Differential Effects of the Primary Forms of Cross Functional Integration on Product Development Cycle Time

In markets characterized by high rates of technological and market change product life cycles tend to be shorter, resulting in the increased importance of competing on the basis of product development cycle time. For firms operating in these dynamic market environments, competing on the basis of cycle time may not only be a source of competitive advantage, but in some industries may actually be essential for survival.
In this investigation the relative importance of five forms of cross functional integration and R&D integration of information or knowledge from past projects were explored in terms of their effects on product development cycle time. The five forms of cross functional integration included R&D/marketing integration, R&D/customer integration, R&D/manufacturing integration, R&D/supplier integration, and strategic partnerships. A sample of 65 U.S. and Scandinavian high technology firms (or strategic business units) were studied. The sample included firms from the computer, telecommunications, instruments, specialty chemicals, biotechnology, and software industries.
The results demonstrated that R&D integration of knowledge from past projects explained the largest degree of variation in product development cycle time. R&D/marketing integration and R&D/customer integration explained the next largest degree of variation in cycle time reduction. Cross cultural generalizability tests demonstrated that the results were generalizable across the U.S. and Scandinavian samples of firms. In addition, the results were found to be generalizable across industry or product category for five of the six forms of integration.     

Patterns of international R&D cooperation for new product development: the Olivetti multimedia product

Abstract
The aim of the paper is to identify a number of different patterns of international R&D cooperation during the initial phases of the product development process. This is a case-study of new product development based on the work of the Olivetti Multimedia Laboratory in Pisa, how it set up its own pattern of multinational collaboration in the idea generation and pre-competitive phase; how, in turn, this collaboration led to new R&D collaboration agreements to satisfy specific problem-solving requirements connected with the confirmation of a dominant design, though limited to a certain extent by previous agreements between Olivetti and other firms; the role played by marketing in the choice of alternative solutions. Finally, in the product implementation phase, the emergence of a defined technological paradigm leads to a highly competitive environment, where R&D collaboration is increasingly directed towards multifunctional requirements (R&D, manufacturing, marketing) within a strategic network of alliances that involves large sized companies, start-up firms, industrial and university research units.     

Product–service innovation and performance: the role of collaborative partnerships and R&D intensity

Treating the intersection of the strategic partnerships, R&D intensity and servitisation literatures, this study explores empirically whether external collaborative service development and provision and industrial R&D intensity help to unpack the complex relation between product–service innovation (servitisation) and performance. We argue that manufacturing firms implementing services benefit from strategic partnerships with Knowledge‐Intensive Business Service (KIBS) firms. KIBS partnering provides opportunities for downsizing, externalising risks and sharing knowledge. Additionally, manufacturers in R&D‐intensive industries are more likely to benefit from implementing service provision than firms in other sectors because of industry dynamics and reduced customer uncertainty. The study surveys executives in 370 large manufacturers worldwide. Results reinforce the importance of concentric strategic partnerships to successful product–service innovation in high R&D industries.     

How capital structure influences diversification performance: A transaction cost perspective

Extant theories agree that debt should inhibit diversification but predict opposing performance consequences. While agency theory predicts that debt should lead to higher performance for diversifying firms, transaction cost economics (TCE) predicts that more debt will lead to lower performance for firms expanding into new markets. Our empirical tests on a large sample of Japanese firms support TCE by showing that firms accrue higher returns from leveraging their resources and capabilities into new markets when managers are shielded from the rigors of the market governance of debt, particularly bond debt. Furthermore, we find that the detrimental effects of debt are exacerbated for R&D intensive firms and that debt is not necessarily harmful to firms that are either contracting or managing a stable portfolio of markets. Copyright © 2013 John Wiley & Sons, Ltd.     

External technology acquisition in large multi-technology corporations

Based on different contractual forms and their associated degrees of organizational integration, a typology of strategies for technology acquisition (sourcing) is constructed. Based on a sample of corporations in Europe, Japan and US, it is shown that external acquisition of technology through various strategies increases in importance in general. Product case studies further show that external acquisition of technology is associated with technology diversification into increasingly costly new technologies. As a result corporations become multi-technological ('multech'). At the same time quasi-integrated corporate systems of innovation arise in which in-house R&D is managed together with a mix of strategies for external acquisition of technology, using various contractual forms. This presents new challenges to traditional in-house R&D management. Technology diversification is moreover shown to be associated with growth of sales as well as with growth of R&D expenditures. A high level of external technology acquisition presents risks that ought to lead companies to consider technology based product diversification.     

