A research on the impact of partner′s social value on firms′ critical innovation

BI Jing-Yu

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Science Research Management ›› 2021, Vol. 42 ›› Issue (1) : 67-77.

A research on the impact of partner′s social value on firms′ critical innovation

Bi Jingyu¹, Xie En²

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Abstract

In a volatile business environment, firms usually build and operate a set of R&D alliances with multiple external partners as R&D alliance portfolios to achieve economic and technological objectives. However, due to the less transparent information disclosure process in emerging markets, it is difficult for firms to obtain reliable information about potential partners through public sources. As a result, firms trend to view the high frequency with which a specific partner is selected by other firms as a convincing signal of quality, because others′ actions can help the focal firm to reduce information asymmetries associating with partner selection decisions. Thus, the R&D alliance portfolio is often featured with high partners′ social value. Previous studies have examined how partners′ social value of the R&D alliance portfolio influence firms′ innovation outcomes, however, the conclusions are inconsistent. Specifically, how partners′ social value influences firms′ critical innovation still remains unknown. This study attempts to fill this gap by drawing on transaction cost theory to examine how partners′ social value of R&D alliance portfolio (which is measured as the average of the linkages of all partners in R&D alliance portfolio) influences firms′ critical innovation.
Because few of the previous studies focus on exploring the boundary effect of partners′ social value on firms′ critical innovation, while, the attributes of participants in the alliance portfolio can indeed affect the information obtained by the focal firm from external partners, especially the technological diversity and geographic diversity of R&D partners in the R&D alliance portfolio. Still, how partners′ technological diversity and geographic diversity moderate the relationship between partners′ social value and firms′ critical innovation remains unclear.
The empirical study, leveraging Chinese listed biopharmaceutical firms during a twenty-year period (1997-2017), and using a negative binomial regression model, aims to fill these gaps by posing two research questions. First, how partners′ social value of R&D alliance portfolio influences firms′ critical innovation. Second, how partners′ technological diversity and geographic diversity moderate the relationship between partners′ social value and firms′ critical innovation. Our results indicate that: (1) Partners′ social value has an inverted U-shaped effect on firms′ critical innovation; (2) Partners′ technological diversity weakens the inverted U-shaped effect of partners′ social value on firms′ critical innovation. The higher the technological diversity of the partners, the inverted-U shaped relationship between partners′ social value and firms′ innovation is weakened; (3) Partners′ geographic diversity has enhanced the inverted U-shaped effect of partners′ social value on firms′ critical innovation. The higher the geographical diversity of partners, the inverted-U shaped relationship between partners′ social value and firms′ critical innovation is steeper. Because existing research provides multiple measurements of firms′ critical innovation, we also use the number of citations of firms′ patent as the measurement of firms′ critical innovation to conduct a robustness test, the results further indicate that the conclusion of this article is still robust.
Relevant research results not only help supplement the existing literature on alliance portfolio and partner diversity but also can provide useful references for managers of the focal firms to select partners and manage their R&D alliance portfolio, thereby improving their innovation capabilities and innovation investment efficiency.

Key words

partners′ social value / partners′ technological diversity / partners′ geographic diversity / firms′ critical innovation

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Bi Jingyu, Xie En. A research on the impact of partner′s social value on firms′ critical innovation[J]. Science Research Management. 2021, 42(1): 67-77

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