Does service intangibility affect entrepreneurial orientation?

Service firms face a unique set of challenges in their internationalization and foreign market growth. Their services' characteristics, particularly intangibility, constrain the options available to them for growth. When such firms are services International New Ventures (INVs), their challenges are combined with those related to rapid internationalization and growth. This research investigates how service intangibility and the typical challenges of INVs relate to the firms' Entrepreneurial Orientation and their foreign market growth. The findings show that indeed service intangibility has a relationship with firm proactiveness, risk-taking, and innovativeness; and that not all elements of Entrepreneurial Orientation have a positive impact on growth.     

Incremental Innovation and Business Performance: Small and Medium-Size Food Enterprises in a Concentrated Industry Environment

Past studies have analyzed issues pertaining to the definition of innovation, methods of measuring innovation and the relationship between organizational characteristics and innovation orientation. Extant studies have adopted a large business or a technologically intense context of study. By studying the adoption of new products, methods, systems, markets, and supply sources in small and medium-size seafood retail enterprises, this study reviews innovation and the adoption of innovation in a broader and novel context. Seafood retailers in this study operate in a concentrated industry environment where two large supermarket chains account for more than 70 percent of national food retail sales. The seafood retailers operate in a highly competitive environment, the industry is maturing, the firms are not very advanced technologically, and the sector has a disproportionately large number of firms owned and operated by persons of non-English speaking backgrounds. The results of the study indicate that incremental innovation offers substantial competitive advantages to small and medium-size firms, that incremental innovations can be adopted and operationalized rapidly by entrepreneurs with different cultural backgrounds and skills, and that small and medium-size firms that focus on sales and marketing innovations are profitable and are able to compete successfully with large businesses.     

Protecting Innovation Through Patents and Trade Secrets: Evidence for Firms with a Single Innovation

Abstract

This paper analyzes the use and effectiveness of patents and trade secrets designed to protect innovation. While previous studies have usually considered patents and trade secrets as substitutes for one another, we investigate to what extent and in what situations the two protection methods are used jointly. We identify protection strategies for single innovation firms and hence overcome the assignment problem of existing empirical studies, that is, whether firms using both protection methods do so for the same innovation or for different innovations. Employing firm panel data from Germany, we find fairly few differences between the determinants for choosing secrecy and patenting. Single innovators that combine both strategies, 39% of the group, tend to aim at a higher level of innovation and act in a more uncertain technological environment. Firms combining both protection methods yield significantly higher sales with new-to-market innovations, providing some evidence for a complementarity of the two protection methods.     

Grassroots innovation success: The role of self-determination and leadership style

An increasing number of firms engage in grassroots innovation, i.e., the voluntary generation and development of innovations by any member of an organization, regardless of function or seniority. However, no empirical study to date identifies the determinants of success or failure of grassroots innovation initiatives. We execute a survey study among 3,728 managers in 14 countries, 2,353 of which (63.1%) had already engaged in grassroots innovation. We find that, on average, firms that adopt grassroots innovation outperform firms that do not. We also find that firms that enable (1) employee autonomy, (2) competence development, and (3) relatedness (i.e., helping employees establish mutually beneficial relationships with trusted colleagues) in their grassroots innovation initiatives outperform firms that do not. We document that such effects are contingent on a firm’s institutional environment (i.e., leadership style and market orientation). For instance, the lower the market orientation and the higher the hierarchical leadership of the firm, the higher the performance returns the firm obtains from fostering autonomy and relatedness in grassroots innovation. These findings encourage managers and firms to adopt (or persist in their) grassroots innovation initiatives, to infuse them with sufficient autonomy, competence, and relatedness and match them with the right leadership style.     