Who explores further? Evidence on R&D outsourcing from the survey of research and development

Building off the resource‐based view and the knowledge‐based view, our study aims to examine determinants of firms’ R&D outsourcing, using annually‐conducted firm‐level survey data of Japanese R&D companies from 1984–2012. This survey allows us to measure strategic R&D outsourcing, isolated from those more for cost‐reducing, such as prototyping, testing and inspecting. The results corroborate the argument of complementarity in scale between internal R&D and R&D outsourcing. We also find that firms employing more doctorate holders and diversifying in knowledge spaces tend to make more use of R&D outsourcing. This study sheds light on firms’ absorptive capacity, associated both with higher‐order R&D human capital and diversified knowledge spaces, as determinants of R&D outsourcing.     

Organizing for Inbound Open Innovation: How External Consultants and a Dedicated R&D Unit Influence Product Innovation Performance

Firms increasingly acquire technological knowledge from external sources to improve their innovation performance. This strategic approach is known as inbound open innovation. The existing empirical evidence regarding the impact of inbound open innovation on performance, however, is ambiguous. The equivocal results are due to moderating factors that influence a firm's ability to acquire technological knowledge from external sources and to transform it into innovation outputs. This paper focuses on a relevant yet overlooked category of moderating factors: organization of research and development (R&D). It explores two organizational mechanisms: one informal and external‐oriented (involvement of external consultants in R&D activities) and one formalized and internal‐oriented (existence of a dedicated R&D unit), in the acquisition of technological knowledge through R&D outsourcing, a particular contractual form for inbound open innovation. Drawing on a capabilities perspective and using a longitudinal dataset of 841 Spanish manufacturing firms observed over the period 1999–2007, this paper provides a fine‐grained analysis of the moderating effects of the two organizational mechanisms. The involvement of external consultants in R&D activities strengthens the impact of inbound open innovation on innovation performance by increasing marginal benefits of acquiring external technological knowledge through R&D outsourcing. Moreover, it reduces the level of inbound open innovation to which the highest innovation performance corresponds. Instead, the existence of a dedicated R&D unit makes the firm less sensitive to changes in the level of inbound open innovation, by reducing marginal benefits of acquiring external technological knowledge through R&D outsourcing, and increases the level of inbound open innovation to which the highest innovation performance corresponds. The results regarding the role of informal and formalized R&D organizational mechanisms contribute to research on open innovation and absorptive capacity, and also inform managers as to what organizational mechanism is recommended to acquire external technological knowledge, depending on the objectives that the firm pursues.     

The Effects of Knowledge Depth and Scope on the Relationship between R&D Alliances and New Product Development

In this study, we extend the new product development (NPD) literature that proposes that firms' knowledge depth, defined as the reuse of well understood technical knowledge, and scope, defined as the use of newly acquired technical knowledge, and new knowledge accessed from R&D alliances all positively impact NPD. Building on the knowledge‐based view of the firm, we posit that the impact of firms' R&D alliances is limited when their internal knowledge depth and scope are adequate for NPD needs. We suggest that although firms form R&D alliances to gain the right to access external knowledge of R&D alliance partners, they are not obligated to invest in resources to integrate external knowledge from R&D alliances. We propose that they wait to see if their internal knowledge depth and scope prove sufficient for NPD. If the external knowledge proves to be unnecessary, firms choose not to invest the resources required to integrate this knowledge with their internal knowledge. Alternatively, we suggest an increased impact of R&D alliances on NPD when firms are more limited in their internal knowledge depth and scope. We propose that when knowledge depth and scope prove insufficient, firms make the additional investments required to integrate external knowledge from R&D alliances with their internal knowledge stock. This reasoning is consistent with real options theory as it has been applied in alliance research, where strategic alliances are characterized as real options. We find support for our hypotheses using panel data of 738 firm year observations for 143 U.S. biopharmaceutical firms operating in 2007. Our study contributes to the NPD literature and suggests new directions for future research.     

