How and when does co-production facilitate eco-innovation in international buyer-supplier relationships? The role of environmental innovation ambidexterity and institutional pressures

Eco-innovation is an important element of a firm's environmental sustainability strategy and provides both competitive and environmental benefits, resulting in a win-win solution. Although previous studies have examined the influence of co-production on innovation, little is known about how and when co-production affects eco-innovation in the context of international buyer-seller relationships. Building upon the resource-based view, the dynamic capability perspective, and institutional theory, this study develops a conceptual model focusing on the effects of co-production on eco-innovation, the mediating effects of environmental innovation ambidexterity, and the moderating role of institutional pressures. The research was carried out using a survey-based quantitative study and the proposed hypotheses were tested using the hierarchical regression analysis. The results of a survey of 124 OEM suppliers in Taiwan show that co-production has a positive effect on environmental innovation ambidexterity. Our findings also show that the direct relationship between co-production and environmental innovation ambidexterity is stronger when institutional pressures are high as opposed to when they are low and that environmental innovation ambidexterity mediates the relationship between co-production and eco-innovation. This study contributes to a theoretical understanding of why some firms develop more environmental innovation ambidexterity than others, by analyzing co-production as a predictor and institutional pressures as a moderator. We discuss the theoretical and managerial implications of our findings.     

Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth

This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view.     

A bricolage perspective on service innovation

Service innovation is often viewed as a process of accessing the necessary resources, (re)combining them, and converting them into new services. The current knowledge on success factors for service innovation, such as formalized new service development (NSD) processes, predominantly comes from studying large firms with a relatively stable resource base. However, this neglect situations in which organizations face severe resource constraints. This paper argues that under such constraints, a formalized new service development process could be counter-productive and a bricolage perspective might better explain service innovation in resource-constrained environments. In this conceptual paper, we propose that four critical bricolage capabilities (addressing resource scarcity actively, making do with what is available, improvising when recombining resources, and networking with external partners) influence service innovation outcomes. Empirical illustrations from five organizations substantiate our conceptual development. Our discussion leads to a framework and four testable propositions that can guide further service research.     

Doing More with Less: The Disordinal Implications of Firm Age for Leveraging Capabilities for Innovation Activity*

Innovation requires the entrepreneurial capabilities of opportunity recognition and opportunity exploitation. Such capabilities generally accrue over time from a firm's cumulative learning and experience. In this study, we theorize that firm age should therefore moderate the firm's ability to leverage these capabilities for innovation activity, such that older firms can obtain higher outputs from their capabilities than younger firms can. We examine this relationship using a sample of 676 small and medium enterprises. We find that when both younger and older firms have highly developed innovation capabilities, older firms appear to enjoy higher levels of innovation activity than younger firms do. However, younger firms generally appear more likely to have higher levels of innovation activity than older firms do, when neither firm has highly developed innovation capabilities. We conclude with a discussion of the implications of these findings for research and practice.     

Does innovativeness of knowledge-intensive business services differ from other industries?

This article seeks to determine whether the innovative capabilities of knowledge-intensive business services (KIBS) do actually differ from other industries through comparing the innovation capacities and financial performance of KIBS with firms operating in other sectors (non-KIBS). Based upon a 1000-firm sample, the results of our estimated econometric model demonstrate that non-KIBS firms are in possession of significantly greater innovation capacities than KIBS firms. These differences were observed across factors such as organisational process innovation, the launch of already existing products in new markets, branding and new product designs. Nevertheless, as regards the actual importance attributed to product/service innovation, KIBS firms place a greater comparative importance on innovation in comparison with their non-KIBS peers. In addition, the empirical evidences display a significantly different range of effects of innovation capacities on financial performance and concludes that non-KIBS firms turn in better comparative performances than specialist KIBS firms.     

