Diversity of External Innovation, Absorptive Capacity, and Innovation Output: An Example for Companies Listed on Taiwan Stock Exchange Markets During the Period From 2000 To 2004

Abstract

Few studies have investigated how an enterprise applies the open innovation model to facilitate its innovation performance in a newly industrialized country. This paper focuses on examining whether the diversity of external innovation, consisting of mergers and acquisitions, R&D cooperation, technology transfer, and technology licensing contracts, promotes firm innovation performance. Another focus is to determine how absorptive capacity moderates the relationship between the diversity of external innovation and innovation outputs in Taiwan. Evidence from pooling data gathered during the period from 2000 to 2002 demonstrates that the diversity of external innovation enables an enterprise to support superior outcomes. Both ratios of mergers and acquisitions to external innovation and ratios of technology transfer to external innovation positively influence patent counts. Moreover, the results show that R&D capability, depth and scope of networks, as well as external innovation experience, positively affect the relationship between diversity of external innovation and future patent accumulation. Meanwhile, the moderating effects of  R&D capability and depth and scope of networks are stronger than those of external innovation experience. Finally, the moderating effects of the long-term relationships with supplier-and customer-affiliates are stronger than those of relationships with non-affiliates.