Table Of ContentInnovation without R&D
Oliver Som
Innovation without R&D
Heterogeneous Innovation Patterns
of Non-R&D-Performing Firms
in the German Manufacturing Industry
With a foreword by Prof. Dr. Carsten Dreher
RESEARCH
Oliver Som
Karlsruhe, Germany Bernhard Schmidt
Voestalpine Langenhagen, Deutschland
Linz, Österreich
This publication has been accepted as a dissertation at the University of Flensburg,
Internationales Institut für Management (IIM), 2011.
ISBN 978-3-8349-3491-8 ISBN 978-3-8349-3492-5 (eBook)
DOI 10.1007/978-3-8349-3492-5
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Foreword V
Foreword
"Research and development" were regarded in the past decades as the driver
of productivity growth in economies. Inevitably, therefore, investments in re-
search and development were described as economically meaningful and a
sign of normative political will. This was reflected not least in the 3% target of
the European Union. With this target, an indicator gained importance which
was regarded as a success guarantee for sustainable growth: the so-called
R&D ratio, which is described in economic terms as R&D expenditure relative
to gross domestic product and from a business administration perspective as
R&D expenses related to sales (R&D intensity). This seemingly paradigmatic
correlation, however, has been increasingly questioned in the past years. For
instance, Arundel et al. established in 20081 that half of the firms surveyed in
the Community Innovation Survey do not conduct any research or develop-
ment at all. Srholec and Verspagen (2008)2 point to the different innovation
strategies within the so-called high-tech sectors which have been successful
despite their varying expenditures on R&D.
This debate is potentially explosive as it casts doubts on accepted causal links
in innovation and research policy and gives additional weight to alternative in-
novation strategies. In his thesis the author deals with exactly these relation-
ships by specifically targeting this group of companies in his investigation.
Oliver Som addresses a truly relevant issue in the area of innovation research,
innovation economics and innovation policy which calls for a holistic view of
both the operative level and also the economic interconnections.
The main research question in this thesis is whether the non-R&D-performing
firms in German manufacturing industry display heterogeneous innovation pat-
terns. For this purpose, it is important to observe both the structural dimension
- namely, whether and why heterogeneity in the non-R&D-performing firm
populations can be expected – as well as the substantive dimension - to what
1 Arundel, A., Bordoy, C., Karneva, M. (2008): Neglected Innovators: How Do Innovative
Firms That Do Not Perform R&D Innovate? Results of an analysis of the Innobarometer
2007 survey No. 215. INNO-Metrics Thematic Paper.
2 Srholec, M., Verspagen, B. (2008): The Voyage of the Beagle in Innovation Systems
Land. Exploration on Sectors, Innovation, Heterogeneity and Selection. UNU-Merit
Working Paper Series #2008-008, United Nations University, Maastricht.
VI Foreword
extent and in which dimensions heterogeneity of innovation patterns on the
part of non-R&D-performing firms can really be distinguished.
For this he developed a conceptual framework which draws on evolutionary
innovation economics and the resource-based view of strategic business
management. This emphasises the heterogeneity and the use of different re-
sources and thus the possible elaboration of competitive advantages for com-
panies. The empirical analysis is unique, because Mr. Som succeeds in co-
herently organising the presently available, partly contradictory analytical find-
ings from previous studies, and for the first time paints a differentiated picture
of various innovation strategies of non-R&D-performing firms based on quanti-
tative data. The heterogeneous innovation patterns identified in his cluster
analysis provide a consistent explanation of why firms, despite the fact that
they do not conduct research and development, are still competitive and con-
tribute to economic growth. I therefore wish this thesis, which was both pre-
sented and successfully defended at the University of Flensburg, many inter-
ested readers.
Carsten Dreher
Preface VII
Preface
As though it were a corporate innovation project, writing a doctorate thesis is a
rocky road paved with all kinds of challenges. To start with, there are large un-
certainties with regard to the expected final result. And if a result is actually
reached, will anybody be interested in it, in other words: is there any demand?
Furthermore, the necessary financial and human resources have to be pro-
vided, where especially the latter are particularly susceptible to all kinds of dis-
tractions during the writing phase of such a paper and are therefore in need of
special care and attention. Bureaucratic hurdles have to be managed, external
impulses and ideas have to be acknowledged and evaluated, knowledge
stocks and data have to be gathered and tied together. In addition, the market-
ing concept has to be constantly modified and revised for the doctoral advisor.
Not least, the project has to be protected from the persistent emergencies and
peculiar logics of the day-to-day normal work schedule. To ensure the
smoothest and perfectly timed interplay of all these factors, many people con-
tributed decisively to the success of this doctorate thesis. I would like to ex-
press my thanks to them at this point.
First of all, I must say thank you to my doctoral advisor, Professor Dr. Carsten
Dreher. He not only created the necessary conditions for the project by adopt-
ing me as an “extern” in his department, but also contributed to the success of
the undertaking with his scientific expertise and personal advice. Thanks also
go to Professor Dr. Hartmut Hirsch-Kreinsen for taking on the role of co-
supervisor, as well as to Professor Dr. Dr. Willi Petersen for acting as the
chairman of the examination committee. As well as all the co-workers of Pro-
fessor Dreher at the Universities of Flensburg and Berlin (FU), I am especially
grateful to Dr. Alexander Martin and Dr. Anette Biedermann for their valuable
advice and support.
