The role of institutional arbitrage in the search for product innovation: Firm level evidence from Norway

Evolutionary theorizing conceptualizes the discovery of new products as a successful outcome from searching for innovation in which firms combine new and old knowledge and resources. Prior research has shown that the propensity for discovering new products is greatest when firms cross a technological and/or organizational boundary in the search for new knowledge. In this paper, we add a new dimension to this literature: we examine whether, and to what extent, crossing a national boundary, as when firms use knowledge from network partners in foreign countries, influences the likelihood that firms will introduce new products into the market. Drawing on theorizing on institutional arbitrage in the literature on national innovation systems (NIS) and varieties of capitalism (VOC), we propose that companies that cross a national boundary in searching for innovation are significantly more likely to introduce new products. Detailed survey data on firms; data on their network partners, including their location; and regression analysis show that the use of knowledge from actors in foreign NIS has a positive influence on product innovation.     

Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects of RI Management Systems in Large Established Firms

To escape the intense competition of today's global economy, large established organizations seek growth options beyond conventional new product development that leads to incremental changes in current product lines. Radical innovation (RI) is one such pathway, which results in organically driven growth through the creation of whole new lines of business that bring new to the world performance features to the market and may result in the creation of entirely new markets. Yet success is elusive, as many have experienced and scholars have documented. This article reports results of a three-year, longitudinal study of 12 large established firms that have declared a strategic intent to evolve their RI capabilities. In contrast to other academic research that has analyzed specific projects to understand management practices appropriate for RI, the present research reported explores the evolution of management systems for enabling radical innovation to occur repeatedly in large firms and reports on one aspect of this management system: organizational structures for enabling and nurturing RI. To consider organizational structure as a venue for capability development is new in the management of innovation and dynamic capabilities literatures. Conventional wisdom holds that RIs should be incubated outside the company and assimilated once they have gained traction in the marketplace. Numerous experiments with organizational structures were observed that instead work to manage the interfaces between the RI management system and the mother organization. These structures are described here, and insights are drawn out regarding radical innovation competency requirements, transition challenges, senior leadership mandates, and business-unit ambidexterity. The centerpiece of this research is the explication of the Discovery–Incubation–Acceleration framework, which details three sets of necessary, though not sufficient competencies, for building an RI capability.     

科技金融对创新效率影响的实证研究——基于中国高技术产业省级面板数据

基于中国东部、中部、西部以及全国2007~2016年高技术产业的省级面板数据,以科技经费投入和技术人力投入作为投入指标,以专利数量和新产品的产值作为产出指标,首先使用DEA方法计算了不同地区高技术产业的创新效率。以企业自主创新投入、政府支持、科技信贷和风投支持作为科技金融指标,使用面板模型实证分析了科技金融对于高技术产业创新效率的影响。结果表明,考察期内,中国不同地区高技术产业的创新效率均有所提升;科技金融的发展在一定程度上提升了高技术产业的创新效率,但是外商直接投资对于创新效率产生了一定的抑制作用。最后针对本文结论提出了相关建议。     

Perspective: The Innovation Dilemma: How to Innovate When the Market Is Mature

Most companies have ambitious growth goals. The trouble is there are only so many sources of market growth. Markets in many countries and industries are mature and increasingly commoditized; achieving growth in market share is expensive; and acquisitions often do not work. For most companies, product development means line extensions, improvements, and product modifications, and only serves to maintain market share. Markets aren't growing, so firms increasingly compete for a piece of a shrinking pie by introducing one insignificant new product after another. The launch of a truly differentiated new product in mature markets is rare these days. As a result, development portfolios have become decidedly less innovative since the mid‐1990s, and R&D productivity is down. The answer is bold innovation—breakthrough products, services and solutions that create growth engines for the future. This means larger‐scope and more systems‐oriented solutions and service packages. Examples such as Apple's iPod are often cited. (Note that Apple did not invent the MP3 player, nor was this opportunity in a blue ocean; in fact there were 43 competitors when Apple launched!) What Apple did succeed in was in identifying an attractive strategic arena (MP3s) where it could leverage its strengths to its advantage and then to develop a solution that solved users’ problems. The result—an easy‐to‐use, easy‐to‐download MP3 system, which also happened to be “cool.” Our benchmarking studies reveal that five vectors must be in place to undertake this type of innovation to yield bolder and more imaginative development projects. First, develop a bold innovation strategy that focuses your business on the right strategic arenas that promise to be engines of real growth. Most businesses focus their efforts in the wrong areas—on flat markets, mature technologies, and tired product categories. Break out of this box towards more promising strategic arenas with extreme opportunities. Next, foster a climate and culture that promotes bolder innovation. Leadership is vital to success. If senior management does not have the appetite for these big concepts, then all your efforts and systems will fail. Senior management plays a vital role here in promoting an innovative climate in your business. Next, create “big ideas” for integrated product‐service solutions. The best methods for generating breakthrough new product ideas are identified in this paper. Then drive these “big concepts” to market quickly via a systematic and disciplined idea‐to‐launch system designed for major innovation initiatives. Just because these projects are imaginative and bold is no reason to throw discipline out the window. In fact, quite the reverse is true. Finally build a solid business case and focus on the winners. Most innovation teams don't get the facts, and consequently build weak business cases; the result is that many worthwhile innovations don't get the support they need to be commercialized. It's essential to do the front‐end homework, and so build a compelling business case. Then make the right investment decisions—evaluating “big concepts” for development when little information is available. Note that financial models don't work well when it comes to evaluating major innovations, because the data are often wrong. But other methods can be used to make these tough go/kill decisions. Illustrations and examples are provided from many industries and companies to show how to implement these five vectors.     

