Which is Better for a Firm’s Financial Performance: An Externally Oriented or Inwardly Oriented Innovation Strategy? An Empirical Study of Korean SMEs

Title
Which is Better for a Firm’s Financial Performance: An Externally Oriented or Inwardly Oriented Innovation Strategy? An Empirical Study of Korean SMEs
Authors
이용길박승호송용일
Keywords
Financial Performance; Innovation Strategy; open innovation; SMEs; closed innovation; R&D outsourcing
Issue Date
2009-07
Publisher
Asian journal of technology innovation
Citation
VOL 17, NO 1, 57-74
Abstract
Research in the field of innovation shows that companies today often rely on interactions with users, suppliers, and other external sources when it comes to seeking innovative practices. Many studies find that this “open” innovation search model contrasts favorably with the inward-oriented model of the past, although many of these studies still rely on the traditional measures of output such as patent applications. The authors further this research by examining how a concrete measure of financial performance (operating profit) is related to the variables of openness and closedness in innovation strategy. Our approach is unique in the sense that we examine a sample comprising only of small and medium-sized enterprises, categorize firms according to industry, and look at such unique variables as family control of the SME (whether the CEO and/or stockholders are family members) and the SME’s exposure in an online financial newspaper. We gather data on 215 Korean SMEs from Korea’s Data Analysis, Retrieval, and Transfer System, Worldwide Intellectual Property Search, and the online newspaper Money Today. Findings include the rather surprising result that a closed innovation strategy as represented by family control of the SME relates positively to financial performance.
URI
http://pubs.kist.re.kr/handle/201004/35682
ISSN
1976-1597
Appears in Collections:
KIST Publication > Article
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