The Diffusion of a Process Innovation with Gently Declining Production Cost

This paper develops a model to investigate the diffusion process of a cost-reducing process innovation within an industry. Two factors drive the diffusion process. First, the gradually declining production cost with the innovation makes the adoption of the innovation more profitable, and consequently motivates more firms to adopt it over time. Second, the switching from old technology to new technology requires suitable organizational knowledge, which is costly to acquire. This tends to slow down the diffusion. The interaction between the two factors determines the path and the speed of the diffusion process. The model is able to explain three observations in technology diffusion, including (1) the S-shaped diffusion path; (2) the rejection of an innovation by some firms; and (3) unprofitable technology adoption. A policy implication of the model is that, through subsidizing the transfer of relevant knowledge from adopters to non-adopters, government can facilitate the diffusion of innovations and improve social welfare.     

Antecedents to differentiation strategy in the exporting SME

Small- and medium-sized enterprises (SMEs) face various constraints related to size and resource base. Such firms face additional liabilities when they venture into foreign markets. Given such conditions, exporting SMEs should develop and leverage appropriate orientations and strategies, with a view to maximizing firm performance. In this paper, we examine the antecedents to differentiation strategy in the exporting SME. We focus on differentiation strategy because, among the generic strategies, it provides especially important competitive advantages to SMEs. Using survey data from several hundred SMEs, we examine key factors that support the use of differentiation strategy in exporting smaller firms. Findings support our model and hypotheses, and reveal strong roles for Entrepreneurial Orientation, International Growth Orientation, and International Learning Orientation, in the development of Differentiation Strategy. Findings hold implications for SMEs and resource-constrained firms generally.     

Different determinants at different times: B2B adoption of a radical innovation

This research aims to empirically determine which factors best explain business to business adoption of a radical, high-tech innovation early in the diffusion process. Early lifecycle data collection provides insights about the differences in determinants of adoption at different times in the product diffusion process. The results indicate that differences do exist between the determinants of early adoption, intent to adopt later, and unawareness of the innovation. The influencers of earliest adopters appear to be innovation-focused: the perceived benefits of the innovation as well as the strength of the producer network positively relate to early adoption; early adopters also tend to perceive the technology in the innovation as less different than previous technology than do those who intend to adopt later. The influence of a champion within the adopting firm, the ability of the firm to sense and respond to new technology, and the depth of technology knowledge within the adopting firm are significant influencers across multiple stages of diffusion, showing that firm-internal traits are particularly important influencers of adoption. Laggard firms are missing the critical firm traits that lead to information gathering and understanding of innovations. In addition to contributing to adoption research theory and methodology, this research has implications for innovation-marketing and innovation-adopting firms.     

Understanding the drivers of organizational innovations

Organizational innovations involve the implementation of significant changes in business practices, the workplace organization, and external relations. The article reports an analysis of organizational innovations' objectives and adoption in 240 Spanish healthcare businesses. Statistical tests find a dynamic behavior in healthcare organizations with 40.8% having developed an organizational innovation in the period from 2007 to 2009. The main objectives pursued are related to improved knowledge sharing and innovation skills. Results also reveal a close relationship between organizational and product/process innovations. Specifically, healthcare companies developing new organizational methods to improve innovation skills and knowledge sharing are more successful in adopting product and process innovations.     

Discussion of “Recognizing Ethical Issues: An Examination of Practicing Industry Accountants and Accounting Students”

Although the political and consumer consciousness has turned increasingly green, many firms continue to resist the adoption of environment-friendly technological innovations—even in the face of higher costs, negative health effects, and stricter government oversight. This article examines how business owners weigh the trade-offs associated with environment-friendly innovations by examining the role of prosocial motivation in their decision-making process. We use primary data to overcome a common restriction in studying environmental innovations—the scarcity of relevant data—to analyze how business owners’ expectations, perceptions, and motivations affect innovation in organizational processes and, consequently, the level of environmental friendliness of their products or services. We found that prosocial motivation had a significant negative impact on innovation adoption and that it is expressed differently under high and low levels of customer compatibility—possibly because business owners have a larger number of competing social objectives and priorities. Our results further showed that the innovation’s ability to satisfy downstream customer demands has the greatest impact on environment-friendly innovation adoption decisions by business owners. This study enhances our understanding of how business owners make innovation decisions based on competing business, environmental and social objectives and provides a foundation for future research in this area.     

