Exploring the effects of slack resources and internationalisation on innovation performance: a study of software development MNCs

Abstract

Intensive international business research has already been done on knowledge, networking and strategic orientation, with regard to what shapes innovation performance. Looking at the existing achievements, however, it appears that little attention has been devoted to how tangible resources and internationalisation could change firms' innovation performance. To address these research gaps, this thesis intends to incorporate the slack resource theory and multinationality construct into the international business (IB) research of innovation. Through introducing the former, the study seeks to illustrate how slack, yet tangible, resources could change firms' innovation behaviours, decision-making and performance. Through introducing the latter, the study seeks to present how internationalisation could contribute to firms' innovation performance in three conceivable ways. By combining these two theoretical constructs, the study forms a conceptual model and four separate research hypotheses.

The hypotheses were tested using the financial data collected from 67 internationalised software development firms. The results showed slack resources and internationalisation to be two highly influential factors that shape firm' innovation performance. In particular, a linear and positive relationship was found between slack resource, high- and low-discretion, and innovation performance. Furthermore, firms' degree of internationalisation (DOI) was found to bear a positive relationship to innovation performance. Lastly, firms' DOI was found to interact positively with high-discretion slack resources in shaping innovation performance. Potential implications of this study could enrich the IB research of innovation, extend the slack resource research of innovation and enrich the multinationality studies of innovation.