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.     

Preferred supplier programs for consulting services: An exploratory study of German client companies

Research has recently provided evidence that at least some companies have involved purchasing departments in buying professional services such as management consulting services. Some departments have established preferred supplier programs (PSPs) for consulting services, i.e., programs for consultancies with whom a company seeks to build up long-term relationships. While there are several studies that analyze such programs for suppliers of goods, research on business services is limited. Our aim is to present an exploratory analysis of PSPs for consulting services. Based on a survey of German client companies, we found that the most important reason for establishing PSPs is to reduce costs and transaction costs. Furthermore, our findings revealed that companies with and without PSPs for consulting services apply high significance to relational selection criteria. Moreover, in companies with PSPs, purchasing departments are more frequently involved in selecting consultancies compared to companies without PSPs. Finally, we found that companies with and without PSPs do not differ in their assessment of problems associated with the purchasing of consulting services. The study contributes to research on the purchasing of consulting services by indicating that the consultant–manager relationship should be extended to a service triad, involving purchasing professionals, managers, and consultants. Moreover, we contribute to research on PSPs by extending the focus to PSPs for knowledge-intensive service providers.     

Organizing IT purchases: Evidence from a global study

Information technology (IT) purchasing is covering an increasing part of companies’ expenditure. Scholars mainly investigated IT purchasing in terms of make or buy drivers from an IT perspective. Similarly, companies have been focusing on make or buy decisions and specifications definition in relation to technological characteristics. This often resulted in failures related to the goods/services purchased due to e.g. lack of negotiation skills, contracting, and suppliers’ relationship management. Accordingly, IT purchasing might require new structures and processes management.The purpose of the paper is to investigate what are the possible configurations for IT purchasing, and how these configurations are characterized in terms of purchasing process (i.e., strategic purchasing, sourcing and supply) and organization (i.e., roles involved, level of centralization, and span of control). Furthermore, the paper asks how IT relevance and purchasing maturity might affect these configurations. Through 12 case studies of leading international companies, four main configurations of the organization and the purchasing process for IT purchasing were identified, namely neutral (no specific approach is in place), IT oriented (the IT department takes the lead over the purchasing department), purchasing oriented (the purchasing department manages the whole IT sourcing process) and IT strategic (IT and purchasing departments jointly manage the IT purchasing process). The choice of the configuration is driven by IT strategic importance (low for neutral and purchasing oriented) and purchasing maturity of the company (low for neutral and IT oriented).     

A processual analysis of the purchasing and supply organization in transition: the impact of offshoring

Many companies have resorted to offshoring in order to reduce costs and grow their global market presence. Yet it remains unclear what impact the offshoring strategy has on the purchasing and supply organization (PSO) of these companies. In this paper the nature and type of changes offshoring organizations make within the PSO are examined, i.e. how new purchasing and supply management (PSM) structures and practices emerge, are maintained or are discarded as production operations are relocated. The processual perspective is used to analyze empirical data from a rich, in-depth case study within a global engineering company. Results suggest that in line with the law of requisite variety the PSO changes thoroughly when the company relocates its production activities through the captive offshoring mode, but does so in a more disjointed and non-linear manner than the current stage models would suggest. The offshoring process provides momentum for PSO change and influences where and how the change happens. We present five propositions for further research and conclude that offshoring provides managers with opportunities to: (i) change and influence the strategic direction of PSM in their organizations, and (ii) build viable strategies of retaining and managing knowledge and PSM competencies in global operations.     

“财务报表保险制度”审计委托模式分析

随着安然、世通等著名公司审计失败丑闻的揭露,现行的财务报表审计制度成为人们质疑的焦点。美国罗恩(Ronen)教授,提出财务报表保险制度,引起了强烈的反响。本文对财务报表保险制度的相关问题进行了分析,并就建立我国财务报表保险制度需要完善的配套措施提出了建议。     

Are supply chain management theories culturally constrained? An empirical assessment

Culture plays an increasingly important role in supply chain management as many manufacturing firms have linkages to suppliers and customers from various countries. In this paper we propose treating culture as an explanatory variable to test the assumption that existing theories are universally applicable. The primary research question was: Do purchasing theories built on samples from mainly North American companies with Anglo-Saxon cultures apply in other cultural contexts? We developed and tested a model where top management??s view of the purchasing function affects purchasing practices and manufacturing performance. The statistical results provide evidence that the engagement and efficacy of purchasing practices is highly dependent on culture. This finding has significant implications from the perspective of decision making in international supply chain management. Specifically, top managers across multiple cultures could decide to structure and evaluate the purchasing function similarly, but these decisions could lead to different practices and different outcomes depending on the culture.     

