sustainability

Article
R&D Cooperation and Knowledge Spillover Effects
for Sustainable Business Innovation in the
Chemical Industry
Petr Hájek ID
and Jan Stejskal * ID

Faculty of Economics and Administration, University of Pardubice, CZ53210 Pardubice, Czech Republic;
[email protected]
* Correspondence: [email protected]; Tel.: +420-466-03-6067




Received: 22 February 2018; Accepted: 30 March 2018; Published: 3 April 2018


Abstract: This paper investigates the influence of research and development (R&D) cooperation on
the creation of spillover effects for sustainable firms in the chemical industry. We explore the evidence
for the origin of knowledge spillovers derived from cooperation amongst firms and universities and
R&D organizations as well as to test the influence of internal/external financial support on these
effects. The results confirm that when firms acquire knowledge from internal sources, this leads
to increased innovation and sustainable performance. We have proved that internal expenditure
results in increased internal knowledge spillovers. These findings may be specific for Central and
Eastern (CEE) transition countries, indicating their efforts to build path-dependent structures based
on knowledge institutions and businesses as well as knowledge networks. However, this study
also provides a more “global” contribution to the knowledge spillover effect theory. It shows
that a firm’s cooperation both with universities and with other firms promotes different types of
knowledge spillovers and can affect diverse modes of sustainable activities in innovation.

Keywords: spillover effects; chemical industry; innovation; sustainability

1. Introduction
Knowledge-based theories indicate that it is possible for a firm to attain economic growth
through innovation development while integrating local knowledge, the intensity (and frequency) of
knowledge transfer processes among other local firms [1], and the variety of knowledge within the
firm [2]. Such innovation may also be dependent on the “intensity” and “variety” of the knowledge
sources available to a firm. The process of generating knowledge does not only enable cooperation
between the firms in the region but also enables the external acquisition or purchase of knowledge;
for example, via integration into business networks, industrial clusters or cooperating international
trade networks [3], or from universities or R&D institutes. Knowledge spillovers from universities
to firms are considered critical mechanisms as to how knowledge generated by one economic unit
is exploited by another [4]. However, this process is not limited to university–firm relationships
but involves a range of firm activities with other economic units, such as firms, customers, research
institutes, etc. Previous research has reported that knowledge spillovers promote both innovation
and cooperation [5,6]. While the former has been thoroughly studied since the seminal work by
Romer [7], the latter has only been extensively investigated in the last decade. The positive effect
of knowledge spillovers on the decision to cooperate stems from the belief that the emergence of
cooperation in R&D requires both intensive contacts and a high level of trust arising from preceding
informal knowledge spillovers [8]. However, additional knowledge spillovers can be generated
via cooperation activities. This makes the effects difficult to measure. Moreover, several scholars

Sustainability 2018, 10, 1064; doi:10.3390/su10041064 www.mdpi.com/journal/sustainability

