Innovation is critical for firm growth and survival. Thus, how much value firms create and capture from their innovative activities has been an interest of scholars. This dissertation explores three important questions on this topic to which extant literature has paid little attention. First, I examine how the external threat caused by a bankruptcy event in an industry affect industry firms’ innovative activities. Although extant research has examined how firm-specific threats (e.g., firm’s own bankruptcy risk and operating performance) affect firm innovative activities, little is known about how the common threat in an industry affects firm innovative activities. Drawing on threat-rigidity theory, I propose that the threat caused by bankruptcy leads firms to reduce innovative activities and that this effect may depend on the firm’s own situation – firm’s own bankruptcy risk. Second, I examine how trade secrecy helps firms capture value from innovative activities. Despite trade secrecy’s importance and calls to examine factors that moderate the effectiveness of trade secrecy, there have been few empirical studies of when trade secrecy is most effective. I propose that trade secrecy may have a positive effect on firm financial returns to R&D activities and that this effect is contingent upon concurrent use of other appropriation mechanisms and industrial conditions. Third, I examine how firms can capture more value from innovative activities by building on its own inventions – generative appropriation. I propose that technological knowledge dispersion has a negative effect on generative appropriation while geographic knowledge dispersion has a curvilinear effect; I also propose that these effects are stronger when environmental technology opportunities are smaller. Overall, the findings of this study supported my hypotheses
