieregger, C. (2020). Reconciling the firm size and innovation puzzle. Organization Science, 31(2), 477-488. http://dx.doi.org/10.1287/orsc.2019.1310
• Lasagni, A. (2012). How Can external relationships enhance innovation in SMEs? New evidence for Europe. Journal of Small Business Management, 50(2), 310-339. http://dx.doi.org/10.1111/j.1540-627X.2012.00355.x
• Laursen, K, & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27(2), 131-150. http://dx.doi.org/10.1002/smj.507
• Leiponen, A., & Helfat, C. E. (2010). Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 31(2), 224-236. http://dx.doi.org/10.1002/smj.807
• Lerner, J., Shane, H., & Tsai, A. (2003). Do equity financing cycles matter? Evidence from biotechnology alliances. Journal of Financial Economics, 67(3), 411-446. http://dx.doi.org/10.1016/S0304-405X(02)00256-8
• Mancusi, M. L., & Vezzulli, A. (2014). R&D and credit rationing in SMEs. Economic Inquiry, 52(3), 1153-1172. http://dx.doi.org/10.1111/ecin.12080
• Mateut, S. (2018). Subsidies, financial constraints and firm innovative activities in emerging economies. Small Business Economics, 50(1), 131-162. http://dx.doi.org/10.1007/s11187-017-9877-3
• Medda, G. (2018). External R&D, product and process innovation in European manufacturing companies. The Journal of Technology Transfer, 45, 339-369. http://dx.doi.org/10.1007/s10961-018-9682-4
• Mohnen, P., Palm, F. C., van der Loeff, S. S., & Tiwari, A. (2008). Financial constraints and other obstacles: Are they a threat to innovation activity? De Economist, 156(2), 201-214. http://dx.doi.org/10.1007/s10645-008-9089-y
• Monfardini, C., & Radice, R. (2008). Testing exogeneity in the bivariate probit model: A monte carlo study. Oxford Bulletin of Economics and Statistics, 70(2), 271-82. http://dx.doi.org/10.1111/j.1468-0084.2007.00486.x.
• Mowery, D. C., Oxley, J. E., & Silverman, B. S. (1998). Technological overlap and inter-firm cooperation: Implications for the resource-based view of the firm. Research Policy, 27(5), 507-523. https://doi.org/10.1016/S0048-7333(98)00066-3
• Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7(6), 485-501. http://dx.doi.org/10.1002/smj.4250070602
• Park, S. H., Chen, R., & Gallagher, S. (2002). Firm resources as moderators of the relationship between market growth and strategic alliances in semiconductor start-ups. Academy of Management Journal, 45(3), 527-545. http://dx.doi.org/10.2307/3069379
• Peng, H., Tan, H., & Zhang, Y. (2020). Human capital, financial constraints, and innovation investment persistence. Asian Journal of Technology Innovation, 28(3), 453-475. http://dx.doi.org/10.1080/19761597.2020.1770616
• Piga, C. A., & Atzeni, G. (2007). R&D investment, credit rationing and sample selection. Bulletin of Economic Research, 59(2), 0307-3378. http://dx.doi.org/10.1111/j.0307-3378.2007.00255.x
• Radas, S., & Bozic, L. (2012). Overcoming failure: Abandonments and delays of innovation projects in SMEs. Industry and Innovation, 19(8), 649-669. http://dx.doi.org/10.1080/13662716.2012.739769
• Rauter, R., Globocnik, D., Perl-Vorbach, E., & Baumgartner, R. J. (2019). Open innovation and its effects on economic and sustainability innovation performance. Journal of Innovation & Knowledge, 4(4), 226-233. http://dx.doi.org/10.1016/j.jik.2018.03.004
• Rizwan, M. F., & Khan, S. U. (2007). Long-run performance of public vs. private sector initial public offerings in Pakistan. Pakistan Development Review, 46(4), 421-4333. http://dx.doi.org/10.30541/v46i4IIpp.421-433
• Santamaría, L., Nieto, M. J., & Rodríguez, A. (2021). Failed and successful innovations: The role of geographic proximity and international diversity of partners in technological collaboration. Technological Forecasting and Social Change, 166, 120575. http://dx.doi.org/10.1016/j.techfore.2021.120575
• Sasidharan, S., Lukose, P.J.J., & Komera, S. (2015). Financing constraints and investments in R&D: Evidence from Indian manufacturing firms. The Quarterly Review of Economics and Finance, 55, 28-39. http://dx.doi.org/10.1016/j.qref.2014.07.002
• Savignac, F. (2008). Impact of financial constraints on innovation: What can be learned from a direct measure? Economics of Innovation and New Technology, 17(6), 553-569. http://dx.doi.org/10.1080/10438590701538432
• Veugelers, R., & Cassiman, B. (1999). Make and buy in innovation strategies: Evidence from Belgian manufacturing firms. Research Policy, 28, 63-80. http://dx.doi.org/10.1016/S0048-7333(98)00106-1
• Wadhwa, A., Bodas Freitas, I. M., & Sarkar, M. B. (2017). The paradox of openness and value protection strategies: Effect of extramural R&D on innovative performance. Organization Science, 28(5), 873-893. http://dx.doi.org/10.1287/orsc.2017.1145
• Wang, L., Yeung, J. H. Y., & Zhang, M. (2011). The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty. International Journal of Production Economics, 134, 114-122. http://dx.doi.org/10.1016/j.ijpe.2011.06.006
• World Bank. (2021). World development indicators. Retrieved from https://data.worldbank.org/indicator
• Wu, J. (2014). The effects of external knowledge search and CEO tenure on product innovation: Evidence from Chinese firms. Industrial and Corporate Change, 23(1), 65-89. http://dx.doi.org/10.1093/icc/dtt009
• Zhang, M., Zhao, X., Voss, C., & Zhu, G., 2016. Innovating through services, co-creation and supplier integration: Cases from China. International Journal of Production Economics, 171(2), 289-300. https://doi.org/10.1016/j.ijpe.2015.09.026

Identyfikatory

DOI

https://doi.org/10.7341/20221846