Sustainability 2018, 10, 1064 2 of 20

have shown that cooperation is an important driver of innovation activity [9]. This paper seeks to
address these issues and examines the indirect and direct effects (those with and without cooperation,
respectively) of knowledge spillovers on innovation activity. Specifically, the goal of this paper is to
introduce evidence of the creation of knowledge spillovers resulting from the cooperation of firms in
the chemical industry with universities and R&D institutes as well as to test the influence of internal
and external financial support on these knowledge spillovers. In contrast to previous studies [10,11],
we have focused on the difference between the cooperation of firms with both universities and with
other firms as well as their influence on innovation activities. Moreover, we focus on sustainable
business innovation that is defined by the European Commission [12] as: “the production, assimilation or
exploitation of a novelty in products, production processes, services or in management and business methods,
which aims, throughout its lifecycle, to prevent or substantially reduce environmental risk, pollution and other
negative impacts of resource use (including energy)”. Sustainable business innovation needs to move
beyond incremental adjustments [13,14]. Sustainable innovations are particularly relevant in the
chemical industry because their adoption (by firms and customers) does not exclusively depend on
their instrumental attributes. Firms and customers may be motivated to adopt sustainable innovations
because of their positive environmental and symbolic attributes. End users as well as politicians
and managers increasingly are considering the impacts of innovation processes (throughout their
life-cycle). As indicated above, sustainable innovations are usually radical rather than incremental.
Therefore, they often depend on collaborative efforts that go beyond traditional business alliances and
supply chains [15]. Specifically, various internal and external collaborative partners are incorporated
into the sustainable innovation process, such as green supply chains, universities, or government
entities. A degree of concerted action (collaboration and mutual learning) is required for sustainable
innovation [16]. The need for these collaborative efforts can also be explained by the theories of
institutional, stakeholder, and ecological modernization [15].
Although the level of cooperation and innovation is still low in CEE countries, the process of
transition has increased the involvement of firms in these activities [17]. This is particularly true for
knowledge-intensive manufacturing industries such as electric and chemical industries. The chemical
industry was chosen for analysis because it is a traditional type of manufacturing industry, has
a significant impact on sustainable development, can be compared internationally, frequently engages
in cooperation on open innovation with other sectors, and is often supported by public financing.
Recent literature has called attention to the novel concept of responsible research and innovation in
industry [18,19]. In addition to an economic value, social value is also expected to be achieved by
innovation activities. This is relevant to numerous industry sectors, including the chemical industry.
The chemical industry is science-driven; basic research is given a high degree of importance which
leads to highly innovative and unpredictable results [20]. Moreover, the chemical industry claims
a significant percent of the Czech Republic’s (and of most CEE countries’) manufacturing output.
The Czech chemical industry is notable as an industry that was significantly affected in the wake of
the Czech Republic’s entry into the EU, thanks to public support from EU funds and changes in the
funding structures of universities. In addition, chemical faculties are some of the most important
sources of basic research in the Czech Republic. Applied research also evolves quickly because of
changes in the methods for evaluating research and development with institutional support from
the public sector; these changes aim to increase university–firm cooperation. Accordingly, we expect
a high degree of transferability of results to CEE transition countries.
Hypotheses for attaining this goal are defined in the next section. In addition, Section 2 lays out the
theoretical dimensions of the research. Section 4 describes the collection and statistical characteristics
of the data. In Section 5, structural equation models are employed to test the hypotheses. The final
section discusses the results, presents the implications and limitations of this study, and concludes
the paper.
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2. Theoretical Background
It has been demonstrated that any type of knowledge and skill transfer (knowledge transfer is the
process by which one entity is affected by the experience of another [21]) results in knowledge spillover
effects. These are effects that occur either through the interaction of entities (primary knowledge
spillover effects) or subsequently occur as an aftereffect of spillover between participating entities and
others (secondary knowledge spillover effects) [22]. These positive effects influence the innovation
capacity of firms as well as the research abilities or absorptive capacity of universities and R&D
institutes. These effects occur in cooperating, often related, value chains [2]. Frenken et al. [23]
demonstrate that a higher number of technologically related sectors in the region correlate to a higher
level of inter-sector knowledge spillover between entities. Positive effects were demonstrated using
several activities which led to the creation of patents as well as those seen in the so-called unrelated
variety. The unrelated variety can cause other unmeasurable side effects [24].
Both internal knowledge and knowledge bought on the market are necessary to hasten the
development of open innovation, as is knowledge that is a product of cooperation (either between
firms or within the firm–university framework or regional triple helix). The university and R&D
institute sectors are essential for generating knowledge [10]. It has been demonstrated that universities
help to increase the number of patents in industrial fields [25] and that universities themselves are
influenced through cooperating entities and cooperative projects [11].
Universities and R&D institutes must enter a cooperative relationship with industry to make their
research fields compatible to foster the practical application of both knowledge transfer and knowledge
acquisition (especially in knowledge-intensive industrials). Schartinger et al. [26] demonstrated that
knowledge-oriented firms from intensive industrial sectors have among the highest levels of intensity
in terms of interaction and cooperation. The chemical industry ranked among the top ten industries
in terms of R&D interaction intensity [26]. By contrast, assumptions of a strong attempt to cooperate
were not met by either the electrical industry, electronics, or machinery manufacturing in Austrian
business sectors. From an economic perspective, it is even possible to specify industrial sectors
that rely on a wider spectrum of scientific findings in their innovative processes and, at the same
time, embody a high level of generation and transfer of findings between firms and universities.
The chemical industry clearly belongs to knowledge-intensive sectors. These sectors fundamentally
need interdisciplinary knowledge; they need cooperating entities to help to generate new scientific
research. Therefore, they frequently cooperate or even establish their own scientific research centers.
Various studies demonstrate that particularly strong university–industry linkages occur between
the technical sciences and manufacturing sectors, including chemical engineering, pharmaceuticals,
and biotechnology in Western countries [27,28]. Public research usually provides expert knowledge
and technological infrastructure for sustainable innovation activities in these sectors [26].
The proximity of firms in the chemical industry to suitably oriented universities and research
centers allows for considerable mobility of knowledgeable workers and accordingly the emergence of
spillover effects (for example, see [26,29,30]). These studies demonstrate that the proximity between
a university and a chemical firm enables intensive cooperation, not only on the basis of communal
research activities and projects but also on the basis of educating firm employees or external lectures
for university students [31].
The case study presented here focuses on the chemical industry of a CEE country,
the Czech Republic. It presents new findings and enriches the existing literature. It is necessary
to emphasize that individual CEE countries are largely pro-export economies with similar historical
factors affective of societal and economic developments; this includes a primary dependence on the
German economy or on the economies of other Western countries as well as a similar research character
that is historically distant from the application sphere (which greatly affects the transfer of knowledge
and innovation co-operation). They demonstrate distinct knowledge spillover and the emergence
of external knowledge spillovers under the influence of marked supplier–consumer cooperation
which affects most company production processes. With regards to the size and maturity of CEE
Sustainability 2018, 10, 1064 4 of 20

economies, it is necessary to acknowledge that external knowledge as well as foreign direct investment
(and the public systems supporting it) do not have as marked an impact on this region’s creation
of innovation or the reinforcement of competitive standing as they do for companies cooperating
inside countries such as Great Britain, Germany, or the Netherlands. There are no studies that provide
valid information on the use of knowledge and R&D cooperation in specific economies such as
the CEE countries’ economies. The chemical industry was selected to make it easier to compare
results with those of Western countries. This industry represents one of the most technology intensive
manufacturing industries in the EU with a major impact on economic growth [32]. In fact, the European
chemical industry has a strong market position, accounting for about 18% of the sales of chemical firms
worldwide. Moreover, the EU chemical firms’ R&D activity is high in terms of patent applications and
innovation is largely generated via industry–academia collaboration or in chemical clusters [33].

