Risky Innovation: The Impact of Internal and External R&D Strategies upon the Distribution of Returns

José Mata, Martin Woerter*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


External innovation increases the profits of the median firm, but also increases dispersion and the kurtosis of the distribution of profits. This means that external strategies are risky and may require a very large number of attempts before average returns are obtained. This puts smaller firms into a position of disproportionately high risk. Despite the earlier evidence that the rewards from innovation are positively skewed, we find no effect of innovation strategies upon the skewness of the distribution of firms’ profits.
Original languageEnglish
JournalResearch Policy
Issue number2
Pages (from-to)495-501
Number of pages7
Publication statusPublished - Mar 2013
Externally publishedYes


  • Risk
  • Innovation
  • Research and development
  • Firm performance

Cite this