Virtual customer environment design and organizational innovation: An exploration–exploitation perspective

ABSTRACT

Many firms are developing virtual customer environments (VCEs) that provide customers the opportunity to submit, discuss, and vote for new ideas. Some studies show that VCEs promote the development of incremental improvements in existing products and services (i.e., exploitative innovation). However, other studies find that customers working in VCEs will often suggest radical ideas for brand new products and services (i.e., exploratory innovation). Exploration and exploitation are often incompatible; thus, we address this paradox by investigating whether the design of a firm’s VCE architecture is related to the firm’s exploratory innovation activity and exploitative innovation activity. Using matched data collected from VCEs and managers, we show that two-way information exchange VCE tools facilitate exploratory innovation, and one-way information exchange VCE tools enhance exploitative innovation. We also find that absorptive capacity positively moderates the latter relationship. Our findings have implications for research and practice in VCEs, organizational innovation, and organizational learning.     

The Impact of Leadership on Absorptive Capacity: New insights from the UAE

This paper investigates the impact of transformational and transactional leadership on the absorptive capacity of firms within an emerging market setting. Unlike some findings from the Western world, the results indicate that both transformational and transactional leadership styles positively influence the learning processes of absorptive capacity. More specifically, the results indicate that transactional leadership style positively influences the exploratory and transformative learning processes, while the transformational leadership style positively affects the exploitative learning process. Given the unique context under investigation and the fluid institutional arrangements associated with it, the results reflect the need for leadership guidance. Implications for theory and practice are discussed.     

Unpacking Open Innovation: Absorptive Capacity,Exploratory and Exploitative Openness,and the Growth of Entrepreneurial Biopharmaceutical Firms

In this article, we explore the relationship between two key aspects of open innovation in small firms—absorptive capacity (ACAP) and external relationships—and their effects on growth in the U.S. and European biopharmaceutical sectors. Results from an international sample of 349 biopharmaceutical firms surveyed in the United States, United Kingdom, France, and Germany suggest that realized ACAP plays an important role in determining firms’ growth. In terms of the interaction between firms’ ACAP and external relationships, we find that engagement with exploratory relationships depends strongly on the continuity of R&D, while participation in exploitative relationships is more conditional on firms’ realized ACAP.     

Global networks as a mode of balance for exploratory innovations in a late liberalizing economy

This article suggests that under weak institutional arrangements, adverse economic conditions, and institutional voids in a late liberalizing economy, local firms that are part of the global value chains of multinational enterprises develop international networks as a balancing strategy to engage in exploratory innovations. We argue that local firms do so in order to counter the negative influences of local institutions on exploratory innovations. Using exploratory in-depth qualitative analysis, we study the suppliers of motorcycle parts in Pakistan that are working with leading Japanese and Chinese motorcycle assemblers. The results suggest that in adverse economic situations local institutional factors can sustain only the development of exploitative innovations. As a balancing strategy, motorcycle part suppliers develop international networks with global Tier 1 suppliers, international trade fairs, and international institutions. This strategy helps circumvent the negative influence of home institutional factors on developing exploratory innovations. Our study highlights the importance of global networks as a balancing strategy for creating exploratory innovations by firms in a late liberalizing economy.     

Impact of domestic and foreign knowledge mechanisms on the innovation performance of Indian firms

Research on emerging market firms (EMFs) has acknowledged the role of innovation in catching-up with advanced economies. Although we know that EMFs’ innovation increasingly depends on collaborations and cross-border knowledge flows, less has been said about the effectiveness of foreign and domestic knowledge mechanisms adopted to improve EMFs’ innovation performance. We hypothesize that foreign mechanisms rely on diverse knowledge and foster explorative innovation (i.e. innovation that extends the existing local competencies), while domestic mechanisms are more likely to be associated with the exploitation of the local existing competencies. Additionally, we claim that the breadth of EMFs’ absorptive capacity strengthens the impact of foreign knowledge mechanisms on explorative innovation, while depth increases the impact of domestic knowledge mechanisms on EMFs’ exploitative innovation, thus highlighting that the interplay of knowledge resources internal and external to the firm involve different levels of recombination. Our empirical analyses conducted on a sample of 161 Indian bio-pharmaceutical firms observed from 1997 to 2018 confirm our hypotheses, thus contributing to the literature on EMFs’ catching up via internationalization and innovation.     

