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Abandoning innovation projects, filing patent applications and receiving foreign direct investment in R&D

Li, R. and Yan, J. and Yao, N. and Tian, K. and Xia, S. and Yang, X. and Xiong, Y. (2022) 'Abandoning innovation projects, filing patent applications and receiving foreign direct investment in R&D.', Technovation., 114 . p. 102435.

Abstract

Foreign direct investment in R&D is one of the popular channels indigenous firms use to upgrade their technological capacities and improve market intelligence following innovation setbacks. Firms often employ various signals to secure higher levels of foreign direct investment in R&D. However, the majority of research on this topic focuses on the role of positive rather than negative signals. Firms are often conservative about communicating negative information regarding their innovation projects due to concerns around competition and managerial performance appraisal. Drawing on signaling theory, this study investigates the impact of a negatively valenced signal – the experience of abandoning innovation projects – on attracting foreign direct investment in R&D. Moreover, although firms are known to send multiple signals simultaneously, little is known about how the interactions between oppositely valenced signals (specifically, the experience of abandoning innovation projects, which is a negative signal, and the filing of patent applications, which is a positive signal) affect foreign direct investment in R&D. A study of 11,354 Spanish firms from the Spanish Technological Innovation Panel during the period 2008–2015 found that the experience of abandoning innovation projects has a positive effect on foreign direct investment in R&D. However, this positive effect is weakened by patent applications due to the signaling of conflicting messages. These results have important theoretical and practical implications for the advancement of signaling theory and the management of innovation setbacks.

Item Type:Article
Full text:Publisher-imposed embargo until 11 December 2023.
(AM) Accepted Manuscript
Available under License - Creative Commons Attribution Non-commercial No Derivatives 4.0.
File format - PDF
(1159Kb)
Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1016/j.technovation.2021.102435
Publisher statement:© 2021. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/
Date accepted:27 November 2021
Date deposited:11 March 2022
Date of first online publication:11 December 2021
Date first made open access:11 December 2023

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