Organizing for Inbound Open Innovation: How External Consultants and a Dedicated R&D Unit Influence Product Innovation Performance

Firms increasingly acquire technological knowledge from external sources to improve their innovation performance. This strategic approach is known as inbound open innovation. The existing empirical evidence regarding the impact of inbound open innovation on performance, however, is ambiguous. The equivocal results are due to moderating factors that influence a firm's ability to acquire technological knowledge from external sources and to transform it into innovation outputs. This paper focuses on a relevant yet overlooked category of moderating factors: organization of research and development (R&D). It explores two organizational mechanisms: one informal and external‐oriented (involvement of external consultants in R&D activities) and one formalized and internal‐oriented (existence of a dedicated R&D unit), in the acquisition of technological knowledge through R&D outsourcing, a particular contractual form for inbound open innovation. Drawing on a capabilities perspective and using a longitudinal dataset of 841 Spanish manufacturing firms observed over the period 1999–2007, this paper provides a fine‐grained analysis of the moderating effects of the two organizational mechanisms. The involvement of external consultants in R&D activities strengthens the impact of inbound open innovation on innovation performance by increasing marginal benefits of acquiring external technological knowledge through R&D outsourcing. Moreover, it reduces the level of inbound open innovation to which the highest innovation performance corresponds. Instead, the existence of a dedicated R&D unit makes the firm less sensitive to changes in the level of inbound open innovation, by reducing marginal benefits of acquiring external technological knowledge through R&D outsourcing, and increases the level of inbound open innovation to which the highest innovation performance corresponds. The results regarding the role of informal and formalized R&D organizational mechanisms contribute to research on open innovation and absorptive capacity, and also inform managers as to what organizational mechanism is recommended to acquire external technological knowledge, depending on the objectives that the firm pursues.     

A jump-diffusion model for the euro overnight rate

In this work we introduce a jump-diffusion process for the euro overnight rate (the European over night index average) that is able to capture the main characteristics of this rate: (i) dynamics constrained to remain in the corridor of official rates fixed by the European Central Bank; (ii) mean reversion towards the official rate on main refinancing operations; and (iii) highly discontinuous pattern (with jumps), also without variations in the official rate. After calibrating the model parameters on historical data, we implement the model to price an overnight indexed swap. Finally, a comparison between our model and the most common short-term interest rate models is presented.     

Risk management within the cannabis industry: Building a framework for the cannabis industry

Thirty states and the District of Columbia have legalized the use of cannabis for medicinal and/or recreational use by either formally or informally de‐criminalizing its use. However, cannabis remains a Schedule 1 drug under the Federal Controlled Substances Act (21 U.S.C. Sections 801 through 812), leaving federal law in conflict with the laws of over half of the states. As a result, market participants in legal cannabis businesses face risks due to the industry's unique legal status within the United States. We examine the risks and challenges deemed by the cannabis industry as the top risks facing the industry's continued future growth and its sustainability. In addition to general risks inherent in a nascent industry, a legal cannabis business faces additional risks, such as risks in its banking and finance activity, placement of insurance, payment of taxes, and managing its supply chain. These legal businesses also face true legal risk from the possibility of being shut down by the federal government and seizure of assets and product under the CSA. This paper also examines whether the cannabis industry would benefit from a futures market to mitigate price risk.     

