Process Innovation, Alliances, and the Interplay of Firm Age: Early Evidence from Italian Small Firms

Abstract

We investigate whether and how process innovation of small enterprises is influenced by allying with another firm. Drawing on resource-based view of the firm and integrating findings from studies on the liabilities of age and newness, we argue: 1) for a direct association between strategic alliances and process innovation, and 2) in favor of a moderating role of firm age on this relationship. The results from a representative sample of 159 Italian small firms shed new light on the role of strategic alliances in explaining process innovation, and support this proposal. We find a significant and positive relationship between strategic alliances and process innovation, and a moderating effect of firm age on this relationship. This suggests that a younger firm benefits more than an older one from the increase in process innovation activities occurring as a result of alliances with other firms. The age of the firm appears to dictate the nature of relationship between strategic alliances and process innovation. Significant and novel theoretical and managerial implications are discussed.