The strategic dilemmas of innovative enterprises: proposals for high‐technology sectors

High levels of research and development (R&D) expenditure, pressure for innovation and the creation of new knowledge are features that distinguish high‐technology (high‐tech) enterprises from other, less technologically advanced, firms. Confronted with multiple contemporary approaches to strategy and turbulence in their environment, these enterprises make strategic choices continuously and dynamically. This paper proposes a model and matrix for the classification of high‐tech enterprises’ development strategies (with regard to their specific features), which are then verified. Qualitative research was conducted in 61 medium and large high‐tech companies based in Poland that operate either in Poland or in the global marketplace. The results show that high‐tech firms have the fundamental goal of developing R&D activity as a resource (and its redundancy) rather than product/market goals. The studied firms strive above all for leadership in innovation, creating new technologies based on their own R&D resources, while also using outside sources and mostly applying the personalisation approach in knowledge management. However, they choose different paths for product and market development, depending on the opportunities presented by the environment, and the firm's ability to identify and take advantage of these.     

The Paradox of Openness: How Product and Patenting Experience Affect R&D Sourcing in China?

External R&D sourcing may help firms compete in an environment characterized by rapid technological changes. Yet, prior studies have produced conflicting findings on how a firm's technological experience affects the extent to which the firm engages in external R&D sourcing. Although many highlight that firms with extensive technological experience are equipped with more technological knowledge, collaborative skills, and absorptive capacity, encouraging greater levels of external R&D, others suggest the opposite due to potential exchange hazards and partnership conflicts. Adopting an external partner's perspective, the current study reconsiders this “paradox of openness” by analyzing how a focal firm's product experience and patenting experience affect an external partner's tendency to provide external R&D services to the focal firm. Specifically, this study explore how a focal firm's knowledge protectiveness and tacitness embedded in its product and patenting experience influences the external partners' motivation for knowledge transfer. This study predicts that a firm's product experience increases the focal firm's external R&D sourcing because it provides high levels of knowledge tacitness and external openness and can encourage external partners to share and exchange knowledge with the focal firm. In contrast, a firm's patenting experience decreases the focal firm's external R&D sourcing because it denotes knowledge explicitness and protectiveness and may discourage external partners to share and exchange knowledge with the focal firm. This study further predicts that patenting experience has a negative moderating effect on the relationship between product experience and external R&D sourcing. Using a data set of 575 high‐tech firms in China, this study finds support for our predictions. Our findings contribute to the growing literature on the knowledge‐based view and technology entrepreneurship in emerging markets.     

How Do Interaction Activities among Customers and between Customers and Firms Influence Market Performance and Continuous Product Innovation? An Empirical Investigation of the Mobile Application Market

Mobile application markets (MAMs) significantly differ from other existing marketplaces at least in two aspects. First, customers (app users) and firms (app providers) frequently interact with each other in real time, which is not common in the conventional marketplaces. Second, many app providers incorporate customers’ opinions or suggestions into their software upgrades, representing one of the most unique and interesting aspects of MAMs. Therefore, it has become critical to understand the impact of interaction activities not only among customers, but also between customers and firms on the market performances of new products in MAMs. One of the most significant issues firms face is whether firms reflect on customers’ postpurchase interaction activities, and the next interesting question is how firms respond to them. This study explores the effects of customer‐to‐customer (C2C), customer‐to‐firm, and firm‐to‐customer interaction activities on market performance. In addition, this study investigates how communication activities influence a firm's tendency to pursue continuous product innovation through research and development (R&D). Using data obtained from a major MAM, T store, three models that are respectively related to product sales, product lifetime, and a firm's R&D activity for product upgrades, are applied to empirically test hypotheses concerning the effects of interaction activities. In our analyses of market performance, a hierarchical log regression model with 10,840 weekly transactions data set related to product sales (model A) and 291 aggregate transactions related to product lifetime (model B) is used. Results indicate that C2C and customer‐to‐firm communication activities have a positive impact on sales, but little relationship with product lifetime. However, a firm's continuous product R&D has a positive impact on both sales and lifetime performance. Our analysis of a firm's R&D (model C) shows that C2C and customer–firm communication increases a firm's R&D activity. Taken together, these results have important implications for customer–firm interactions, market performance, and R&D strategies.     