On the internationalization of Turkish hospital chains: A dynamic capabilities perspective

How do professional service firms build the capabilities required for effective international operations? Although the internationalization of manufacturing firms is a widely studied topic, the literature on the internationalization of service firms remains scant. The problem is even more acute when it comes to studies of professional services such as healthcare organizations and hospitals. Yet, we encounter remarkable examples of international market expansion by professional service firms. In this paper, we report on a study of large privately-owned hospital operators from the emerging economy of Turkey, based on in-depth interviews with senior executives. Taking advantage of Turkey’s strategic location in the region, these firms have shown extraordinary entrepreneurial initiative expanding their operations beyond the home market over the past two decades. Even more impressive is the creative strategies these firms have been deploying in terms of market entry modes. These range from medical tourism to setting up diagnostic clinics abroad, operating full-service hospitals in key markets, management contracts, and attracting equity capital from international investment firms. We draw from the theory of dynamic capabilities in order to explain the success these firms have had in cultivating international market opportunities. We contend that it takes a variety of organizational capabilities for traditionally domestic-market focused firms to expand into international markets. We provide an integrative discussion and offer implications for advancing knowledge and managerial practice.     

Driving dynamic knowledge articulation and dynamic capabilities development of service alliance firms

By investigating drivers of dynamic learning in service alliance firms, this empirical study demonstrates the locus of dynamic knowledge articulation (DKA) and dynamic capabilities (DCs) development. This study uses a sample of 363 service alliance firms to test the distinctive role of drivers of dynamic learning in DKA and DC development. The results show that manager integration powers, external linkages, codification of experience, and ambiguity have positive effects on DKA. Moreover, DKA has a strong positive influence on DC development. This study contributes to the literature by focusing on DKA and DC development from the perspective of processes, structure, and DCs of service alliance firms.     

Performance of professional service firms from emerging markets: Role of innovative services and firm capabilities

Professional service firms (PSF) from emerging markets face a financial dilemma: PSFs tend to utilize high-wage labor, yet their emerging market status makes foreign clients cautious regarding quality and less willing to pay high prices. To allay these concerns, PSFs may be able to develop attractive, highly innovative services, but as the resource-based view (RBV) notes, this requires emerging market firms to possess critical capabilities to support such a competitive advantage. Relying on services theory, we propose that entrepreneurial orientation (EO) of management and expert human capital (HC) are critical capabilities, enabling a PSF to develop and market innovative services profitably. In testing our model on 201 Indian PSFs, we find a mediating role for innovativeness whereby EO and HC drive service innovation which, in turn, accounts for financial performance. Further, we find EO positively moderates the innovative service–performance relationship as proactive, risk-tolerant managers improve foreign marketing. Insights for theory and practice are provided that enable PSFs to overcome the constraints and challenges of their emerging market origin.     

Influence of innovation on performance: analysis of Spanish service firms

The main objective of this research was to analyse innovation in service firms. In strategic management, the methodology of fit allows us to study the adjustment between two dimensions by revealing the internal consistency between them and its influence on the efficiency of firms. This paper is focused on the analysis of fit between types of services (classified according to intensity of innovation) and the innovation decisions made by these firms. The fit has been contrasted through the methodology of adjustment as an approach to the ideal profile. An important question in this paper consists in revealing whether the fit between the type of services and innovative decisions influences a firm's performance.     

Towards an asymmetry-based view of Chinese firms’ technological catch-up

By carefully reviewing our research and related literature, in this paper, we propose a two-stage model of Chinese firms’ technological catch-up, and provide asymmetrybased explanations. We argue that at the approaching stage, Chinese firms mainly focus on knowledge accumulation through frugal innovation for capturing local and global low-end markets; while at the pole vault stage, they focus on knowledge creation through radical innovation for capturing the high-end market. Moreover, we propose that lacking world-leading technologies but striving to achieve technological catch-up quickly, Chinese firms mainly rely on asymmetric resource and capabilities that are embedded within Chinese institutional, technological and market contexts. Turning these asymmetries into sustainable capabilities and then matching them to market opportunities by developing asymmetric innovation strategies, Chinese firms could achieve technological catch-up in a unique way.     

