Battle royal in biotechnology: R&D vs. product vs. process innovations

Companies regard innovation as a central element of their business. However, as not all innovation types are the same, the central question is: should their announcements bring about the same effect on performance? This article analyses potential differences in firm value derived from the innovation-type announcements 'R&D', 'product', and 'process', made by intensive news-generating firms such as biotech companies. The empirical application shows a significantly positive reaction to innovation announcements, with the prospect of future innovation ('R&D' investment announcements) having greater impact on firm value than 'product' and 'process' innovations. Firm experience also acts as a moderator in this innovation-performance relationship, which is particularly relevant for entrepreneurs who need to develop and send credible signals indicating the value of the firm's intangible assets to the market.