R&D capacity and the innovation collaboration paradox: the moderating role of the appropriation strategy

Abstract

R&D capacity is claimed to be a stimulant for open innovation. We argue that after a specific level of R&D investment, firms diminish their external innovation collaboration due to the risk of knowledge imitation and unwanted spillovers, which generates a concave relationship between the two variables. This concave relationship can be flattened if an appropriation strategy is applied. Using 3815 firm observations from the German Mannheim Innovation Panel (MIP) in 2013 and 2017, our regression results support our hypotheses. Theoretically, our study suggests that the absorptive capacity literature should consider the potential negative impact of internal R&D capacity on openness. Similarly, economists should approach knowledge spillovers as a manageable issue if an appropriation strategy is present. Specifically, appropriation stimulates openness by playing a double role in protecting internal knowledge against imitation while also sending a quality signal for external partners to collaborate. This effect is driven by the presence of an appropriation strategy regardless of its form or strength.