An abstract is not available for this content so a preview has been provided. Please use the Get access link above for information on how to access this content.

Informed by the perspective of innovation capabilities, we examine innovation activities performed by firms on a continuous basis. Many firms are encouraged to use innovation activities, but young firms tend to have less experience and fewer resources to coordinate multiple innovation activities than established firms. We analyse 535 small and medium-sized service enterprises in the USA and the UK. We find that young and established firms tend to use similar types of innovation activities involving research and development, information technology, training, market analysis, and product design. Yet, young firms that are more productive tend to focus on a single innovation activity, rather than multiple innovation activities. Innovation activities may compete for firm resources and thus serve as substitutes, instead of complements, among young firms.

Executives often cite innovation as the critical capability necessary for their company’s growth and success. Open innovation has been heralded as an important approach for the acceleration of the innovation process, especially for large, established firms. The impact of open innovation practices of young firms, whose resources and capabilities differ significantly from those of more mature firms, has been left nearly unexplored. In addition, the quantitative analysis of the effects of open innovation on firm performance is scarce. While size comparisons are important, age-specific factors are potentially more influential on the outcomes of open innovation activities. Thus, this research seeks to compare different open innovation activities of young verses established firms, and explore their effects on innovation and financial performance. The analysis of survey-based data from 1,202 UK firms across multiple sectors shows that established firms engage more strongly in inbound activities while young firms are significantly more active in knowledge and technology transfer (outbound activities). However, these preferences are not always fruitful as only selected open innovation activities are beneficial for young and established firms. Different open innovation activities are relevant for different types of performance. This research contributes to theory and practice by questioning the generalizability of the open innovation concept and highlighting activity and age-specific factors that trigger the variability in the effect of open innovation activities on different types of firm performance.

This paper examines the relationship between organisation structure and innovation performance in a large sample of UK small and medium-sized enterprises. It asks whether there is an optimal structure and whether this differs between different firm environments and between young and older firms. We find that the influences on the ability to innovate differ from those on the commercialisation of innovations. We show that decentralised decision-making, supported by a formal structure and written plans, supports the ability to innovate in most circumstances and is superior to other structures. We also find some evidence that young firms operating in high technology sectors with informal structures have a greater tendency to be innovative. In addition, we find very few differences between young and older firms in terms of their optimal structures in low technology sectors.

While firms have increasingly relied on external knowledge in their innovation process, there is still a question of when various forms of "openness" benefit firm performance. In this paper, building upon the notion of ambidexterity, we develop a typology of firms differing in their degrees and forms of "openness" in managing external knowledge, namely, traditional, explorative and ambidextrous firms. We posit that "external" ambidexterity promotes superior performance in both innovation and growth. We also examine the role of internal R&D in complementing "openness". Drawing upon a recent large scale cross-sectional survey among UK small and medium-sized firms (SMEs), we examined firms' open innovation choices and their performance impacts. We find support for the ambidextrous hypothesis while the role of internal R&D is nuanced.

In this paper we use a size and industry matched sample of over 1,900 UK and US businesses for the period 2004–05 in the manufacturing and business services sectors to analyse the relative “strength” of the university–industry ecosystems in which these firms operate in the two economies. Our analysis shows that in both countries universities per se play a quantitatively smaller role as a source of knowledge for business innovation than either the business sector itself or a variety of organisations intermediating between the university and business sectors. Our analysis reveals a much more diffuse university–industry ecosystem in the UK in which a higher proportion of businesses claim links external to themselves in their pursuit of knowledge for innovation and a higher proportion report directly connecting with universities. US firms are more likely to access knowledge through a combination of business and intermediary sources and are less likely to have established formal collaborative or partnership agreements in the 3 years prior to the survey. We also find, however, that a higher proportion of US firms place a very high value on the connections they have with universities and are much more likely to commit resources to support such innovation related university interactions. A similar pattern of diffuse but weaker links characterise the supply of public sector financial assistance for innovation in our sample firms. UK firms are more likely to be in receipt of assistance, but receive far less per firm in absolute terms and relative to their R&D expenditures. It appears that the UK university–industry ecosystem is characterised by a greater width than quality of interaction.

