Opportunity recognition and SME performance: the mediating effect of business model innovation

Opportunity recognition is vital for small and medium-sized enterprises (SMEs), but SMEs face challenges in capturing recognized opportunities. Given that opportunity recognition does not automatically lead to higher SME performance and that SMEs need to take appropriate actions to exploit recognized opportunities to achieve better performance, it is imperative to explore the mediators that enable SMEs to translate opportunity recognition into higher performance. This study proposes that business model innovation may be a key conduit through which opportunity recognition affects SME performance. Based on a dataset of 155 SMEs, we find that the positive relationship between opportunity recognition and SME performance is mediated by business model innovation. These findings not only aid SMEs in accomplishing the performance effect of opportunity recognition, but also provide some insights into the implications of business model innovation.     

Linking business model design and operational performance: The mediating role of supply chain integration

Despite the increasing interest in the role of business model design (BMD) in improving performance, its influence on operational performance remains unexplored, as do the underlying mechanisms of such effects. Drawing on dynamic capability theory, we propose that supply chain integration (SCI), including external integration and internal integration, mediates the relationship between BMD and operational performance. Matched survey data and objective performance data were collected from 131 Chinese manufacturing firms in three waves to test our research model. The key results are that external integration fully mediates the effect of novelty-centered BMD on operational performance, and efficiency-centered BMD directly improves operational performance. Theoretical and practical insights on how BMD and SCI can be leveraged to support operational performance are discussed.     

Client dependence and vendor innovation: The moderating role of organizational culture

With the dramatic increase in technological interconnectedness between firms and the overall speed of technological change, organizations depend on each other to survive and stay competitive. While it is generally believed that dyads and networks can offer advantages over internal development in the innovation process, the authors suggest that it is not necessarily the case. Using a sample of 120 vendor firms that work in information technology industries in the Indian subcontinent, they find that client dependence in the inter-organizational relationship decreases vendor innovation. To resolve this dark side of business relationships, they further examine how the organizational culture can impact the dependence-innovation relationship. In line with organization literature, the authors distinguish two sub-dimensions of outcome-oriented culture: performance orientation, which reflects a firm's internal focus on employee performance, and competitiveness, which reflects a firm's focus on external competitors and markets. It is found that a vendor's competitiveness facilitates innovation, and that it weakens the negative effect of client dependence on vendor innovation. However, performance orientation strengthens the negative effect of client dependence on vendor innovation. Accordingly, in order to prevent themselves from falling into the dependence trap in the innovation process, firms need to build an externally oriented competitive culture and avoid overemphasizing their internal performance.     

The fit between market learning and organizational capabilities for management innovation

This paper examines how market learning (both explorative and exploitative) interacts with organizational capabilities (technological capabilities and marketing capabilities) to affect management innovation. Drawing upon data from a sample of 272 firms each of which contributed two key informants to the study (resulting in a total of 544 respondents), we find that both exploratory and exploitative market learning have a positive effect on management innovation. The effects of exploratory and exploitative market learning on management innovation are contingent on technological and marketing capabilities. Specifically, technological capabilities enhance the positive effect of exploratory market learning and weaken the positive effect of exploitative market learning on management innovation. Marketing capabilities enhance the positive effect of exploitative market learning and weaken the positive effect of exploratory market learning on management innovation. This study contributes to the literature by integrating organizational learning theory with the absorptive capacity perspective to explain management innovation.     

Priorities when selecting business partners for service innovation: The contingency role of product innovation

Firms increasingly engage in business-to-business cooperation to develop relevant innovations. Scholars have shown that firms can improve service innovation either by cooperating with suppliers or by cooperating with competitors. However, there is a dearth of research examining the relative importance of cooperating with suppliers and competitors to improve service innovation, and how this relative importance depends on embracing product innovation. Based on a cross-industry sample of 16,062 Spanish firms, this article addresses these research gaps, finding that firms can benefit from cooperating with both suppliers and competitors to boost service innovation, without prioritizing either. However, this article also shows that, if firms embrace product innovation, they should prioritize cooperating with competitors to boost service innovation.     

