The Limits to Collaboration Across Four of the Most Innovative UK Industries
| DOI | http://doi.org/10.1111/1467-8551.12353 |
| Author | Maksim Belitski,David B. Audretsch |
| Published date | 01 October 2020 |
| Date | 01 October 2020 |
British Journal of Management, Vol. 31, 830–855 (2020)
DOI: 10.1111/1467-8551.12353
The Limits to Collaboration Across Four
of the Most Innovative UK Industries
David B. Audretsch and Maksim Belitski 1
School of Public and Environmental Aairs, Indiana University Bloomington, 1315 E. 10th Avenue SPEA,
Bloomington, IN, 47405, USA 1Henley Business School, University of Reading, Whiteknights, Reading, RG6
6UD, UK
Corresponding author email: m.belitski@reading.ac.uk
This study demonstrates the importance and limits to external knowledge collabora-
tion across dierent geographical dimensions and the most innovative UK industries
(knowledge-intensive business services (KIBS), high-tech manufacturing, information
and communication technologies (ICT), creative industries). Traditionally, this issue has
presented a challenge for the geography of innovation, external knowledge sourcing and
open innovation literatures,in ter ms of first identifying the phenomenon and second mea-
suring it. We propose and estimate a structural model that estimates the knowledgepro-
duction function with innovation inputs and outputs at the firm level. Our sample includes
19,510 observations and 17,859 firms, mainly from the UK Innovation Survey and the
Business Registry. We demonstrate that external collaboration may bestowa significant
advantage for innovation developed by the firm and in collaboration with other busi-
nesses, but there are limits to collaboration. They arelikely to be better oset by firms in
knowledge-intense sectors (KIS), while they remain consistent across collaborationwith
partners across four geographical regions. Our findings call forfurther research on inno-
vation and revision of national and regional innovationpolicies.
Introduction
The innovation process involves a resource-
intensive search to find new combinations of
commercially exploitable new technology and
The use of these data does not imply the endorsement of
the data owner or the UK Data Service at the UK Data
Archive in relation to the interpretationor analysis of the
data. This work uses research datasetswhich may not ex-
actly reproduce National Statisticsaggregates.
Weare thankful to the British Academy for financial sup-
port and dissemination of the project findings ‘Knowl-
edge frontiers and boundaries for the New UK’ within a
call ‘Tackling the UK’s International Challenges’. Award
Reference: IC160084. We are especially thankful to the
Editor, Professor Douglas Cumming, for helpful and
clear guidance throughout the revision process and Dr
Luis Pedauga from the University of Leon, Spain for
methodological support.
A free video abstract to accompany this article can be
found online at: https://youtu.be/rfdv3c8eWmM
knowledge (Colombo et al., 2016; Hargadon
and Sutton, 1997; Laursen, 2012; Laursen and
Salter, 2006; Nelson and Winter, 1982; Stuart and
Podolny, 1996). This requires organizations to
create knowledge within a firm as well as source
knowledge from external collaborators (Colombo
et al., 2011; Rosenkopf and Nerkar, 2001; Shan,
Walker and Kogut, 1994). The joint use of inter-
nal and external knowledge to accelerate firm’s
innovation has become a major foundation of the
‘open innovation’ concept (Chesbrough, 2006).
While the traditional innovation collaboration
models are becoming more open (Aldieri and Cin-
cera, 2009; Bogers, 2011; Chesbrough, Vanhaver-
beke and West, 2006; Choi and Contractor, 2017;
von Hippel, 2005; West and Bogers, 2014), the the-
oretical and empirical emphasis has increasingly
moved towards the assumption on both the ben-
efits and costs of external collaboration (Cassi-
man and Veugelers, 2002; Colombo et al., 2016;
C2019 British Academy of Management and Wiley Periodicals LLC. Published by John Wiley & Sons Ltd, 9600 Gars-
ington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
The Limits to Collaboration Across Four of the Most Innovative UK Industries 831
Drield, Love and Menghinello, 2010; Drield,
Love and Yang, 2014; Grindley and Teece, 1997;
Teece, 1986, 2000; Veugelers, 1997, 1998). Al-
though external collaborations can help partners
to co-create new products, managing external col-
laborations, facilitating knowledge transfer and
osetting potential costs of collaboration are not
simple, as a firm may have to adopt a variety of ex-
ternal collaboration practices (Heiman and Nick-
erson, 2004). This includes the enhancement of
the internal knowledge base (e.g. investment in
research and development (R&D), hiring highly
skilled employees, training, etc.), which increases
firm’s competitive advantage by accumulating and
integrating both internal and external knowledge
(Helfat and Martin, 2015). An increase in eco-
nomically valuableknowledge will challenge firm’s
appropriation and legal protection mechanisms,
and may result in an increase in transaction costs
and risk of uncontrolled knowledge flows to third
parties (Ceccagnoli, 2009; Veugelers and Schnei-
der, 2018). This suggests that investment in the
internal knowledge base, along with an enhance-
ment of external collaboration intensity, may be-
come a fundamental dilemma in innovation man-
agement (Faems, Van Looy and Debackere, 2005;
von Hippel, 1994).
