Formal and informal appropriation mechanisms: The role of openness and innovativeness

This paper analyses how firms’ degree of openness and innovativeness influence their use of formal and informal appropriation mechanisms. Patents, trademarks, copyrights, and design rights are formal appropriation mechanisms. Secrecy, lead-time, and complexity are examples of informal appropriation mechanisms. Both external search breadth and depth are positively associated with firms’ use of informal appropriation mechanisms, while only external search breadth is positively associated with formal appropriation mechanisms. Firms’ degree of radical (incremental) innovation orientation is negatively (positively) associated with their use of formal appropriation mechanisms. Analysis of the joint impact of openness and innovativeness, suggests that for radical innovators it is external search breadth (rather than depth) that has a positive association with the use of informal appropriation mechanisms. In contrast, for radical innovators external search depth (rather than breadth) is associated with the use of formal appropriation mechanisms. For incremental innovators, external search breadth (rather than depth) is associated with the use of both formal and informal appropriation mechanisms.     

The relationship between knowledge search strategies and absorptive capacity: A deeper look

The present study analyzes how the breadth and depth of search strategies affect the dimensions of a firm's absorptive capacity: exploration, transformation and exploitation. Results of an analysis of a sample of 467 Spanish manufacturing firms reveal that openness of external knowledge search contributes to firms' exploratory, transformative and exploitative learning processes in different ways. In particular, a strong curvilinear effect of external knowledge search breadth on exploratory and exploitative learning was found. It is also important to establish deep relationships with external agents to achieve transformative and exploitative learning up to a certain point after which relationships become negative. Interestingly, for a firm to develop explorative learning, it is not important to establish deep relationships. And for a firm to develop transformative learning it is not important to establish broad relationships. Some suggestions for managers and future lines of research are provided.     

The influence of scope, depth, and orientation of external technology sources on the innovative performance of Chinese firms

It is commonly accepted nowadays that external knowledge sources are important for firms' innovative performance. However, it is still not clear, what dimensions of firms' external knowledge search strategy are crucial in determining their innovation success and whether these search strategies are contingent on different innovation modes. In this study, we analyse how the innovative performance is affected by the scope, depth, and orientation of firms' external search strategies. We apply this analysis to firms using STI (science, technology and innovation) and DUI (doing, using and interacting) innovation modes. Based on a survey among firms in China, we find that greater scope and depth of openness for both innovation modes improves innovative performance indicating that open innovation is also relevant beyond science and technology based innovation. Furthermore, we find that decreasing returns in external search strategies, suggested by Laursen and Salter (2006), are not always present and are contingent on the innovation modes. Next, we find that the type of external partners (we label it “orientation of openness”) is crucial in explaining innovative performance and that firms using DUI or STI innovation modes have different sets of relevant innovation partners. This shows that the orientation of openness is an important dimension—in addition to the scope and depth of openness. As respondents are located in China, this study provides evidence that open innovation is also relevant in developing countries.     

Successful eco‐innovators: Exploring the association between open inbound knowledge strategies and the performance of eco‐innovative firms

The main purpose of this paper is to analyse the association between open inbound knowledge strategies and the performance of eco‐innovative firms in the food and beverage industry. We propose a mixed framework based on the eco‐innovation literature and the open innovation approach. We consider the characteristics in a traditional sector based upon a resource‐based perspective. Three types of firms are distinguished in terms of their sales growth in the Spanish food industry from the least to the most successful eco‐innovators. Using multinomial logistic regression models, it is shown that the diversity of collaborators (breadth of external sources of knowledge) and joint adoption of product and process eco‐innovations are positively associated with the probability of achieving high sales growth. Moreover, we find an inverted U‐shaped relationship between the breadth of the external search and firm performance, but only for the group of the most successful firms. Moreover, operational flexibility, knowledge‐based capabilities and company size are also positively related to the group of successful eco‐innovators.     

The impact of open innovation on firm performance: The moderating effects of internal R&D and environmental turbulence

Researchers have identified open innovation as two dimensions, external technology acquisition and external technology exploitation. This study explores the direct and interactive effects of these two dimensions on firm performance and further examines the moderation effects of two factors (i.e., internal R&D and environmental turbulence) on the relationship between both types of open innovation and firm performance. Based on Chesbrough's open innovation model, multi-item scales were developed to measure two dimensions of firm-level open innovation. Survey results of 176 Taiwanese high tech manufacturing firms provide support for most hypotheses. The result shows that external technology acquisition positively affects firm performance, whereas external technology exploitation does not. This study also finds that external technology acquisition strengthens the relationship between external technology exploitation and firm performance. Both external technology acquisition and external technology exploitation are positively related to firm performance under high internal R&D investment and a turbulent market environment. However, technological turbulence only positively affects the relationship between external technological acquisition, but not external technology exploitation, and firm performance. The findings contribute to enhanced understanding of how the degree of leveraging open innovation dimensions depends on their complementarity, internal R&D, and environmental turbulence.     