3. Hypotheses
Recent findings have shown that collaboration promotes innovation activity (sometimes
innovative cooperation). This has been demonstrated for both collaboration inside individual
enterprises [34] and collaboration with other partners [35–37]. Incoming knowledge spillovers have
been found to be another important determinant of innovation activity. However, previous studies
have largely focused on the direct effects of incoming knowledge spillovers [35,38,39]. We have
assumed that a collaborative environment increases the effects of knowledge spillover. In other
words, we are exploring spillover effects that result from a firm’s innovation activity without apparent
cooperation with other entities as well as those that result from cooperation with other entities on the
creation of innovation.
On one hand, internal sources of knowledge are critical for chemical firms; they require specific
management strategies such as enlisting scientists to support internal collaboration (collaboration
within the enterprise or enterprise group [40,41]). Internal knowledge spillovers generate a sustainable
competitive advantage based on unique knowledge and technologies; they also aid in the creation
of external knowledge spillovers [42]. Thus, chemical firms solve the inability of universities to
produce results in a short time (this is due to the dichotomy in business and university goals).
Therefore, we propose the following hypothesis:

Hypothesis 1. When firms from the chemical industry acquire knowledge from internal sources, it results in
cooperation within the enterprise leading to the existence of significantly higher internal knowledge spillovers.

On the other hand, external collaboration for innovation activities has been identified as a crucial
component of an open innovation model [41,43]. External collaboration includes several modes,
such as collaboration with universities, R&D institutes, and market entities.
Cassiman and Veugelers [44] demonstrated that a higher percentage of incoming knowledge
spillovers from the publicly available pool of knowledge promotes firms’ collaboration in R&D with
universities and R&D institutes. In contrast, firms that benefit from protected information are more
likely to engage in collaborative agreements with other enterprises. Cassiman and Veugelers [45]
further demonstrated the importance of knowledge spillovers produced by research centers and
universities on the mode of innovation activities, internal R&D, or external knowledge acquisition
(which supports the open innovation paradigm). Belderbos et al. [46] found that institutional
knowledge spillovers are more generic in nature and increase R&D cooperation. Un et al. [47]
argued that firm–university collaboration increases (open) innovation activity when compared with
collaboration with other enterprises. For chemical industries, the intensity (depth) rather than the
variety (breadth) of knowledge acquisition from publicly available sources has been demonstrated as
singularly important [48]:
Sustainability 2018, 10, 1064 5 of 20

Hypothesis 2. When firms from the chemical industry acquire knowledge from publicly available sources
(universities or research institutes), the probability of firms’ cooperation with universities is increased, leading to
the existence of significantly higher external (firm-university) knowledge spillovers.

We have also assumed that the effect of knowledge spillovers will be greater when the
input knowledge is diversified, i.e., using knowledge acquired on the market (from suppliers,
clients, and the competition) [49]. Reniers et al. [50] postulated that chemical companies are
increasingly engaged in collaborative activities which promotes sustainable chemical production.
External knowledge spillovers occur as a result of human mobility and the high mobility of R&D
activities. For many industries, this can present necessary but insufficient conditions for innovation [42].
Knowledge acquired from clients is particularly important for new product development within
chemical firms [51]. Cho and Lee [52] examined the roles of user innovation in supporting sustainable
business innovations in firms. It was shown that industries differ in the modes of user innovation
models. Various tools are used to acquire knowledge from specific users. Collaborative market
relationships not only help firms integrate and link operations to increase effectiveness but they also
support continuous innovation [53]. In the case of CEE countries, this has been found to be particularly
related to horizontal spillovers (within the same industry [54]). Generally, innovation in chemical firms
requires an interaction between their internal R&D activities and external knowledge sources [55].
Zhu et al. [56], who analyzed internal and external crowdsourcing in the chemical industry, pointed
to similar considerations. They found that the success of chemical projects depends on externally
purchased knowledge and human resources. Given that a market participant’s competitors operate
in the same sustainable environment, we assume that market participants have similar goals and
accordingly solve similar problems. This forces them to cooperate within a specific time period. On the
basis of the facts presented above, we hypothesize the following:

Hypothesis 3. When firms from the chemical industry acquire knowledge from market participants,
the probability of firms’ cooperation with other firms is increased, leading to the existence of significantly
higher external (firm–firm) knowledge spillovers.

Becker and Dietz [34], Abramovsky et al. [57], and many other studies have reported that the
intensity of in-house R&D promotes the probability of R&D collaboration with other enterprises or
institutions. As noted above, in contrast to other industries, R&D intensity is critical for innovation
activities in the chemical industry [33].
Busom and Fernández-Ribas [58] have found that public support significantly increases the
probability of firm collaboration with a public research organization but that this effect is smaller for
cooperation with other firms. Hottenrott and Lopes-Bento [49] found that public support is important
for innovation activity and is especially effective when supporting internationally collaborating firms
towards open innovation creation. When supported by public funds, innovation should become
a collective good. However, in the practice of chemical firms, this only happens in the long run unless
an innovation is patented [31].
Current European public policies which target the economic development of individual countries
are largely focused on the development and support of their own regions. These policies should
be conducted in a decentralized way [59]; they should not be focused only on creating a scheme
for financial support (in the form of redistribution measures), but appropriate tools should be
utilized to support the creation of investments with capacity-building effect, i.e., increasing absorptive
capacity [37]. Ferreras-Méndez et al. [60] claim that absorption capacity mediates the effect between
the intensity of the external knowledge search and the firm’s performance. It is possible to influence
this through the effective use of knowledge, learning ability, and cooperation between the various
economic sectors (for example, [61]). The triple helix is an example of the application of this cooperation
principle between the nonprofit sector and the for-profit sector [62]. The so-called laissez-faire triple
helix is rooted in individual sectors cooperating on research as well as the creation of innovation.
Sustainability 2018, 10, 1064 6 of 20

