Innovation and Exporting: Does Quality Matter?

We study the effect of innovation on a firm’s propensity to export, developing a simple model where heterogeneous firms operate in a monopolistically competitive market and set their prices as a markup above the marginal cost. The key proposition of our model is that firms that invest in better quality products are more likely to export. We test it using Italian firms’ data. Econometric results suggest that innovation, defined as quality upgrading, has a significant effect on the firms’ propensity to export; and, for those who are already exporting, innovation—defined as new products—has a significant effect on a firm’s turnover.     

Competitive Strategies of Tiawanese PC Firms in Their Internationalization Process

Small Taiwanese firms have been successful in developing market niches internationally for their products in the fast-growing and highly competitive global information industry. To identify the competitive strategies used by these firms, a study was udnertaken which classified various stages of their internationalization processes. Results indicate that these firms established their momentum in the global marketplace either by using a regional focus combined with innovation synergy or by emphasizing a combination of marketing techniques as their strategy components.     

Specialization versus diversity in Canadian technological development

In the new era of liberalized North American trade one of Canada's goals is export-led growth in technology intensive activities. Macro-economic data show that technology intensive specializations are developing but their international success is limited. One reason is that business spends less on R&D in Canada than in most OECD countries. Problems associated with macro data have prompted the use of survey-derived data listing the high-technology products of firms in order to define technological clusters. Most of the firms comprising each cluster are small: the distribution of large producers and R&D labs and the structure of clusters are discussed. Aggregate and micro data are used to establish the localization of technology intensive industry, especially in the Toronto metropolitan region. This is the largest concentration of technology intensive firms and the importance of services as markets and as sources of technology intensive products is established. The conclusion weighs the importance of specialization versus diversity, small firm entrepreneurship versus the importance of large firms, and metropolitan attraction for high-tech firms vs. the chances of medium-sized urban centres.     

Financial vulnerability and export dynamics

This paper examines the implication of financial shocks on firms’ export dynamics in developing economies. To address this question, we use the Exporter Dynamics Dataset, which contains new data on the microstructure of exports for 34 developing countries between 1997 and 2011, and investigate how exporter behaviour is affected by financial crises. We find that financial crises in both the origin and destination countries have a large negative effect on firm, product and destination dynamics, particularly in industries dependent on external finance. Financial crises make the costs of exporting more difficult to meet and in turn reduce firms’ ability to start exporting, introduce new products and sell to new destinations. We also find that the impact of financial crises is less pronounced in exporting countries with relatively more open capital accounts, suggesting that portfolio inflows may be a good substitute for underdeveloped domestic financial markets.     

Designing ‘green’ vendor rating systems for the assessment of a supplier's environmental performance

In the last few years ‘green’ movements, institutions and governments have forced many companies to improve their environmental performance. As a consequence of this growing interest in the environment, many firms established integrated relationships with their suppliers to design new ‘green’ products. Unfortunately, no model has been suggested to support the decision-maker in the selection of the most effective supplier from an environmental viewpoint. Hence, the objective of the paper is to design a conceptual approach that first identifies measures for assessing a supplier's environmental performance and, secondly, suggests effective techniques for developing the supplier selection procedure according to an environmental viewpoint.     

Accelerating Adoption of New Products of Thai Consumers: The Moderating Roles of Self-Brand Concept and Reference Group

The effect of consumer innovativeness on intention to purchase new products has been considerably investigated, but moderating effects to increase adoption rate of new products have thus far been overlooked. Drawing from the concept of consumer innovativeness, using survey research among Thai consumers, and analyzing data with hierarchical regression analysis, the author reveals that self-brand concept and reference groups can accelerate the adoption rate of new products. Successful firms can redefine marketing strategies to increase the adoption rate by developing new products and using brand strategy to fit with the individual or his/her group.     