Examining the relationship between creativity and innovation: A meta-analysis of organizational,cultural, and environmental factors

It is generally believed that creativity enhances innovative activities. However, empirical research regarding the impact of creativity on innovation, although positive, has produced a wide range of results. In this study, we conduct a meta-analysis of 52 empirical samples comprising 10,538 observations to test the nature of this relationship, and in particular how organizational, environmental, and cultural factors moderate the creativity-innovation link. We find a strong positive relationship between creativity and innovation, especially at the individual level. In addition, we find intriguing moderating effects in which the relationship between creativity and innovation is stronger for large firms, process innovations, and low-tech industries relative to small firms, product innovations, and high-tech industries. Further, we find that moderate levels of uncertainty avoidance maximize the correlation between creativity and innovation. We conclude by discussing theoretical and managerial implications and offering suggestions for future research in the entrepreneurship and innovation literature.     

Exporting status and success in innovation: evidence from CIS micro data for EU countries

Using a large sample of micro data from four waves of Community Innovation Survey for EU member states, we investigate the relationship between firms’ export status and different sorts of innovation activities. We find systematically positive relationship between the two, whereby the strongest correlation is found in case of product innovation and the weakest in case of organizational innovations. While aggregate data show that innovation success is increasing in firm size, we find that exporting has the strongest effect on innovation in the medium-sized firms. We also explore cross-country differences in the impact of export status on innovation. Countries with a higher share of exports in GDP and greater share of spending on research and development generally display a stronger correlation between exporting status and innovation.     

Local User-Producer Interaction in Innovation and Export Performance of Firms

This paper studies the effects of local market attributes on local firms’ exports of innovations. Our starting point are three common hypotheses. First, innovations are a major determinant for the export performance of firms. Second, user–producer interaction is an important factor for successful innovations. Third, user–producer interaction is most efficient in close proximity. Taken together this would mean that intense local user–producer interaction increases exports. This reasoning contradicts a main proposition in international management that overt local responsiveness may be hampering export chances of a firm. In order to generate global innovations, an international firm should look at the world market instead, for instance by identifying the global common denominator of national preferences. Yet, many local innovations have become globally successful. This paper investigates the question to what extent local demand is capable of inducing innovations that are export effective. We utilize data from the German innovation survey of 4,786 firms in the manufacturing and service industries. In this survey firms were asked about the sources of their innovation and their export activities. We find evidence that the export orientation and the domestic demand structure stimulate export success.     

Effect of market orientation,network capability and entrepreneurial orientation on international performance of small and medium enterprises (SMEs)

This study contributes to literature on the internationalization of SMEs by analysing the influence of International Market Orientation, Network Capability, and International Entrepreneurial Orientation on the International Performance of this kind of businesses. Particularly, both the direct effects of explanatory variables of International Performance and interdependence relations between them are analysed. Results obtained from a sample of 161 Mexican SMEs using SEM-PLS analysis show that the International Performance of this kind of businesses is favourably influenced by their Network Capability and International Entrepreneurial Orientation, but not by their International Market Orientation. Similarly, it is verified that interdependence relations exist among the explanatory variables of International Performance of SMEs, where positive impact of International Entrepreneurial Orientation is observed on Network Capability and the International Market Orientation of SMEs.     

Licensing versus direct investment: implications for economic growth

We develop a symmetric two country model of foreign direct investment (FDI) that captures the internalization decision and its implications for both the rate and magnitude of innovations. When mode choice (licensing versus FDI) is fixed, a subsidy to multinational production increases the rate but decreases the size of innovations. When mode can switch, the rate and size of innovations both increase, provided the subsidy is not too large. Although innovation size decreases for industries where firms already were choosing FDI, innovation size increases for industries where firms switch from licensing to FDI because multinationals choose larger innovations than licensors.     

Understanding the Innovation Behavior of Family Firms

This paper examines innovation behavior in family firms, analyzing their innovation efforts, sources, and results. Its underlying premise is that innovation behavior depends on the firm's resource endowment and the level of risk inherent in the decision to innovate, factors that make family involvement an influential characteristic in innovation processes. Using a large sample of Spanish firms, the findings show that family firms perform fewer innovation efforts and are less inclined to turn to external sources of innovation—such as technological collaboration—than nonfamily firms. Finally, family firms are more likely to achieve incremental innovations than radical innovations.     

