Effects of innovation modes and network partners on innovation performance of young firms

Purpose - While the importance of “science and technology-based innovation” (STI) and “doing, using and interacting-based innovation” (DUI) innovation modes in firm innovation performance has been well-established, little is known about how they affect the innovation performance of young firms. The author examines the most effective innovation mode and boundary conditions for the innovation performance of developing companies. Design/methodology/approach - The author tests the two modes of innovation using data from 159 young firms in China. Findings - The author’s analysis indicates that a higher level of DUI innovation mode is more relevant to the innovation performance of newly established enterprises. Moreover, the effectiveness of the innovation mode is bound by the networks in which the company operates and interacts. The effectiveness of STI and DUI innovation modes is enhanced when there are high levels of innovation and business network interconnectedness from the technology network partner. Research limitations/implications - These findings have important implications on innovation research as they highlight the joint effects of innovation modes and quality of network ties on young firms seeking to improve their innovation performance. Practical implications - STI and DUI innovation modes represent different forms of innovation activities that may affect the knowledge and resources of young firms used to improve innovation performance. Knowing this can help young firms to choose effective innovation mode. Originality/value - This study makes three contributions. The first is to pay specific attention to the neglected topic of the influence of STI and DUI innovation modes on innovation performance of young firms. Understanding that the two innovation modes offer different methods of gaining knowledge and resources can help young firms choose an effective innovation mode for their business; Second, the author examines the boundary conditions of the effectiveness of innovation modes. Specially, the author examines the moderating role of external networks, which can help clarify conflicting results in this regard. 10;The third contribution is to investigate the importance of network relationships for innovation activities moving beyond the extent of network relationships to instead consider the ability of those relationships to expose a firm to innovative techniques and methods.