Managing Open Innovation
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Managing Open Innovation

Connecting the Firm to External Knowledge

André Spithoven, Peter Teirlinck and Dirk Frantzen

Open innovation is about firms’ external relations with other firms and organisations. It is a topic which has attracted an immense amount of attention, but which has also been heavily criticised due to the diversity of the ideas and fuzziness of its key concepts. To date, the bulk of the literature on open innovation draws on case study material to illustrate the operation of firms in an anecdotal way. By contrast, this book examines open innovation practices by using large-scale datasets and stresses their impact on firm performance. The authors examine four key issues: differences between firms in open innovation practices, public funding to enhance external relations, R & D outsourcing of firms, and the role of human resources in R & D and innovation.
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Chapter 5: Public Funding for Innovation and Research Cooperation

André Spithoven, Peter Teirlinck and Dirk Frantzen


5.1 INTRODUCTION In innovation policy circles in Europe there has, in the past two decades, been a growing awareness of the importance of fostering cooperative research. This is reflected by an increasing proportion of public funding awarded by the various regional, national and EU authorities to cooperative research networks rather than individual firms. Despite this development, the bulk of the econometric evaluation literature on public funding for innovation concentrates almost exclusively on the question of whether funding actually helps increase R&D expenditure by firms or the number of patents granted. Only a very limited number of studies have addressed the issue of whether public funding for innovation does indeed succeed in influencing the cooperative practices of firms. As stated below, these studies are not without problems. Some fail to address the problem of endogeneity caused by funding selectivity. Of those that do address the issue, Belderbos et al. (2004) make use of an instrumental variable regression analysis explaining different types of research cooperation, using lagged values of the explanatory variables as instruments. But they admit that lagged funding may still be partly endogenous in the sense that it may have been brought about by past targeting of firms involved in research cooperation, whose cooperative behaviour persists during the current period. Busom and Fernandez-Ribas (2004, 2008) and Aschhoff et al. (2006) do, for their part, present non-parametric matching analyses. But, due to the cross-sectional nature of their data with respect to a specific point in time, there are serious doubts...

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