专利执行保险、技术创新与企业绩效

作为知识产权保护重要制度之一,专利执行保险通过降低技术溢出损失和外部融资约束提升企业技术创新,进而对企业绩效产生深远影响。本文基于沪深A股2012~2019年上市公司微观数据,实证研究专利执行保险实施背景下专利保护对企业技术创新和财务绩效的影响。研究发现:专利执行保险对企业技术创新存在显著的“创新激励”效应,特别是对创新投入和创新产出的提升作用明显,在考虑控制内生性问题后,上述结论仍成立;技术溢出损失效应和外部融资约束是影响专利执行保险创新激励效应的重要机制和渠道;专利执行保险和企业技术创新对企业财务绩效影响显著,其中对滞后5期内的企业财务绩效提升最为明显。研究为完善知识产权保护对创新激励作用探讨,加快专利执行保险试点推广以及如何激发企业创新提供理论价值和政策启示。     

A question of (mis)alignment: innovation mandates and absorptive capacity routines

Research suggests that effective R&D requires the right combination of inward-looking and outward-looking absorptive capacity routines. However, we do not have an adequate understanding of how these routines influence innovative output in R&D units with different mandates. In this paper, we argue that adopting an absorptive capacity routine would positively or negatively influence the R&D subsidiary’s innovative output, depending on whether the routine is aligned or misaligned with the subsidiary’s innovation mandate to ‘exploit’ existing knowledge or ‘explore’ new knowledge. We test this using data collected from a global packaged-software firm with 14 international R&D subsidiaries that implemented six major absorptive capacity routines in the period 2000–2010. Our research provides new insights for both scholars and practitioners in R&D management, by showing that balancing of absorptive capacity routines should be considered in light of innovation mandates of subsidiaries as well as the firm. Our analysis also provides insights on why decision makers may still adopt misaligned routines.     

Book Reviews

The first review discusses a provocative book about innovation and the impact of technological change. Although the book also provides all readers with an invaluable historical perspective, the reviewer believes that it lacks predictive utility for practitioners. The second review covers a book devoted to strategic breakthroughs. The reviewer finds that the focus on the customer and the role of top management can be valuable for practitioners. The third review describes a book covering competitive advantage. Our reviewer praises the book highly, finding it of particular value for practitioners, both seasoned and novice. The fourth review is of a book devoted to improving new product development. The reviewer recommends the book as providing detailed practical guidance.
This issue also reviews two new books of special interest to professors. The first, by Robert Dolan, is a short text-and-cases book dealing with new product development and commercialization, primarily from the standpoint of strategic needs, data sources, and decision analytic methodologies. The second, by Richard Nelson, is a compendium of thoughtful essays dealing with the national innovation systems of fifteen different countries.     

Major Innovation as a Dynamic Capability: A Systems Approach*

Major innovation (MI), composed of both radical and really new innovation, is an important mechanism for enabling the growth and renewal of an enterprise. Yet it is poorly managed in most established firms, and success stories are rare. This conceptual article draws on systems theory, recent advances in dynamic capabilities theory, and the management of innovation literature to offer a framework for building an MI dynamic capability. The framework is composed of seven elements that together form a management system rather than a process‐based approach to nurturing radical innovation. These system elements are (1) an identifiable organization structure; (2) interface mechanisms with the mainstream organization, some of which are tightly coupled and others of which are loose; (3) exploratory processes; (4) requisite skills and talent development, given that entrepreneurial talent is not present in most organizations; (5) governance and decision‐making mechanisms at the project, MI portfolio, and MI system levels; (6) appropriate performance metrics; and (7) an appropriate culture and leadership context. It is argued that dynamic capabilities for phenomena as complex as MI must be considered in a systems fashion rather than as operating routines and repeatable processes as the literature currently suggests. A set of propositions is offered regarding how each element should play out in this parallel management system. Finally, each element's role in the major innovation system is justified in terms of four criteria required by systems theory: (1) The system is identifiable, and its elements are interdependent; (2) the effect of the whole is greater than the sum of the parts; (3) homeostasis is achieved through interaction and networking with the larger organization; and (4) there is a clear purpose in the larger system in which the MI management system is embedded. Examples are given to demonstrate these criteria. Systems theory offers a new way of thinking about dynamic capability development and management.     

