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Causal Relationships among Technology Acquisition, Absorptive Capacity, and Innovation Performance: Evidence from the Pharmaceutical Industry.

ABSTRACT: This paper discusses the importance of absorptive capacity in improving a firm's innovation performance. Specifically, we examine firm interaction with the knowledge and capabilities of outside organizations and the effect on the firm's bottom line. We use the impulse-response function of the vector auto-regressive model to gain insight into this relationship by estimating the time required for the effect of each activity level to reach outputs, the spillover effects. We apply this methodology to pharmaceutical firms, which we classify into two sub-groups--large firms and medium and small firms--based on sales. Our results show that the impact of an activity on any other activity is delayed by three years for large firms and by one to two years for small and medium firms.

SUBMITTER: Jeon J

PROVIDER: S-EPMC4504511 | biostudies-literature | 2015

REPOSITORIES: biostudies-literature

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Causal Relationships among Technology Acquisition, Absorptive Capacity, and Innovation Performance: Evidence from the Pharmaceutical Industry.

Jeon Jieun J Hong Suckchul S Ohm Jay J Yang Taeyong T

PloS one 20150716 7

This paper discusses the importance of absorptive capacity in improving a firm's innovation performance. Specifically, we examine firm interaction with the knowledge and capabilities of outside organizations and the effect on the firm's bottom line. We use the impulse-response function of the vector auto-regressive model to gain insight into this relationship by estimating the time required for the effect of each activity level to reach outputs, the spillover effects. We apply this methodology t ...[more]

PMID: 26181440

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Project description:OBJECTIVE:There is a huge technology gap between regions in Chinese pharmaceutical manufacturing industry, which is the reality that must be faced. However, most of the available researches on innovation efficiency are based on the logic of a given technology level, ignoring the regional technological gap. This paper will stand from the perspective of technology gap and re-examine the innovation efficiency of pharmaceutical manufacturing industry in different regions of China and its impact on regional industrial competitiveness. METHODS:We use the DEA-BCC input-oriented model to measure innovation efficiency of 28 provinces from the data of China's pharmaceutical manufacturing industry. The threshold model is constructed, with technology level as the threshold variable, innovation efficiency as the main explanatory variable, and industrial competitiveness as the dependent variable. In the threshold model, 28 regions are divided into three technical groups, and further, the impact of innovation efficiency on industrial competitiveness in different groups is analyzed and compared. RESULTS:According to the empirical research results, an U-shaped efficiency trap has been found in Chinese pharmaceutical manufacturing industry, and the areas with medium technical level are at the bottom of the trap. The improvement of innovation efficiency does not necessarily promote the improvement of regional industrial competitiveness. Only in high-level and low-level technology groups, innovation efficiency has effectively promoted the improvement of industrial competitiveness. In addition, the intensity of R&D investment has a similar impact on industrial competitiveness. CONCLUSIONS:The findings suggest that, regions in the efficiency trap should strive to seek opportunities for industrial transformation and focus on the industrial transformation of new technology, new industry and new opportunities, instead of blindly pursuing R&D investment intensity and superstitious innovation efficiency. So as to free up innovation resources for high-quality technological innovation in other regions. In addition, the Chinese government should make use of its public hospital system to normalize and expand the centralized drug procurement and eliminate the low-quality innovation.

Dataset Information

Causal Relationships among Technology Acquisition, Absorptive Capacity, and Innovation Performance: Evidence from the Pharmaceutical Industry.

Publications

Causal Relationships among Technology Acquisition, Absorptive Capacity, and Innovation Performance: Evidence from the Pharmaceutical Industry.

Similar Datasets

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