The Impact of R&D Sources on New Product Development: Sources of Funds and the Diversity Versus Control Debate

Cuervo-Cazurra, A. Nieto. M. J., Rodriguez, A. 2018. The impact of R&D sources on new product development: Sources of funds and the diversity versus control of knowledge debate. Long Range Planning, 51 (5): 649-665.

26 Pages Posted: 27 Dec 2018

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Maria Jesus Nieto

Universidad Carlos III de Madrid - Management & Strategy Division

Alicia Rodríguez

Universidad Carlos III de Madrid

Date Written: March 21, 2017

Abstract

We build on the knowledge-based view to study the relative impact of alternative sources of R&D on innovation performance. We contrast two arguments: One is that diversity of knowledge is better for innovation, because the integration of a larger variety of knowledge helps create new products that can fulfill unmet customer needs; another is that control of knowledge is better, because the incentive and contextual system of the firm facilitates employees’ experimentation, which leads to novel products. We clarify this debate by contrasting both arguments and arguing that their relative importance depends on the sources of finance to fund innovation. We find that in general control is relatively better than diversity for the sale of new products. However, we also find that alternative sources of finance moderate the relationships: internal funds strengthen the impact of R&D sources with more knowledge diversity on the sale of new products, while the use of external funds strengthens the impact of R&D sources with more knowledge control on the sale of new products.

Keywords: R&D, innovation, outsourcing, offshoring, finance

JEL Classification: O31, O32

Suggested Citation

Cuervo-Cazurra, Alvaro and Nieto, María J. and Rodríguez, Alicia, The Impact of R&D Sources on New Product Development: Sources of Funds and the Diversity Versus Control Debate (March 21, 2017). Cuervo-Cazurra, A. Nieto. M. J., Rodriguez, A. 2018. The impact of R&D sources on new product development: Sources of funds and the diversity versus control of knowledge debate. Long Range Planning, 51 (5): 649-665. . Available at SSRN: https://ssrn.com/abstract=3298382

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

María J. Nieto

Universidad Carlos III de Madrid - Management & Strategy Division ( email )

E-28903 Getafe (Madrid)
Spain

Alicia Rodríguez

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

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