The stock market response to changing drug patent legislation: The case of compulsory licensing in Canada

Between 1969 and 1987 pharmaceutical companies holding patents in Canada were subject to immediate compulsory licensing. This study evaluates the stock market response to both the imposition of immediate compulsory licensing in 1969 as well as its subsequent revocation in 1987. Since the affected companies were multinational enterprises, we analyse the movement of share prices on the New York Stock Exchange. The results indicate that patent protection is viewed positively by the stock market, but only when measured with hindsight (in 1987). Our results are consistent with other studies that suggest that patent protection does allow the appropriation of gains from knowledge by firms in the pharmaceutical industry. Thus, pharmaceutical companies would benefit from international agreements to provide more stringent levels of patent protection.     

Implementing organizational change in supply towards decentralization

This paper presents the findings from research in large companies investigating implementation issues faced by chief purchasing officers as their supply organization changed to greater decentralization. Once the decision was made to decentralize, responsibility for implementation was given to the chief purchasing officer (CPO). Firms changing their supply organization to a more decentralized structure faced a number of implementation issues, including the business unit concerns, role of the chief purchasing officer, top management involvement, changes to existing purchasing staff and the involvement of consultants. In the nine changes studied across seven companies, the decentralization process also required the CPO to address a number of simultaneous activities, including cost reduction objectives and implementation of information technology systems. A surprising “purchasing paradox” was also uncovered as top management still expected decentralized supply units to provide additional savings.     

Voluntary Adopters of Integrated Reporting – Evidence on Forecast Accuracy and Firm Value

This study investigates how integrated reporting (IR) creates value for investors. It examines how providers of financial capital benefit from an improved firm information environment provided by IR. Specifically, this study investigates the effect of voluntary IR disclosure on analyst earnings forecast accuracy as well as on firm value. To do so, we use an international sample of 167 listed companies that voluntarily publish an integrated report. Our analysis shows no significant effect of a voluntary IR publication on analyst earnings forecast accuracy and no significant effect on firm value. We thus do not find evidence for the fulfillment of IR's promises regarding improved information environment and value creation of voluntary adopters. We conclude that such companies might already have a relatively high level of transparency leading to an absent additional effect of IR disclosure. Positive effects of IR appear to be more relevant in environments where IR is mandatory.     

Procurement of logistics services and sustainable development in Europe: Fields of activity and empirical results

This paper strives to answer the general question; how far purchasers of logistics services take into account aspects of sustainable development. Modeled on the German Sustainable Development Strategy, which is based on the EU Sustainable Development plan, five fields of activity are defined: the reduction of transport intensity and emission, the reduction of land use, the choice of carrier under consideration of sustainable aspects, the permanent improvement of working conditions, and the enhancement of qualified employment. Then, propositions for purchasing companies of logistics services are developed, which contribute to safeguard ecological as well as social sustainability. In order to conduct an explorative study, a questionnaire was sent to 750 purchase and logistics managers. It was found that purchasing companies place high value on ecological and social aspects. But the perceived importance is not associated with purchasing companies' own contributions to logistics service providers' sustainable activities. Additionally, it was seen that purchasing companies exert only a minor influence on logistics service providers regarding ecologically and socially sustainable actions. A fundamental precondition for a sustainably oriented procurement of logistics services can be seen in the purchasing companies' awareness of the need for integrating sustainable aspects in economic decisions.     

Property Tax Equalization Rates: Implications of Their Use in Tax Inequality Cases in the City of New York

A bstract . The New State Board of Equalization and Assessment annually determines for each taxing jurisdiction within the state, an estimate of the ratio of its assessed values to market values. The methods used in constructing such ratios are reviewed as well as the ways in which the ratios are used. Special emphasis is given to the use of the ratio by taxpayers in tax inequality or certiorari cases. Using data on New York City , it is estimated that maximum use of the ratio in such cases could lead to as much as a 22 percent reduction in the City's property tax base. As well, estimates are made of the redistributive effects across different property types in the city under the assumption that tax rates are increased to just offset the revenue effects of the tax base erosion. The most obvious effect is the increased burden on residential housing owner-occupiers.     

