The relationship between international innovation collaboration, intramural R&D and SMEs’ innovation performance: a quantile regression approach

In the current global economic landscape, it is virtually impossible for any single firm to stay abreast of all relevant technological advances. Thus integration in global innovation networks is becoming more and more important for competitiveness and growth. However, the fact that international collaboration is organizationally demanding raises important questions concerning the relative importance of international collaboration and intramural R&D for innovation performance, and how they interact in determining it. These questions are particularly relevant in the context of SMEs due to the narrower internal knowledge bases of smaller organizations. In the following they are investigated using Norwegian innovation survey data and quantile regression. Firms in the upper quantile of the innovation performance distribution face a trade-off between engaging in global innovation collaboration and engaging in systematic R&D, where both individually have a positive effect. This is consistent with baseline OLS findings. By contrast, firms in the lower quantiles of the distribution are found to strengthen their performance by means of R&D only. Consequently, the baseline OLS regression results fail to capture the determinants of innovation performance for the population of SMEs that are not already strong innovation performers. This leads to a risk of excessive SME innovation policy emphasis on inducing international collaboration.