This paper was written in the framework of my professional activity as a scien-
tific researcher at the Fraunhofer Institute for Systems and Innovation Re-
search ISI in Karlsruhe. I am deeply indebted to numerous colleagues at
Fraunhofer ISI. I would especially like to mention Professor Dr. Eva Kirner,
who during her time at ISI accompanied the project as my mentor from its first
steps up to its oral disputation, who honed the study at decisive points using
her scientific expertise and who managed to motivate me, the author, again
and again at critical phases with her confidence. I also thank Dr. Steffen
Kinkel, Head of the Competence Center Industrial and Service Innovations, for
putting in place the very good framework and working conditions which en-
abled me to write this thesis. Special thanks go to Spomenka Maloca for her
VIII Preface
valuable and patient advice and support on statistics as well as Dr. Christoph
Zanker and Katharina Mattes for many fruitful discussions and shouldering
some of my other project responsibilities during the final crucial phase of writ-
ing this thesis. For taking on the job of editing and proofreading the final
manuscript, I would like to thank Christine Mahler-Johnstone and Gillian Bow-
man-Köhler, as well as Sabine Schöller, who was in charge of its publication at
the Gabler Verlag.
The biggest thanks by far must go to my family. Above all, I would like to ex-
press my heartfelt appreciation to my partner, Antje Bierwisch. She was at my
side through all the ups and downs of this project, accompanying me with un-
derstanding and love and also contributed significantly to its success with her
many suggestions and discussions. Finally, I would like to thank my parents
Rosemarie and Otto Som from the bottom of my heart. Their unconditional and
unswerving support made it possible for me to pursue this course of study and
they were always there for me during its writing. Sadly, my father did not live
long enough to see this work completed. It is dedicated to him.
Oliver Som
Table of contents IX
Table of contents
Foreword V(cid:3)
Preface VII(cid:3)
Table of contents IX(cid:3)
List of figures XIII(cid:3)
List of tables XV(cid:3)
List of abbreviations XVII(cid:3)
1(cid:3) Introduction 1(cid:3)
1.1(cid:3) Economic relevance of non-R&D-intensive industries 5(cid:3)
1.2(cid:3) Innovation and competitive strategies of non-R&D-intensive firms 7(cid:3)
1.3(cid:3) Identifying the research gap 11(cid:3)
1.4(cid:3) Motivation, research objectives and approach of the thesis 14(cid:3)
1.5(cid:3) Positioning in theory of science 21(cid:3)
2(cid:3) R&D as a determinant of technological progress, economic growth and
firms' competitiveness 23(cid:3)
2.1(cid:3) The concept of "economic growth" 23(cid:3)
2.2(cid:3) From SCHUMPETER to economic growth theory 25(cid:3)
2.3(cid:3) The classical start - SOLOW’S theory of exogenous economic growth 29(cid:3)
2.4(cid:3) The advancement of SOLOW'S inheritance - The endogenous growth
theory 36(cid:3)
2.4.1(cid:3) Different strands of endogenous growth theory 37(cid:3)
2.4.2(cid:3) ROMER’S model of endogenous economic growth 40(cid:3)
2.4.3(cid:3) Summary and criticism 51(cid:3)
2.5(cid:3) Economic growth theory in the context of this thesis 59(cid:3)
X Table of contents
2.6(cid:3) The firm level perspective - institutionalised in-house R&D 63(cid:3)
2.6.1(cid:3) Definition of Research and Development (R&D) 63(cid:3)
2.6.2(cid:3) How can firm level R&D be measured? 69(cid:3)
2.6.3(cid:3) The historical emergence of R&D activities at firm level 70(cid:3)
2.6.4(cid:3) Determinants of firm level R&D 74(cid:3)
2.6.5(cid:3) R&D as a firm level driver of innovation and economic success 77(cid:3)
2.6.6(cid:3) Internal and external R&D – A complementary or supplementary
relationship? 89(cid:3)
2.6.7(cid:3) Summary and criticism 96(cid:3)
2.7(cid:3) Excursion – Analysis of the economic relevance of different R&D-
intensive sectors 101(cid:3)
2.8(cid:3) The shift from the R&D paradigm to a systemic innovation approach 104(cid:3)
3(cid:3) Firms' heterogeneity and sources of innovation and economic success
beyond the scope of R&D 111(cid:3)
3.1(cid:3) Evolutionary economic theory and the heterogeneity of firms 111(cid:3)
3.1.1(cid:3) Variation 116(cid:3)
3.1.2(cid:3) Selection 118(cid:3)
3.1.3(cid:3) Replication / retention 122(cid:3)
3.1.4(cid:3) Summary and criticism 125(cid:3)
3.2(cid:3) Structural heterogeneity of non-R&D-performing firms 129(cid:3)
3.3(cid:3) Sources of firms’ competitive advantage in strategic management 131(cid:3)
3.3.1(cid:3) The market-based approach of strategic management 132(cid:3)
3.3.2(cid:3) Summary and criticism 134(cid:3)
3.3.3(cid:3) The resource-based theory of the firm 138(cid:3)
3.3.4(cid:3) Summary and criticism 166(cid:3)
3.4(cid:3) Extending the firm-internal resource-based theory 178(cid:3)
3.4.1(cid:3) The relational-based view of the firm 178(cid:3)
3.4.2(cid:3) Summary and criticism 187(cid:3)
3.4.3(cid:3) The knowledge-based view of the firm 191(cid:3)
3.4.4(cid:3) Summary and criticism 206(cid:3)
3.5(cid:3) R&D as only one resource among equals to explain firms’
competitive advantage 213(cid:3)
