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R&D alliance and SMEs' innovation performance: Exploring contingent roles of absorptive capacity and technological opportunity

Author

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  • Ji-Hoon Park

    (Hanyang University)

  • Ribin Seo

    (Dongduk Women’s University)

Abstract
The strategy of forming research and development (R&D) alliances is effective for small and medium-sized enterprises (SMEs) to acquire external knowledge intentionally, thereby supplementing their knowledge deficiencies through interactions with alliance partners. However, the practical issue of these firms’ limitations can significantly curtail their potential to optimize the potential innovation returns of alliances. This issue is the focal point of our investigation, where we explore the influence of the firm’s absorptive capacity (AC) and technological opportunity (TO) on the performance-by-alliance mechanism. These two essential elements shape the firms’ accessibility to external knowledge at the organizational and environmental levels, respectively. To address potential self-selection bias in the decision of alliance engagement, we apply the propensity score matching method to a dataset of 2,460 Korean firms derived from the 2019 Survey on Technology of SMEs. We use data envelopment analysis to measure innovation performance by employing dyadic effectiveness and efficiency indicators. Our findings reveal that R&D alliance engagement enhances firms’ innovation effectiveness but not necessarily their efficiency. Interestingly, the positive relationship between alliance engagement and innovation effectiveness is amplified when firms demonstrate high AC and operate in low TO regimes. However, we also found a paradoxical result: firms show high AC and operate in high TO regimes, and alliance engagement yields diminishing returns in innovation efficiency. This unexpected finding underscores the complexity of the alliance engagement process. This study enriches the literature by presenting a new perspective on the cost-benefit orchestration in the alliance engagement process for SMEs. We highlight the crucial importance of determining the optimal AC-TO balance for value-capturing strategies within alliances, as it is vital to reconcile the dichotomy between innovation effectiveness and efficiency in the alliance-renting process.

Suggested Citation

  • Ji-Hoon Park & Ribin Seo, 2025. "R&D alliance and SMEs' innovation performance: Exploring contingent roles of absorptive capacity and technological opportunity," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 61-91, March.
    • Handle: RePEc:spr:eurasi:v:15:y:2025:i:1:d:10.1007_s40821-024-00285-4
    DOI: 10.1007/s40821-024-00285-4
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