The relationship between research and innovation in the semiconductor and pharmaceutical industries (1981-1997)

This paper evaluates the impact of basic and applied research on innovation in two industries. Whereas innovation in the pharmaceutical industry is closely tied to both basic and applied research, innovation in the semiconductor industry depends mainly upon applied research. Surprisingly, many firms perform little basic research, but they produce many innovations. Within each industry, firms pursue different R&D strategies: firms that emphasize basic research absorb more basic scientific knowledge than those that emphasize applied research. These findings suggest that future research must carefully consider how industry context and the composition of R&D mediate the relationship between research and innovation. (C) 2003 Elsevier B.V. All rights reserved.