"Managing" Learning by Doing: An Empirical Study in Semiconductor Manufacturing

This article examines the contributions of human resource and organizational practices to the development and supply chain management interface. It addresses this issue in the context of the semiconductor industry by highlighting the importance of these practices for learning‐based improvement in manufacturing. One of the most important factors for competitiveness in the semiconductor industry is the ability to manufacture new process technologies with high yields and low cycle times. The more effective management of new process technologies within the manufacturing facility aids firms in managing production costs, volumes, and inventories. Efficient management of new process development and introduction translates into enhanced internal supply chain management performance by improving the design of internal workflows, manufacturing performance, and the acquisition and installation of new manufacturing processes. Because much of the knowledge that underpins semiconductor manufacturing is idiosyncratic, however, firm‐level differences in human resource and organizational practices are likely to have consequences for performance. The article derives learning curve models of the rate of improvement in manufacturing yield (i.e., the rate of learning) and cycle time (i.e., the speed of production) following the introduction of a new process technology in a manufacturing facility. It then tests the influence of the use by semiconductor manufacturers of teams for problem solving and intrafirm knowledge transfer, the level of internal adoption of information technology (IT), and more extensive and effective workflow and production scheduling systems on manufacturing performance. It finds that the manners in which semiconductor manufacturers allocate engineering resources to problem‐solving activities, utilize information technology in the manufacturing facility, schedule production, and control the “shop floor” influence the levels and rates of improvement in both manufacturing performance measures. The article makes several contributions to the literature on product and process development and, accordingly, to research on the product development/supply chain interface. In particular, the model of organizational‐based learning provides a better understanding of the determinants of learning‐based performance improvement. In particular, better manufacturing performance results not strictly from greater cumulative volume but also from the actions of managers that affect the organization of establishment‐level problem‐solving activities and information exchange. The article also demonstrates that human resource and organizational practices in both the development and the adoption of new process technologies improve manufacturing performance by accelerating new product introduction, improving workflow, and enhancing the efficiency of manufacturing processes.     

Employment Practices and Semiconductor Manufacturing Performance

This article analyzes the factors contributing to superior manufacturing performance in the semiconductor industry. Through an analysis of firm-level data from the United States, Asia, and Europe, we explore the relationship between firm performance along quality and quantity dimensions and three components of the employment system: skill development, employee participation in problem solving, and employee collaboration. We find that manufacturing success is related to the introduction of new production technology and the involvement of all occupations in problem solving under the leadership of engineers, who play a key (and growing) role in this high-tech industry. We find that the operators and technicians play a smaller role in creating high-performing semiconductor factories than has been found in studies of more traditional factories, such as automobiles and steel.     

Open for Ideation: Individual‐Level Openness and Idea Generation in R&D

Organizations are increasingly encouraging their scientists and engineers to source knowledge externally. However, it is unclear how the openness of individuals to external sources of knowledge affects their ideation performance, that is, their ability to develop new, useful innovative ideas for their organization, and which factors might moderate this process. Drawing on theories of combinatorial search, and using a sample of 329 R&D scientists and engineers working in a large organization, we demonstrate that individuals' openness to external sources of knowledge is curvilinearly related to their ideation performance. Openness provides benefits such as alertness and variety which contribute to ideation up to the point where increasing integration and approval costs cause negative returns to set in. We also examine how the R&D time horizon, ties to senior managers, and the breadth of individual knowledge moderate the costs and benefits of openness to individuals. We explore the implications of these findings for managerial practice.     

Managerial Ties and Firm Innovation: Is Knowledge Creation a Missing Link?

Managerial ties, the personal networks of senior managers, have been found to be facilitators of firm performance because of their network benefits. However, social network theory suggests that managerial ties only play a “conduit” role by providing possibilities and opportunities to approach external resources. How can firms turn these possibilities and opportunities into internal knowledge assets and further transform them into firm innovation? Extant research constructs a direct mechanism for the managerial ties–firm innovation link. The research reported here, however, provides and investigates an indirect ties‐innovation argument where organizational knowledge creation processes, including knowledge exchange and knowledge combination, are mediators. And managerial ties are examined through two traditional dimensions, business ties and political ties. This study employs empirical data from 270 firms in China and uses structural equation modeling techniques to reveal interesting findings. First, the results support the key argument that the influence of managerial ties on firm innovation is indirect. Second, knowledge exchange and knowledge combination are different constructs and the former positively influences the latter. More interestingly, business ties can exert a significant direct impact on both knowledge exchange and knowledge combination, while political ties can only influence knowledge exchange directly. Although both knowledge exchange and knowledge combination impact product innovation directly, only knowledge combination can directly influence process innovation. These findings indicate that the role of political ties is declining, but business ties still have substantial influence on firm innovation in transitional China. Different processes of organizational knowledge creation, such as knowledge exchange and knowledge combination, make distinct contributions to firm innovation. Product innovation, as opposed to process innovation, is more externally oriented and needs more organizational level knowledge creation activities. This article extends the understanding of the ties–innovation link, organizational knowledge creation theory, and firm innovation in a transitional economy by providing a more complete understanding of how firms can access and internalize external resources and then transform them into product innovation and process innovation.     