An optimisation strategy for concurrent Supply Chain Finance schemes

The uncertainty and financial instability that has plagued companies and industries in the last decade is one of the root causes behind the development of Supply Chain Finance (SCF), a set of schemes aiming to optimise the management of financial flows at the supply chain level. Recent years have seen a proliferation of different SCF schemes, with different impacts on working capital costs and requirements throughout the supply chain. The practicality of SCF usage indicates that the concurrent adoption of multiple schemes is not only possible, but even likely. However, literature on SCF still focuses on individual SCF schemes, while the concurrent adoption of multiple SCF schemes remains largely unaddressed. Thus, the objective of this paper is to assess the tangible benefits deriving from a multi-scheme SCF strategy. Based on the analytical formulation of the benefits of three relevant SCF schemes (Reverse Factoring, Inventory Financing and Dynamic Discounting), the paper formalises a model that investigates the benefits that a buyer can achieve by onboarding suppliers onto these three schemes. The results show how working capital requirements and the cost of finance represent the key parameters to assessing the benefits of the concurrent adoption of multiple SCF schemes. Moreover, the funding limits of the SCF schemes themselves strongly affect the relevance of such strategies; strict limits will increase the relevance of having ‘alternative’ schemes available to onboard suppliers. To highlight the managerial relevance of the model, the article provides a numerical example based on a real-world application.     

Analyzing party competition through the comparative manifesto data: some theoretical and methodological considerations

This paper deals with some of the theoretical and methodological concerns arising from an in-depth analysis of one of the most successful research groups in comparative politics: the Comparative Manifesto Project. The first part of the paper discusses its theoretical background: the dimensionality of the political space, the operationalisation of the saliency theory and whether through election manifestos it is possible to determine the actual party positions. The second part attempts to contribute to the methodological debate by focusing on generally neglected weaknesses of the CMP’s method with regard to both the classification scheme and the coding procedure. In particular, it shows that it is probably impossible to correct the major problems here identified without destroying their comparability across time and space, since they are so deeply rooted in the CMP’s approach.     

Bridging macroeconomic data between statistical classifications: the count-seed RAS approach

ABSTRACT

In applications, it is often necessary to link heavily aggregated macroeconomic datasets adhering to different statistical classifications. We propose a simple data reclassification procedure for those cases in which a bridge matrix grounded in microdata is not available. The essential requirement of our approach, which we refer to as count-seed RAS, is that there exists a time period or a geographical entity similar to the one of interest for which the relevant economic variable is observed according to both classifications. From this information, a bridge matrix is constructed using bi-proportional methods to rescale a seed matrix based on a qualitative correspondence table from official sources. We test the procedure in two case studies and by Monte Carlo methods. We find that, in terms of reclassification accuracy, it performs noticeably better than other expeditious methods. The analytical framework underlying our approach may prove a useful way of conceptualizing data reclassification problems.     

The contribution of Design Thinking to the R of R&D in technological innovation

Literature on Design Thinking has mainly focused on whether its key principles enhance performance in the development phase (the D of R&D) of the technological innovation process. However, it has dedicated scant attention to the earlier research phase (the R of R&D). This aspect is surprising, given that many innovations fail as a result of early research actions and decisions. This article examines how it is possible and desirable to apply Design Thinking to the research phase of the technological innovation process. How can Design Thinking support innovation, even when advanced breakthrough technologies are at stake, the market is distant, and product applications and specific user needs have not been identified yet? To respond to this question, we investigate the research work of the design center of a global electronics company that uses a design approach called Proxemics to envision future interactions between bodies (people), objects (technology), and spaces (context). Although Proxemics is consistent with and implements the human centeredness and experimentation principles of Design Thinking, results of this study show that its logics and tools are different from those used in Design Thinking in the D of R&D due to the more abstract nature of the tasks in the R of R&D.     

Ecological risk assessment of pesticides in the EU: what factors and groups influence policy changes?

