Green Product Innovation in Manufacturing Firms: A Sustainability‐Oriented Dynamic Capability Perspective

Despite environmental sustainability being identified as one of the key drivers of innovation, extant literature lacks a theoretically sound and empirically testable framework that can provide specific insights into green product innovation from a capability perspective. This study develops a theoretical framework from a sustainability‐oriented dynamic capability (SODC) perspective. We conceive SODCs as consisting of three underlying processes (external resource integration, internal resource integration, and resource building and reconfiguration) that influence the change/renewal of sustainability‐oriented ordinary capabilities (SOOCs) (green innovation capability and eco‐design capability). This study answers two key questions: which SODCs are needed to develop green innovation and eco‐design capabilities? Which of these capabilities lead to better market performance of green products? We test a structural model linking SODCs to market performance in 189 Italian manufacturing firms. First, we find that the nature of the SODC–performance link (direct or indirect) depends on the SODC type. Specifically, resource building and reconfiguration is the only SODC with a direct effect on market performance. Second, all three types of SODC affect the eco‐design capability, which mediates the link between SODCs and market performance. Third, we find that external resource integration is the only SODC affecting the green innovation capability, which mediates the link between external resource integration and market performance. Resource building and reconfiguration is the SODC with the overall (direct and indirect) highest impact on market performance. This study, among the first to consider capabilities for green product innovation under a dynamic capability perspective, provides implications for scholars, managers and policy makers. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Enhancing green product and process innovation: Towards an integrative framework of knowledge acquisition and environmental investment

Despite the increasing interest in green innovation literature, little is known on how and under what conditions firms' knowledge transfer activities affect green innovation. There is lack of research that on how particular organizational capabilities are seen more useful and how it influences on green innovation performance. To address this research gap, we examine a mediation model in which we explore whether a firm's knowledge acquisition capability and investment in environmental management mediate the impact of buyer-driven knowledge transfer activities on green product innovation and green process innovation. On the basis of an analysis of a sample of 239 manufacturing firms, we find that buyer-driven knowledge activities have a greater positive impact on green product innovation than green process innovation. Investment in environmental management fully mediates the relationship between buyer-driven knowledge transfer activities and green process innovation, and knowledge acquisition capability partially mediates the relationship between buyer-driven knowledge transfer activities and green product innovation. The current study provides evidence that internal competencies and the role of buyers in knowledge transfer are critical for explaining the green product innovation and green process innovation. Our results suggest that buyer involvement pushes firms to develop resource acquisition capability to enhance green product innovation. Our results also highlight the importance of investment in environmental management for overcoming the environmental challenges in the manufacturing firms.     

Are fiscal policy incentives effective in stimulating firms' eco-product innovation? The moderating role of dynamic capabilities

This study investigates the effectiveness of fiscal policy incentives—in particular, direct subsidies and tax credits—in stimulating eco-product innovation among Chinese manufacturing firms. We also examine the moderating effects of dynamic capabilities. The empirical results, which are based on survey data from 265 firms in China, demonstrate that both direct subsidies and tax credits are conducive to firms' eco-product innovation. In addition, we find that when firms' dynamic integration capabilities are strong, the facilitating effects of direct subsidies and tax credits on eco-product innovation are likewise strong. Moreover, dynamic reconfiguration capabilities positively moderate the relationship between tax credits and eco-product innovation. By identifying moderators that influence the effect of fiscal incentives on eco-product innovation in heterogeneous firms, this study contributes to fiscal policy debates and realizing sustainable development.     

How do established firms improve radical innovation performance? The organizational capabilities view

The paper examines organizational capabilities for improving performance, with respect to radical innovation (RI), in established firms. These organizational capabilities are (1) openness capability, (2) autonomy capability, (3) integration capability and (4) experimentation capability. The paper proposes four research hypotheses, to examine the relationship between four types of organizational capabilities and radical innovation performance. A dataset of 112 corporate RI-specific capabilities and innovation performance data, from the top 500 Taiwanese manufacturing firms, is collected via a postal questionnaire survey. The multiple regression results reveal a positive relationship between organizational capabilities and radical innovation performance. Finally, some managerial recommendations, to develop radical innovation capabilities, are provided.     