Exploring the influence of resource environments on absorptive capacity development: The case of emerging market firms

Research recognizes that emerging market firms (EMFs) have relatively underdeveloped absorptive capacity. Yet, scarce attention has been paid to the conditions that constrain or facilitate EMFs’ absorptive capacity development. In this article, we explore how differences in home country resource environments influence EMFs’ absorptive capacity. We suggest that home country institutions and factor markets influence EMFs’ choice among three learning strategies: duplicative imitation, creative imitation, and innovation. Building on the organizational learning perspective, we then explore how learning strategies of EMFs’ from different emerging economies influence their preferences with respect to sources of new knowledge, and consequently the implications of these strategic choices for their absorptive capacity.     

Open innovation: Are absorptive and desorptive capabilities complementary?

While recent studies in open innovation emphasize the synergies between in-bound and out-bound knowledge flow, empirical results are inconsistent. In this study, we argue that in order to engage simultaneously in both “buying” and “selling” activities, firms need to develop specific capabilities to manage knowledge inflows and outflows, e.g., absorptive and desorptive capacities. We build on key aspects of open innovation and knowledge management literature, arguing that absorptive and desorptive capacity are complementary rather than substitute, and engaging simultaneously in both activities should allow firms to develop their financial performance. We test our model using a sample of 541 New Zealand firms that are deeply involved in international collaborations and find empirical evidence that absorptive and desorptive capacity are not independent and the balanced development of these capabilities has higher impacts on firm’s performance. Further, our findings indicate that technology licensing capability is not a stand-alone task, and its interplay with absorptive capacity plays a key role in the development of a firm’s performance.     

The Impact of Knowledge Acquisition and Absorptive Capacity on Technological Innovations in Developing Countries: Evidence From Egyptian Small and Medium-Sized Enterprises

The author examines the determinants of technological innovations in Egyptian manufacturing and service small and medium-sized enterprises. Three categories of determinants are explored: (a) firms’ exposure to external knowledge and technologies, (b) firms’ absorptive capacity, and (c) financial and market barriers to innovation. A large dataset derived from the 2009 Egyptian innovation survey is used to estimate two binary logit models of factors explaining firms’ propensity to innovate in the manufacturing and service sectors. Results show that Egyptian manufacturing and service small and medium-sized enterprises follow similar paths to innovate and confirm the assumption that the catching-up reality in most developing countries makes the patterns followed by firms to innovate fundamentally different from those applied in countries at the technology frontier.     

Corporate culture and absorptive capacity: The moderating role of national culture dimensions on innovation management

Firms have to strive for innovation constantly in order to gain and retain a competitive advantage, which renders absorptive capacity (ACAP) – a firm’s ability to absorb and apply external knowledge – highly relevant. Based on data obtained from 592 CEOs and managers of firms in Austria, Brazil, Germany, India, Singapore, and the United States, we show how ACAP can be fostered in an international context. We analyze how corporate culture affects potential as well as realized ACAP and how national culture dimensions moderate these relationships in a fit-as-moderation model. We reveal that the adhocracy culture supports potential and realized ACAP, whereas the market and hierarchy cultures hinder both potential and realized ACAP. Moreover, the relationship between corporate culture and potential ACAP is stable across national culture dimensions, whereas selected national and corporate cultures are more effective in fostering realized ACAP. These results open up opportunities for researchers and support firms in their attempts to foster their firms’ knowledge management processes.     

前瞻型环境战略对企业绿色创新绩效的影响研究--绿色智力资本与吸收能力的链式中介作用

近年来,将环境问题置于企业战略层面已得到普遍认同,绿色创新是我国经济新常态下解决环境问题实现可持续发展的关键。基于自然资源基础观理论、知识管理理论和吸收能力理论,本文对长三角地区249家制造业企业进行实证研究,验证前瞻型环境战略对绿色创新绩效的作用过程与影响机理。实证结果表明,制定前瞻型环境战略的企业可以通过积累绿色智力资本和增强吸收能力来提高企业绿色创新绩效。通过Bootstrap检验发现,绿色智力资本对吸收能力有积极影响,二者在前瞻型环境战略与绿色创新绩效间有链式中介作用,并在对比中发现链式中介效应与单独中介效应具有显著差异。研究为企业制定环境战略和提高绿色创新绩效提供了理论指导与管理启示。     