Open innovation practices in SMEs and large enterprises

Few studies on open innovation (OI) address OI practices in small and medium-sized enterprises (SMEs) and how their use of OI and the resulting benefits differ from those of large enterprises. The lack of resources in SMEs to engage in looking outward is said to be a barrier to OI, but at the same time this shortage is cited as a motive for looking beyond organisational boundaries for technological knowledge. We investigate how OI dimensions impact the innovative performance of SMEs in comparison to large companies. The key finding is that the effects of OI practices in SMEs often differ from those in large firms. SMEs are more effective in using different OI practices simultaneously when they introduce new products on the market, whereas this is less the case for large firms. Turnover from new products in SMEs is driven by intellectual property protection mechanisms, while large firms in this case benefit more from their search strategies.     

Strategic and Business Planning Practices of Fast Growth Family Firms

Fast-growth family firms were surveyed about their business and strategic planning practices. Of the 65 fast-growth family firms surveyed, the majority prepare written formal plans. The business plans are in sufficient detail to enable the business to tie planning to actual performance and to adjust management compensation accordingly. The majority of the firms regularly share information with employees regarding comparisons between actual company performance results and goals or planned performance. Further, the majority of the firms describe their business strategy as a high quality producer strategy rather than as a low-cost or time-based strategy. Further, when bringing new products to market, these fast-growth family firms adopt a first mover or early follower strategy. Implications of these findings for growth-oriented family firms are presented.     

The effects of business–university alliances on innovative output and financial performance: a study of publicly traded biotechnology companies

Companies in the biotechnology industry face major challenges in developing and commercializing new products. Focusing on publicly traded biotechnology firms that are not members of university incubators or research parks, this paper argues that the links these companies develop with universities can have beneficial effects on a company's operations. Analysis of 2457 alliances undertaken by 147 biotechnology firms shows that companies with university linkages have lower research and development (R&D) expenses while having higher levels of innovative output. However, the results do not support the proposition that companies with university linkages achieve higher financial performance than similar firms without such linkages.     

Linking reputations through umbrella branding

This paper develops a theory of umbrella branding as a way to link the reputations of otherwise unrelated products. The analysis predicts that umbrella branding can credibly signal positive correlation between the qualities of the included products to consumers, but cannot certify high quality or signal negative quality correlation. Moreover, whenever umbrella branding signals perfect positive quality correlation, firms that already sell a high (low) quality product have stronger (weaker) incentives to invest in developing another high quality product than new entrants.     

Uncovering Barriers to Complex Incremental Product Innovation in Small and Medium‐Sized Financial Services Firms*

Developing new products is of the highest importance for the survival of firms. This not only refers to really new products, but firms also need to invest in modifying their existing products. Small and medium‐sized companies are no exception to this rule. The present study focuses on the innovative activities of small and medium‐sized financial service companies and aims to answer how small and medium‐sized financial services firms organize their product innovation processes and what the main barriers during these innovative attempts are. Data from 30 financial small and medium‐sized enterprises were collected to address these issues. The data showed that the firms in our study experience problems in terms of resources, project‐based working, incentives, and information technology, despite the fact that the innovative efforts are aimed at modifying existing services. Although these issues may not be totally unexpected, the results from this study do point at some interesting distinctions with the previous literature. Furthermore, it is suggested that the impact of the barriers may be of lower importance than is often assumed in the innovation literature.     

The endogenous role of location choice in product innovations

The location choice of product innovations is a prevalent phenomenon one that has received little attention in the literature. This study examines the ways in which comparative industry environment, technology and product characteristics, and entry timing affect the firm's location choice of new product development activities between headquarters and foreign subsidiaries and the implications of location choice for performance. Our findings indicate that: (1) firms are more likely to locate their new product development activities at foreign subsidiaries in mainland China than at headquarters in Taiwan when the industry environment at foreign subsidiaries is more favorable, when technologies and products are more mature, and when the entry to mainland China's market is earlier than that of its competitors; (2) in general, firms locating their new product development activities at headquarters in Taiwan perform better than firms locating their new product development activities at foreign subsidiaries in mainland China after controlling for endogeneity bias; (3) firms locating their new product development activities at headquarters (at foreign subsidiaries) perform better than if they had located their new product development activities at foreign subsidiaries (at headquarters). Managerial implications and future research directions are discussed.     

