Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns

José Mata, Martin Woeter

Research output: Contribution to journalArticlepeer-review

34 Citations (Scopus)

Abstract

External innovation increases the profits of the median firm, but also increases dispersion and the kurtosis of the distribution of profits. This means that external strategies are risky and may require a very large number of attempts before average returns are obtained. This puts smaller firms into a position of disproportionately high risk. Despite the earlier evidence that the rewards from innovation are positively skewed, we find no effect of innovation strategies upon the skewness of the distribution of firms' profits.
Original languageEnglish
Pages (from-to)495-501
JournalResearch Policy
Volume42
Issue number2
DOIs
Publication statusPublished - 1 Jan 2013

Keywords

  • Risk
  • Innovation
  • Research and development

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