Sources of knowledge acquisition for Chinese software engineers

This research adopts a triangulation strategy based on ethnographic case study and questionnaire survey shedding light on how Chinese software engineers acquire codified and tacit knowledge in their daily development work. Software engineers make effective use of complementary resources within a broad spectrum of choices for seeking advice, learning how to solve technical problems, and transferring knowledge to the local community of practice from far beyond the organizational boundary. The analysis focuses on patterns of advice seeking relations within and across project team boundaries, also highlighting the Internet software technology forums as an important channel for technical information sharing across organizational boundaries. The implications for R&D managers are also discussed with special reference to software development and other knowledge intensive computer related work in China.     

Learning: What and How? An Empirical Study of Adjustments in Workplace Organization Structure

We seek to understand how firms learn about what adjustments they need to make in their organization structure at the workplace level. We define four organizational systems: traditional (the simplest system), high‐performance (the most complex system), decision‐making oriented, and financial‐incentives oriented (intermediate complexity). We analyze (1) learning‐by‐doing on adoption of more or less complex systems, (2) the performance–experience learning curves associated with different systems, (3) the match between perceived organizational capabilities and the choice of systems, the influence of (4) other firms’ systems and performance on a firm’s adjustment decisions, and of (5) a firm’s location on its decisions.     

Work frustration in engineering departments

A large number of engineers work in organizations with specialized jobs of a routine nature. In many ways they can be compared with workers on a production line; it is the same work that is done over and over again. Empirical studies demonstrate that this leads to frustration. There is no standard solution available, but there are a number of approaches that can lead to greater satisfaction if one is willing to experiment with them. A more organic, less structured management system and more use of problem oriented project groups may bring benefits. Job enrichment, where engineers are given more responsibility by transfer of tasks previously done by managers and seniors, and special training where engineers are given an opportunity to systematically develop their capabilities should be considered. Further, organizational development must be mentioned where an external change agent together with the people involved develops a solution aiming at the satisfaction of the needs of both the individual and the organization. Finally come flexible working hours which have an indirect effect on the job situation by allowing for a richer life off the job.     

How mutuality reinforces partnership development: Japanese and Korean marketing perspectives

Relationship building is about ‘mutuality’ and how an organizational cultural value system enhances the development of long-term relationships that influence the marketing strategy process. This paper explains how senior managers embrace the concept of mutuality in order to establish a partnership arrangement in the context of a vertical marketing system. From the literature, four propositions relating to customer service policy, the process of innovation, relationship marketing and comparative national culture were developed and placed in the context of a Japanese and a South Korean electronics company based in the UK. The propositions were validated using in-depth, personal interviews with a limited number of senior managers in the two global companies. Evidence suggests that managers in Japanese companies formulate industry and country specific customer service policies, dictate R&D programmes, and spend a long time getting to know an individual in a potential partner organization(s) before they engage in any form of business integration. Whereas managers in South Korean companies are keen to communicate extensively and seek to acquire additional skills and knowledge so that they can innovate and implement cost effective strategies.     

Collaborative Prototyping: Cross‐Fertilization of Knowledge in Prototype‐Driven Problem Solving