Patent-based investment funds as innovation intermediaries for SMEs: In-depth analysis of reciprocal interactions,motives and fallacies

SMEs and academic spin-offs play an important role in generating innovations but face resource and competency constraints that have implications for commercializing their technologies. In two in-depth case studies we analyze how patent-based investment funds (PBIFs), operating as innovation intermediaries, help overcome these constraints. In contrast to other patent intermediaries, PBIFs acquire patents and patentable inventions at an early stage of technology development when access to capital is particularly critical. They invest in the technological and legal advancement of their portfolio, which is mostly conducted in close interaction with the technology-providing SMEs and their original inventors. These PBIFs not only provide high added-value in the course of technology commercialization but also operate international networks to facilitate the commercialization of SMEs' technologies at an international scale. Although PBIFs are a promising new agent in the heterogeneous field of innovation intermediaries, their commercialization results and the actual rate of returns are not yet well established.     

Organizational structure characteristics’ influences on international purchasing performance in different purchasing locations

This study contributes to the understanding of how firms should structure their purchasing organization to improve their performance. While the research into structural characteristics’ impacts on purchasing performance is evolving, it is still incomplete, especially concerning the contingencies on different purchasing environments. Drawing on ideas from the organizational information processing and contingency approaches as well as the international business literature, the present study proposes a model in which three key organizational structure characteristics – centralization, standardization, and specialization – are associated with purchasing performance. This study posits that the relationships are contingent on a purchasing location’s formal and informal institutional context. Based on a sample of 195 German manufacturers, the model is empirically tested using structural equation modeling. The findings support the relevance of organizational structure characteristics for international purchasing and firm performance and they also support the notion that the effects are contingent on the purchasing location’s institutional context.     

Industry dynamics with knowledge-based competition: a computational study of entry and exit patterns

I propose a computational model of industry evolution capable of matching many stylized facts. It views the firm as a myopic but adaptive entity whose survival depends on its ability to perform various activities with greater efficiency than its rivals. In this model, the shakeout pattern arises naturally in the early stage of industrial development. I provide a full comparative dynamics analysis of how various industry-specific factors determine the numbers and the rates of entries and exits over time as well as the ages of the exiting firms. An earlier version of this paper was circulated and presented under the title, “Non-Equilibrium Industry Dynamics with Knowledge-Based Competition: An Agent-Based Computational Model.” I would like to thank the two anonymous referees, Jason Barr, Ed Bell, Jon Harford, Joe Harrington, Bill Kosteas, Edward Nell, and the conference participants at the EEA-2007 Meetings (New York, NY) as well as the 2007 International System Dynamics Conference (Boston, MA) for their helpful comments and suggestions. I gratefully acknowledge the support of the College of Graduate Studies at Cleveland State University.     

Managing tensions between exploitative and exploratory innovation through purchasing function ambidexterity

This paper investigates how companies can manage tensions between exploitative and exploratory innovation by developing an ambidextrous purchasing function. We identify four types of ambidexterity (structural, sequential, contextual and managerial) and discuss how these can be combined to complement each other. We present an in-depth case study of a large firm (S Corp), which has implemented an ambidextrous purchasing function to contribute simultaneously to exploitative and exploratory innovation. We observe how the four types of ambidexterity were manifested and applied to balance purchasing's contribution to both exploratory and exploitative innovations. The case study shows how the different types of ambidexterity can be combined to mitigate tensions. Based on our case study findings, we identify a two-stage process of developing purchasing ambidexterity, combining the four types of ambidexterity over time. Our findings enrich the understanding of how companies can develop an ambidextrous purchasing function to facilitate purchasing's contribution to exploitative innovation and exploratory innovation.     