Capabilities play a vital role in influencing firm performance, but a remaining question is how this role may differ between established and young firms. We find that the timing for young US servic...

This article investigates factors that affect rejection rates in applications for outside finance among different types of investors (banks, venture capital funds, leasing firms, factoring firms, trade customers and suppliers, partners and working shareholders, private individuals and other sources), taking into account the non-randomness in a firm's decision to seek outside finance. The data support the traditional pecking order theory. Further, the data indicate that firms seeking capital are typically able to secure their requisite financing from at least one of the different available sources. However, external finance is often not available in the form that a firm would like.

We review five decades of takeover actively in the UK. We assess the relative characteristics of acquiring and acquired companies and the performance impacts of merger using both accounting and share price based measures. We conclude that the fundamental conclusions reached by Ajit Singh about takeovers and the market for corporate control in his seminal contributions of the 1970s remain true in the light of subsequent work.

This book provides an insightful view of major issues in the economics of corporate governance (CG) and mergers. It presents a systematic update on the developments in the two fields during the last decade, as well as highlighting the neglected topics in CG research, such as the role of boards, CG and public interest and the relation of CG to mergers. Two important conclusions can be drawn from this book: the first is that corporate governance systems that better align shareholders’ and managers’ interests lead to better corporate performance; second, there is an important relationship between CG structures and the quality of firm decision-making, one of the most important being the decision to merge or take over another firm.

This chapter addresses the changing nature of corporate governance in the United Kingdom over recent decades and examines whether these changes have had an impact on the UK market for corporate control. The disappointing outcomes for acquiring company shareholders in the majority of corporate acquisitions, public discontent with some pay deals for top executives and some high profile corporate scandals led in the early 1990s to a call for governance reform. The scrutiny of governance in UK companies has intensified since the publication of the Cadbury Report in 1992 and has resulted in calls for changes in the size, composition and role of boards of directors, in the role of institutional shareholders, the remuneration and appointment of executives, and in legal and accounting regulations. We review the background to these changes and the consequences of the changes since 1990 for governance structures. Finally, we examine whether these changes have affected takeover performance in recent years. Our analysis is specific to the institutional circumstances of the UK although we refer where appropriate to takeover studies in other countries.

We investigate the extent to which product innovation moderates the relationship between capabilities and competitive advantage among small and mediumenterprises (SMEs). Using resource-based and capabilities theories, we examine capabilities as organisational routines, focusing on job rotation and multi-skilling. We examine competitive advantage by using logistic regression to assess the probability of top performance in productivity relative to most other firms in the same industry. Considering the path-dependence in developing capabilities and innovation, we use a longitudinal sample of 300 UK manufacturing SMEs in traditional and high-technology industries to evaluate the effects of innovating and using capabilities continuously over time. The results suggest that firms using job rotation ormultiskilling and introducing product innovations consistently from 2002 through 2004 are more likely to be top performers in 2004. The findings support a theoretical model according to which the association between capabilities and competitive advantage is moderated by innovation.

This paper explores the impact of management characteristics and managerial ownership on a firm’s innovation performance in transforming innovation resources into commercially successful outputs. These questions are investigated using a recent firmlevel survey database for 440 innovative British small and medium enterprises (SMEs) over the period 1998-2001. Both Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) are employed to benchmark each firm’s innovative efficiency against best practice. Quality and the variety of innovations are taken into account by combining Principal Component Analysis (PCA) with DEA. We find evidence suggesting that the innovative efficiency of SMEs is significantly affected by their management characteristics and ownership structure. Formality in management structure, incentive design and human resource management practices all show significant effects on the innovative efficiency of firms. Managerial ownership is found to have a nonmonotonous, non-linear relationship with the firms’ innovative efficiency, supporting both an alignment effect and an entrenchment effect of managerial ownership on the innovation performance of firms. Results of this study reveal a significant moderating influence of the industry’s technological environment on the relationship between management characteristics, ownership structure and innovative efficiency of firms. Evidence from this study suggests that formal management structure and training intensity play a more important role in commercialising innovation inputs in hightechnology sectors; while incentive schemes and managerial ownership are more important for innovative efficiency in the traditional sectors.