Here, the university sector has the role of implementing basic research and providing knowledge while
the business sector uses new findings to create commercialized innovations [34]. The public sector
(the government at different levels) has the task of preventing market failure which could damage the
cooperation of the individual entities.
Das and Icart [33] demonstrate that EU funding not only drives chemical companies to
participate in projects but it also promotes collaboration with universities, research institutes, and even
other enterprises.
We incorporated the role of in-house and public R&D expenditure in the following hypotheses:

Hypothesis 4. Internal R&D expenditure leads to increasing the effect of internal knowledge spillovers on
sustainable business innovation activity.

Hypothesis 5. Government and EU support leads to increasing the effect of external knowledge spillovers on
sustainable business innovation activity.

4. Research Methodology

4.1. Conceptual Models

Taken together, the hypotheses listed above can be illustrated by the conceptual models in
Figures 1 and 2.

Figure 1. Conceptual model for Hypotheses H1, H2, and H3.

Sustainability 2018, 10, 1064 7 of 20

Figure 2. Conceptual model for Hypotheses H4 and H5.

To verify these hypotheses, we developed a structural equation model which can test both the
mediation effects of R&D collaboration (Hypotheses H1, H2, and H3) and the moderator effects
of internal R&D expenditure and external financial support (Hypotheses H4 and H5). Specifically,
this proposed model can be described in the following way. Let X1 (internal knowledge spillovers),
X2 (market knowledge spillovers), X3 (university knowledge spillovers), X4 (research lab knowledge
spillovers), X5 (other external knowledge spillovers), X6 (internal R&D expenditure), and X7
(government and EU financial support) be causal predictors of Y1 (sustainable business innovation
developed by the firm itself), Y2 (sustainable business innovation developed with universities),
and Y3 (sustainable business innovation developed with other enterprises). Additionally, let M1
(internal collaboration), M2 (collaboration with universities), M3 (collaboration with research institutes),
and M4 (market collaboration) be mediator variables. Then Xi influences Yk directly as well as indirectly
through mediator variables Mj causally located between Xi and Yk .

4.2. Data Collection and Characteristics

For the subsequent empirical analysis, we used the data obtained within the Community
Innovation Survey (CIS). The survey was conducted at firm level in the Czech Republic for the years
2008–2010. Details on sample selection can be found at the web portal of Eurostat. As a part of this
survey, data was gathered for a total of 5151 firms with more than 10 employees (response rate >60%).
Only firms from the chemical industry were considered (523 firms), corresponding to NACE
categories 20–23.
The firm’s innovation activity was specified according to whether the firm introduced a new
or significantly improved product (goods or services) or process (a production process, distribution
method, or supporting activity) to the market. Moreover, only sustainable business innovation was
considered. These were identified according to the firms’ innovation objectives. Specifically, business
innovations were regarded as sustainable when a firm’s innovation objectives were medium or high in
at least one of the three following areas: (1) the reduction of energy and material costs; (2) the reduction
of environmental impacts; and (3) the improvement in employees’ health or safety. Out of the 523
firms, 218 firms (41.7%) were innovative and 305 (58.3%) were non-innovative.
For both discrete and continuous missing data, we employed a multiple imputation method [63].
The basic descriptive statistics for the determinants of innovative activity we observed are presented
in Table 1. From this, it can be seen that the majority of innovative firms cooperated on innovative
Sustainability 2018, 10, 1064 8 of 20

activity but mostly within their own group of firms. Accordingly, government and EU support was
more likely directed towards innovating firms.

Table 1. Descriptive statistics of the innovative firms.

Innovative
No Yes
Cooperation—no 184 98
Cooperation—yes 121 120
In-house 70
With universities 21
With other enterprises 29
Government support—no 260 165
Government support—yes 45 53
EU support—no 260 176
EU support—yes 45 42

The paired t-test demonstrated on the scale of significance that both innovating firms and firms
cooperating on innovation have significantly higher personal expenses for R&D (Figure 3).

Figure 3. Internal R&D expenditure (minimum, first quartile, median value, third quartile and
maximum value).

All variables used in the modeling of knowledge spillovers are described in detail in Appendix A.

5. Modeling Knowledge Spillovers

Adopting the approach of Simonen and McCann [8] or Montoro-Sanchez et al. [5], incoming
knowledge spillovers were approximated by evaluating the importance of chosen communication
sources. The chemical firms were asked to assign a level of importance to the following communication
sources: (1) internal, (2) the market, (3) universities, (4) research institutes, and (5) other sources.
First, a confirmatory factor analysis was carried out. Maximum likelihood estimates were used in
this analysis. The average weights (AW) for the three models (the firms developed the innovation by
themselves/with universities/with other firms) are shown in Table 2. To assess the models’ internal
consistency, Cronbach’s alpha was computed (all values at least acceptable, >0.60).
Sustainability 2018, 10, 1064 9 of 20

Table 2. Results of confirmatory factor analysis for communication sources.