This paper presents an inductive study that shows how collaborative prototyping across functional, hierarchical, and organizational boundaries can improve the overall prototyping process. Our combined action research and case study approach provides new insights into how collaborative prototyping can provide a platform for prototype‐driven problem solving in early new product development (NPD). Our findings have important implications for how to facilitate multistakeholder collaboration in prototyping and problem solving, and more generally for how to organize collaborative and open innovation processes. Our analysis reveals two levels of prototyping. Besides the more formal managerial level, we identify the informal designer level, where the actual practice of prototyping takes place. On this level, collaborative prototyping transforms the act of prototyping from an activity belonging exclusively to the domain of design engineers to an activity integral to NPD, with participants from within the organization (different functions and managers) and from outside (consultants and users). In effect, this collapses the discrete steps in the prototyping process (at the managerial level) to an essentially continuous process of iterative problem solving (at the designer level) that is centered around the collaborative prototype, which allows participants to see their suggestions implemented and exposing them to the design constraints. The study, moreover, shows how, at various stages of the prototyping process, the actual prototype was used as a tool for communication or development, thus serving as a platform for the cross‐fertilization of knowledge. In this way, collaborative prototyping leads to a better balance between functionality and usability; it translates usability problems into design changes, and it detects emerging usability problems through active engagement and experimentation. As such, the collaborative prototype acts as a boundary object to represent, understand, and transform knowledge across functional, hierarchical, and organizational boundaries. Our study also identifies some constraints in involving the appropriate stakeholders at the right time. The paper specifically elaborates on the role of users in collaborative prototyping, which is important in order to cover all phases of the problem‐solving cycle but triggers an interesting challenge due to the “reverse empathy” that a user may develop for the design constraints—parallel to the designer empathy for the user context. Finally, our study shows that despite the continuous nature of the (designer) practice of prototyping, there are certain windows of opportunities (at the managerial level) during which the collaborative prototyping approach actually leads to changes in the product design.     

Conceptualizing Innovation Orientation: A Framework for Study and Integration of Innovation Research*

The term innovation orientation has been frequently used in the innovation literature, but with a mix of conceptualizations and meanings. Drawing from work found in the innovation, management, and marketing literatures over the past 35 years, the concept of innovation orientation as a system is conceptualized and defined in this article. The domain of innovation orientation is delineated as a multidimensional knowledge structure and a framework for understanding innovation orientation and its consequences in an organizational context are developed. The framework defines the innovation orientation knowledge structure as composed of a learning philosophy, strategic direction, and transfunctional beliefs within an organization that define and direct the organizational strategies and actions toward specific innovation‐enabling competencies and processes. These innovation‐oriented firm competencies are in the areas of resource allocation, technology, employees, operations, and markets. The framework then explains that these appropriately developed innovation‐enabling competencies lead to innovation outcomes, specifically ideal innovation form, type, and rate that, in turn, affect firm performance. An inventory of propositions for future research that correspond to the innovation orientation concept is also presented in this comprehensive framework. This study provides two important contributions to the existing innovation literature. First, the article examines the vast innovation literature to arrive at a clear definition of the innovation orientation construct to provide a consistent conceptualization for future research. Second, the article develops a comprehensive, organized framework for understanding innovation orientation and its effects. In doing this, the framework extends the dynamic capabilities research stream by offering an explanation of how innovation orientation fosters the development of organizational competencies and makes it possible for a firm to recognize and respond to shifts in market dynamism.     

The Vital Role of Problem‐Solving Competence in New Product Success*

Problem solving, a process of seeking, defining, evaluating, and implementing the solutions, is considered a converter that can translate organizational inputs into valuable product and service outputs. A key challenge for the product innovation community is to answer questions about how knowledge competence and problem‐solving competence develop and sustain competitive advantage. The objective of this study is to theoretically examine and empirically test an existing assumption that problem‐solving competence is an important variable connecting market knowledge competence with new product performance. New product projects from 396 firms in the high‐technology zones in China were used to test the study's theoretical model. The results first indicate that problem‐solving speed and creativity matter in new product innovation performance by playing mediator roles between market knowledge competence and positional advantage, which in turn sustains superior performance. This new insight suggest that mere generation of market knowledge and having a marketing–research and development (R&D) interface will not affect new product performance unless project members have the ability to use the information and to interact to identify and solve complex problems speedily and creatively. Second, these results suggest that different market knowledge competences (customers, competitors, and interactions between marketing and R&D) have distinct impacts on problem‐solving speed and creativity (positive, negative, or none), which underscore the need to embrace a more fine‐grained notion of market knowledge competence. The results also reveal that the relative importance of some of these relationships depends on the perceived level of turbulence in the environment. First, competitor knowledge competence decreases problem‐solving speed when perceived environmental turbulence is low but enhances problem‐solving speed when perceived turbulence is high. Second, competitor knowledge competence has a positive relationship with new product performance when the environmental turbulence is high but no relationship when the environmental turbulence is low. Third, the positive relationship between problem‐solving speed and product advantage is stronger when the perceived environmental turbulence is high than when it is low, which implies that problem solving is more important for creating product advantage when environmental turbulence is high and change is fast and unpredictable. Fourth, the negative relationship between problem‐solving speed and new product performance is stronger when the perceived environmental turbulence is high than when it is low, which means that problem‐solving speed is more harmful for new product performance when change is fast and unpredictable. And fifth, the positive relationship between product quality and new product performance is stronger when perceived environmental turbulence is low than when it is high, which implies that product quality may more likely lead to new product performance when the environment is stable and changes are easy to predict, analyze, and comprehend.     

