Making sense of innovation by R&D and non-R&D innovators in low technology contexts: A forgotten lesson for policymakers

This paper attempts to use an integrated theory based on the framework of a firm's internal and external sources of knowledge to analyze how R&D activities differ in innovation from non-R&D activities, especially in the context of low and medium–low tech (LMT) sectors where most of the firms are SMEs. Simultaneously, the paper also explores the key differences between R&D and non-R&D innovators. The empirical analysis is based on a representative panel of 2023 Spanish manufacturing firms from the Spanish Ministry of Industry for 2005 and 2006. Innovation in product and process is explained using non-R&D variables such as marketing, design or the hiring of tertiary degree employees. Only innovation in product is explained by R&D expenditures. Regarding innovation in process, the R&D variables work in a few specific cases. Therefore, innovation can be explained using non-R&D variables. The firms with more internal resources, those which conduct R&D activities, present a better absorptive capacity (AC) and this leads them to engage in cooperation agreements and to access external flows of knowledge. The paper has important implications for policymakers due to the fact that most policies for R&D are based just on R&D programmes.

► R&D activities are limited for explaining the process innovation output.
► R&D expenditures basically work on product innovation in high-tech large firms.
► Non-R&D activities are important as drivers to explain process innovation.
► Neglected innovators show a poor search strategies to access external knowledge.
► R&D innovators use the majority of external sources of knowledge.