The rationale is as follows. Getting the knowl-
edge from the external collaborators is only half
the challenge,the other half is to exploit knowledge
inflows and leverage knowledge outflows (West
and Bogers, 2014), where the proprietary model
frequently broke down (Chesbrough and Rosen-
bloom, 2002).
Despite the theoretical underpinning and im-
portance of external collaboration in open inno-
vation management literatures(Heiman and Nick-
erson, 2004; West and Bogers, 2014; West et al.,
2014), relatively little theoretical and empirical re-
search is available on the relationship between ex-
ternal knowledge collaboration and new product
development, which is either developed within a
firm (enterprise group) or co-created with other
business partners.
Building on the extant literature on open inno-
vation (Cassiman and Veugelers, 2002; Colombo
et al., 2016), knowledge spillovers (Audretsch
and Feldman, 1996; Marshall, 1920), innovation
collaboration (Beck and Schenker-Wicki, 2014;
Faems, Van Looy and Debackere, 2005; Laursen
and Salter, 2014), wediscuss the potential limits to
external collaboration and evaluate the direct and
indirect eect of knowledge collaborationon firm’s
innovationdeveloped by the firm and in collabora-
tion with other businesses.
By employing both industrial and geographical
perspectives (Boschma and Frenken, 2010; Kang
and Park, 2012; Rodr´
ıguez, Nieto and Santa-
mar´
ıa, 2018) to external knowledge collaboration,
this study estimates a knowledge productionfunc-
tion (Cr´
epon, Duguet and Mairesse, 1998; Pakes
and Griliches, 1984) for a sample of 17,859 firms
(19,510 observations) across the most innovative
UK sectors (knowledge-intensive business services
(KIBS), high-tech manufacturing, information
and communication technologies (ICT), creative
sector) and across fourgeographical dimensions of
collaboration (regionally, nationally, Europe and
other world). In addition, we control for selection
bias (Dustmann and Rochina-Barrachina, 2007)
and develop a model which distinguishes between
the benefits and costs of external knowledge
collaboration for firm’s innovation.
In doing so, we aim to advance the theory and
practice of external knowledge sourcing and open
innovation (Dahlander and Gann, 2010) on how
best to manage firm’sopenness and enhance the in-
ternal knowledge base to the extent to which firm’s
innovation is facilitated. We also extend the prior
literature, which focused on knowledge sharing
and expropriation in external innovation collab-
orations (Cassiman and Veugelers, 2002; Heiman
and Nickerson, 2004) as well as on the dynam-
ics of breadth in external innovation collaboration
(Chapman, Lucena and Afcha, 2018; Love, Roper
and Vahter, 2014).
There are several important findings in this
paper. First, firms which developinnovation inter-
nally and in collaboration with other businesses
will benefit from external knowledge collabora-
tion. Second, a joint increase in external collab-
oration intensity and firm’s internal knowledge
base leads to a diminishing return to knowledge
collaboration, also knownas the ‘limits to collabo-
ration’. Third, firms in knowledge-intense sectors
(KIS) are likely to be better able to integrate
external and internal knowledge into innovation
activities, osetting the limits to collaboration.
Finally, our results highlight that limits to collab-
oration are consistent across four geographical
dimensions of collaboration (regional, national,
Europe, world). This study informs policymakers
who are interested in stimulating firm’s knowl-
edge collaboration on a more comprehensive
C2019 British Academy of Management and Wiley Periodicals LLC.
To continue reading
Request your trial