The Role of Public External Knowledge for Firm Innovativeness

Public research organizations (PROs) and universities receive large amounts of public funds for the generation and transmission of knowledge and companies contract external knowledge from both. An important question for a firm’s management of its R&D and for public innovation policies is: What is more beneficial to generate firm innovations, external knowledge created by PROs or by universities? In this paper, we assess the impact of external knowledge from PROs versus universities on firm innovativeness. We use information of R&D acquisitions from a panel dataset of more than 10,000 Spanish firms from 2005 to 2014. We show that external knowledge from PROs and from universities increases firm innovativeness. Our results suggest that the knowledge generated by PROs is more sensitive to the absorptive capacities of the firm than the knowledge generated by universities. This has implications for research policy, the management of R&D, and organizational strategies of the knowledge activities of firms. Firms with low absorptive capacities benefit relatively more from the knowledge generated by universities than the knowledge by PROs. Moreover, R&D managers might plan both their external and internal R&D if they acquire external R&D from PROs