The role of market competition for knowledge competencies, R&D and innovation: an empirical analysis for German firms

Abstract

Purpose -Knowledge competencies and (R&D) activities are one of the most important sources of innovation and have been widely discussed in the literature. In comparison, the role of the competitive environment for the innovation activities of firms is still open to debate and has not been fully understood yet. Therefore, this paper intends to provide new evidence on the interaction between knowledge competencies and R&D activities of firms on the one side and their competitiveness in the market environment on the other. In particular, the moderating function of market competition is explored. In this respect, the analysis covers the main innovation types as well as both sectors, manufacturing and services. Design/methodology/approach -The empirical analysis is based on a three years panel dataset of German manufacturing and service firms obtained from Mannheim Innovation Panel (MIP) and Community Innovation Surveys (CISs: 2011(CISs: , 2013(CISs: and 2015. For the estimation, a binary instrumental variable treatment model with Heckman selection method is used. Also, it provides a suitable approach to estimating the binary variables in order to cope with endogeneity concerns. Findings -The estimation results show that R&D activities and knowledge competencies are positively related to innovation activities of different types conditioned on firms' specific perception of their competitive environment, in terms of outdated products/services as well as strong competition from abroad. Most importantly, the results from the moderation estimation reveal that there is a significant difference between the manufacturing and service sector. Service firms engage more in internal R&D activities on generating product innovations while the manufacturing firms conduct more external R&D on specific types of innovation. Further, the authors find that strong competition from abroad positively and significantly reinforces the effect of knowledge competencies on innovation activities for more types in services than in manufacturing. In contrast, outdated products and services tend to decline the effect of knowledge competencies for some innovation types in both sectors. The authors also observe a positive and significant reinforcement effect on knowledge competencies. However, it is found more beneficial for service firms since they can employ more innovation strategies. Originality/value -The focus of the study is mainly on the impact of firms' competitive environment on innovation activities in various types through its interaction with knowledge competencies and R&D activities, across manufacturing and service firms.

Openness and Sensing Capacity: The Case of Micro and Small Furniture Industries in Tanzania

“…The selection of wards from different divisions ensured the representation of different parts of the cities in the sample, whereas the selection of wards with the highest number of MSFIs enhanced the likelihood of obtaining innovation data. The intensity of firms enhances competition, and, as stated earlier, Moen et al (2018) and Basit et al (2022) indicate that competition enhances innovation. Each of the selected wards with less than five, five up to ten, and more than ten licensed MSFIs contributed three, six, and nine MSFIs from different streets in a ratio of 1 top: 1 average: 1 low performer in owning modern furniture production machines.…”

Coupled open innovation and dynamic capabilities: Their effect on low-tech micro and small firms’ innovation

“…Given that multiple geographically proximal wards constitute a division, the highest local administrative area following the ward in Tanzania (URT, 1982), one ward is selected from every three geographically proximal wards in each division. The chosen ward has the highest number of licensed furniture manufacturers to enhance the likelihood of sampling innovative MSFIs, as increased numbers correlate with heightened competition and innovation (Basit et al, 2022;Moen et al, 2018). The number of licensed furniture manufacturers is obtained from city trade officers, serving as a proxy for the concentration of furniture manufacturing industries in each ward.…”

“…Hinteregger et al (2018) have noted the need to study low-tech industries more in the context of open innovation. Moreover, the concentration of MSFIs is optimal for fostering competitiveness (Dinh & Monga, 2013), which enhances innovation (Basit et al, 2022;Moen et al, 2018). This competitiveness and potential for innovation in MSFIs are crucial for facilitating the availability of innovation data.…”