Market AW Other AW
Communication Suppliers 0.335 Conferences 0.662
Sources Customers 0.690 Scientific journals 0.871
Competitors 0.700 Professional associations 0.564
Consultants 0.345 Internet 0.566
Cronbach’s alpha 0.603 0.755

In Table 3, we examined the mediation role of cooperation. In this model, communication sources
Xi , i = 1,2, . . . ,5 (internal, market, . . . , other) and R&D expenditure Xi , i = 6 (internal) and i = 7
(government and EU) influence innovation activity Yk (k = 1 for innovation by themselves, k = 2
with universities and k = 3 with other firms) directly as well as indirectly through mediator variables
(cooperation) Mj causally located between them (M1 for internal, M2 for firm-universities, M3 for
firm-research institutes, and M4 for firm-market), see Figure 4. The effects (direct and indirect) can be
estimated as follows:
Mj = iM + ai × Xi + eM , (1)

Yk = iY + ci × Xi + bj × Mj + eY , (2)

where ci is the estimate of the direct effect of communication sources on sustainable business innovation
activity (knowledge spillovers emerging in the process of knowledge acquisition), and ai × bj estimates
the indirect effect (knowledge spillovers emerging in the process of cooperation).

Figure 4. Structural equation model.

Knowledge spillover modeling was carried out by using the structural equation models in the
LISREL 9.2 software package [64]. In addition to regression coefficients and fit indices of the structural
equation model presented in this section, Appendix B shows the covariance matrix of the used variables.
The condition number of this matrix was 7.427, indicating no multicollinearity in the data.
Internal communication creates knowledge spillovers only when there is innovation by a solitary
firm or if they cooperate with other firms (Tables 3 and 4). However, it was not utilized in innovative
cooperation with universities (the impact was lower). Communication and innovation development in
cooperation with the market participant did not show any significant results. When the firms decided to
develop innovation with the university or R&D institutes, the overall influence on innovation capacity
remained positive. Table 3 shows the importance of communication with universities even when they
introduce the innovation alone or in collaboration with other enterprises. Creating knowledge spillovers
was, together with government scientific research organizations, the most important for innovation
development in all models of innovation development. However, it was demonstrated that, although
knowledge gained from universities, research institutes had the most significant indirect effect; firms did
not continue with innovation development in cooperation with these organizations and instead used this
knowledge for cooperation on sustainable business innovation with other firms (Table 4).
Sustainability 2018, 10, 1064 10 of 20

Table 3. The effects of knowledge spillovers on collaborative activities (standard errors).

Collaboration
Variable Internal With Univ. With Res. Inst. With Market Partic.
Communication
Internal 0.0948 (0.0169) *** 0.0510 (0.0155) *** 0.0183 (0.0103) * 0.0733 (0.0209) ***
With univ. 0.0429 (0.0201) ** 0.1290 (0.0183) *** 0.0162 (0.0122) 0.0282 (0.0247)
With res. inst. 0.0082 (0.0258) 0.0215 (0.0235) 0.0697 (0.0157) *** −0.0064 (0.0317)
With market partic. 0.0053 (0.0218) 0.0132 (0.0199) −0.0098 (0.0133) 0.0344 (0.0268)
Other 0.0121 (0.0179) 0.0066 (0.0164) 0.0096 (0.0109) 0.0264 (0.0221)
Internal R&D expend. 0.0346 (0.0155) ** 0.0040 (0.0142) −0.0226 (0.0095) ** −0.0234 (0.0191)
Gov. and EU support 0.0074 (0.0354) ** 0.0785 (0.0323) ** 0.0995 (0.0215) *** 0.1410 (0.0436) ***
Blocked-Error-R2 0.1030 (0.0073) 0.2120 (0.0061) 0.1410 (0.0027) 0.0834 (0.0111)
Notes. Univ. = universities, res. inst. = research institutes, market partic. = market participants,
expend. = expenditure, * significant at p < 0.10, ** significant at p < 0.05, *** significant at p < 0.01.

Abramovsky et al. [57] report that R&D expenditure and public support promote collaborative
innovation. Therefore, we also examined the effects of: (1) expenditure on R&D (0—lower than
the median 3300 thousand CZK, 1—greater than this median), and (2) government and European
financial support.
A firm’s expenditure on R&D positively influences its ability to cooperate on innovative activities.
These are necessary when using knowledge acquired on the market, from universities, or from other
sources. However, as shown in Table 3, internal R&D expenditure significantly promoted only internal
collaboration. In contrast, government and EU support strongly contributed to firms’ collaboration
with universities, research institutes, and market participants.
Concerning direct effects between knowledge acquisition and innovation activities (Table 4), firm
resources supported innovations generated by the firm alone or in cooperation with other enterprises.
These resources were important when using knowledge acquired from research institutes (when
developing innovation on its own) and knowledge acquired from universities (when developing
innovation in cooperation with other firms). Government and EU resources then supported innovation
created in collaboration with other firms or with universities. In the latter case, communication with
other resources appeared to be critical.

Table 4. The effects of knowledge spillovers on innovation activities (standard errors).