Competitive strategy for open and user innovation

I study the incentives to open technologies in imperfectly competitive markets with user innovation. Firms may choose to open part of their knowledge or private information so that it becomes freely accessible to users. Openness decisions are governed by a trade‐off between collaboration and appropriability: by becoming more open, a firm encourages user innovation but hampers its ability to capture value. I find that large firms are less open and invest more in product development than small firms, and that firms react to greater openness from rivals by becoming more open. I also show that compatibility and spillovers have a negative effect on openness, and that firms become more open as the number of competitors increases.     

The dynamic adjustment of environment, strategy, structure, and resources on firm performance

Under the uncertainty of external environment, how do the firms exploit resources, adjust organizational structures, and adopted proper strategies to gain the better performance is an important issue. Many theories have been proposed to explain this phenomenon. Structure-conduct-performance model suggest that industry structure influences the firm behavior and determines the performance of individual firms and of the industry as a whole. Strategy-structure-performance model suggest that strategy must dictate organizational structure, which in turn influences performance. The environmental perspective considers external environments. Resource-Based View suggests that management must focus on the values of resources to generate sustained competitive advantages and to improve performance. Dynamic adjustment among environment, strategy, structure, and resources can become primary causes of the firm performance. The purpose of this paper is to clarify the gaps between different theories and to complement the existing theories. This paper confirmed the measurement of the constructs first and competing models were used to examine dynamic adjustment among constructs and the relationships to firm performance. The results demonstrated that most of the relationships among constructs were supported and support the dynamic adjustment of the constructs. When facing uncertain environments, firms tend to use competition strategies as well as cooperation strategies; firms tend to formalize organizational structures and to amass resources. Firms which conduct cooperation strategies and possess more resources will attain better performance levels than those that do not. As to the theoretical models, the structure-conduct-performance model and the environmental perspective were supported. Practitioners should recognize the importance of the industrial and environmental factors.     

An analysis of firm-level innovation strategies in the US biotechnology industry

This study examines factors that may affect innovation strategies and performance of firms in the biotechnology industry. Specifically, differences between factors common to firms with high R&D intensity and those to firms with low R&D intensity are investigated. Biotechnology firms with relatively higher levels of R&D intensity attribute their innovation performance to research-based innovation factors and strategies such as strengthening their own research capabilities, entering into research collaborations with universities, industry leaders and other biotech firms, and licensing their technology. These strategies can be summarized as alignment within the industry. Firms with relatively lower R&D intensity have a hybrid focus—they invest in R&D but may also have products on the market. These firms attribute their innovation performance more so to production-based innovation factors and strategies such as gaining market access and maintaining connections with customers. Their strategy focuses on competitiveness, marketing, and distribution channels, while not ignoring the importance of a strong research base and the need to advance technologically. In a sense, strategies employed to achieve successful innovation reflect the stage of innovation in which a firm is operating for a particular product or process.     

Boundary‐spanning search and firms' green innovation: The moderating role of resource orchestration capability

Building on resource‐based theory and resource orchestration theory, we investigate the impact of two characteristics of boundary‐spanning search, search breadth and search depth, on firms' exploitative and exploratory green innovations. We also examine the moderating role of resource orchestration capability. The results of data analysis from 186 manufacturing firms in China show that both search breadth and search depth have inverted U‐shaped relationships with exploitative and exploratory green innovations. Furthermore, resource orchestration capability is found to moderate the inverted U‐shaped relationship between boundary‐spanning search and green innovation. Specifically, with high resource orchestration capability, the inverted U‐shaped relationships of search breadth with exploitative and exploratory green innovations are flattened, whereas the relationships of search depth with exploitative and exploratory green innovations are almost linear. Our research contributes to the literature on green innovation by uncovering the complex effects of boundary‐spanning search on exploitative and exploratory green innovations.     

