Breakthrough innovations: The impact of foreign acquisition of knowledge

Abstract

Based on the Spanish Technological Innovation Panel, this paper explores the role of R&D off shoring on innovation performance from 2004 to 2012. Specifically, we focus our attention on the impact of different types of off shoring governance models into the profitability of developing a breakthrough innovation. Our study provides evidence that forms developing a breakthrough innovation tend to beneffit more from the external acquisition of knowledge than those engaged on incremental innovations. We also find evidence that acquiring knowledge from forms outside the group is more profitable than in case they do it with forms within the group. Finally, the external acquisition of knowledge tends to present a higher return on breakthrough innovation in the case of taking such knowledge from the business sector and not from universities or research institutions.