Cooperating with External Partners: The Importance of Diversity for Innovation Performance

University of Zurich, Institute of Business Administration, UZH Business Working Paper No. 331

31 Pages Posted: 5 Mar 2013

Date Written: March 4, 2013

Abstract

Innovations are rarely generated in complete isolation. Due to inherent uncertainty, high knowledge requirements, and high financial investments, many firms search for external partners to develop new products and processes. However, there is an ongoing debate as to whether firms who cooperate with diverse external partners such as suppliers, customers and governmental research institutions see increased innovation performance as compared to firms who cooperate with a less diverse range of collaborators. This paper investigates how diversity in cooperation networks affects firms' innovation performance output as measured by sales share of innovative products. To address this question, the authors analyze a large-scale sample of microdata from Swiss firms from four waves (1999, 2002, 2005, and 2008) of the Swiss innovation survey using panel data analysis. The findings suggest that firms with greater diversity in their cooperation network benefit by generating new product innovations, and that small firms benefit more from diversity of collaborators as compared to other firm sizes. The study further detects a curvilinear relationship between diversity of collaborator types and innovation performance, and emphasizes the importance of appropriate HRM and knowledge management policies and practices to provide firms with an effective mechanism for maximizing benefits from a diversified cooperation network.

Keywords: Collaboration for innovation, cooperation strategies, diversity, innovation performance, human resource management policies and practices, knowledge management strategies; technological capabilities, multinational corporations, small firms

JEL Classification: O32

Suggested Citation

Beck, Mathias and Schenker-Wicki, Andrea, Cooperating with External Partners: The Importance of Diversity for Innovation Performance (March 4, 2013). University of Zurich, Institute of Business Administration, UZH Business Working Paper No. 331. Available at SSRN: https://ssrn.com/abstract=2228015 or http://dx.doi.org/10.2139/ssrn.2228015

Mathias Beck (Contact Author)

ETH Zurich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland
+41 44 632 29 46 (Phone)

HOME PAGE: http://kof.ethz.ch

Andrea Schenker-Wicki

University of Basel ( email )

Petersplatz 1
Basel, CH-4003
Switzerland

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