In this Paper we carefully link knowledge flows to and from a firm’s innovation process with this firm’s investment decisions. Three types of investments are considered: investments in applied research, investments in basic research, and investments in intellectual property protection. Only...

Successful innovation depends on the development and integration of new knowledge in the innovation process. In order to innovate successfully, the firm will combine different innovation activities. In addition to doing own research and development, firms typically are engaged in the acquisition...