Can supplier innovations substitute for internal R&D? A multiple case study from an absorptive capacity perspective

Prior literature suggests that significant internal R&D resources are needed to leverage suppliers for innovation and that external knowledge sources can be used to complement the internal knowledge base. Based on the analysis of four inbound open innovation projects at Fortum, a multinational energy utility company, we argue that companies with low R&D intensity may adopt an alternative approach which aims at substituting – not merely complementing – internal R&D with external innovations. We adopt the absorptive capacity perspective while investigating the cases and focus on four distinct capabilities: acquisition, assimilation, transformation, and exploitation. We find that the substitution approach consists of short-term research on new technological areas in order to gain the ability to identify and evaluate alternative technologies, as well as joint business models and operations based on complementary capabilities between the parties. The cases also suggest that the innovation process requires significant collaboration and the buying company's supplier management capabilities may improve the success of inbound open innovation projects of this type.     

The Effects of Culture and Structure on Strategic Flexibility during Business Model Innovation

This study uses responses from 107 multinational firms to reveal CEO perceptions of the drivers of strategic flexibility during business model innovation. While the positive effect of creative culture is confirmed, partner reliance reduces strategic flexibility during business model innovation. Further, structural change is disaggregated into efforts that either focus managerial attention on core activities or reconfigure existing activities. CEOs perceive that structural flexibility requires structural simplification while retaining control of non‐core functions. We find that the relative magnitude of business model innovation effort moderates the effect of reconfiguration on strategic flexibility. The implications for theories of organizational design and dynamic capabilities are discussed.     

Can platform competition support market segmentation? Network externalities versus matching efficiency in equity crowdfunding markets

We investigate whether, in spite of the existence of cross‐market network externalities, platform competition can lead to segmentation of the two sides of the market served by the platforms. We address this question in the context of competition between two equity crowdfunding platforms that connect startups looking for capital with prospective investors. Given the heterogeneity in the populations of startups and investors in terms of the riskiness of the former population and the degree of risk aversion of the latter population, we investigate whether there exists an equilibrium where the two populations are segmented to ensure an improved match between them. We find that the segmenting equilibrium can arise only when compatibility in terms of their risk profiles is of high importance to both populations, and compatibility is significantly more important than the size of the network externality considered by startups. Segmentation is likely to improve the welfare of both populations when the basic benefit from any kind of match is relatively high.     

Customer and Supplier Collaboration in Green Product Innovation: External and Internal Capabilities

Firms collaborate in green product innovation to develop products with less environmental impact. These products typically use less energy, have lower emissions and incorporate more environmentally friendly materials. In an industrial setting, firms often collaborate along the supply chain with customers and suppliers. This paper focuses on external and internal capabilities that firms need when collaborating in green product innovation. The paper builds on data from five large industrial firms in ten case studies, in which these firms collaborate with customers and suppliers to innovate green products to an industrial market. External and internal capabilities are investigated. The study points to the importance of finding a suitable partner. Partners need to have environmental expertise and contribute knowledge or technology that is new to the firm. Firms need to combine relational capabilities, such as trust, with contractual agreements in collaborative innovations. The findings point to the importance of knowledge management with the partner as well as internally in the firm. The study shows that no partner collaboration operates in isolation but is situated in a network context. Copyright © 2018 John Wiley & Sons, Ltd and ERP Environment     

Disentangling the Role of Management Control Systems for Product and Process Innovation in Different Contexts

ABSTRACT

This paper studies the relationship between the use of management control systems and different types of innovation (product and process), taking into account innovation contexts (high-tech versus low-tech sectors). We develop and test our hypotheses based on a large sample of Spanish manufacturing firms and find that input controls have a positive association only with process innovation in both innovation contexts. Behavior controls have similar effects on both types of innovation outcomes for high-tech firms, while they have stronger positive associations with process than with product innovation for low-tech firms. Output controls are equally relevant for product and process innovation in both contexts.     

Developing leaders for creative efforts: A domain-based approach to leadership development

As we move into the 21st century, innovation, sustained innovation, has become a critical determinant of organizational success and survival. Although we know much about potential influences on innovation, little is known about the actions that should be taken to develop the people who must lead these efforts. In the present paper, we present a model of the capacities and capabilities people need to lead creative efforts. A selection, optimization, and compensation model is used to specify the kind of interventions that might provide a basis for developing these capacities and capabilities. The implications of these observations are discussed with respect to both the relevance of available leadership development techniques and the unique needs of people asked to lead creative efforts.     

