Empirical results from this study contribute to understanding of the relationships between a firm’s R&D investment, absorptive capacity, autonomous R&D climate, and firm innovation performance. A number
of significant findings and implications stems from empirical results. First, absorptive capacity partially mediates the relationship between R&D investment and firm innovation, which confirms the expectation that R&D human capital is an important indicator for absorptive capacity, which plays an important knowledge transformation role in firm
innovation. A firm’s R&D investment can turn into innovative outputs (patents) via enriching the firm’s absorptive capacity during the transformation process. Second, the results are somewhat surprising in the moderating effect of autonomous R&D climate. While previous research in this area suggests that the greater autonomy can help firm
innovation, our results suggest that the lower R&D autonomy may better facilitate a climate for firms to utilizing the greater absorptive capacity for firm innovation. This echoes the assertion that the hand-off from
the R&D team may not be a panacea for creativity or innovation. A certain level of coordinating or monitoring, such as a clear R&D direction, is necessary, particularly if a firm’s absorptive capacity become greater.
Business practitioners can learn lessons from this research by understanding the mediation effect of absorptive capacity on the relationship between R&D investment and firm innovativeness as well as the negative interaction effect of absorptive capacity by autonomous R&D climate, suggesting that absorptive capacity has greater impact on firm innovation as the firm facilitates less R&D autonomy. Thus, firms should pay more attention to increase their investment on R&D human capital, which enhances their absorptive capacity by doing so. In the meantime, firms should reduce the autonomy of R&D staffs as they integrate internal knowledge with external resource to innovate in the greater absorptive
capacity.