Achieving sustained competitive advantage in retail and consumer service firms: The role of entrepreneurial orientation and entrepreneurial bricolage

The vital role of entrepreneurial orientation and entrepreneurial bricolage in creating sustained competitive advantage in retail and consumer service firms is increasingly acknowledged in modern markets. Using data from 246 retail and consumer service firms (hereafter R&CSFs) in Japan, this paper develops and empirically tests a framework delineating how entrepreneurial-oriented R&CSFs strategically combine existing resources while managing risks to differentiate their service portfolios to be competitive. The findings reveal that entrepreneurial orientation and entrepreneurial bricolage influence differentiation advantage and risk management, which, in turn, is associated with creating a sustained competitive advantage (hereafter SCA). This paper adds novel insights to the dynamic capabilities view and retail and service marketing literature by identifying entrepreneurial orientation, entrepreneurial bricolage, and risk management as dynamic capabilities, which allows R&CSFs to create service innovations in resource-constrained environments.     

Towards an asymmetry-based view of Chinese firms’ technological catch-up

By carefully reviewing our research and related literature, in this paper, we propose a two-stage model of Chinese firms’ technological catch-up, and provide asymmetry-based explanations. We argue that at the approaching stage, Chinese firms mainly focus on knowledge accumulation through frugal innovation for capturing local and global low-end markets; while at the pole vault stage, they focus on knowledge creation through radical innovation for capturing the high-end market. Moreover, we propose that lacking world-leading technologies but striving to achieve technological catch-up quickly, Chinese firms mainly rely on asymmetric resource and capabilities that are embedded within Chinese institutional, technological and market contexts. Turning these asymmetries into sustainable capabilities and then matching them to market opportunities by developing asymmetric innovation strategies, Chinese firms could achieve technological catch-up in a unique way.     

Dual-edged tools of trade: How international joint ventures help and hinder capability building of Chinese firms

Forming international joint ventures (IJVs) with multinational corporations (MNCs) from advanced economies has been widely adopted by firms in emerging economies as an organizational approach to building up their innovative capabilities. In this paper, we emphasize that such an approach has both advantages (knowledge transfer from MNCs) and disadvantages (overdependence upon MNCs and reduction of innovation incentives) in the capability building of indigenous firms. Utilizing a longitudinal dataset consisting of 474 industries in China during 1998–2002, we find supporting evidence for the co-existence of the positive and negative impacts of IJVs. Specifically, we find that IJV presence has an inverted U-shape impact on innovative capabilities of indigenous firms; such an impact is stronger in industries with low (versus high) technology gap. We discuss the implications of our findings for research, managerial practice, and government policy.     

Organizational Dynamic Capability and Innovation: An Empirical Examination of Internet Firms

This paper extends the dynamic capability perspective into the study of innovation by entrepreneurial firms. Drawing from both the resource-based view and the dynamic capability perspective, this paper explores theoretically and examines empirically the different roles played by a firm's resource stock (endowment of resources and capabilities) and its integrative capabilities (ability to recognize opportunities as well as to configure and deploy resources) in the process of firm innovation. Our structural equation modeling results, based on a sample of 120 Internet-based companies, indicate that both the firm's resource stock and integrative capabilities affect its innovation. Additionally, we also found that the relationship between resource stock and innovation is mediated by integrative capabilities. That is, merely possessing well-endowed resource stock per se is not sufficient for innovation. Thus, it is the firm's ability to mobilize its resources and capabilities and align them dynamically with the changing opportunities in the environment that is of vital importance as the firm constantly innovates to survive and create its own competitive advantage. In the hypercompetitive and fast changing Internet-based environment, such a need for dynamic capabilities is especially accentuated. Implications and suggestions for future research are provided.     

Innovation patterns and their effects on firm performance

This study aims to identify various innovation patterns and understand their effects on firm performance across business service sectors. By collecting empirical data from 198 Korean business services firms, we explore these firms’ major innovation patterns, conceptualized as combinations of different service innovation dimensions: service concept, service delivery, customer interaction, and technology. Then, in accordance with the innovation patterns they display, we group these firms into four clusters: ‘service delivery-based high-technology', ‘service delivery and customer interaction-integrated', ‘customer interaction-based high-technology', and ‘strongly balanced’ innovators. Last, we investigate whether these patterns influence firm performance. Our findings are three-fold: (1) the innovation patterns in business service firms result from the creation of new combinations of major service innovation dimensions, (2) four independent innovation patterns emerge in business service firms, and (3) these patterns lead to different levels of firm performance. Practically, our findings highlight the importance of highly qualified employees, customer interaction, and technology in improving financial performance.     

