Essays on strategic innovation dynamics in firms: focusing on the tie strength and new-to-market product innovation

Abstract

The first study investigates the application of the ‘strength of weak ties’ theory, derived from social network theory, to business activities. The research explores the impact of inter-corporate tie strength on innovation using three-year panel data comprising 3,881 Korean small and medium-sized enterprises (SMEs) in the high-tech manufacturing sector. The results reveal an inverted U-shaped relationship between tie strength and SMEs’ patent achievement, with a positive moderation effect from research and development (R&D) intensity. Notably, SMEs maintaining weak ties with large corporations demonstrate more positive innovative performance than those with no such relationships or maintaining strong ties. These findings underscore the strategic significance for SMEs to establish an appropriate level of connection with large corporations, particularly in dynamic, technologically advanced, and competitive environments, for sustained innovation. The second study identifies factors influencing new-to-market (NTM) product innovation and analyzes its impact on financial performance. In today’s fiercely competitive business environment, achieving the timely development of market-leading products is crucial for securing a sustainable competitive advantage. Utilizing data from the 2018 Korea Innovation Survey (KIS), logistic regression analysis reveals that R&D intensity and external collaboration positively impact NTM product innovation. However, organizational flexibility does not exhibit statistical significance, and the influence of government funding on NTM product innovation is less positive than anticipated. Additionally, a one-way analysis of variance (ANOVA) is employed to explore the profound impact of NTM product innovation on firms’ financial performance. The findings indicate that NTM product innovation positively affects firms’ sales growth rate with a two-year lag. Overall, the results of this study provide valuable insights for firms looking to enhance their innovation strategies and for government policymakers aiming to strengthen innovation ecosystems and promote sustainable economic growth.