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Why some firms never invest in formal R&D

Authors

  • Alvaro Cuervo-Cazurra,

    Corresponding author
    1. Moore School of Business, Sonoco International Business Department, University of South Carolina, Columbia, South Carolina, U.S.A.
    • University of South Carolina, Moore School of Business, Sonoco International Business Department, 1705 College Street, Columbia, SC 29208, U.S.A.
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  • C. Annique Un

    1. Moore School of Business, Sonoco International Business Department, University of South Carolina, Columbia, South Carolina, U.S.A.
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Abstract

In this paper we study the frequency of formal R&D investments. We link real options theory to the knowledge-based view to explain how a firm's knowledge resources influence its frequency of investing in R&D to establish technological options. Specifically, we propose that a firm that lacks internal knowledge resources is more likely to never invest in R&D, a firm that has both internal and external knowledge resources is more likely to sometimes invest in R&D, while a firm that has internal knowledge resources but lacks external knowledge resources is more likely to always invest in R&D. Copyright © 2010 John Wiley & Sons, Ltd.

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