Firm-specific Innovations and Rent Appropriation: Tests of Contingencies

• Main Authors: WANG, Heli C., CHEN, Wei-ru
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: Firm specificity; Technological innovation; Value appropriation; Environmental dynamism; Technological diversity; Strategic Management Policy; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3442; https://doi.org/10.5465/AMBPP.2006.22896780
• Institution: Singapore Management University

This paper extends the resource-based theory of the firm to examine the contingencies that either intensify or reduce the relationship between firm-specific innovation and value appropriation. Based on a large-scale analysis of a sample of US manufacturing firms, we found that greater innovation rents appropriation is associated with an increase in firm specificity of its innovative knowledge. But the positive relationship between firm-specific innovations and firm value appropriation tends to decrease when the product or technology market is highly dynamic. Further, under high environmental dynamism, firms should increase the diversity in their knowledge composition in order to mitigate the risk of value erosion associated with firm-specific innovations.