October 2007

IZA DP No. 3126: The Catalysing Role of In-House R&D in Fostering the Complementarity of Innovative Inputs

published in: Industry and Innovation, 2014, 21, 179-196

The aim of this study is to test the possible catalysing role of in-house R&D in fostering the complementarity of innovative inputs on a sample of 3045 manufacturing firms drawn from the third Italian Community Innovation Survey (1998-2000). The interactions between four different sources of innovation – internal and external R&D, embodied and disembodied technological acquisitions – have been simultaneously explored through the two (direct and indirect) testing frameworks for complementarity. Results from both the approaches show that the innovative process is a phenomenon combining within itself both complementarity and substitutability relationships, depending both on the typology of the targeted innovation output and on the particular combination of innovative inputs we focus on. In particular, it is in-house R&D that seems to create the precondition allowing firms to enjoy complementarity effects. Indeed, the possibility of exploiting synergies between different innovative inputs turns out to be subordinated to having undertaken a minimum amount of internal R&D. The implication of this result is that a role for in-house R&D emerges, beyond its direct effect in generating an innovative output: even if internal research is not a necessary precondition for a firm to be innovative, it should still be carried out because of its important role in the generation of synergies that amplify the impacts of the other innovative inputs it interacts with.