The Effect of "Front-Loading" Problem-Solving on Product Development Performance

In recent years, there has been a growing interest in the link between problem‐solving capabilities and product development performance. In this article, the authors apply a problem‐solving perspective to the management of product development and suggest how shifting the identification and solving of problems—a concept that they define as front‐loading—can reduce development time and cost and thus free up resources to be more innovative in the marketplace. The authors develop a framework of front‐loading problem‐solving and present related examples and case evidence from development practice. These examples include Boeing's and Chrysler's experience with the use of “digital mock‐ups” to identify interference problems that are very costly to solve if identified further downstream—sometimes as late as during or—after first full‐scale assembly. In the article, the authors propose that front‐loading can be achieved using a number of different approaches, two of which are discussed in detail: (1) project‐to‐project knowledge transfer—leverage previous projects by transferring problem and solution‐specific information to new projects; and (2) rapid problem‐solving—leverage advanced technologies and methods to increase the overall rate at which development problems are identified and solved. Methods for improving project‐to‐project knowledge transfer include the effective use of “postmortems,” which are records of post‐project learning and thus can be instrumental in carrying forward the knowledge from current and past projects. As the article suggests, rapid problem‐solving can be achieved by optimally combining new technologies (such as computer simulation) that allow for faster problem‐solving cycles with traditional technologies (such as late stage prototypes), which usually provide higher fidelity. A field study of front‐loading at Toyota Motor Corporation shows how a systematic effort to front‐load its development process has, in effect, shifted problem‐identification and problem‐solving to earlier stages of product development. They conclude the article with a discussion of other approaches to front‐load problem‐solving in product development and propose how a problem‐solving perspective can help managers to build capabilities for higher development performance.     

Engineering careers and technology transfer: Japanese companies in the UK

This article examines two issues: first how Japanese companies recruit, train and utilise engineers in their UK transplants; secondly, how technology transfer between British and Japanese engineers is affected by career structures. It draws on questionnaire responses from 88 companies and interviews at a small number of sites.     

Bridging inter- and intra-firm boundaries: management of supplier involvement in automobile product development

Outsourcing has become an important strategy for many firms. Yet, firms need to compete with their competitors who also outsource and may share the same suppliers. This article explores how a firm could outperform others in managing the division of labor with a supplier in product development. Drawing on the empirical data collected from the Japanese auto industry, this paper shows that an automaker needs capabilities to coordinate various activities both externally with a supplier and internally within its own organization, in order to gain better component development performance. Overall, the results imply that outsourcing does not work effectively without extensive internal effort. Copyright © 2001 John Wiley & Sons, Ltd.     

How does the second-order learning process moderate the relationship between innovation inputs and outputs of large Korean firms?

We investigate how the second-order learning process moderates the relationship between innovation performance and two types of knowledge seeking behavior, namely exploration and exploitation. We reinvestigate the second-order learning process of the top 100 Korean firms from 1997 to 2007 by capturing CEO turnover, board turnover, and R&D alliances. We argue that the current findings about exploration and exploitation should be reclassified in terms of innovation input and output. We suggest that researchers investigate the organizational learning process to understand the link between innovation inputs and outputs. Our empirical results show that while innovation inputs are not related to exploratory outputs, the second-order learning process reshapes the relationship between both exploration/exploitation type innovation inputs and exploratory innovation outputs, and that the new focus of organizational learning process can refine current innovation literature.     

War for talents—How perceived organizational innovativeness affects employer attractiveness

Recruiting high potentials is the foundation for creating knowledge, innovation and competitive advantages. Unfortunately, many companies face the problem of having a hard time recruiting high potentials in a tightening labor market. To secure future innovation, growth and competitiveness companies must be attractive for potential employees. Within this respect, past research suggests that innovative companies might be at an advantage as they appear more attractive to employees in general and to those with an innovative personality in specific. Hence, HR communication might use an organization's innovativeness within employer branding to attract high potentials. However, current literature falls short to provide empirical evidence on whether and how the communication of organizational innovativeness affects employer attractiveness and especially attracts innovative employees. The results of our scenario-based experiment (n = 322) show that organizations with an innovative product portfolio and a strong innovation culture appear more attractive to potential employees. These effects turned out to be even stronger for employees which are highly innovative as they care a great deal about the organizational innovativeness of the company they work for. Thus, our findings suggest that communicating organizational innovativeness within employer branding is an effective measure not only to improve employer perceptions in general, but also to attract innovative employees.     