For the last couple of years, European environmental risk assessment (ERA) regulations have undergone significant changes. The new 1107/2009 directive which came into effect in 2011 has triggered an on-going debate on defining specific protection goals for ERA. During this period, we conducted a study on policy change among the most influential ERA stakeholders from Europe. We interviewed 43, purposively sampled, participants from the European safety authorities, plant protection product industry and academia. Transcribed interviews underwent thematic analysis conducted separately by two coders. As we followed the advocacy coalition framework, our findings focus on stakeholders’ processes, interrelations and values behind the ERA policy change. The main challenges emerging from our analysis turned out to be the slow uptake of scientific developments into ERA and very broadly defined protection goals. The use of safety factors and cut-off criteria left risk assessors with many uncertainties. With ERA in its current form it turned out to be impossible to determine whether the current scheme is over- or under-protective. Still, the study shows that the problem of over- or under-protectiveness lies deep in the perception of stakeholders and depends greatly on their priorities. Academics strive for better ecological relevance as a priority. They have concerns that ERA is oversimplified. Regulators worry that ERA relies too much on risk mitigation and is possibly not protective enough, but at the same time, the majority believes that the assessment is well established and straightforward to follow. Industry representatives would like to see ERA based more on probabilistic risk assessment. Recent changes, according to risk assessment and management practitioners have led to an inevitable increase in complexity, which is not perceived as a positive thing, and does not necessarily translate into better risk assessment.     

Purchasing professional services: A transaction cost view of the antecedents and consequences of purchasing formalization

Professional services represent an increasing share of expenditures in contemporary organizations. While these services are often of strategic importance, they are also perceived as being difficult to purchase and use, which creates challenges for the purchasing process. In order to address these challenges, organizations are increasingly engaging in systematic efforts to improve their ability to purchase professional services. These efforts focus on formalizing the purchasing process by introducing policies, guidelines, and other measures for the hiring of service suppliers. Based on a transaction cost economic framework, the current paper investigates the nature, antecedents and consequences of formalization initiatives in the purchasing of professional services. The results from a cross-sectional study of 76 large Swedish organizations show that the formalization of purchasing professional services takes two different forms: the formulation of policies and the establishment of preferred supplier agreements. The former is driven by company size, whereas the latter is driven by the frequency of purchase transactions. Only the establishment of policies, however, is found to be positively related to organizations' perceived ability to purchase professional services.     

Technology Acquisition in Family and Nonfamily Firms: A Longitudinal Analysis of Spanish Manufacturing Firms

Technology acquisition from external sources has been identified as a critical competence for sustained success in innovation, and research has paid a good deal of attention to studying its advantages, drawbacks, determinants, and outcomes. Traditionally, research has modeled the choice to acquire technology from outside a firm's boundaries as the result of a trade‐off between the benefits of external acquisition (e.g., higher return on investment, lower costs, increased flexibility, access to specialized skill sets, and creativity) and its drawbacks (e.g., opening the market to new entrants, risk of imitation of core competencies, and reduced value appropriability). Yet, this view does not capture the behavioral considerations that may potentially encourage or discourage managers from sourcing technology outside the firm's boundaries. This behavioral aspect is especially important if one wants to understand the conduct in external technology acquisition of family firms, which are found to favor strategic actions that preserve the controlling families' control and authority over business, even at the cost of giving up potential economic benefits. Thus, external technology acquisition is likely to be interpreted differently in family and nonfamily firms. Despite its importance, how the involvement of a controlling family affects decisions in technology and innovation management and specifically external technology acquisition is an overlooked topic in extant research and requires further theoretical and empirical examination. This study attempts to fill these gaps by extending the tenets of the behavioral agency model and prior research pointing to particularistic decision‐making in family firms to uncover the behavioral drivers of external technology acquisition in family and nonfamily firms. Theory is developed that relates performance risk, family management, and the contingent effect of the degree of technology protection on external technology acquisition, and the hypotheses are tested with longitudinal data on 1540 private Spanish manufacturing firms. The analyses show that managers are more likely to acquire technology from external sources through research and development contracting when firm performance falls below managers' aspirations. Family firms are generally more reluctant to acquire external technology, and the effect of negative aspiration performance gaps becomes less relevant as family management is higher, which is attributed to family managers' attempts to avoid losing control over the trajectory that technology follows over time. However, family firms become more favorable to considering the adoption of an open approach to technology development when some protection mechanisms (specifically, the filing of patents on the firm proprietary technologies) increase the managers' perceptions of control over the technology trajectory. As such, this study makes a contribution to the understanding of the behavioral factors driving external technology acquisition, and it offers important insights regarding technology strategy in family firms.