Market-facing innovation networks: How lead firms partition tasks, share resources and develop capabilities

We focus, in this paper, on ‘market-facing innovation networks’. Rooted in the modular and integrated nature of the products they develop, high levels of product innovation activity are occurring through the behaviours of firms, leading and developing such networks. These lead firms are small and medium enterprises, traditionally tasked with business to business distribution and commercialisation activities. This study enhances our understanding of how task partitioning and resource sharing practices, and their evolution over time, are related to the nature and scope of capabilities of lead firms within the context of market-facing innovation networks. Through a multiple case study methodology, our findings depict and characterise efficiency and relational approaches of lead firms. Outcomes, in terms of firm and network level innovativeness and commercialisation, are discussed. Findings are explained by the tension created by the need to manage on-going routine distribution activities and emergent networked product innovation activities.     

The network perspective and the internationalization of small and medium sized software firms from Syria

This study has employed a case-based approach to explore the relevance of relational factors in explaining the internationalization of six software B2B SMEs from Syria. It contributes by providing rare empirical insights on the internationalization behavior of Middle Eastern SMEs and redressing, albeit slightly, the apparent research gap in the internationalization of knowledge-based SMEs from developing countries. Analysis results suggest the importance of the relational perspective in explaining the initial internationalization, market selection and internationalization speed of the investigated software firms. It emerged that the case firms either reacted to the cross-border opportunities offered by their relational contacts or proactively pursued overseas opportunities through existing and newly developed relationships. Their market entry decisions and internationalization pace also appear to have been influenced by these relationships. Both social and business networks were found to be important, but social ties seemed more influential at initial stages, with business networks becoming more dominant subsequently. The article concludes with appropriate recommendations for managerial decision making and future research.     

The internationalisation from a network perspective: A longitudinal study

This article explores a range of internationalisation options in terms of their adequacy in explaining the patterns of internationalisation undertaken by contemporary organizations. It is argued that there is a life cycle in the internationalisation of firms and that existing explanations of internationalisation cater for some, but not all, elements in this life cycle. The paper then outlines a longitudinal study of the internationalisation of an Australian firm from its early tentative involvement via export in the 1960's to its acquisition by an overseas firm in 2000. This study shows that network embeddedness appears to offer the most comprehensive explanation for the international life cycle of contemporary organizations.     

Networks for the commercialization of innovations: A review of how divergent network actors contribute

Successful commercialization is of great importance to innovative firms, and the recent literature has increasingly acknowledged that networks make a contribution not only to research and development but also to commercialization. However, research on networks facilitating the commercialization of innovations is scattered across divergent disciplines. A single company is rarely capable of generating successful diffusion in the commercialization of an innovation; success often requires cooperation between individual actors and organizations, and support from stakeholders. Consequently, the network aspect of commercialization is crucial. The aim of this study is thus to integrate the knowledge on how current research and business has employed the network approach in commercialization, and how contributors external to the innovator firm can facilitate the commercialization of innovations. On the basis of an extensive metatheoretical literature review and a qualitative and quantitative content analysis on articles linking networks explicitly to commercialization, this study produces a conceptual synthesis on network actors' contribution potential to commercialization. The analysis identified divergent network approaches to commercialization and gathered extant knowledge on “commercialization networks” from the multidisciplinary literature of innovation management, marketing, management, technology, entrepreneurship, and other relevant disciplines. Networks for commercialization have been linked to divergent network approaches, such as industrial networks, social networks, strategic networks, and entrepreneurship networks. According to the findings, customers and users, distributors, complementaries, suppliers, investors, associations, public organizations, and policy makers and regulators can support commercialization by performing practical commercialization tasks, facilitating innovation adoption/diffusion and creating markets. We also identified four modes of contribution. In terms of methods, qualitative research dominates current examinations on the topic while longitudinal research and investigations from multiple network actors' perspectives are almost absent. The results also indicate a need to develop coherent conceptualizations and accumulate knowledge that would strengthen the theoretical basis of the research. A pivotal contribution of this article is that it is the first to generate an integrative framework and a research agenda on networks for commercialization — a theme that is emergent, multifaceted, and crucial to innovative companies.     