New Service Development Process

Abstract

To continue to grow, more and more U.S. service firms have looked overseas in recent years to find markets for their offerings. Thus, innovation in the global context has become a strategic imperative for many service firms. While the issue of how to foster service innovation has been an area of extensive research, the cross-national comparison of innovation practices particularly between developed and emerging countries has been only a nascent field of research. To address this gap in the literature we conducted a comparative study of new service development process and stages of the financial service firms in an emerging country, India, and a developed country, the United States. The results support the central argument of the article that significant cross-national differences do exist with regard to a firm's new service development process. The findings should be of value to managers faced with the tasks of selecting and managing service innovation in emerging markets, as well as those firms experiencing international competition.     

Dynamic learning and strategic alliances: A commentary essay

Strategic alliances and the learning benefits they foster in partner firms inspire a rich literature in the organizational sciences. Part of this literature asks whether or not alliances drive dynamic learning opportunities and thus help partner firms create or enhance dynamic competitive capabilities. Chen, Lee, and Lay (2010) show that alliances do foster the development of dynamic competitive capabilities and do this through dynamic learning mechanisms. This commentary essay critiques the merits of the authors' potential contributions to extant theory and managerial practice and offers new questions for further research.     

Unpacking the impact of innovation ambidexterity on export performance: Microfoundations and infrastructure investment

When designing and managing routines for their innovation activities firms often face a challenge. Either they can concentrate their efforts on one approach i.e. exploring new ideas or exploiting its existing capabilities, or they can try to do both, i.e. becoming ambidextrous. In this paper, we aim to explore first the effect of exploration, exploitation and ambidexterity on export performance and second the moderating role of investment in infrastructure. Using firm-level data from the UK’s innovation survey (CIS) we find that both exploration and exploitation improve export performance. We also find that investment in infrastructure weakens this relationship. Counterintuitively, we find that ambidexterity has a negative effect on export performance, and that it is negatively moderated by investment in infrastructure. We use microfoundations arguments (the routines firms employ and the actions taken by individuals and groups within them to shape their exporting capabilities) to explain how efforts to achieve ambidexterity can improve export performance.     

Resource and Capability Constraints to Innovation in Small and Large Plants

In an attempt to enhance firm’s competitiveness, policy initiatives have sought to encourage more firms to innovate, with a particular focus on small firms. The success of such initiatives, however, depends on a clear understanding of the factors that are constraining innovation activity, and whether these differ for firms of different sizes. This paper examines those resources and capabilities that firms identify as constraining their innovation activity, the difference in these for small and larger plants and the actual impact of these perceived constraints on the probability of innovating and the degree of innovation success. Drawing on longitudinal data the paper demonstrates that innovation is an evolutionary process with the constraints to innovation being different for small and larger plants. From a policy perspective, initiatives to overcome constraints to innovation in small plants should extend beyond those of finance to include greater networking opportunities, cost reduction programmes and marketing strategies to increase the profit margin on new products, human resource management practices on implementing change and easier access to information about new technologies. In contrast policies to promote innovation in larger plants should focus on minimising the risk of development and enhancing access to specialist expertise.     

Towards a framework for innovation in retailing through social media

Retail firms are increasingly using social media for purposes other than traditional marketing, such as innovation. Yet, while the innovation literature has established the benefits of involving customers in the development of products/services through open innovation, the role of social media in innovation is not well understood. Accordingly, we investigate how social media drives innovation in retail businesses. Using data from 414 firms, we find that social media positively relates to radical and incremental innovation, mediated by multiple digital channels and moderated by digital capabilities. Consequently, we propose a social media dynamic capabilities framework to guide future research and innovation in retail business.