Cooperation for Innovation and Its Impact on Technological and Non-Technological Innovations: Empirical Evidence for European Smes in Traditional Manufacturing Industries

Abstract

Drawing on a sample of small and medium-sized enterprises (SMEs) in traditional manufacturing industries from seven EU regions, this study investigates how cooperation with external organisations affects technological (product and process) innovations and non-technological (organisational and marketing) innovations as well as the commercial success of product and process innovations (i.e., innovative sales). Our empirical strategy takes into account that all four types of innovation are potentially complementary. Empirical results suggest that cooperation increases firms’ innovativeness and yields substantial commercial benefits. In particular, increasing the number of cooperation partnerships has a positive impact on all measures of innovation performance. We conclude that a portfolio approach to cooperation enhances innovation performance and that innovation support programs should be demand-led.

Collaboration with External Organizations and Technological Innovations: Evidence from Spanish Manufacturing Firms

“…In the case of cooperation, the "attention allocation problem" would arise because cooperation with different partners is demanding on management attention and thus entails an opportunity cost with respect to other innovation activities. Once a firm reaches a certain number of collaborative partners, managers do not have enough time and effort to dedicate to additional collaborative partners [14]. If this argument holds in practice, it would mean that Spanish firms, especially those with limited management resources, should focus on fewer cooperative partnerships, rather than spreading their resources thinly and thus underutilizing external knowledge.…”

“…The resource-based view regards firms as bundles of tangible and intangible resources [11]. It proposes that firms cooperate with different partners to access external resources that are complementary to firms' internal resource and thus exploit synergies between them [12][13][14][15]. The knowledge-based view regards firms as institutional knowledge creators and facilitators [16], in particular regarding the transformation of tacit into explicit knowledge that can be used for the development of new products and processes [7].…”

“…Cooperation with customers can facilitate product innovation as customers can reveal their preferences and unfulfilled needs to the focal firm [17,35]. The joint development of a new product could improve market share and product credibility, and potentially reduce risks associated with the commercialization of new products [12,14,15]. However, sometimes customers might not be aware of their preferences and even more so of their unmet needs.…”

“…These appropriation issues often result in knowledge exchange being limited to explicit knowledge, and thus excluding tacit knowledge exchange [36]. Empirical studies on R&D cooperation usually report the smallest number of firms cooperating with competitors (see, e.g., [14,15]) given that trust has been recognized as the necessary success factor for R&D cooperation [15,35,37,[39][40][41][42]. However, although firms avoid collaborating with competitors, this type of collaboration is most frequently found in high-technology sectors, as firms in these sectors are continuous innovators, engaged in large and risky R&D investments.…”

“…However, although firms avoid collaborating with competitors, this type of collaboration is most frequently found in high-technology sectors, as firms in these sectors are continuous innovators, engaged in large and risky R&D investments. Thus, firms in high-technology sectors use cooperation with competitors as the cost and/or risk reduction strategy through economies of scale and rationalized R&D processes [12,14,15]. Another feature of cooperation with competitors is that they have a similar knowledge base as their competitors, which means that there is little scope for synergistic effects with regards to innovation activities in the focal firm [7].…”