An investigation into the mediating role of cross-functional coordination on the linkage between organizational norms and SCM performance

Organizational norms as a set of embedded values and beliefs have long been recognized in literature to provide norms that bind individuals into collectivities. Drawing on resource dependence and relational marketing theories, the present study specifies five organizational norms: cooperative, cross-functional information sharing, intraorganizational knowledge sharing, participative culture and mutual trust for supporting cross-functional coordination in supply chain management (SCM). These organizational norms are examined in terms of the mediating role of cross-functional coordination for the relationship between organizational norms and supply chain performance. Analyses of data from a survey of high-tech firms in the U.K. substantiate that organizational norms impact on both supply chain responsiveness and firm performance through cross-functional coordination as a mediator. The implications of the positive effect of organizational norms on SCM performance are discussed for theory, practice and research.     

The false promise of technological determinism: the case of enterprise resource planning systems

According to software vendors and consultants, Enterprise Resource Planning systems (ERPs) transform the nature, structure and management of work regardless of organisational context. This paper contests this technologically deterministic view of organisational change by demonstrating the role that discourse plays in the social construction of ERPs.     

The impact of SME internationalization on innovation: The mediating role of market and entrepreneurial orientation

In today's highly competitive global environment, even small and medium-sized enterprises (SMEs) need to make product and process innovations in order to outperform the competition and satisfy global customers. Investigating the success factors of innovation performance has become critical for the survival and competitiveness of SMEs. The aim of this study is to explore the impact of the degree of internationalization (DoI) on innovation performance through the mediating factors of market and entrepreneurial orientation in the context of emerging-market SMEs. We tested our model and hypotheses with 235 SMEs in the United Arab Emirates, which is an emerging market. The results obtained from partial least squares estimates indicate that the degree of internationalization positively affects innovation performance and, more importantly, that this relationship is indirect and fully mediated by market and entrepreneurial orientation for SMEs. These results shed light on the mechanism of the effect of DoI on innovation performance in the emerging-market SME context.     

Perceptions of organizational context and job attitudes: The mediating effect of organizational identification

Informed by social exchange theory and social identity theory, we developed a conceptual model that examines the mediating role of organizational identification in the relationship between employees’ perceptions of organizational context and their job attitudes. In our model, the antecedents include perceived organizational support (POS), procedural justice, and perceived job insecurity. The outcome variables consist of affective organizational commitment, job satisfaction, and intentions to leave. Our respondents were 591 workers employed in three different firms in China. The results of regression analyses showed that employees’ job attitudes are affected by their perceptions of organizational context and organizational identification. Further, organizational identification was found to mediate the effects of POS on the outcome variables.     

Development and return on execution of product innovation capabilities: The role of organizational structure

This paper conceptualizes and tests an integrated model that combines the dual-core and ambidextrous models of product innovation. The integrated model distinguishes the development and return on execution of radical and incremental product innovation capabilities. The authors argue that organizational structure plays an important dual role as an (a) antecedent to the development of radical and incremental product innovation capabilities and (b) as a moderator in determining the new product performance returns from executing such capabilities. Using a sample of high-tech firms, the study finds that organizational structure is more consistent in predicting the execution of product innovation capabilities into new product performance than in predicting the development of such capabilities. For example, the effect of radical product innovation capability on new product performance is negative but nonsignificant under a formal structure, while the same effect is positive under an informal structure. Conversely, the effect of incremental product innovation capability on new product performance is positive under a formal structure, while the same effect is negative under an informal structure. The implications for managing different types of product innovation capabilities under formal versus informal structures and their effects on new product performance are discussed.     