Industrial marketing firms and knowledge transfer: Toward a basic typology of community structures

Industrial firm boundaries are dynamic, changing with every new alliance or acquisition. As boundaries evolve, managers must develop organizational structures that effectively leverage knowledge. This paper presents and explains the analytical foundation of a typology of community structures, featuring the basic structures of Crew, Séance, and Guru. This typology is applied to three examples of knowledge transfer in industrial marketing. A competence exploitation example examines knowledge transfer between a firm and a subsidiary established primarily for increasing existing product sales in a new market. A competence creation example examines the community structures for utilizing the product and market knowledge of a subsidiary to benefit the firm's new product development decisions. The final example examines the “tech vs. touch” tradeoffs in interpersonal communication and knowledge transfer. The back-to-basics typology of community structures helps stimulate strategic thinking, and facilitates future explorations of knowledge management in industrial marketing.     

Customers' participation in product development through crowdsourcing: Issues and implications

This paper focuses on customers' participation in a product development process through crowdsourcing practices. Results from five case studies of consumer goods companies suggest that the implementation of crowdsourcing operations affects the components of an existing business model and requires rethinking the marketing function. Moreover, despite some organizational constraints and fears, crowdsourcing generates a win–win relationship, creating value for both firms and customers. However, the findings reveal two negative consumer reactions to crowdsourcing practices, i.e., feelings of exploitation and being cheated, that may jeopardize their success. The results suggest the need to establish an open business model based on crowdsourcing.     

Marketing capabilities and innovation-based strategies for environmental sustainability: An exploratory investigation of B2B firms

While emerging literature on sustainability shows that environmentally responsible strategies can contribute to competitive advantage and enhanced financial performance, little is known about specific marketing capabilities that lead to sustainable consumption behavior, and whether implementing such strategies leads to firm competitive advantage. Using the case method approach, this study explores marketing-related strategies and practices pertaining to sustainable consumption as reported by leading sustainable firms in the B2B context. We examine case studies of forty seven B2B firms and identify key marketing capabilities that tie to innovation-based sustainability strategies, sustainable consumption behavior and firm performance. We use our findings to develop a conceptual framework linking marketing capabilities to innovation strategies for firm sustainability, sustainable consumption behavior and firm competitive advantage, and put forward propositions for future research.     

Making sense of network dynamics through network pictures: A longitudinal case study

There have been a number of attempts to describe and analyse networks and company positions in them and to help companies to manage or change their “network position” [ [H?kansson & Snehota, 1995] and [Ford et al., 2003]]. But most of these have confined their attention to a particular point in time or have looked at network evolution over a restricted time period, such as Lundgren (1995) [Lundgren, A. (1995) Technological Innovation and Network Evolution. Routledge, London and New York.] and Andersson (1996) [Andersson, Per (1996), The emergence and change of Pharmacia Biotech 1959-1995. The power of the slow flow and the drama of great events, doctoral thesis, Stockholm School of Economics, Stockholm.]. This paper is based on the idea that insights into the dynamics and evolution of networks and companies may be found by taking a longer term perspective. It uses historical documents and correspondence to examine the evolution of a network and of a single company within it over a period of close to a century. The paper highlights the fact that networks and networking are not modern inventions, but are intrinsic to the nature of business activity. The case study also provides illustration of a number of network phenomena, such as network position, networking and the paradoxes that are endemic in networks. Finally, the paper concludes with some lessons that may be drawn from the case for successful management in a network.     

Studying innovation processes in real-time: The promises and challenges of ethnography

This paper discusses the promises and challenges of innovation ethnographies. We depart from the notion that innovation processes are highly contingent, messy and non-linear and examine ways in which these processes have been studied. Our focus is on the challenges posed by the use of ethnographic methods to study innovation in-the-making. Our discussion is illustrated by an example culled from a longitudinal, real-time study of an innovation process in the food industry, inspired by actor-network theory (ANT) and its injunctions to focus on controversies and follow the actors. We conclude that although innovation ethnographies pose plenty of theoretical, methodological and practical challenges, they remain a promising and powerful method to map out the complex and tortuous paths of these processes.     