跨界搜寻策略、知识异质度与企业技术创新绩效

以我国106家高科技企业为研究样本,探讨跨界搜寻广度、深度与平衡对企业技术创新绩效的影响,以及内外部知识异质度在其中起到的中介作用。结果表明：跨界搜寻广度、深度与企业技术创新绩效之间存在倒U形关系,而跨界搜寻平衡正向影响企业技术创新绩效,内外部知识异质度在跨界搜寻策略与企业技术创新绩效关系中起到中介作用。     

Exploration and exploitation and firm performance variability<Emphasis>:</Emphasis> a study of ambidexterity in entrepreneurial firms

A challenge young entrepreneurial firms usually face is reducing variability in firm performance in order to mitigate survival difficulties. This paper suggests ventures should have a clear preference for either exploration or exploitation, because such an approach to ambidexterity reduces variability in firm performance. We specifically concentrate on the moderation effects of firm size and environmental dynamism in a sample of young entrepreneurial firms. We found evidence for the effects of lower performance variability in dynamic environments. This is an important insight, because environmental dynamism is a contingency where performance variance is considered problematic for entrepreneurial firms. Our research has implications for the establishment phase of entrepreneurial firms as it suggests they should carefully consider how much they explore to be as different as possible and how much they exploit to be as effective as possible. This is particularly important when they are younger and exposed to dynamic environments.     

Green innovation and knowledge: The role of size

This paper reports research on relationship between firm's knowledge sourcing strategy and green innovation. The data are taken from Spanish Technological Innovation Panel survey during 2007–2011. The study contributed to the literature by focusing on the moderating role of firm size on the relationship between knowledge sources and green innovations. Results from over 5,000 firms indicate a shift in the focus from internal knowledge to external knowledge when developing green innovations as firms grow in size. Despite benefits from broad knowledge search on green innovations, the relationship has an inverted U shape. The diminishing returns of knowledge breadth on green innovations are present for smaller firms and disappearing as firms get larger. Government policies promoting more coordination and knowledge complementarity between private and public sector will help to influence more knowledge transfer, ensuring a more sustainable and green economy.     

The more the merrier? Network portfolio size and innovation performance in Nigerian firms

A positive relationship between firms' networking activities and innovativeness has been consistently established in the literature on innovation. However, studies considering different innovation types, and on developing countries are scarce. This paper addresses questions concerning the relationship between networking strategies and innovativeness of firms, using innovation survey data on Nigerian firms. Quantile regression is applied to trace the link between portfolio size and innovation at different levels of innovative success. The results show a positive relationship between a firm's innovation performance and the size of its networking portfolio. This relationship varies across different innovation types and with increasing innovation performance. The findings suggest that the widely accepted portfolio approach to external search for knowledge is not necessarily always the best—its utility depends on the firm's current level of innovative success. This poses a challenge for open innovation.     

Firm performance in dynamic environments: The role of operational slack and operational scope

This study examines the effects of operational scope (breadth of product offering, extent of geographical diversification, and extent to which production processes can effectively meet varying demand) and operational slack (resources in excess of what is required to fulfill expected demand) on firm performance, contingent on two components of a firm's dynamic environment, unpredictability and instability. We collate quarterly data on 3857 publicly traded firms in 19 industries from the years 1991 to 2013 (representing 99,559 firm-quarter observations). Using panel data analysis, we find that narrow product offerings, low geographical diversification, low levels of excess capacity, and low inventory slack are each positively associated with firm performance. More importantly though, we find that operational scope is associated with improved performance in unpredictable environments, whereas operational slack is associated with improved performance in unstable environments. These findings contribute to the research on operations strategy by identifying the industry-specific environmental conditions under which operational slack and operational scope are associated with firm performance.     

External corporate venturing modes as new way to develop dynamic capabilities

Today, firms encounter scarce resources and rapid technology change which render formerly successful business models obsolete. Research shows that some firms perform better than others in continuously discovering, evaluating, and exploiting opportunities in volatile environments and that this is dependent on firm’s dynamic capabilities. Besides obtaining dynamic capabilities through internal R&D activities, firms have open up their innovation process to pursue dynamic capabilities outside their organizational boundaries through external corporate venturing by accessing startup's technological capabilities necessary to innovate. External corporate venturing is a means to develop new distinctive capabilities and businesses by exploring and exploiting business opportunities outside a firm’s existing boundaries. Drawing on the dynamic capability literature, we use a multiple case study approach to examine the contribution of external corporate venturing to firms’ dynamic capabilities. Our results reveal that firms indeed use corporate venturing to identify and exploit startup’s technological knowledge and competencies to increase firm’s dynamic capabilities. But our empirical data also shows that not every firm is fully profiting from all dynamic capability phases as their corporate venturing modes are not linked with each other and cumulative effects are not realized.     

