The effect of technological knowledge assets on performance: the innovative choice in Spanish firms

Abstract

The aim of this article is to examine the relationship between Technological Knowledge Assets (TKAs) and performance, in the light of making the 'innovative choice' that involves short-term costs of acquiring or generating the assets but aims at longer term benefits through innovation. To that end, a study of 1267 industrial firms in Spain was carried out over a period of 5 years, 1998-2002. The results show that TKAs have a positive indirect effect on financial performance mediated through innovation. They also reveal that TKAs have a negative direct effect on performance, except licences. Thus, the combined effect of TKAs on performance urges the need for innovation to obtain a positive payoff.