Sustainability‐oriented capabilities for eco‐innovation: Meeting the regulatory,technology, and market demands

Despite consensus in the literature that regulation, technology push, and market pull drive eco‐innovation (EI), evidence remains limited on the diverse firm capabilities needed to boost EI. Building on the natural‐resource‐based view of the firm and the EI literature, this paper posits that firms need to renew and realign their capabilities, and ultimately develop distinctive sustainability‐oriented capabilities, in order to meet the rapidly changing regulatory, technology, and market demands. Results of the analysis, based on a survey of U.K. firms, reveal that EIs are more likely to arise when firms (a) build capabilities on voluntary self‐regulation (i.e., executive driven environmental management system and corporate social responsibility) because such organizational capabilities allow them to address increasing regulatory pressures; (b) invest in environmental research and development (i.e., eco‐R&D)—instead of generic research and development—because it provides them with the relevant and specific technological capabilities to tackle technology shifts towards sustainability; and (c) develop capabilities in green market sensing as such capabilities allow them to address green consumption needs.     

企业外部能力与突变创新

在动态能力理论和产业组织理论的基础上,本文分析了企业构建组织外部能力与突变创新的关系,从政治战略观点的角度提出了两种动态能力,即：影响政府的能力和影响行业的能力。其中,影响政府的能力与突变创新具有倒U型关系;影响行业的能力对突变创新具有促进作用;影响政府的能力与影响行业的能力对于企业突变创新的作用是互补的。     

Capabilities in Motion: New Organizational Forms and the Reshaping of the Hollywood Movie Industry*

abstract This paper looks at the evolution of capabilities in the Hollywood movie industry in the aftermath of the transition from a studio era dominated by integrated hierarchies to a post‐studio era dominated by flexible hub organizations supplied by networks of resource providers. Adopting a dynamic capabilities perspective we argue that two industry capabilities – mobilizing and transforming capabilities – play a crucial role in assembling and transforming resource bundles into feature films. We further argue that the transition to new organizational forms shifts the co‐evolutionary process, with practices and routines that make up mobilizing capabilities changing faster and becoming more important to box office success than practices and routines that make up transforming capabilities. We test our hypotheses using a sample of 400 films split between the studio and post‐studio eras. The results support our hypotheses, pointing to the influence of centralized control versus dispersed access to resources. The strategy of integrated hierarchical organizations depends on ownership of resources that reduces incentives to develop mobilizing capabilities, and increases incentives to develop transforming capabilities. The advent of new organizational forms, by contrast, increases returns to new practices and routines that mobilize resources at the expense of returns on exploring practices and routines that make up transforming capabilities.     

Human capital,social capital,and innovation: a multi-country study

The authors examine the effects of two forms of capital, i.e. human capital and social capital, on innovation at the country level. We use secondary data from the World Development Report on a country's overall human development to test for a relationship between human capital and innovation. We also use previous conceptualizations of social capital as comprising trust, associational activity, and norms of civic behaviour to test for relationships between these indicators of social capital and innovation using data from the World Values Survey. Unlike most previous studies that examined human and social capital within a given country, we develop and empirically test a theoretically grounded model that relates human and social capital to innovation at the societal level across 59 different countries, thus providing a more global view of the role of these two forms of capital in generating value. We find strong support for the positive relationship between human capital and innovation and partial support for the positive effect of trust and associational activity on innovation. However, contrary to our prediction, we find a negative relationship between norms of civic behaviour and one of our innovation measures.     

Innovation Strategy and Entry Deterrence

We model an incumbent’s decision to pursue radical or incremental innovation when facing a rival entrant. The radical innovation may yield lucrative financial returns but entails significant technological and market‐related uncertainties. It is also particularly attractive to the rival entrant: if the market for it pans out, such an innovation obsoletes the existing technology and any incremental improvements to it. Each firm has its own assessment of the market potential for the radical innovation, and the reliability of these market forecasts can differ. We show that when the entrant’s market‐assessment capability is weak, the incumbent will pursue incremental innovation and postpone its plans to develop radical innovation even when it thinks highly of the market potential for the radical innovation. The incumbent does so to avoid validating the high market potential to the entrant, who may otherwise be encouraged to invest aggressively. The incumbent thus prefers to look “soft” with respect to its innovation strategy in order to discourage entry. Even if its innovation strategy is not observable, we show that an incumbent that assesses the commercial potential for a radical innovation favorably may pursue an incremental path and communicate its plans publicly; this strategy serves to reduce entry by affecting the entrant’s beliefs about the market potential of the innovation. Finally, we extend the model to investigate the entrant’s decision to communicate its innovation intentions. We find that the entrant communicates its plans to aggressively pursue radical innovation only if the incumbent’s market‐assessment capabilities are strong. In doing so, the entrant acts preemptively to discourage the incumbent from pursuing the radical innovation, and is less concerned with validating market potential.     