Outward foreign direct investment and domestic innovation performance: Evidence from China

Recent years have witnessed substantial outward foreign direct investment (OFDI) from many emerging economies. Should the governments of these economies encourage OFDI in order to promote domestic innovation? Much OFDI by emerging economy multinational enterprises (EMNEs) has been undertaken to acquire strategic assets overseas, but do these acquisitions bring innovation benefits at home? The empirical analysis presented in this paper considers the effects of OFDI on regional innovation performance, using a panel of Chinese provinces, and finds that OFDI has a very significant impact on domestic innovation. Furthermore, we also identify three contingent factors – absorptive capacity, foreign presence, and the competition intensity of the local market – that moderate the impact of OFDI on innovation performance.     

SMEs' Radical Product Innovation: The Role of Internally and Externally Oriented Knowledge Capabilities

This study examines the role and contribution of specific internally (knowledge diversity and sharing capabilities) and externally oriented knowledge‐related capabilities (exploratory, transformative, and exploitative learning processes of absorptive capacity) to radical product innovation in small and medium‐sized enterprises (SMEs). It extends the current literature on the topic by considering both types of knowledge‐related capabilities and by hypothesizing and testing connections between both. Our path analysis results, based on a sample of 194 SMEs in dynamic environments, indicate that radical innovation is positively affected by exploitative learning and by the knowledge sharing capability. Implications and suggestions for future research are discussed.     

Knowledge absorptive capacity: New insights for its conceptualization and measurement

The processes for absorbing external knowledge become an essential element for innovation in firms and in adapting to changes in the competitive environment. Despite the huge growth in the absorptive capacity literature, a methodological gap still remains about a certain ambiguity in the definition of the construct specifying its theoretical domain and dimensionalization, and a lack of validation of the construct in most studies. The aim of this paper is to contribute to the literature on absorptive capacity through the creation and validation of two scales, justified with a thorough analysis of the literature, to measure the key components of the absorptive capacity construct: potential and realized absorptive capacities. The study includes confirmatory factor analysis on a sample of 952 Spanish firms to verify that the scales meet the psychometric properties the literature requires. The study results confirm the validity of the proposed scales and support their consolidation as a commonly used instrument with which to measure absorptive capacity.     

Learning by exporting under fast,short-term changes: The moderating role of absorptive capacity and foreign collaborative agreements

What are the consequences for innovation of fast, short-term changes in exporting activity? Building on the learning by exporting literature and using a sample of 880 Italian manufacturing firms over two successive time periods, our study reveals key asymmetries. First, a rapid increase in export breadth, but not in export depth, reduces the firm’s probability of developing new innovative outputs. Second, no such effects are found in the case of a decrease in firms’ exporting activity. Third, both absorptive capacity and foreign collaborative agreements facilitate the absorption of the shock occurring when firms experience a rapid increase in export breadth, but not when the rapid increase takes place in export depth. Theoretical and managerial implications emerge from this research.     

Marketing and Technological Absorptive Capacities: Environmental Antecedents and Performance Outcomes in High-Tech Firms

Purpose: This article investigates marketing and technology absorptive capacities as distinct types of external knowledge while considering three environmental conditions, namely uncertainty, munificence, and heterogeneity and two distinct outcomes, namely innovation and financial performance.

Methodology/approach: Using a quantitative approach, the authors analyze data from 141 Israeli business-to-business high-tech firms.

Findings: The data mostly supported the hypotheses. Empirical findings imply that an uncertain environment is a precursor for a strong effort to develop a technological absorptive capacity and, to a lesser extent, a marketing absorptive capacity. Technological and marketing absorptive capacities were found to be distinct constructs with positive impacts on financial and innovation performance. Marketing absorptive capacity had a stronger impact than technological absorptive capacity on financial performance. Surprisingly, marketing absorptive capacity was negatively associated with innovation performance.

Originality/value: This study attempts to overcome some limiting assumptions of absorptive capacity theory that have contributed to its reification in order to make three theoretical contributions. First, it distinguishes between marketing and technological absorptive capacities. Second, it tests differential responses of the two absorptive capacities to environmental contingencies. Third, it compares the differential impacts of marketing and technological absorptive capacities on financial and innovation performance.     

