Innovation in IT firms: An investigation of intramural and extramural R&D activities and their impact

This research examines how intramural activities that are developed internally within the firm and extramural activities that are undertaken in collaboration with an external partner lead to product and process innovation. We use hierarchical regression analysis on data collected for European and Chinese firms and determine that intramural activities have a profound positive impact on process innovation, whereas their impact on product innovation is positive only for large firms. We discover that process innovation positively impacts product innovation but not vice versa. The results are important for managers who guide the R&D activities of a firm to product and process innovation.