Who benefits from radical innovations of SMEs? - Empirical evidence from the German Biotechnology

Abstract

Radical innovations are of key importance from an economic point of view since they bear the potential to trigger the emergence of new technological trends and fuel economic prosperity while simultaneously causing far-reaching structural change processes. In this paper we focus on the transfer channels of radical innovations launched by small and medium-sized firms (SMEs). Based on a unique longitudinal dataset covering the observation period 1996 - 2016, we identify and trace back radical innovations of SMEs in the German Biotech in order to analyze the extent to which SMEs themselves or eventually also other organizations in their direct cooperation surrounding benefit from radical innovations in terms of subsequent innovation performance. Results from panel data count models indicate that direct cooperation partners of radical innovators generally seem to show higher innovative performance than partners of the control group, i.e. not radical innovating statistical twin firms. A more differentiated picture emerges if one considers the geographical and technological proximity of the cooperation partners.