A new perspective on open innovation: established and new technology firms in UK bio‐pharmaceuticals

The aim of this paper is to explore open innovation (OI) implementation and its impact on firm innovation performance in sectors experiencing technological discontinuities. The paper employs the framework of inbound, outbound and coupled OI to identify processes reflecting sourcing, externalising and exchanging knowledge across organisational boundaries on upstream and downstream innovation activities and explores their impact on the innovation performance of new and established technology firms. The empirical setting is the UK bio‐pharmaceuticals sector during 1991 and 2001, a paradigmatic era of discontinous change and intensified OI implementation. First, our findings show that new technology firms (NTFs) and established technology firms (ETFs) differ in their extent and patterns of inbound, outbound and coupled OI, reflecting that they implement OI to manage their competences in light of technological change. Second, we identify a complex and multifaceted relationship between OI and patenting performance, with NTFs experiencing enhanced performance from some OI processes while ETFs experiencing challenges. The paper suggests that delineating OI into inbound, outbound and coupled, along upstream and downstream activities, offers a deeper understanding of the role of OI in innovation, guiding selective implementation in pursuing enhanced innovation performance during periods of discontinuous technological change.     

Service innovation and adoption in industrial markets: An SME perspective

Service innovation is essential, particularly for companies operating in highly competitive environments, as it can lead to innovation adoption behaviors, which in turn influence overall business performance. Drawing upon the innovation adoption and relationship marketing literature, and grounded within the structure-conduct-performance paradigm and social exchange theory, this study examines the reputational and relational mechanisms through which service innovation influences the innovation adoption decisions of small and medium-sized enterprises (SMEs). A survey of 336 Australian SME representatives reveals the critical role of suppliers’ sustainable competitive advantage (SCA) and affective commitment in mediating the relationship between service innovation and innovation adoption behavior. However, industry-relevant moderators in the form of technological turbulence and long-term orientation constrain the mediating effects. Specifically, perceived SCA has stronger mediating effects among short-term-oriented customers, whereas affective commitment has stronger mediating effects when technological turbulence is low. The findings provide useful insights for organizations in terms of capitalizing on their reputation and relationship with customers to encourage the adoption of innovation by SMEs.     

A methodology for the construction of dynamic capabilities in industrial networks: The role of border agents

The article presents a methodology for the formation and functioning of industrial networks that favors the development of dynamic capabilities with regard to the creation, integration, transfer and absorption of knowledge. This methodology has been put into practice in a case study: Lignum Facile. The presence of some misalignments between our initial proposal and its implementation helped us reshape and emphasize particular processes and flows associated to the methodology. Beyond the typical localization and agglomeration advantages, the analysis suggests that the success in the formation and functioning of industrial networks is mainly related to their potential to formulate immaterial relationships capable of stimulating learning processes, the dissemination of technological knowledge and innovative activities. Particularly, we found that the inclusion of border agents – intermediaries between the market and industry such as architects, engineers or designers – is fundamental to develop innovations at the intersection of different scientific and technological disciplines.     

Reconciling the paradox of supply-side and demand-side strategies in industrial innovation

Abernathy and Utterback [Abernathy, W.J. & Utterback, J.M., (1978). Patterns of industrial innovation. In Burgelman, R.A., Maidique, M.A. and Wheelwright, S.C., Strategic management of technology and innovation: 149-155. McGraw Hill.] argued that successful firms seek a functional product performance strategy in the early stage of industrial innovation and seek a cost reduction strategy in the late stage. However, Adner and Levinthal [Adner, R. & Levinthal, D., (2001). Demand heterogeneity and technology evolution: Implications for product and process. Management Science, 47(5), 611-628.] argued firms enhance functionality or reduce prices to a level that corresponds to consumer willingness to pay in the early stage, and increase performance at a relatively stable product price (i.e. new strategy they claimed) in the late stage. This study reconciles this paradox of choosing strategies using an integrative framework for theory development. Generated from the framework, a numerical indicator of performance/cost ratio directs firm strategy choices in industrial innovation when an environment changes. This study justifies the popular use of performance/cost ratio in practices as primary criteria to predict the winning dominant standard from a value creation perspective and elucidates an evolution of industrial innovations by using a three-year field study.     

