Firm independence as a driver of product innovation. The impact of firm independence on product innovation by firms in the Dutch manufacturing industry.

Abstract

Nowadays, many firms use technological acquisitions to access innovations that were generated by other firms. Firms that are acquired generally lose their independence. The question arises if (not having) autonomy has an impact on the level of product innovation in firms. Based on existing theory and empirical evidence, the presumption is made that firm independence is beneficial for product innovation. Since not being independent entails group membership, the impact of group membership on product innovation is also addressed. It is expected that group membership is beneficial for new-to-the-firm innovation, but not for new-to-the-market innovation. In order to test the aforementioned presumptions, a mixed methods research is conducted. The quantitative data come from the 2009 European Manufacturing Survey, whereas the qualitative data consists of three interviews conducted at recently acquired manufacturing firms. The results show that in general, firm independence does not have an impact on the likelihood of firm establishments to introduce product innovations. Furthermore, group membership does not have an impact on the likelihood to introduce NTTF product innovations. Young subsidiaries do appear to perform better in terms of product innovation compared to young stand-alone firms, but overall there is no difference between these firm establishment types. The qualitative data indicate that for firms that were acquired in recent years, there are benefits of losing independence and gaining group membership on their innovation activities. However, because of the quantitative outcomes, this positive effect is thought to be temporary. The thesis finishes with a discussion of the results, theoretical as well as practical implications and limitations of this research. Also, a reflection of the research process is given.