Catch‐up through Collaborative Innovation: Evidence from China

Collaborative innovation has received the attention of management scholars for decades. The primary focus of our research is to explore the mechanisms that drive innovation catch‐up of latecomers in an emerging economy through research and development collaborations (i.e., academic and industrial collaborations). Using a sample of 1,066 firms in a high‐tech cluster in China, we find that collaborative innovation strategy has an inverse U–shaped effect on a firm's innovation performance. In addition, the relationship between collaborative innovation strategy and innovation performance is positively moderated by absorptive capacity © 2016 Wiley Periodicals, Inc.     

Do innovative emerging market cross-border acquirers create more shareholder value? Evidence from India

This study attempts to investigate the role of absorptive capacity of emerging market firms in creating shareholder value from developed market acquisitions. It analyzes the cumulative abnormal return of cross border acquisitions of listed Indian firms in Europe focusing on acquirers’ research intensity. The study discovers a U-shaped relationship between research intensity of Indian acquirers and their cumulative abnormal return following acquisitions in Europe. As such, firms with no research capacity can benefit from the acquisition by accessing advanced targets, although firms with extensive research capacity outperform any of their Indian competitors as these firms have the absorptive capacity to not only exploit but also explore the knowledge base of the acquired target. Furthermore, we found a positive effect of the acquisition of a high-tech target company, regardless of the absorptive capacity of the acquirer. We also found that business group membership has a positive impact on shareholder value, although horizontal acquisitions as compared to vertical and unrelated deals have a significantly negative impact for these companies. This result is again linked to the more explorative nature of vertical and unrelated acquisitions in comparison with horizontal deals that are more based on the exploitation of existing resources and capabilities.     

The role of entrepreneurial marketing in new technology ventures first product commercialisation

This paper sheds light on the importance of entrepreneurial marketing (EM) in the context of new technology ventures (NTVs) first product commercialisation. This study explores the role of EM expressed as the degree of complementarity between entrepreneurial orientation (EO) and market orientation (MO) in driving firms’ innovation activities including competence exploration and exploitation in achieving first product performance (FPP). The results of a survey drawn from Indian NTVs identify a significant effect for the complementarity of EO–MO on exploratory and exploitative innovation activities. Furthermore, the findings indicate a positive effect of both exploratory and exploitative activities in enhancing FPP and the contingency role of marketing capabilities (MCs) in enhancing the impact of competence exploration and exploitation in first product commercialisation.     

Absorptive capacity development in Indonesian exporting firms: How do institutions matter?

This paper addresses how firms from an emerging market characterized by a challenging and variable institutional environment learn about internationalizing. Building on the organizational learning and institutional literatures, and the concept of absorptive capacity (AC), and using a sample of Indonesian manufacturing-sector exporters we identify two dimensions of internationalization-related AC: international market and international strategic operation. Unlike previous literature, we find that indirect, or second-hand, experience contributes more than the firm's own experience to the development of international market AC. Furthermore, the second-hand experience feeds Indonesian manufacturing exporters’ learning in both positive (e.g., buyers) and negative (e.g., suppliers and foreign multinationals in Indonesia) ways. In contrast, the development of international operation strategy AC appears to be driven internally, with minimal contribution from either first- or second-hand experience. We posit that these outcomes are influenced by the rapid and substantial changes in the domestic institutional environment faced by the Indonesian manufacturers.     

Absorptive capacity,innovation and cultural barriers: A conditional mediation model

The construct of absorptive capacity has two dimensions: potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). This study addresses these two dimensions separately, and analyzes their influence on innovation outcomes (IO) in organizations. The study also examines the mediating role of RACAP in the relationship between PACAP and IO. Furthermore, the paper contains a discussion on the moderating role of cultural barriers (CB) in decreasing the PACAP–RACAP link. Consequently, this study builds and tests a conditional process model. Data comes from a sample of 110 firms from the Spanish automotive components manufacturing sector. Results from variance-based structural equation modeling and the PROCESS tool show that RACAP fully mediates the influence of PACAP on IO, and that CB negatively conditions this indirect effect. This study provides evidence that when CB attains medium-to-high values, this indirect influence is not different from zero.