Inderscience Publishers

A longitudinal examination of performance of two ways on innovation in Taiwan: internal R&D investment and external technology aquisition

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While internal Research and Development (R&D) investment and external technology acquisition are the two primary ways adopted by Taiwan's manufacturing firm's for innovation, relatively little research has focused on evaluating the contribution of these two ways of innovation on firm's performance. This study therefore aims to investigate the impact of (1) internal R&D (2) external technology acquisition and (3) internal R&D investment combined with external technology acquisition on firm's performance, focusing on a developing country, Taiwan. A total of 341 electronics-manufacturing firms balanced over the period from 1998 to 2002 are taken as the analytical sample. Based on an extended framework of production function, the results reveal internal R&D investment has a positive effect on firm performance, whereas external technology acquisition per se does not. In addition, the results suggest that the combination of both internal R&D investment and external technology acquisition enhance firm's performance. Furthermore, the sensitivity analyses validate these results of this study.

Keywords: research and development, internal R&, D investment, technological innovation, external technology acquisition, firm performance, longitudinal analysis, high technology firms, high tech industry, Taiwan, technology management, manufacturing

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