P ROPOSITIONS BASED ON FIRM CHARACTERISTICS

Firm-related factors have on a large scale been emphasized to be a critical factor in explaining firms´ capacities to develop innovation and exploit the result of R&D, either in-house or in collaboration (e.g. Ahuja and Katila, 2004; Damanpour, 1991; Leonard-Barton, 1992; in Constantopoulos et al., n. a.). Firm characteristic refers to internal features like innovation-related capabilities and experiences that can enable a firm to benefit from cooperative R&D (Spanos et al., 2014). We will look into firm age, firm size and its previous experience with R&D and relate this to collaboration, being as FHF projects are collaborative research projects.

4.7.1 Firm age

According to Cohen and Levinthal (1990) new firms tend to go into collaborations since they

generally lack necessary knowledge for in-house innovation, while Katila and Shane (2005)

39 along with Teece (1986) argue that it is because of lack experience, financial and other types of resources (in Constantopoulos et al., n. d.). Established firms, in contrast, may have gathered such experience in collaborative R&D and may have a better understanding of the market and a higher market share (Zaheer and Bell, 2005), more products in development (Rothaermel and Deeds, 2004), wealthy financial resources and a record of partnerships (Sorensen and Stuart, 2000; in Constantopoulos et al., n. d.). Based on this theory we make proposition 1 and 2 where relatively new firms are considered those firms five years or younger at project start, while well-established firms display the remaining.

Proposition 1: Most of the projects funded by FHF belongs to young firms with a low degree of network

Proposition 2: Well-established firms are more successful in collaboration

4.7.2 Firm size

The size of a firm can be viewed through its human, financial or physical resources. We will examine size by looking at the number of employees, the results before taxes and revenue, as this is the data available. An element that will affect a firm’s collaboration and project success is slack resources and tolerance to potential losses, which there is evidence that large firms hold. This is according to research from Europe, i.e., Huiban and Bouhsina (1998a and 1998b), Premkumar and Ramamurthy (1997), Thong and Yap (1995), Ventura and Marbella (1997), from India, i.e., Lal (1999), and from the US i.e. Premkumar and Roberts (1999) (Constantopoulos et al., n. d.). Furthermore, Fitjar and Rodríguez-Pose (2011) find that company size has significant positive impacts on all forms of innovation and that size will affect the capacity of firms to develop networks and collaborate. Interestingly, Clarysse et al., (2009) find that larger firms tend to use their subsidies better. However this contradicts the finding by Clarysse et al., (2004) where the conclusion was that size does not matter. In accordance with this theory, we make proposition 3.

Proposition 3: The larger the firm size, the more successful, and the more extensive is the

collaboration

40 Other findings concerning the size of the firm include Bergman et al., (2009). The finding was that smaller firms tend to have a stronger level of scale and acceleration in comparison to large firms, as mentioned previously (Pérez, 2016). Based on this, we make proposition 4.

Proposition 4: The smaller the firm size, the higher level of speed/ acceleration of projects

4.7.3 Previous experience with R&D

According to Constantopoulos et al., (n. a.) previous participation in R&D activities makes firms better off in collaborative R&D activities as they will be able to contribute more, to develop synergies with their partners and be part in collaborative learning. In such event, the risk following R&D collaborations will arguably be lowered even if there is something entirely new being worked on.

Previous experience with R&D can be viewed as a reflection of firms´ continuous participation in FHF projects. The importance of such previous experience lays in the ability of a firm to assimilate and further develop from collaborative R&D into innovations to its advantage.

According to Cohen and Levinthal (1990), this is a function of its absorptive capacity. The argument is that even if a new technology is developed, this technology will usually be one part of the knowledge and must be complemented with other developments like components, sub-systems, process innovation etcetera. Furthermore, if a firm does not have enough absorptive capacity to do so, the new knowledge developed is not likely to be beneficial (Spanos et al., 2014). With this line of reasoning, the firms´ history of innovation-related activities reflected in prior R&D activities will in principle impact their capacity to derive positive effects from collaborative R&D projects (Kleinknecht and Reijen, 1992; Colombo and Garrone, 1996; in Spanos et al., 2014).

Furthermore, it follows from Constantopoulos et al. (n. a) that firms having engaged in R&D activities previously will have developed particular experience in performing such activities.

This is because they will likely have developed the necessary resources, skills, and knowledge.

Confirmation that complements this is found by Albors-Garrigos and Rodriquez Barrera (2011)

who established that firms with prior skills in exploiting external sources and with previous

cooperation linkages would perform better when it comes to innovation (Pérez, 2016). They

41 conclude that behavioral responses are more reliant on the firm´s prior innovative behavior and less reliant on size. Based on this theory, we make proposition 5 and 6.

Proposition 5: A firm that has previously been involved with R&D projects will be more successful in collaborations

Proposition 6: A firm that has previously been involved with R&D projects will be more

successful (in general)