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Summary

They investigate innovation strategies that minimize negative interfirm differences and enhance positive interfirm differences in innovation across high-tech firms with different levels of competitive rivalries. Using longitudinal data over more than six years from 247 companies and surveying 212 senior managers, They show that interfirm differences in innovation, not the absolute level of innovation, influence a firm’s long-term stock return. Moreover, the long-term stock market rewards are greater for minimizing negative interfirm difference in innovation than for enlarging positive interfirm differences. Finally, competitive rivalry within the industry influences the effectiveness of innovation strategies on interfirm differences in innovation. They discuss the implications for these findings for the management of innovation strategies.

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