Sustainable Business Innovation Developed

Variable By Themselves With Univ. With Enterpr.
Communication
Internal 0.0048 (0.0241) 0.0034 (0.0196) −0.0997 (0.0217) ***
With univ. 0.0080 (0.0285) −0.0119 (0.0232) 0.1480 (0.0257) ***
With res. inst. 0.0575 (0.0354) * −0.0690 (0.0289) ** 0.0934 (0.0320) ***
With market partic. −0.0164 (0.0294) 0.0277 (0.0240) 0.0214 (0.0266)
Other −0.0739 (0.0242) *** 0.0337 (0.0198) * −0.0906 (0.0219) ***
Internal R&D expend. 0.0872 (0.0212) *** −0.0241 (0.0173) 0.0617 (0.0191) ***
Gov. and EU support −0.0662 (0.0494) 0.0747 (0.0403) * 0.0809 (0.0446) *
Collaboration
Internal 0.3880 (0.0594) *** 0.0357 (0.0484) −0.1520 (0.0536) ***
With univ. −0.1320 (0.0650) ** −0.0458 (0.0530) 0.1560 (0.0586) ***
With res. inst. −0.0034 (0.0975) 0.1620 (0.0795) ** 0.1440 (0.0879)
With market partic. −0.0003 (0.0482) −0.0076 (0.0393) −0.3100 (0.0435) ***
Blocked-Error-R2 0.1390 (0.0133) 0.0399 (0.0089) 0.3050 (0.0108)
Notes. Univ. = universities, res. inst. = research institutes, enterpr. = other enterprises, * significant at p < 0.10, **
significant at p < 0.05, *** significant at p < 0.01.
Sustainability 2018, 10, 1064 11 of 20

Given the combined results of Tables 3 and 4, the ability to transform cooperation into real
sustainable business innovation was supported by a firm’s own expenditure. These resources were
important not only for innovations created in-house but also for those created in cooperation with
other firms. Government or EU support influenced the ability to transform cooperation into innovation
only via collaboration with research institutes.
To determine model fit, we used fit indices of the proposed structural equation model as has been
recommended in the literature [65]. Specifically, we employed (1) absolute fit indices (the maximum
likelihood ratio chi-square test, RMSEA, and SRMR) to estimate how well the model fit the sample
data and (2) incremental fit indices (CFI and NFI) to compare the chi-square value to a baseline model.
For the absolute fit indices, a good model fit is achieved when there is an insignificant result for
chi-square, RMSEA <0.08, and SRMR <0.08 [65]. Similarly, CFI >0.90, NFI >0.95 and PGFI >0.90
indicate a good fit. The results in Table 5 suggest a poor fit in terms of the chi-square test.
However, this measure assumes multivariate normality and performs poorly for large samples.
Therefore, RMSEA and SRMR have recently been preferred to estimate the absolute fit. Our model is
acceptable particularly in terms of SRMR. In addition, the model can also be deemed acceptable in
terms of the incremental fit indices.

Table 5. Goodness of fit statistics.

Statistics Value
Maximum Likelihood Ratio Chi-Square 27.546 a
Root Mean Square Error of Approximation (RMSEA) 0.125
Standardized Root Mean Square Residual (SRMR) 0.024
Comparative Fit Index (CFI) 0.969
Normed Fit Index (NFI) 0.968
Notes: a degrees of freedom = 3 and p = 0.000.

6. Discussion
It is possible to make the following conclusions about the research hypotheses that were
established (see Figure 5 for Hypotheses H1–H3 and Figure 6 for Hypotheses H4 and H5).
Hypothesis H1 was confirmed. The results confirm that chemical firms in the Czech Republic acquire
knowledge from internal sources and cooperate with entrepreneurs in their industry. The study of
Murovec and Prodan [66] carried out on the CIS data for Czech industries support our results. This
reflects a large gap between research and the application sphere in the Czech Republic and CEE
countries. This cooperation and these sources of internal knowledge lead to significantly higher
internal knowledge spillover. The results confirm previous assumptions from other studies (West
and Bogers [34] achieved the same results). These results confirm that cooperation in the chemical
industry in a small open economy is essential for maintaining competitive advantage. In a business
network, cooperation that is exclusively internal leads to an effective use of resources, the ability
to conceal new knowledge, and no risk of time delay. However, it can be assumed that there are
high costs for R&D as well as investments into new technologies and educated workers for this
type of cooperation and knowledge (this is confirmed by the results obtained in Chesbrough and
Crowther [43]). This reflects the small willingness of small and medium enterprises (SMEs) to invest in
technology and the development of knowledge potential. Therefore, the increased costs are shared and
can be optimized in business networks or within clusters. Other authors also confirm these results (for
example, biotechnology firms in Spain by Ferreras-Méndez et al. [60]). Finally, the role of technology
readiness and system readiness must be highlighted [67]. Specifically, sustainable innovations might
fail on the market as a result of the insufficient maturity of a technology. Moreover, the connectivity of
sustainable innovations with the system in its environment is increasingly crucial as opposed to the
level of the technology [68].
Sustainability 2018, 10, 1064 12 of 20

