Complementarities in the Search for Innovation: Managing Markets and Relationships

Extant research has characterized a firm’s search for external knowledge in its innovation activities as either relational or transactional in nature. The former implies that a firm chooses and develops collaborative relationships with knowledge sources like universities, customers or suppliers, while the latter suggests transactions governed by markets for technology. We argue that prior literature has ignored that both search strategies are interrelated and complementary: adopting one strategy has a higher marginal return on innovation performance if the other one is present. Moreover, we suggest the benefits from complementarity to be higher when a firm is more distant to the technological frontier in the industry and when markets for technology in that industry are shallow. We test our hypotheses on a sample of 3921 German firms from 2001 to 2009 and find support for our hypotheses.

Grimpe, Christoph and Wolfgang Sofka (2016), Complementarities in the Search for Innovation: Managing Markets and Relationships, Research Policy 45 , 2036-2053