Complementarity in the innovation strategy: Internal R&D, external technology acquisition, and cooperation in R&D.

Successful innovation depends on the development and integration of new knowledge in the innovation process. In order to successfully innovate, the firm will combine different innovation activities. In addition to doing own research and development, firms typically are engaged in the acquisition of knowledge on the technology market and cooperate actively in R&D with other firms and research organizations. In this paper we show that there exist important complementarities between the different innovation activities. We test complementarity between the innovation activities both directly, through the productivity approach, and indirectly, through the adoption approach. Using data from the Community Innovation Survey on Belgian manufacturing firms, we show that firms that are only engaged in a single innovation strategy, either internal R&D activities or sourcing technology externally, introduced fewer new and substantially improved products compared to firms which combine internal and external sourcing. This result is consistent with complementarity between own R&D and external technology sourcing activities. In the adoption approach we show that the different innovation activities are strongly positively correlated and identify common drivers, resulting in the perceived complementarity between these innovation activities. An important finding is that a more basic R&D base which may serve as an absorptive capacity and a capacity to strategically protect intellectual property are important common drivers for the different innovation activities