Hypothesis H2 was confirmed only for (public and private) R&D institutes; it was rejected in
the case of university cooperation. The results showed that cooperating universities contributed to
the creation of innovation less frequently than R&D institutes. This finding is in line with Perez and
Sánchez [69]. This may be attributable to different goals; the teaching of the students is the traditional
mission of universities in CEE countries. The situation was different when chemical firms did not
have enough resources for their own research or they wanted to collaborate with research institutes for
some other reason (in CEE countries, this is typically a result of drawing subsidies from EU funds;
see J. Stejskal et al. [6]). Direct enterprise–university communication was proved to be significantly
effective. However, other effects leading to innovation creation were not significant. Conversely,
communication and cooperation with research institutes resulted in knowledge spillover effects. When
a chemical firm in the Czech Republic collaborated with research institutes, this resulted in significant
positive effects for both parties. Similar results were observed in Czech high-tech industries [70].
The reason is that research organizations must effectively raise funds for their existence (more than 50%
of their costs are not subsidized) and they must therefore be able to overcome obstacles and meet the
firms’ requirements (by being flexible and dynamic, not having a time delay risk, preparing legislative
framework, being able to protect knowledge and patents, etc.).
As indicated above, the specific context of CEE countries suggests that the level of cooperation and
innovation is still low. This is attributed to the lower quality of physical and human capital, knowledge
institutions, weak global connectivity, and insufficient involvement in business and knowledge
networks based on the triple helix concept [71]. The knowledge networks are particularly important
for the generation of knowledge spillover effects which substantially differ in terms of stakeholders
involved. Brem and Radziwon [72] refer to the following types of stakeholders and corresponding
knowledge spillovers: (1) project initiators (higher quality of environment for project applications,
higher credibility towards the industry, etc.), (2) universities (establishing long-term relationships
with government and industry, gathering experience in developing sustainable innovation projects),
(3) government (development towards sustainable goals), and (4) industry (sustainable innovations,
knowledge transfer from universities, etc.).
In terms of CEE countries, it is apparent from the results that the ability to effectively support
the creation and transfer of findings is very sensitive to “crowding out” factors such as bureaucracy,
legal environment, requirements for sustainable development, culture (including “not invented here”
culture [34]), and the performance or efficiency of a given organization’s operation. This corroborates
the findings of Dachs et al. [71], suggesting that cooperative behavior is dependent on national factors
and deeply rooted in the underlying innovation system. These factors must be investigated further
to better allocate public funds to prevent a crowding out effect, not only the crowding out of private
investments by public ones but also of private efficiency by public inefficiency. This effect was also
investigated and confirmed in P. McCann et al. [73].
The third option for knowledge acquisition is the market. A lack of high-quality knowledge on the
market is a unique characteristic of the chemical industry in the Czech Republic. Currently, this leads
to cooperation. The results show that innovative performance was affected negatively by knowledge
obtained on the market. Therefore, hypothesis H3 was rejected. This finding supports the literature as
to the role of cooperative relationships in knowledge generation [74]. In prior research, the question
was raised as to the suitable types of cooperative relationships for relevant knowledge spillovers [74].
Here, we contribute to this discussion by concluding that, on the one hand, cooperative relationships
with research institutes is effective for university–industry knowledge spillover effects. On the other
hand, university–industry cooperative R&D activities are not a suitable medium for generating
knowledge spillovers.
Hypothesis H4 was confirmed. We have proved that internal R&D expenditure led to an increased
effect of internal knowledge spillovers on sustainable business innovation activity. Investment directed
towards exclusively internal cooperation greatly enhanced the ability to create innovation. These results
expand previous findings on the role of R&D expenditure in innovation activity [73]. In addition, our
Sustainability 2018, 10, 1064 13 of 20

findings confirm that internal resources had greater importance for sustainable (eco-)innovations [75].
Internal spillover effects are certain to arise in this situation. This is a new insight for transition and
emerging economies, indicating their path to competitiveness based initially on the presence internal
knowledge spillovers. However, it can be anticipated that external knowledge spillovers will become
stronger in future as a result of the development of knowledge institutions and networks. This finding
corroborates those reported by Bouncken et al. [76].

Figure 5. Results of the analyses for Hypotheses H1–H3.

Figure 6. Results of the analyses for Hypotheses H4 and H5.

Sustainability 2018, 10, 1064 14 of 20

In several studies, government and EU support show varying efficiency (this varies between
both countries and industries [70]). In fact, doubts remains as to the effectiveness of EU investment.
Doubts are largely related to the legacy of economic specialization of the past, including physical
resources and heavy industries [76–80]. Varying support efficiency was also observed in this study.
Hypothesis H5 was confirmed only for cooperation with research institutes. The results showed a small
positive effect for this type of support. This is a situation specific to CEE economies. A lack of flexibility,
the actors’ varying goals, legislative obstacles, and a long time delay contributed to these results.
The results show that firms did develop cooperation with universities but positive effects for creating
innovation did not result (specifically, the results were not significant). Our results support the findings
from Vokoun [81]. We posit that firms often established cooperation with universities, conducted
research with them, and eventually, the firms discontinued the cooperation. The firms most likely
perceived obstacles and did not see any benefits for the discernible time period. However, the firms
needed to make the responsible R&D investment yield a profit, so the firms continued to cooperate
with other firms (for details about responsible R&D, see Gurzawska et al. [82]). The firms used all
external knowledge; however, if other internal knowledge was added, this form of cooperation led
to highly positive results concerning innovation creation. This specific fundamental outcome also
supports the recent findings of Belderbos et al. [83], indicating that firm–university collaboration is
more effective in the presence of high scientific absorptive capacity. Absorptive capacity generally
helped firms turn broadly sourced external knowledge into sustainable (eco-)innovation [84]. This was
obviously not the case for Czech chemical firms. Therefore, the availability of scientists at universities
seemed to be important when establishing university collaboration from the perspective of the chemical
industry’s sectoral innovation system [85]. In this context, the concept of open science has recently
been discussed [86].

