A COMPARISON OF WITHIN-FIRM AND EXTERNAL SOURCES OF PRODUCT INNOVATION

This paper examines the role of internal and external research, design and development (RD&D) activity in the innovation performance of New York State manufacturing firms in the scientific instruments sector. S urvey data from a sample of 204 small and medium-sized companies sugge st that the incidence of successful product development is higher amon g firms that combine in-house RD&D with technical support from indepen dent specialists. Significantly, firms that supplement their in-house innovation efforts with outside talent are found to exhibit better com mercial performance than their counterparts that operate on the basis of either internal or external technical resources alone. The paper co ncludes with a brief agenda for future empirical research on the condi tions that support product innovation among small and medium-sized fir ms.