The role of openness in the fuzzy front-end of service innovation

The early stages of innovation involve high levels of uncertainty, leading to it being labelled as the “fuzzy-front end” (FFE). Although openness has been identified as pivotal to innovation performance in the open innovation literature, little effort has been put into exploring its role in the FFE. Specifically, this study examines ‘openness competence’ within the FFE–i.e., the ability of a FFE team to explore, gather and assimilate operant resources from external sources by means of external searches and inter-organisational partnerships. The aim is to investigate the impact of openness competence on front-end uncertainty reduction and service innovation success. Data were obtained from a survey of 122 IT-based service innovation projects implemented by IT service provider firms in Thailand. The results suggest that openness competence positively influences both the degree of uncertainty being reduced during the FFE and the overall success of service innovations. These findings offer several implications for research on open innovation and the FFE as well as encouragement to managers to apply a more open approach to the FFE of their service innovation projects.     

Technological opportunity and the relationship between innovation output and market structure

This study examines influences of technological opportunity on the relationship between market structure and the innovation output of different‐size firms. A simultaneous‐equations model is specified and estimated separately for technologically progressive and technologically unprogressive industries. The study finds that innovation activities of small firms and large firms bear different relationships to market structure, in part resulting from interindustry differences in technological opportunity. In technologically progressive industries, innovation output (especially of small firms) is lower in the presence of high concentration and is increased substantially by high R&D intensity. Large‐firm innovation output has a positive effect on industry concentration, but only in technologically unprogressive industries. Copyright © 2005 John Wiley & Sons, Ltd.     

Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry

Due to worsening environmental conditions around the globe, firms have been investing a great deal of money in green technologies as a way of coping with the environmental crisis. This paper uses a unique data set based on the Korea Innovation Survey to examine the impact of green innovation on labor productivity, and the determinants of environmental activities in 2010. The empirical results show that green innovation intended for both firm and customer benefits has a positive effect on labor productivity. This finding means that firms need to implement firm‐oriented green innovation as well as customer‐oriented green innovation in order to increase their performance. Our findings also show that there are significant differences in aggregate green innovations depending on different firm sizes and industries. Specifically, large firms implement environmental activities more than small ones, and pollution‐intensive industries tend to invest more in activities related to environmental technology. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Some immediate - but negative - effects of openness on product development performance

This paper charts an unnoticed theme in the current debate on open innovation, namely the foundational question whether increasing openness is beneficial? The paper approaches this question by conceptualising the degree of ‘openness’ and analyses the importance of increasing degrees of openness for NPD performance. Inter-organizational relationships in New Product Development lay the foundation for operationalising openness because these represent important sources of ideas and knowledge in purposive inbound open innovation. This exploratory paper finds that on immediate NPD performance measures the single firm strategy is performing better than the collaborative strategy. However, we also find that the use of internal and external relationships is highly correlated and that these interact with each other. Finally, with increasing degrees of openness the product development projects are slower than the norm in the industry, slower than what is usual for the firm’s projects and had higher cost than the norm in the industry and the firm’s usual projects. These results offer a more critical perspective on openness and NPD performance than the literature on the open innovation paradigm suggests. The paper discusses these results and offers some challenges for management and research of open innovation.     

Building absorptive capacity to organise inbound open innovation in traditional industries

The discussion on open innovation suggests that the ability to absorb external knowledge has become a major driver for competition. For R&D intensive large firms, the concept of open innovation in relation to absorptive capacity is relatively well understood. Little attention has; however, been paid to how both small firms and firms, which operate in traditional sectors, engage in open innovation activities. The latter two categories of firms often dispose of no, or at most a relatively low level of, absorptive capacity. Open innovation has two faces. In the case of inbound open innovation, companies screen their environment to search for technology and knowledge and do not exclusively rely on in-house R&D. A key pre-condition is that firms dispose of “absorptive capacity” to internalise external knowledge. SMEs and firms in traditional industries might need assistance in building absorptive capacity. This paper focuses on the role of collective research centres in building absorptive capacity at the inter-organisational level. In order to do so, primary data was collected through interviews with CEOs of these technology intermediaries and their member firms and analysed in combination with secondary data. The technology intermediaries discussed are created to help firms to take advantage of technological developments. The paper demonstrates that the openness of the innovation process forces firms lacking absorptive capacity to search for alternative ways to engage in inbound open innovation. The paper highlights the multiple activities of which absorptive capacity in intermediaries is made up; defines the concept of absorptive capacity as a pre-condition to open innovation; and demonstrates how firms lacking absorptive capacity collectively cope with distributed knowledge and innovation.