Expanding organic relationships between R&D, innovation, and productivity: evidence from Korean SMEs

ABSTRACT

Existing evidence regarding to innovation process primarily focus on the relationship between specific factor and performance with using empirical model that estimate single equation. Although these have provided useful insights, some concerns remain regarding our understanding of innovation. First, while business does not comprise only one step but several steps that share an organic relationship according to the context, few studies simultaneously reflect and analyse the relationship between factors. Second, few assume that an outcome is related to an input as well as to the effects of the input on the outcome. In this regard, the major attention of this study is to reflect the circulative and interrelationship between R&D, innovation, and productivity. In terms of methodology, we first perform a multiple regression analysis to estimate a single equation, and, subsequently, uses the three-stage least square (3SLS) method to simultaneously estimate the interrelationship between innovation input, innovation, and productivity. As a result, we found that the organic relationship between a firm’s R&D investment, innovation, and productivity leads to a positive effect. Especially, productivity simultaneously exert an influence on an R&D investment under a systemic framework of innovation process. Our findings provide empirically supporting the argument that innovation should be understood as a systemic process.

KEYWORDS:

• Innovation process
• R&D investment
• three stage least squares
• CDM model
• SME

Acknowledgements

This study is supported by Konkuk University in 2019. This paper is a revised and developed version of the first author’s master’s thesis. The authors are grateful for useful comments to two anonymous referees and the editor.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This study is supported by Konkuk University in 2019 [grant number 2019-A019-0607].

Notes on contributors

Kang Ho Bong

Kang Ho Bong is currently a Ph.D candidate of management of technology at Konkuk University in Seoul, Republic of Korea. His research interests include innovation management, strategic decision-making, and science & technology policy. His research has been published in Applied Economics Letters, Journal of Technology Innovation, Journal of Korea Technology Innovation Society among others.

Jaemin Park

Jaemin Park is currently a professor of management of technology at Konkuk University in Seoul, Republic of Korea. He earned his Ph.D. in economics from the Ohio State University. His research interests include economic analysis, business economics, and knowledge management. His research has been published in Asian Journal of Technology Innovation, Telecommunication Policy, Applied Economics Letters among others.