Ambidextrous balance and channel innovation ability in Chinese business circles: The mediating effect of knowledge inertia and guanxi inertia

Drawing on organizational learning theory and literature on guanxi, this study examines how and why ambidextrous learning balance influences firm innovation capability in Chinese business circles. We propose a U-shaped relation between ambidextrous learning balance and firm innovation capability which is mediated by guanxi inertia and knowledge inertia in different ways. Specifically, ambidextrous learning balance has an inverted U-shaped impact on guanxi inertia and further influences firm innovation capability. Whereas, ambidextrous learning balance has a linear positive influence on innovation capability through a decreased level of knowledge inertia. Based on survey data collected from, The results obtained from a sample of 197 Chinese channel enterprises using SEMs analysis provide strong support for our hypotheses. In addition, the findings based on firms with unbalanced ambidextrous learning indicate that as opposed to exploratory learning, higher level of exploitative learning leads to an increase in guanxi inertia and a decrease in knowledge inertia. These conclusions reveal how ambidextrous learning balance influence innovation capability for a firm with inherent learning preference which is not discussed by the extant research. At the same time, this study fills the gap of ambidextrous learning balance by considering the influence of culture. Our work also informs foreign practitioners of the optimal ways of learning for innovation in China.     

The role of linked legitimacy in sustainable business model development

In this paper we use legitimacy as a lens to explore how sustainable business models (SBMs) develop within and across business ecosystems. We explore legitimacy as a resource that is created through sustainable development projects. We introduce the idea of linked legitimacy as a key driver for developing SBMs both within the business ecosystem of the focal firm, and in the overlapping ecosystems of their stakeholders. Using data from three business cases we explore different ways firms build and exploit linked legitimacy and how this leads to SBM development. We suggest that linked legitimacy can cross firm boundaries as a resource to be exploited broadly by ecosystem stakeholders. Finally, we re-conceptualize the rules of engagement for developing SBMs. In our model of SBM development, each firm then takes advantage of the resource (linked legitimacy) available in the ecosystem and is free to use it opportunistically, which drives SBM development.     

Vertical innovation partnerships and relational performance: The mediating role of trust,interdependence, and familiarity

Which relational atmosphere would allow clients and suppliers to fully benefit from their innovation partnerships? Adopting an interactionist approach, we hypothesized that elements of a partnership atmosphere mediate the relationship between partnership type and relational performance. Based on taxonomic analysis of 160 cross-industry vertical innovation partnerships (VIPs) with differing contractual, relational, and organizational arrangements, we identified four VIP types: free, project-based, elaborated, and exclusive. Our results did not support a direct effect from VIP types on performance. However, we found that a trustful atmosphere enables achieving and exceeding expected benefits in both project-based and exclusive VIPs, whereas a familiar atmosphere enables achieving and exceeding expected benefits only for exclusive VIPs, and interdependence allows exceeding benefits only for project-based VIPs.     

Leadership and organizational learning's role on innovation and performance: Lessons from Spain

Leadership style has been traditionally emphasized as one of the most important individual influences on firm innovation. Scholars are now paying growing attention to the possibility that the collective capability of organizational learning plays a key role in determining innovation. We propose that leadership style, an individual feature, and organizational learning, a collective process, simultaneously and positively affect firm innovation. A structural equation model and data from 408 large firms in four sectors supported our hypotheses. Organizational learning had a stronger direct influence on innovation than CEO transformational leadership for our sample; however, leadership had a strong, significant influence on organizational learning, indirectly affecting firm innovation. Additionally, innovation positively and significantly influenced performance. Organizational learning also positively affected performance, but interestingly mainly through innovation.     

Changes in firm knowledge couplings and firm innovation performance: The moderating role of technological complexity

We investigate the effect of changes in a firm's knowledge couplings on its innovation performance. We develop arguments to explain how changes in couplings among existing knowledge domains and those between new and existing knowledge domains affect the generation of valuable inventions. We also examine how observed domain complexity, an indicator of the inherent interdependencies among knowledge domains, moderates the effects of changes in a firm's knowledge couplings on innovation performance. Our results suggest that a change in couplings among existing knowledge domains hurts innovation outcomes, but not when the degree of domain complexity is high, whereas coupling new and existing knowledge domains leads to improved outcomes, but not when the degree of domain complexity is high. Copyright © 2013 John Wiley & Sons, Ltd.     