Formation of R&D consortia: industry and company effects

This study investigates economic and strategic inducements of R&D cooperation. We focus on industry and company factors that affect a firm's rate of participation in R&D consortia. These factors are analyzed in a dynamic context using a sample of 312 Japanese firms in 74 industries between 1969 and 1992. We find a firm in an industry with weak competition and appropriability conditions has a higher rate of consortia participation. A firm's R&D capabilities, network formation through past consortia, encounter with other firms in product markets, age, and past participation in large‐scale consortia also positively affect its tendency of consortia formation. Copyright © 2002 John Wiley & Sons, Ltd.     

Why strategic factor markets matter: “New” multinationals' geographic diversification and firm profitability

This study examines firm profitability differences among “new” multinational enterprises (NMNEs) pursuing geographic diversification into two distinct types of geographic locations based on the development of strategic factor markets. Building on strategic factor markets theory, we propose that firm‐specific advantages of NMNEs contribute differentially to firm profitability because they evolve differently given strategic factor market differences in host compared to home countries. Using a sample of Korean manufacturing MNEs during the 1993–2003 period, we find that geographic diversification into resource‐poorer host countries has a positive relationship with firm profitability, whereas geographic diversification into resource‐richer host countries has a U‐shaped relationship with firm profitability. Our study demonstrates why strategic factor markets—an important and often overlooked contextual factor—matter in exploring rationales for geographic diversification. Copyright © 2014 John Wiley & Sons, Ltd.     

A Closer Look at Cross‐functional R&D Cooperation for Innovativeness: Innovation‐oriented Leadership and Human Resource Practices as Driving Forces

Because cross‐functional research and development (R&D) cooperation appears to drive innovation, many firms have invested considerably in it. However, despite substantial efforts to improve information and communication infrastructures or to bring departments in closer proximity with one another, structural investments often fail to produce the desired positive impact on cross‐functional R&D cooperation. This failure may arise because firms undertaking these structural investments do not manage their employees adequately. Extant research acknowledges the importance of motivating and enabling members of the R&D function to cooperate with other functions. Yet empirical studies investigating the relative importance of leadership and different human resource (HR) practices for enhancing cross‐functional R&D cooperation are scarce. Drawing on the resource‐based view and organizational support theory, this study investigates how innovation‐oriented leadership and HR practices might support members of the R&D function and encourage cross‐functional R&D cooperation, which enhances product program innovativeness. Specifically, members of the R&D function who are supported in their innovation efforts through innovation‐oriented leadership and HR practices should reciprocate for the support they receive by intensifying their cross‐functional cooperation to achieve greater product program innovativeness. Relying on multi‐informant data from 125 firms with assessments from marketing and R&D managers, this study shows that innovation‐oriented leadership and HR practices have different effects on cross‐functional R&D cooperation. A structural equation modeling‐based analysis of the hypothesized relationships reveals that innovation‐oriented leadership, rewards, and training and development have considerable positive effects. In contrast, recruitment does not drive cross‐functional R&D cooperation. Because firms usually operate in dynamic markets, and increasingly acquire relevant information from customers when generating innovations, this study also considers market‐related dynamism and customer integration as important contingency factors. For firms facing market‐related dynamism and those relying on customer integration, leadership and training and development are particularly effective for enhancing cross‐functional R&D cooperation. By integrating two theoretical perspectives, this study not only advances knowledge on the antecedents of cross‐functional R&D cooperation, but also helps explain differences in their relative effectiveness. Furthermore, it both adds to the discussion of whether monetary rewards are appropriate means to foster innovation and challenges existing assumptions about the role of recruiting for innovation.     

