THE EFFECTS OF KNOWLEDGE SPILLOVERS AND ALLIANCE PORTFOLIO DIVERSITY ON PRODUCT INNOVATION AND FIRM GROWTH

Abstract

This study examines the extent to which the intra-industry knowledge spillover and a firm’s alliance portfolio diversity have an effect on product innovation performance and the growth of different size of firms. A model was proposed and empirically tested using structural equation modelling with Bayesian estimation. The data was extracted from the Colombian innovation survey EDIT from 2011 to 2016 and comprised a sample of 913 manufacturing firms. The results demonstrated that less-developed and resource-scarce settings, such as Colombia, foster interfirm collaboration regardless of their size. Nevertheless, even when considered the positive and significant effect of collaboration, spillovers are the most relevant external knowledge source in explaining the product innovation performance and growth of small and medium firms. The findings also showed that knowledge spillovers can be detrimental to the large firms’ outcomes, possibly associated with a weaker appropriability regime and the loss of knowledge derived from outgoing spillovers.