Do off-Site R&D Institutions Matter for Corporate Exploratory Innovation?

Abstract

This study examines the effect of off-site R&D institutions on exploratory innovation based on the emerging economy of China. The results using a sample of listed firms from 2009 to 2019 show that off-site R&D institutions can significantly enhance exploratory innovation and firms engaged with off-site R&D institutions exhibit 58.2% higher exploratory innovation than those without off-site R&D institutions. To enhance the robustness of the finding, we employ robustness checks using difference-in-differences, placebo test, and propensity score matching methods. Further mechanism tests demonstrate that the positive productivity effect is attributed to knowledge base expansion, increased knowledge diversity, and the promotion of R&D cooperation, which is consistent with the knowledge diffusion channel. Our findings contribute to a more comprehensive understanding of technology diffusion across regions in a typical country that is engaged in technology catch-up.