Joint problem solving and organizational learning capacity in new product innovation

There is a growing need for firms to acquire knowledge externally, but the process has become increasingly complicated. This article studies the mediating roles of the three process dimensions of organizational learning capacity (OLC), namely, knowledge acquisition, transformation, and application capabilities, in the context of a joint problem solving (JPS) arrangement with external collaborators for new product innovation. They employed the structural equation modelling method and analyse a sample of 331 high-tech manufacturers in China. Their results supported a conceptual model that shows (i) JPS exerts a positive impact on knowledge acquisition and transformation capabilities; (ii) these two capabilities promote knowledge application capacity; (iii) knowledge acquisition alone, and the combination of application and transformation capabilities, mediate the effect of JPS on both innovation efficacy and efficiency. Knowledge acquisition and application capabilities also jointly mediate the effect of JPS on innovation efficacy. They added to the existing literature by highlighting the need to consider the mediating roles of different OLC dimensions and the external context of JPS for learning capacity acquisition. Our model provides a practical framework for managers to better understand and influence OLC dimensions to improve innovation when engaging in JPS.     

Information systems in fast cycle development: identifying user needs in integrated automotive component development

Product development literature strongly emphasizes the need for open communication between suppliers and Original Equipment Manufacturers (OEMs). There is a widespread expectation that computer-aided communication networks will enable organizational members to work more flexibly, to share knowledge and competencies, and to span functional and company boundaries. However, few studies merge the possibilities of new information technologies and the operational needs of specific groups of users, for example product development engineers. The research reported in this paper aims to fill that gap. Through in-depth case studies of two development projects involving one auto OEM, one of its systems suppliers (working directly with the OEM) and five medium-sized expert suppliers (working either directly with the OEM or through the systems supplier), we identify three groups of user needs that are not currently satisfied by existing information system solutions: improvement of coordination and communication; enhancement of the access to new technological information; and support for the development of an organizational memory. We then explore what kind of information systems might help satisfy the above-mentioned needs. Potential barriers to efficient implementation of information systems in terms of the motivation of people using the systems, the reliability of the information, and the willingness to render information more transparent are discussed. It is concluded that when implementing information systems to support operational development work, it is essential to ground the system specification in clearly identified user needs that reflect the double nature of product engineering, namely the continuous interplay between routines and cognitive processes.     

Spawned with a silver spoon? Entrepreneurial performance and innovation in the medical device industry

Entrepreneurs in high‐technology industries often have prior experience at incumbent firms, but we know little about how knowledge obtained at the prior employer impacts entrepreneurial performance. Drawing on previous work from strategy, economics, and organizational sociology, I assess the impact of industry experience on entrepreneurial performance and innovation in medical device start‐ups. I find that spawns (ventures started by former employees of incumbent firms) perform better than other new entrants. Interestingly, my findings suggest that this superior performance is not driven by technological spillovers from parent to spawn, but rather by nontechnical knowledge related to regulatory strategy and marketing. Copyright © 2008 John Wiley & Sons, Ltd.     

Appropriability and the retrieval of knowledge after spillovers

Research summary: Firms create and capture value through innovation. In technology‐driven firms, there has been an explicit emphasis on appropriability through imitation deterrence and cumulative inventions that build on prior firm innovation. We introduce systematic empirical evidence for a third mechanism of appropriability namely, knowledge retrieval, which is defined as the re‐absorption of previously spilled knowledge. We extend previous studies which consider technological complexity and organizational coupling as predictors of appropriability by examining their impact on knowledge retrieval. We find that technological complexity has a curvilinear relationship with retrieval while organizational coupling has a negative relationship. We discuss the implications of these findings for theories of absorptive capacity, organizational design and appropriability of innovation. Managerial summary: It is a widely held assumption that knowledge should be protected and held tightly within the firm to ensure value creation and value capture. The implicit recognition is that knowledge spillovers, or knowledge leakage, is detrimental to performance. By examining the patterns of citations among patents of 142 semiconductor firms, we study how organizational structure and technological complexity play a role. We find that moderate technological complexity improves appropriability. If imitation deterrence is paramount, then the optimal structure would be a tightly‐coupled organization. In other instances, loosely‐coupled organizations may be superior because they foster internal cumulative innovations and, if spillovers were to occur, they also maximize knowledge retrieval. Our findings suggest that all is not lost when spillovers occur and that firms can continue to benefit in downstream innovations. Copyright © 2015 John Wiley & Sons, Ltd.