Kolmapäev, 27. oktoober 2021 kell 11.00 Narva mnt 18-1024
MAAJA VADI, PRIIT VAHTER (Tartu Ülikool)
Complementarities between technological and organizational innovation: dynamics and firm level outcomes
Using Spanish firm level panel data (PITEC) over period 2008-2016, this paper explores the dynamic nature of complementarities between technological and organizational innovation at firms. It investigates the complementarities-in-performance based on analysis of dynamics of formation as well as ending of the joint adoption of these core types of innovation.
Standard study of ‘static’ complementarities that makes use of across-firm variation in our data and applies the widely used supermodularity tests (Milgrom and Roberts 1990, 1995, Brynjolffson and Milgrom 2013, Ballot et al. 2015, Polder et al. 2010) fails to find evidence of significant synergy effects between technological and organizational innovation. However, once we focus on the analysis of ‘dynamic complementarities’ — effects of strategy switches between combinations of innovations over time within firms, we observe clear evidence that some (sequential and simultaneous) strategy switches towards combining technological and organizational novelties are in fact leading to significant performance premium.
Our findings in particular point out the central driving role of technological innovation in these complementarities. We find evidence of sequential complementarity between types of innovation only when organizational innovation is added to the already existing technological innovation at the firm, not when organizational innovation is added as first component of the complementary bundle of innovations at the firm (or when organizational innovation is added on its own). Organizational innovation introduced on its own or persistent organizational innovation over years on its own, without other complementary innovations, is often simply a cost or the firm, without positive performance effects. In terms of dissolving or abandoning the complementary bundles of innovation, the key disadvantage for the firm is related to dropping the technological innovation. However, giving up only organizational innovation from the complementary bundle of innovation while retaining the product or process innovation appears to have no significant negative effect, on average, on firm performance.