A contingency-configurational view of purchasing operations: The mediating role between supplier relationship and firm performance

The literature has considered purchasing and supply management activities from a strategic perspective, but the tactical role of purchasing operations has yet to be explored. Purchasing operations represent the internal modus operandi for transactions with suppliers, comprising three main activities – purchasing transactions, purchasing document management, and purchasing assessment – and supportive activities like purchasing knowledge management. Following the contingency theory, we hypothesize that these internal activities mediate between external supplier relationship management and firm performance (financial, customer and delivery performance). Complementarily, we adopt the configurational theory to hypothesize that this link between external and internal activities can be combined to increase firm performance. To test this contingency-configurational view of purchasing operations, we conducted a quantitative survey with 234 companies. The regression results of the contingency analysis show that purchasing operations activities have a full mediation role in most relationships between supplier relationship management and firm performance, while knowledge management positively moderates the association between purchasing assessment and customer performance. Moreover, the cluster analysis for the configurational analysis shows that supplier relationship management and purchasing operations follow maturity levels of joint implementation of internal and external activities. Our findings shed light on the purchasing operations by defining the activities representing this concept and showing their role in supply management. We also contribute to practice by proposing an integrative system that helps managers organize the firm's purchasing and supply management activities.     

Sustainability concerns in luxury supply chains: European brand strategies and French consumer expectations

Sustainability in supply chain management has become a concern in both research and practice. Although consumption and purchasing have been significantly explored in the luxury sector, a gap in supply chain studies is still evident. Therefore, the aim of this article is to examine how industry bodies and supply chain partners address sustainability concerns in the European luxury sector and how they respond to consumer expectations. In an explanatory study, we have collected data about sustainable supply chain practices in 11 European luxury good companies, by interviewing and surveying 13 managers. In a first consumer study, we held interviews with French luxury consumers in Bordeaux about their sustainability expectations (N = 170). The results show that while the distribution of attention is dependent on the respective supply chain activities, luxury goods companies address sustainability concerns and aim to take responsibility for their activities. However, the emphasis is on the dimension of economic sustainability. A comparison with sustainability expectations of French luxury goods consumers suggests that business practices are not perfectly well aligned with these expectations. Consumers put more emphasis on social and environmental sustainability dimensions. On the other hand, business activities concerning waste reduction and raw material management rather well match consumer expectations.     

The Ascendance of New York Fashion

This article examines the evolution of New York City from a low‐end, high‐volume apparel manufacturing hub to an international fashion capital. Drawing on evolutionary economic theories of path‐dependence, it argues that New York City's initial specialization in ready‐to‐wear apparel has shaped its subsequent development as a mass‐market oriented industry. At the same time, however, it shows how key institutional actors were able to alter the industry's course of development at critical historical junctures by nurturing and promoting their own local design talent. As such, the article's investigation into New York's ascendance as an international fashion center challenges the dominant interpretation of path‐dependence in regional development theory and practice. It contends that industries are not held captive to past choices and illustrates how an industry's origins can shape but not over‐determine its economic development trajectory. L'article examine l'évolution de la ville de New York, laquelle est passée d'un centre de manufacture industrielle de vêtements bas de gamme à une capitale internationale de la mode. En se basant sur les théories économiques évolutionnaires de path‐dependence, il affirme que la spécialisation initiale de New York dans le prêt‐à‐porter a modelé son évolution ultérieure vers une industrie de masse. Parallèlement, il montre toutefois comment des acteurs institutionnels clés ont modifié le cap de l'expansion industrielle à des moments historiques cruciaux en encourageant leurs talents de création locaux. Ce faisant, l'étude de la suprématie new‐yorkaise en tant que centre international de la mode défie l'interprétation dominante de la ‘dépendance de sentier’ dans la théorie et la pratique du développement régional. En effet, elle soutient que les secteurs d'activité ne sont pas prisonniers des choix passés, et illustre comment les origines d'une industrie peuvent influencer sa trajectoire d'expansion économique sans la déterminer irrésistiblement.     

Organizing the purchasing department for innovation

Innovation is by far one of the most important competitive priorities in the current business context. Companies increasingly rely on their supply base to support their innovation potential. As a consequence, the purchasing department might dramatically affect the firm??s innovation capability. This paper aims to investigate??using a multiple case study approach??how the organizational design of the purchasing department could determine a firm??s capability to foster and manage innovation. Seven highly innovative companies were visited and the structures of their purchasing departments were analyzed. Three different configurations for the purchasing department were identified and described.