Firm's basic research and breakthrough innovation-- from the perspective of resource-based view

With intensifying global competition and rapid technological advancement, breakthrough innovation has become a critical avenue for firms to build sustainable competitive advantages. Based on a resource-based view, we provide a theoretical foundation to explain that high-quality basic research plays a fundamental role to achieve firms’ breakthrough innovation. By using Chinese dataset, we find that firms with strong basic research capabilities can boost their breakthrough innovation. Further analyses show that basic research facilitates breakthrough innovation through three mechanisms: enhancing knowledge diversity, increasing access to government R&D subsidies, and strengthening R&D collaboration. Heterogeneity analyses reveal that the effect of basic research is more pronounced for firms with higher absorptive capacity, larger firm size, and in technology-intensive sectors. Moreover, the positive impact of basic research on breakthrough innovation is stronger in more competitive industries. These findings have important implications for understanding the role of corporate basic research in fostering breakthrough innovation, particularly under increasing external technological constraints. • Drawing on dynamic RBV, we theoretically and empirically analyze how basic research shapes breakthrough innovation. • Empirical results show that basic research significantly enhances firms’ breakthrough innovation. • The effect is more pronounced in big firms, with strong absorptive capacity, technology-intensive industry. • The effect is through knowledge diversity, government R&D subsidies, and collaborative R&D channels.