Multiproduct firms and antidumping duties: Evidence from India

ABSTRACT

With the growing availability of high-quality higher-dimension data in international trade, many new stylized facts have also emerged. One such stylized fact is that multiproduct firms play a significant role in international trade. In this paper, we investigate the effect of US antidumping duties on the exports of Indian multiproduct firms. In particular, we study whether US antidumping duties lead the Indian exporter to alter their product-scope to third country markets (aka to trade partners other than the US). Using a unique transaction-level data from India, we find that firms affected by US antidumping duties increased the number of products exported to other destinations by about 0.7 products, on average. This translates to a substantial 40% increase in the product-scope of these firms because a typical Indian exporting firm exported an average of 1.8 products to a given destination in our sample. We also find that firms whose products spanned multiple sectors drove most of this increase. However, we do not find any difference in the product-scope response of firms producing differentiated vs. those producing homogenous products. We find our results to be robust across various specification and sample size changes.     

Design thinking for innovation: Considering distinctions,fit, and use in firms

As firms struggle with high failure rates when developing new products and services, they seek new approaches to innovation. One method garnering attention is design thinking (DT), a design-based method of problem solving. Businesses as varied as Airbnb and PepsiCo are embracing DT in growing numbers, but some may be joining the bandwagon without understanding its distinctions compared to the main alternative, the Stage-Gate (SG) methodology. SG, a project-review process, is used in many firms today to create innovations. To guide managerial consideration of DT, this article provides an explanation of DT as compared with SG, a framework to assess DT’s fit with the firm, and ways DT may be effectively used.     

The effect of investor origin on firm performance: Domestic and foreign direct investment in the United States

This paper evaluates the causal relationship between the source of origin of FDI and the performance of the target firm. The empirical analysis uses new data on a comprehensive sample of public U.S. firms that received FDI between 1979 and 2006. To account for the possibility that performance differences arise due to the selection of superior target firm rather than the change in ownership, I use propensity score matching to create similar comparison groups of target firms prior to acquisitions. The analysis reveals three major findings. First, acquiring firms from industrialized countries lead to labor productivity increases of 13% in the target firm three years after the acquisition compared to targets acquired by domestic firms. Firms that received developing country firm acquisitions, on the other hand, exhibit lower labor productivity gains four years after acquisition, compared to targets acquired by domestic firms. Second, targets receiving FDI by firms from industrial and developing countries also experience increases in profits, compared with firms receiving acquisition by domestic firms from the United States. Third, compared with domestic acquisitions, foreign industrial firm acquisition FDI tends to increase their targets' employment and sales, whereas targets acquired by firms located in developing countries experience a decrease in both revenues and total number of employees. These findings suggest that target firms are subject to significantly different restructuring processes depending on the origin of the acquiring firm.     

A Built-in Bias for Developing Too Many Products Too Frequently: The Problem of Japanese Firms

A problem of Japanese electronics firms and automobile makers is to develop too many products too frequently. They must give thought to a radical change in their product development practices, for the sake of their own financial health as well as for the good of society. It is difficult, however, for them to reduce the number of new products and extend their life span, because they have a built-in bias against doing so.     