How supply chain strategies moderate the relationship between innovation capabilities and business performance

The purpose of this paper is to study how the fit between innovation capabilities and supply chain (SC) strategies affects business performance. An empirical study based on a sample of 329 companies from Portugal and Brazil was performed to test a theoretical model based on the resource-based view. Linear and hierarchical regression analyses are conducted to test the hypotheses. The different combinations of core and supplementary innovation capabilities and lean and agile SC strategies are empirically tested and discussed. Data reveal that core and supplementary innovation capabilities positively impact on business performance and that SC strategies moderate the relationship between innovation capabilities and business performance. The analysis also shows that the combination of an agile SC strategy and supplementary innovation capabilities offers the greatest opportunities to improve business performance. The results of this study could help managers to choose the most appropriate SC strategy, thus contributing to increasing the impact of innovation capabilities on business performance. This study contributes to the knowledge concerning the consequences of adopting different innovation capabilities and SC strategies on business performance.     

Assessing efficiency and innovation in the 3PL industry: an empirical analysis

ABSTRACT

The Third-party Logistics (3PL) industry is facing both important growth rates and increasing competitive pressure. 3PL providers are required to continuously sustain a more and more competitive cost structure (i.e. efficiency) and develop capabilities to improve their services (i.e. innovation); hence, the evaluation of these key success factors is considered a key issue. This paper develops a quantitative analysis of 71 Italian 3PL providers by using Data Envelopment Analysis to jointly assess efficiency and innovation. Furthermore, through a case study research, it corroborates the quantitative results by investigating the strategies of best-in-class companies. Results allowed identifying 13 3PL providers as efficiency leaders and 6 as leaders from both the efficiency and the innovation side. Their input composition indicates a diversification of the business models. A breakdown of the analysis by size and industry focus, along with empirical evidence on the strategies enhancing efficiency and innovation, is also provided.     

Doing More with Less: Building Dynamic Capabilities for Eco‐Efficiency

This article sheds light on the manner in which managers perceive, develop and integrate dynamic capabilities for eco‐efficient activities inherent to industrial ecology. The research employs a case study of 12 Canadian facilities involved in the processing of a wide variety of waste materials. Findings from the experiences of 60 managers interviewed reveal that capabilities for industrial ecology largely depend upon the integration and coordination of competencies, innovations and new routines related to several functional areas: innovation and technological development; control of residual material flows; adjustments in human resources; management of environmental constraints; and networking and marketing. These dynamic capabilities are developed and integrated through a four‐stage process: local experimentation, internal operationalization, enlargement/cross‐functional integration and strategic consolidation. The paper contributes to the extant literature related to dynamic capabilities and the natural resource‐based view by offering an understanding of those factors necessary for the success of industrial ecology, and also by demonstrating the functional and dynamic nature of such factors. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Business orientations and innovation in small and medium sized enterprises

The capability of Small and Medium Enterprises (SMEs) to drive and shape markets is one path to competitive advantage. Firms that drive markets do so by leveraging radical and disruptive innovation to shape the needs of current and future customers, thereby altering market structure. In the current study, we find that firms with an entrepreneurial orientation are more likely to develop both driving markets and market driven innovations, while firms with a market orientation are more likely to develop market driven innovations.     

Concurrent engineering and its consequences

Technology and market changes introduce uncertainty and equivocality in the product development arena, and firms are considering various structural relationships to help them cope with these changes. Concurrent engineering (CE) is a mechanism that can reduce uncertainty and equivocality and improve an organization’s competitive capabilities. CE is typically manifested through concurrent work-flows, product development teams, and early involvement of constituents. It enables information to flow through the organization quickly and effectively thereby, reducing uncertainty. At the same time, it enables debate, clarification, and enactment which are essential elements in combating equivocality. CE practices are also purported to have significant effects on product innovation, quality, and premium price capabilities.This research carefully defines CE and creates a valid and reliable instrument to assess it. It reports on the development and testing of a model that relates CE to some of its most salient consequences. Half of the sample of 244 firms is used for exploratory purposes and half for confirmatory work and hypotheses testing. Results indicate that firms that experience a high technological and product change in their environment are using more CE practices. In addition, results suggest that CE practices have significant direct effects on product innovation. However, only the indirect effects of CE on quality and premium pricing are statistically significant. Firms with higher levels of product innovation have higher levels of quality. Firms with higher levels of product innovation do exhibit premium pricing capabilities but only if they affect quality capabilities. Firms that display elevated quality levels excel in their premium pricing capabilities.