7. Conclusions
The goal of this paper was to analyze the influence of knowledge as an input in production
of sustainable business innovations arising from both individual chemical firms and other entities
(universities and research institutes). It further analyzed the support of these firms and entities by
national or European governments.
Chemical firms were selected for their innovative qualities, because they frequently have
knowledge-intensive production, and typically cooperate with universities and research institutes.
These firms show demonstrably higher firm expenditures on R&D. The markets in which they
participate, including supra-national European and global markets, force them into such expenditure
as a result of an effort to maintain market share via the creation of innovation.
On the basis of these results, it is possible to anticipate changes in managers’ deliberation and
decision-making, particularly when building partnerships specifically open to innovation. We have
corroborated the findings of Laursen and Salter [48], suggesting that the firms’ external focus
may represent important business opportunities. Therefore, managers should steer firms towards
participating in knowledge-intensive cooperative chains or networks (but they have to address the
issue of industrial property rights and patents). Firm participation in industrial clusters also has
positive benefits. For objectivity, it should be noted that too much firm openness can also cause
problems especially when firms collaborate with competitors [87].
In conclusion, it is necessary to mention certain shortcomings of this study. Further empirical studies
are necessary to determine whether the conclusions are applicable for different sectors of manufacturing
industry as well as for other countries. Second, the influence of government and EU support was greatly
simplified which is a result of the limitations of the CIS questionnaire’s current form. The relatively small
sample size and the chemical industry design are also potential limitations of the study. The various
concepts of sustainable innovations (in the chemical industry we encounter a high degree of innovation
patentability) is a specific barrier for application in practice. The difficult transferability of these results to
Western countries is another limitation (the innovative models of the CEE countries and Western countries
Sustainability 2018, 10, 1064 15 of 20

differ significantly). In the future, it would be advisable to focus on specific forms of public support and
their influence on knowledge spillover effects, namely in relationship to managerial decision-making as
to what type of cooperation to include as part of open innovation processes.

Acknowledgments: We gratefully acknowledge the help provided by constructive comments of the anonymous
referees. This work was supported by a grant provided by the scientific research project of the Czech Sciences
Foundation Grant No. 17-11795S.
Author Contributions: Both authors participated equally in the definition of research hypotheses and model
design. Petr Hájek conducted research calculations; Jan Stejskal gave a description of the results and discussion.
Conclusions are processed by both authors together.
Conflicts of Interest: The authors declare no conflict of interest. The founding sponsors had no role in the design
of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, and in the
decision to publish the results.
Sustainability 2018, 10, 1064 16 of 20

Appendix A

Table A1. Variables Used in This Study.

Variable Explanation Measurement

A new or significantly improved product or process developed: (a) by itself, (b) together with universities Dummy variable:
Innovation activity
or (c) together with other enterprises Yes (1)/No (0)
Dummy variable:
Cooperation Collaborative innovation activity with other firms or institutions
Yes (1)/No (0)
Sources of knowledge: How important is the following information source to innovation activities:
Internal Within an enterprise or enterprise group Ordinal variable: Not used (0)
Market Customers, suppliers, competitors and consultants Low (1)
Universities Universities (higher education institutions) Medium (2)
Research institutes Research institutes (government or public) High (3)
Other sources Conferences, trade fairs, journals and professional associations
Dummy variable: Greater than median value
R&D expenditure Total R&D expenditure—including in-house R&D, external R&D and external knowledge acquisition
(1)/Smaller than median value (0)
The enterprise received public financial support for innovation activities from the local, regional, central Dummy variable:
Government and EU support
government or from the EU Yes (1)/No (0)

Appendix B

Table B1. Covariance Matrix.

X1 X2 X3 X4 X5 X6 X7 M1 M2 M3 M4 Y1 Y2 Y3
X1 0.839
X2 0.062 0.853
X3 0.008 0.284 0.465
X4 0.141 0.230 0.184 0.651
X5 0.135 0.368 0.208 0.353 0.988
X6 0.043 0.195 0.073 0.055 0.124 1.002
X7 0.044 0.141 0.076 0.060 0.081 0.076 0.211
M1 0.086 0.058 0.023 0.035 0.049 0.050 0.016 0.131
M2 0.057 0.137 0.057 0.057 0.077 0.040 0.040 0.071 0.124
M3 0.020 0.046 0.043 0.021 0.034 −0.005 0.028 0.020 0.034 0.051
M4 0.077 0.060 0.026 0.055 0.066 0.001 0.039 0.089 0.090 0.038 0.195
Y1 0.019 0.005 0.013 −0.017 −0.049 0.092 −0.008 0.043 0.010 0.001 0.017 0.243
Y2 0.015 −0.002 −0.014 0.020 0.031 −0.021 0.015 0.005 0.003 0.008 0.008 0.005 0.148
Y3 −0.102 0.142 0.084 0.017 −0.018 0.087 0.035 −0.031 0.005 0.006 −0.052 0.035 0.018 0.246
Sustainability 2018, 10, 1064 17 of 20

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