Make or Buy to innovate in the Software sector

Abstract

In the context of profound economic growth that has been taking place in Latin American countries, the extent of innovation in high technology sectors such as Knowledge Intensive Business Services (KIBS), is considered fundamental to build a virtuous developing path. In this sense, successful innovation in business depends on the development and integration of new knowledge in the innovation process. This paper analyzes the existence of complementarity between internal and external sources of knowledge for innovation activities in firms from the software industry of Argentina, taking account of the limited treatment of these matters in studies of innovation of these sectors in emerging economies. The theoretical framework is grounded on the Make and Buy literature, innovation studies and KIBS literature; and the econometric tools involves a group of estimates of the role of innovation (Ordered Probit, Tobit, OLS and Probit). The results allow us to state the existence of complementary relations between internal and external knowledge sources, regardless the regression model considered, which underline the robustness of the quantitative exercise.