When Does Distributed Innovation Activity Make Sense? Location, Decentralization, and Innovation Success

Leiponen AijaHelfat Constance E.

Companies face an expanding set of choices about where to locate their innovation activity, both within their home countries and abroad. This location choice also requires firms to make a simultaneous choice about the organizational structure of innovation activity : almost by definition, multiple locations per firm imply some degree of decentralization. Using firm-level data on innovation output and the location of research and development (R&D) activity, we shed new light on the question of whether firms that have multiple locations also have greater innovation success. Our results indicate that, on average, having distributed R&D activity is beneficial in terms of the extent and breadth of innovation success, and the effect is strongly related to the knowledge sourcing strategies that firms employ. These results are consistent with the interpreta-tion that R&D location decisions are driven by the desire of firms to access a broad set of external sources of knowledge for innovation activities. We also find that the benefits of multiple R&D lo-cations do not apply to novel (new-to-the-market) innovations. Our results suggest that when analyzing technological innovation, it is important to distinguish between novel and imitative innova-tions, since their determinants may differ.

Publication info

Series
Discussion Papers no. 1063
Date
2006
Avainsanat
tutkimus ja kehitys, innovaatiot, organisaatio, hajauttaminen, tietolähteet
Keywords
research and development, innovation, organisation, decentralisation, knowledge sourcing
JEL
O32,L22
Pages
32
Price
10 €
Availability of print version
Language
English