Mitigating the Challenges of Partner Knowledge Diversity While Enhancing Research & Development (R&D) Alliance Performance: The Role of Alliance Governance Mechanisms

This article explores the answers to the following unresolved research question: How do firms mitigate the collaboration challenges associated with partner knowledge diversity and enhance alliance performance? The study provides an alliance performance enhancing framework by identifying two types of partner knowledge diversity: (1) technology base diversity and (2) R&D process experience diversity, and links them with R&D alliance performance. Additionally, the moderating effects of the two types of alliance governance mechanisms (i.e., interactive and contractual mechanisms) were examined to investigate which alliance governance mechanism is conducive to mitigate the collaboration challenges and enhance alliance performance. Using a data set of 316 alliances in the biopharmaceuticals industry, the study found that a moderate degree (not too low or high) of technology base diversity between alliance partners contributes more to R&D alliance performance. Similarly, there was also an inverted U-shaped relationship between R&D process experience diversity and alliance performance; too much diversity in R&D process experience may increase the likelihood of partner opportunism, and therefore negatively affect alliance performance. Additionally, the results showed that alliance governance mechanisms played different roles in alliance collaboration; while the contractual alliance mechanisms help reduce relational uncertainty (e.g., opportunism), the interactive mechanisms promoting a more intensive interaction between partners mitigates task difficulty and facilitates complex technology activities. These findings extend the knowledge-based view (KBV) of strategic alliance and advance research on alliance governance design.     

Factors for improving the level of knowledge generation in new product development

Globalization and other rapid changes in markets and technologies increasingly require companies to generate new knowledge in order to remain competitive. In order to innovate successfully, firms must generate knowledge faster than their rivals. This study develops and tests a conceptual model that focuses on how managerial controllable variables influence the level of knowledge generation in new product development. Based on literature and 'theory-in-use' field research in seven knowledge-intensive organizations, the authors developed research hypotheses and tested the hypotheses using data collected from 277 firms in high technology industries. The findings suggest that information technologies, organizational crisis, individual commitment, the R&D budget, and job rotation increase levels of knowledge generation, whereas lead user and supplier networks are negatively associated with the level of knowledge generation in new product development, and the influence of co-location of R&D staff is not significant.     

Technological diversity,related diversification,and firm performance

Previous findings that related diversification creates value have been called into question over concerns about methodology and measures. Reviewing existing theory to consider how a firm's knowledge base interacts with its product market activity, I address several of these concerns by creating a measure of technological diversity based on citation‐weighted patents. The measure indicates a firm's opportunity for corporate diversification based on economies of scope in valuable knowledge assets, is defined for both single‐ and multibusiness firms, and is not correlated with more fundamental aspects of diversification, such as the number of businesses in the corporate portfolio. Evidence from a large sample of firms shows the positive relationship between diversification based on technological diversity and market‐based measures of performance, controlling for R&D intensity and capital intensity as further indicators of the type of assets underlying diversification. Results hold when controlling for the endogeneity of diversification and performance in a cross‐sectional sample or when controlling for unobserved factors using panel data. Copyright © 2006 John Wiley & Sons, Ltd.     

Leaders,laggards, and the pursuit of foreign knowledge

This paper analyzes how firms in different technological and market share positions use foreign R&D to augment their technological capabilities. Technology transfer issues and absorptive capacity arguments are examined to analyze the different technological capabilities of leading and lagging firms. In addition, a new strategic rationale (in terms of non‐dominant market share firms) that has not been considered in prior studies analyzing knowledge‐seeking FDI is offered. From a panel dataset which includes information on all foreign R&D investments made by publicly traded Japanese manufacturing firms (from 1974 to 1994), I show that Japanese firms investing in foreign R&D tend to be the non‐dominant market share firms, but also the technologically leading firms across fairly diverse industries. By considering both the technological and market share positions of firms, this study reveals important characteristics that influence when firms use foreign R&D as part of a strategy to augment their technological capabilities. Copyright © 2005 John Wiley & Sons, Ltd.     

Non‐R&D innovation and firms’ new product performance: the joint moderating effect of R&D intensity and network embeddedness

Non‐R&D innovation increasingly plays a critical role in explaining firms’ new product performance. Yet, there has been little research on the consequences and contingent mechanisms of non‐R&D innovation for firms embedded in collaborative network environments. To address this research gap, we investigated a conceptual framework of non‐R&D innovation using data drawn from Chinese manufacturing firms. First, we found that non‐R&D innovation positively affects firms’ new product performance. Second, we discovered that high R&D intensity positively strengthens the impact of firms’ non‐R&D innovation on new product performance. Third, we provided critical analysis of the role of non‐R&D innovation in promoting new product performance, accomplished by enhancing R&D investment while simultaneously improving the degree of network embeddedness. Our findings extend both the non‐R&D innovation literature and open innovation literature while providing managers with several key recommendations.