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Incremental vs. Breakthrough Innovation: The Role of Technology Spillovers

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  • Seong K. Byun

    (School of Business, Virginia Commonwealth University, Richmond, Virginia 23284)

  • Jong-Min

    (SKK Business School, SungKyunKwan University, Seoul 03063, South Korea)

  • Han Xia

    (Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080)

Abstract

We show that technology spillovers shift the composition of corporate research and development by promoting innovation based on the exploitation of existing knowledge while disincentivizing innovation that explores new areas and breaks new ground. Accordingly, firms facing large technology spillovers attain fewer superstar inventors among their human capital, who are important drivers of breakthrough technology advancement. These findings complement the existing studies documenting the positive effect of technology spillovers in increasing firms’ overall innovation outputs; they highlight potential downsides of technology spillovers in reducing firm investment in technology breakthrough and valuable human capital. This paper was accepted by Gustavo Manso, finance.

Suggested Citation

  • Seong K. Byun & Jong-Min & Han Xia, 2021. "Incremental vs. Breakthrough Innovation: The Role of Technology Spillovers," Management Science, INFORMS, vol. 67(3), pages 1779-1802, March.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:3:p:1779-1802
    DOI: 10.1287/mnsc.2019.3507
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    3. Kolesnikov, Sergey & Goldstein, Anna P. & Sun, Bixuan & Chan, Gabriel & Narayanamurti, Venkatesh & Anadon, Laura Diaz, 2024. "A framework and methodology for analyzing technology spillover processes with an application in solar photovoltaics," Technovation, Elsevier, vol. 134(C).
    4. Becker, Bettina & Roper, Stephen & Vanino, Enrico, 2023. "Assessing innovation spillovers from publicly funded R&D and innovation support: Evidence from the UK," Technovation, Elsevier, vol. 128(C).
    5. Shuguang Liu & Jiayi Wang & Yin Long, 2023. "Research into the Spatiotemporal Characteristics and Influencing Factors of Technological Innovation in China’s Natural Gas Industry from the Perspective of Energy Transition," Sustainability, MDPI, vol. 15(9), pages 1-34, April.
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    7. Niu, Wenju & Shen, Houcai, 2022. "Investment in process innovation in supply chains with knowledge spillovers under innovation uncertainty," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1128-1141.
    8. Qu, Guannan & Chen, Jin & Zhang, Ruhao & Wang, Luyao & Yang, Yayu, 2023. "Technological search strategy and breakthrough innovation: An integrated approach based on main-path analysis," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    9. Zhang, Ningning & You, Dingyi & Tang, Le & Wen, Ke, 2023. "Knowledge path dependence, external connection, and radical inventions: Evidence from Chinese Academy of Sciences," Research Policy, Elsevier, vol. 52(4).
    10. Xu, Mo & Tao, Changqi, 2024. "How to reach new technological specialisation: The role of related technological capabilities and complementary technological linkages," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    11. Xia, Jing & Niu, Wenju & Chen, Xiaolin & Zhang, Lianmin, 2023. "Investing in a shared supplier to encourage environmental responsibility under spillovers and demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
    12. Byun, Seong, 2022. "The role of intrinsic incentives and corporate culture in motivating innovation," Journal of Banking & Finance, Elsevier, vol. 134(C).
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    14. Liang, Shuang & Tan, Qingmei, 2024. "Can the digital economy accelerates China's export technology upgrading? Based on the perspective of export technology complexity," Technological Forecasting and Social Change, Elsevier, vol. 199(C).
    15. Liu, Jingling & Chen, Yanying & Liang, Feng Helen, 2023. "The effects of digital economy on breakthrough innovations: Evidence from Chinese listed companies," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
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