Beyond invention: the additive impact of incubation capabilities to firm value

Abstract

Incubation is a process whereby the firm nurtures breakthrough discoveries and inventions to test their potential as new business platforms. The recent emergence of organizational roles associated with innovation incubation shows that internal incubation is becoming recognized as an important organizational capability. This development also suggests that firms that invest in discovery for competitive advantage recognize a need to leverage that investment more fully. While case studies describe incubation activities and note their importance, empirical research linking this capability to firm performance is limited. The current study represents an initial attempt at exploring the relationship empirically. Our main finding is that financial markets have difficulty valuing a firm's exploratory discovery investments and that the presence of an incubation capability positively moderates the impact of such investments on firm market valuation. The implication of this result is that investments in certain types of R&D may be suboptimized if there is not a parallel investment in a capability to incubate the opportunities that arise from potentially breakthrough inventions.

Potential of Regional Fuel and Energy Complex with the Typological Features of Regional Development

“…Numerous scientific and applied studies considering the comparative approach to regional specificity speak in favour of the influence of regional characteristics on the realization of the innovative potential of both individual business entities and industries (Badewi et al, 2018;Cheung et al, 2019;Markovitch et al, 2017;Tan et al, 2019). Certain factors affecting the innovative potential and innovative activity are reflected in the studies of foreign and domestic scientists and practitioners.…”

Managing technological uncertainty in science incubation: a prospective sensemaking perspective

“…This includes the activities of incubation embedded in the tenant–incubator relationship (e.g. Mian, ; Becker and Gassmann, ; Ahmad, ; Soetanto and Jack, ; Markovitch et al, ) and the implications of networks for tenant companies’ performance (Collinson and Gregson, ; Bøllingtoft and Ulhøi, ; Sá and Lee, ; Ebbers, ; Díez‐Vial and Montoro‐Sánchez, ). An emerging strand of research relates to the processes and mechanisms through which such organizations change over time.…”

A Knowledge Spillover-based Approach to New Product Conceptualization

“…These indicators are considered as a means to measure innovative output in the KPF [10]. Thus, 90% of investment on R&D improves the characteristics of products and the creation of new patents [15]. R&D can be used to evaluate the number of working hours dedicated to innovation, number of employees, income generated by the sales of products and knowledge that is generated endogenously [9].…”

“…Current research on start-ups in incubation programs focuses on assessing the number of patents produced through collaboration and investment. However, the allocation of monetary recourses on R&D would not be able to generate an economic value if a firm's absorptive capabilities are not effective [15]. To this end, recent literature on STPs have classified knowledge spillovers based on countries, firms and regions; and whether knowledge flows are horizontal or vertical [12].…”

“…It is unclear if these interactions are enhanced by knowledge spillovers [9]. A recent study using R&D as an indicator of innovation from the North American Industrial Classification System distinguished the importance of companies to boost incubation processes to increase breakthrough innovations [15]. The same trend has been measured in STPs, where companies are affected by knowledge spillovers depending on the type and source of knowledge; most importantly, the absorption of global innovation transcends from geographical proximity [12].…”