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Erschienen in: Asia Pacific Journal of Management 1/2014

01.03.2014

The impact of innovation intensity, scope, and spillovers on sales growth in Chinese firms

verfasst von: Suk Bong Choi, Christopher Williams

Erschienen in: Asia Pacific Journal of Management | Ausgabe 1/2014

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Abstract

We investigate the relationship between innovation and sales growth of firms in China. Innovation theories suggest firms create the technological knowledge needed to have market impact with their products and drive sales growth in different ways. These include: (1) through firms’ overall innovation intensity, (2) through decisions on innovation scope (depth vs. diversity), and (3) through knowledge spillovers from technological neighbors. Little research exists on how effective these approaches are for emerging market firms in pursuit of growth. To address this, we integrate and test the effects of these different knowledge creation mechanisms using data from Chinese firms over a five-year period. Findings show that innovation intensity and knowledge spillovers positively impact sales growth. We also develop and test a model capturing the non-linear impact of innovation scope. As predicted, we find a U-shaped relationship for depth of innovation and an inverted U-shaped relationship for diversity of innovation.

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Fußnoten
1
We define innovation in this study as more than new technological development per se; it also includes new combinations of existing technologies as well as new ways of utilizing technology acquired from outside of the firm.
 
2
The IPC code of technological fields we applied was A Human necessities; B Performing operations, Transporting; C Chemistry and metallurgy; D Textiles and paper; E Fixed constructions; F Mechanical engineering, lighting, heating, weapons, blasting; G Physics; H Electricity (others).
 
3
Assuming away the effects of other variables, if any, the estimated regression equation for the non-linear model of the depth (DT) will be stated as: \( Sales\,Growth\left( {SG} \right)=3.18-1.21\left( {DT} \right)+0.78{{\left( {DT} \right)}^2}. \)
To show how depth of innovation affects firm performance, a partial derivative of the non-linear regression equation is taken with respect to depth: \( \frac{{\partial \left( {SG} \right)}}{{\partial \left( {DT} \right)}}=-1.21+1.56\left( {DT} \right). \)
Which will be 0, if DT = 0.77. This partial derivative will be negative if DT < 0.77; it will become positive if DT > 0.77. In other words, other factors being constant, the effect of depth of innovation on firm performance will be negative until innovation depth reaches 0.77.
In this way, the estimated regression equation for the non-linear model of the diversity (DI) will be stated as \( Sales\,Growth\left( {SG} \right)=3.18+0.99\left( {DI} \right)-0.99{{\left( {DI} \right)}^2}\). To show how diversity of innovation affects firm performance, a partial derivative of the non-linear regression equation is taken with respect to diversity:
$$ \frac{\partial (SG) }{\partial (DI) }=0.99-1.98(DI) $$
Which will be 0, if DI = 0.50. This partial derivative will be positive if DI < 0.50; it will become negative if DI > 0.50 in other words, other factors being constant, the effect of diversity of innovation on firm performance will be positive until innovation diversity reaches 0.50.
 
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Metadaten
Titel
The impact of innovation intensity, scope, and spillovers on sales growth in Chinese firms
verfasst von
Suk Bong Choi
Christopher Williams
Publikationsdatum
01.03.2014
Verlag
Springer US
Erschienen in
Asia Pacific Journal of Management / Ausgabe 1/2014
Print ISSN: 0217-4561
Elektronische ISSN: 1572-9958
DOI
https://doi.org/10.1007/s10490-012-9329-1

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