Strategic orientations,joint learning,and innovation generation in international customer-supplier relationships

While innovations generated by international supply channel relationships, as opposed to individual partners, are playing an increasingly important role in the success of all international supply chain partnerships, research on how international supply chain relationships cultivate the process of such innovation generation, particularly for contracting suppliers firms, remains scant. This study explores how supplier joint learning capability can play a role in developing both incremental and radical innovations. The empirical test, which used a sample of 204 Taiwanese executives in electronic suppliers, supports most of the hypotheses in the study. The results demonstrate that different strategic orientations can drive various types of innovation through different paths by the mediating effect of joint learning capability. Specifically, we find that long-term orientation influences only incremental innovation, whereas radical innovation is driven by electronic integration and proactive customer orientation by joint learning. Furthermore, environmental uncertainties such as technological uncertainty and demand uncertainty are found to be moderating the impacts of joint learning capability on radical innovations. Some implications of the results are discussed at the end.     

Incumbent innovation and domestic entry

This paper analyzes the escape-entry incentive for innovation by incumbent firms. The threat posed by the possibility of leading-edge firms entering the market influences incumbent innovation. To overcome problems of endogeneity, we apply an instrumental variable approach to analyze a rich firm-level dataset (1987–2000) for Germany. We find evidence that domestic entry has a negative effect on incumbent product innovation, which is a strong indication of new entrants’ comparative advantage in commercializing new ideas. In contrast, domestic entry has a positive effect on incumbent process innovations, an effect also known as the escape-entry effect.     

Making a first impression as a start-up: Strategies to overcome low initial trust perceptions in digital innovation adoption

High failure rates of digital innovations by start-ups indicate that consumers' initial trust perceptions are make-or-break for their survival. Hence, start-ups have to design adequate business models to manage consumers' initial trust perceptions of digital innovations. Five experiments explore how start-ups can signal trustworthiness in order to overcome low initial trust perceptions and boost adoption. We find three specific design strategies of start-ups' digital business models – customer ratings, benefit communication, and revenue model – to be effective to overcome low initial trust perceptions and to increase adoption of digital innovations. The findings demonstrate that initial trust serves as a critical mediator in the relationship between these design strategies and consumers' adoption intentions. Additionally, the chosen revenue model has differential effects on privacy concerns, which mediate the relationship between revenue model and initial trust. The present empirical insights help start-ups to craft business model design strategies for successful digital innovation launch.     

Innovation,formal vs. informal R&D,and firm size: Some evidence from Italian manufacturing firms

On the basis of data from two recent surveys on innovation diffusion in Italian manufacturing industry, this paper shows that informal R&D is an important part of the total R&D undertaken by small and medium sized firms. Nevertheless, when an output indicator such as the number and the nature of the innovations introduced by firms of different size is used, it emerges that small firms have introduced mainly incremental rather than major innovations. The paper therefore suggests that systematic R&D undertaken by large firms within structured laboratories is more effective (in terms of product innovations) than occasional R&D carried out by small firms.     

Do innovation spillovers impact employment and skill upgrading?

So far, the research on impact of innovation on employment and skills focused on effects within firms and sectors. Little attention was paid to the influence of interlinkages between sectors as a source of employment change. The main contribution of this paper to the field refers to broadening the analysis of innovation impacts to innovation spillovers from vertically linked sectors on firms' employment and skill change in user industries. The empirical analysis conclusively demonstrates an important role of innovation spillovers in the economy. Firms' employment growth is shown to benefit significantly from spillovers of product innovations in manufacturing and knowledge-intensive services. Similarly, firms that are subject to increased spillovers of product innovations as well as marketing and organisational innovations are more likely to upgrade their skill composition. Conversely, employment growth and skill composition of firms seem to be negatively affected by spillovers of process innovations in vertically linked sectors.