Establishing a new business venture unit within a firm

The rapid growth of the United States as a whole is basically a story of the discovery and adoption of novel and improved ways of satisfying wants and needs. Previously, these wants and needs have been championed by individuals such as J.P. Morgan (finance), James B. Duke (tobacco), Andrew Carnegie (steel), Cornelius Vanderbilt (railroads), and John D. Rockefeller (oil). Each of these entrepreneurs commercialized a new idea or invention—the essence of the innovation process. Each bridged the gap between science and the marketplace by developing and commercializing a marketable innovation.Although even more of a need to reach the market as quickly as possible exists today, the majority of the innovations commercialized each year come from new or smaller organizations-often the ones with the least amount of capability and resources to accomplish the task. Existing businesses, especially larger ones, are in a much better position to bridge this gap. These companies have the existing financial resources, business skills, and usually the marketing and distribution systems to successfully commercialize a new innovation. Recognizing this capability, large companies have tried to instill an entrepreneurial spirit or an internal venturing program in an attempt to increase the amount and success of new offerings. This activity has taken on a variety of forms, one of which is the new business venture unit.What are the characteristics of a new business venture unit? Are they more successful at introducing new products than autonomous entrepreneurs? These and other questions were addressed in a research project of Fortune 1000 firms consisting of a mail questionnaire and in-depth personal interviews.The majority of these firms did not have a new business venture unit (70%). Of those firms that did, the average age of their unit was 5.3 years and the range of ages was from a few months to 20 years. In addition, the range of employees in the new business venture unit varied greatly: from one to 100. Firms in the primary product lines of chemical and medical products, computers, beauty products, and feminine products tended to have new business venture units more than did firms in other product areas. These units contained a variety of departments, including marketing (the most frequent), finance, and research and development. Through modest increases in the number of new products introduced each year, the new business venture units also significantly increased the per- centages of sales attributed to products introduced within the previous three years. A good environment for a successful new business venture unit included: encouraging new ideas; allowing mistakes and failure; making available the resources of the firm; encouraging teamwork; establishing broad per- formance goals and an appropriate reward system; and having top management strongly support the unit.     

The High Growth in New Metal-Based Manufacturing and Business Service Firms in Finland

This study examined the effects of the factors involved in the start-up situation and the first seven years' development on the subsequent high growth of firms. The criterion of success used in this study was high growth in business during the first seven years. The subjects were Finnish metal products manufacturing firms and business service firms established in 1990. The results indicated, firstly, that it is the internal networks of firms that bring about competitive advantage, innovations and efficiency. In these entrepreneurial team-driven firms a group of people participate in the strategic management of the firm. It was also found that co-operation between firms and changes in external personal networks contributed to a high rate of growth. The empirical results showed that new firms had equal chances for growth irrespective of their locality. On the other hand, growth was affected by changes in a new firm's competitive situation and by changes in strategic factors. The results also clearly indicated that high growth firms were characterised by rising productivity of labour at the same time as they were generating new jobs.     

Strategies for new product development

In spite of much evidence of its success, many managers hesitate to establish a policy for new product development. Their indecision often arises from two reasons: they fear that a defined strategy may discourage innovation and they are uncertain how to formulate a new product strategy. The author of this article discredits the former notion and, in reply to the latter, proposes the guidelines for developing such a statement. As new products are essential to the continued success of most firms, the strategy must exist and must be operant if the firm is to avoid wasted time, effort, and money as well as employee confusion and discouragement.     

Building A Sustainable Shelf: The Role of Firm Sustainability Reputation

The reputation of firms for being environmentally friendly and socially responsible is a key purchase driver for sustainable products. However, the commitment of firms to sustainability varies – some firms are founded on strong environmental and social principles; other more traditional firms are built on strong product/brand focus and are not known for sustainability. In response to market trends, many traditional firms are introducing sustainable products to their portfolios. We argue that the firm’s sustainability reputation (FSR) will influence consumer purchase with respect to equally sustainable products from different firms. Two choice studies demonstrate that FSR favors sustainable product choice when the consumer decides between equally sustainable products. However, FSR affects the choice only for sustainable products and not regular products and does so only for consumers that construe sustainability at a high (abstract) level. Retailers should pay attention to the role that FSR plays in consumer response when they select sustainable products to sell.