The influence of material resources on innovation projects: the role of resource elasticity

More (rather than fewer) material resources are thought to be the key driver in innovation project performance. Recent empirical evidence, however, suggests that the influence of material resource availability on innovation projects is not as simple and straightforwardly positive as it may seem. We build on the concept of an innovation project team's resource elasticity to disentangle the material resource–innovation output conundrum. This concept is analogous to the marketing concept of price elasticity and points to four types of innovation project teams based on their resource elasticity: In resource‐elastic teams, the relationship between material resources and innovation outcomes is positive (hence, they are ‘resource driven’ when able to dispose of adequate material resources or ‘resource victims’ when lacking these material resources). In contrast, and as a significant departure from previous work, resource‐inelastic teams show no or even a negative relationship between material resource adequacy and team performance (thus, the teams are ‘resourceful’ if they can perform with limited material resources or ‘resource burners’ if they show low success with adequate material resources). Because neither adequate nor inadequate material resources seem to be a reliable predictor of success, we synthesize empirical research efforts that point to each team type's key characteristics to derive novel implications for managing innovation projects.     

The field of radical innovation: Making sense of organizational cultures and radical innovation

Organic organizational structures and cultures facilitate innovation because they allow organizations to shift their understanding of what a product, service or technology means. Yet, organic organizations may have to instill mechanistic structures and bureaucratic processes if they produce successful radical innovations. Thus, the basis of innovation can be undermined by its consequences. To explore this issue, this paper analyzes data from an ongoing longitudinal case study of a SME digital-design agency that developed a radical innovation for the market research industry. The paper observes that founders of the organization shifted their position to become managers as a result of their radical innovation and that other members of the organization have, consequently, re-evaluated their attitude toward the organization. To conceptualize our findings we turn to the work of Pierre Bourdieu. His notion of fields—which structure experiences and are, themselves, structured by experiences—offers a framework to understand the dynamics within an organization that occur as a result of a successful radical innovation. The contribution of our paper is: theoretically, we relate the discussion of innovation to wider social theories of practice and, thus, introduce temporal and cultural dynamics into the account of radical innovation; methodologically, we provide an example of a longitudinal study; and, in managerial terms, we indicate where divisions occur within an organization concerning the construction of meaning between managers and employees after a radical innovation.     

Understanding the role of service innovation behavior on business customer performance and loyalty

Providing new services to customers gives firms a competitive advantage in the market. Consequently, firms strive to develop innovative service that delivers new value propositions to customers and leads to customer satisfaction and the acquisition of new customers. The authors investigate the relationship between the innovative behavior of service providers, business customer performance, and business customer loyalty in the safety industry. The study's results show that technology-oriented and co-creation-oriented innovative behavior leads to business customer performance. Business customer performance is closely related to recommendations and re-contracts. Moreover, the degree of safety involvement has a moderate effect between service innovation and business customer performance. The findings have important theoretical and managerial implications for service innovation for researchers as well as service providers.     

The relationships between intangible organizational elements and organizational performance

Despite the growing awareness of the importance of researching core strategic resources and activities, the work that has been done to date has largely taken the form of anecdotal reports and case study analysis. We have yet to see large‐sample studies demonstrating how organizational elements, independently, complementarily and interactively, may or may not enhance the organization's performance. Moreover, little attention has been given to researching this topic in public sector organizations. The present study aims to bridge this gap by examining the impact of a set of independent intangible organizational elements and the interactions among them on a set of objective organizational performance measures in a sample of local government authorities in Israel. The results of a multivariate analysis indicate that organizational performance (measured by self‐income ratio, collecting efficiency ratio, employment rate, and municipal development) can be well explained by six intangible organizational elements (managerial capabilities, human capital, internal auditing, labor relations, organizational culture, and perceived organizational reputation) and the interactions among them, which need to be taken into account in any cost effective development. Copyright © 2004 John Wiley & Sons, Ltd.