The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets

This study utilized structural equations modeling (SEM) to explore the positive effects of relationship learning and absorptive capacity on competitive advantages of companies through their innovation performances in Taiwanese manufacturing industry. The results of this study showed that relationship learning and absorptive capacity positively influence upon innovation performances of companies, and further have positive effects on competitive advantages of companies. In addition, this study divided the sample into three groups by the levels of relationship learning and absorptive capacity and found that there was a significant difference of innovation performance among these three groups: ‘Highly Capable Companies’, ‘Medially Capable Companies’, and ‘Lowly Capable Companies’. It is important for ‘Lowly Capable Companies’ to increase both of their relationship learning and absorptive capacity to enhance their innovation performances.     

Market share,advertising, R&D,and profitability: An empirical analysis of leading industrial firms in Japan

This paper develops a dynamic model of a leader firm which chooses the time paths of R&D and advertising inputs so as to maximize the present value of expected profits. From this theoretical model simultaneous-equations system for market share, advertising, R&D, and profitability is derived and estimated using the data on the leading industrial firms in Japan. Our results show that, as far as top firms are concerned, market share and demand growth have significant positive effects on profitability, and an increase in the stock of goodwill increases market share as well as profitability.This study was financially supported by the Ministry of Education in Japan. Helpful comments were provided by H. Odagiri. Also I am indebted to an anonymous referee for advice and criticism on various points.     

The impact of state shares on corporate innovation strategy and performance in China

This paper examines the impact of state shares on corporate innovation strategy and performance in the People’s Republic of China (PRC). Through an investigation of 541 publicly traded companies in five high-tech industries during the period between 2000 and 2005, we find that the presence of state shares have a positive effect on the corporate choice of a process innovation strategy over a product innovation one. However, this relationship is moderated by the overall ownership concentration ratio. Moreover, our findings suggest that companies with large state shares prefer to conduct innovations independently rather than collaboratively with others, and they usually achieve better innovation performance. These findings indicate that the government play a role as both an investor and a resource allocation coordinator and therefore complicate the relationship between ownership structure and corporate innovation activities.

Non-linear relationship between industrial service offering and sales growth: The moderating role of network capabilities

In an effort to approach the mixed findings regarding the relationship between a firm's industrial service offering and its performance, this study analyzes the impact of the industrial service offering on sales growth and the moderating role of network capabilities. The proposed research model is tested based on data from 91 Finnish manufacturing firms. Our results demonstrate a non-linear effect of the service offering on sales growth. We also find that network capabilities enhance the effect of the service offering on sales growth. For managers of manufacturing firms, the results imply that the active development of a comprehensive service offering should be implemented in conjunction with the development of organizational capabilities, such as network capabilities, to create value and promote improved performance.     

The impact of market orientation on the development of relational capabilities and performance outcomes: The case of Russian industrial firms

The article investigates the role of market orientation as an antecedent for the development of relational capabilities and performance in Russian industrial firms. We test the direct role of different aspects of market orientation on business performance in comparison to an indirect and mediated influence via improving a firm's ability to become embedded in relational structures. The results of an empirical study demonstrate the differential impact of components of market orientation - customer orientation, competitor orientation, and interfunctional coordination - as direct and indirect antecedents of relational capabilities and thus subsequently of overall firm performance. It can be shown that in Russian industrial markets competitor orientation directly and positively impacts on performance, while the other two components of market orientation have only a mediated effect on performance via the development of relational capabilities.