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Firm capabilities, technological dynamism and the internationalisation of innovation : A behavioural approach

Schubert, Torben LU ; Baier, Elisabeth and Rammer, Christian (2017) In Journal of International Business Studies
Abstract

We develop a behavioural framework of bounded rational decision-making under uncertainty to analyse the role of technological dynamism in the firm’s environment for its decision to internationalise innovation. Applying prospect theory, we argue that technological uncertainty in the firm’s environment affects its risk preferences differently depending on its technological capabilities. A key prediction is that firms with low capabilities will internationalise innovation when faced by technological uncertainty while firms with high capabilities will concentrate their innovation at the home-base. We also argue that our behavioural approach based on prospect theory is not a stand-alone programme but benefits from the integration with... (More)

We develop a behavioural framework of bounded rational decision-making under uncertainty to analyse the role of technological dynamism in the firm’s environment for its decision to internationalise innovation. Applying prospect theory, we argue that technological uncertainty in the firm’s environment affects its risk preferences differently depending on its technological capabilities. A key prediction is that firms with low capabilities will internationalise innovation when faced by technological uncertainty while firms with high capabilities will concentrate their innovation at the home-base. We also argue that our behavioural approach based on prospect theory is not a stand-alone programme but benefits from the integration with traditional concepts in IB. In particular, we make a case that organisational measures fostering absorptive capacity, such as intensive personnel exchange between headquarters and subsidiaries, can help to attenuate the high-capability firms’ tendency to concentrate innovation at the home-base when faced by high uncertainty. We corroborate the predictions of our framework based on data from the German part of the Community Innovation Survey.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
bounded rationality, internationalisation of innovation, limited dependent variable regression, prospect theory, speed of technological change, technological capabilities, uncertainty
in
Journal of International Business Studies
pages
26 pages
publisher
Palgrave Macmillan
external identifiers
  • scopus:85028762074
ISSN
0047-2506
DOI
10.1057/s41267-017-0101-0
language
English
LU publication?
yes
id
bb9c155c-f0f9-4d3a-9f10-f4d5d4c24952
date added to LUP
2017-09-26 12:46:10
date last changed
2018-01-07 12:19:22
@article{bb9c155c-f0f9-4d3a-9f10-f4d5d4c24952,
  abstract     = {<p>We develop a behavioural framework of bounded rational decision-making under uncertainty to analyse the role of technological dynamism in the firm’s environment for its decision to internationalise innovation. Applying prospect theory, we argue that technological uncertainty in the firm’s environment affects its risk preferences differently depending on its technological capabilities. A key prediction is that firms with low capabilities will internationalise innovation when faced by technological uncertainty while firms with high capabilities will concentrate their innovation at the home-base. We also argue that our behavioural approach based on prospect theory is not a stand-alone programme but benefits from the integration with traditional concepts in IB. In particular, we make a case that organisational measures fostering absorptive capacity, such as intensive personnel exchange between headquarters and subsidiaries, can help to attenuate the high-capability firms’ tendency to concentrate innovation at the home-base when faced by high uncertainty. We corroborate the predictions of our framework based on data from the German part of the Community Innovation Survey.</p>},
  author       = {Schubert, Torben and Baier, Elisabeth and Rammer, Christian},
  issn         = {0047-2506},
  keyword      = {bounded rationality,internationalisation of innovation,limited dependent variable regression,prospect theory,speed of technological change,technological capabilities,uncertainty},
  language     = {eng},
  month        = {09},
  pages        = {26},
  publisher    = {Palgrave Macmillan},
  series       = {Journal of International Business Studies},
  title        = {Firm capabilities, technological dynamism and the internationalisation of innovation : A behavioural approach},
  url          = {http://dx.doi.org/10.1057/s41267-017-0101-0},
  year         = {2017},
}