Asia’s national innovation systems: Institutional adaptability and rigidity in the face of global innovation challenges

This paper explores several features of, and changes in, innovation capacity in Asia. The growth of technology-based industries has been a critically important element of Asian industrial development and has required extensive institutional support for the diffusion of innovation and technological learning. As a number of Asian countries reach the global technological frontier they need to develop new capabilities for creating “radical” innovations in order to sustain their international competitiveness. Using the analytical frameworks of national innovation systems and varieties of capitalism, the paper reviews some systemic and environmental factors encouraging and constraining these developments. By referring to illustrative case studies of institutional evolution within Taiwan’s national innovation system and technological entrepreneurship in Korea, the paper argues that whilst there are major developments in models of innovation support, emulating those found in liberal market economies, enduring cultural legacies can remain influential. It highlights the central importance of social as well as economic institutional adaptation. Some management and policy implications of this attribute are considered, and a future research agenda is proposed.

The effect of radical innovation in/congruence on new product performance

Radical innovation is critical for many firms and for society. This research focuses on the impact of radical innovation congruence — the degree to which management values regarding radical innovation match radical innovation norms in the business unit. We offer a model and empirically test it to assess the impact of radical innovation congruence on new product performance. We find that radical innovation norms are positively associated with new product performance, whereas we find no such association for management values and new product performance. Contrary to our expectations, we did not find a significant effect of radical innovation congruence on new product performance; however, we did find that radical innovation incongruence can have a positive effect on new product performance but only when radical innovation norms are higher than management values. Thus, we suggest that the unintended situation of radical innovation incongruence may result in some positive consequences after all. Further, high radical innovation norms, far more than management values, seem to be critical determinants of new product performance.     

中国企业管理创新现状与展望——中国企业管理前沿论坛暨山东省管理学学会2007年理事大会观点述评

作为一门新兴学科,管理学在中国理论和实践中存在诸多问题,同时也孕育着巨大的创新潜力。目前,中国企业管理创新主要表现在思想创新和实践创新两个层面。专家学者们在这两个层面上分别对中国公司治理、中国企业制度改革、中国企业管理整体创新特点、现状及发展趋势等具体研究方向提出了独到的见解。总体来看,中国企业管理创新具有研究重点多元化、学术观点多样性的特点。     

Learning Capability,Technological Parity,and Innovation Mode Use*

The purpose of this research was to examine whether a firm's learning capability interacts with industry technological parity to predict innovation mode use. Learning capability is conceptualized in the current research as a firm's ability to develop or acquire the new knowledge‐based resources and skills needed to offer new products. Industry technological parity is conceptualized as the extent to which similarity and equality exist among the technological competencies of the firms in an industry. Three generic modes of innovation are considered: internal, cooperative, and external innovation. These modes reflect the development of new products based solely on internal resources, the collaborative development of new products (i.e., with one or more development partners), and the acquisition of fully developed products from external sources, respectively. The premises of this research are that (1) technological parity can create incentives or disincentives for innovating in a particular mode, depending upon the value of external innovative resources relative to the value of internal innovative resources and (2) firms will choose innovation modes that reflect a combination of their abilities and incentives to innovate alone, with others, or through others. Survey research and secondary sources were used to collect data from 119 high‐technology firms. Results indicate that firms exhibit greater use of internal and external innovation when high levels of industry technological parity are matched by high levels of firm learning capability. By contrast, a negative relationship between learning capability and industry technological parity is associated with greater use of the cooperative mode of innovation. Thus, a single, common internal capability—learning capability—interacts with the level of technological parity in the environment to significantly predict three distinct innovation modes—modes that are not inherently dependent upon one another. As such, a firm's internal ability to innovate, as reflected in learning capability, has relevance well beyond that firm's likely internal innovation output. It also predicts the firm's likely use of cooperative and external innovation when considered in light of the level of industry technological parity. A practical implication of these findings is that companies with modest learning capabilities are not inherently precluded from innovating. Rather, they can innovate through modes for which conditions in their current environments do not constitute significant obstacles to innovation output. In particular, modest learning capabilities are associated with higher innovative output in the internal, cooperative, and external modes when industry technological parity levels are low, high, and low, respectively. Conversely, strong learning capabilities tend to be associated with higher innovative output in the internal, cooperative, and external modes when industry technological parity levels are high, low, and high, respectively.     

Why and How Combining Strong and Weak Ties within a Single Interorganizational R&D Collaboration Outperforms Other Collaboration Structures

The purpose of this paper is to demonstrate why and how an ambidextrous interorganizational R&D collaboration outperforms other collaboration structures in the creation of innovation. This research effort contributes to a growing stream of research in social network theory suggesting that the contradictory theories of the strength of weak ties and weak network structures on the one hand and the theory of strong ties and closed network structures on the other have a mutually reinforcing effect on innovation outcomes if combined rather than considered separately. An in‐depth exploratory single case study approach within an innovatively organized national R&D collaboration allowed giving further evidence for such a superior innovation performance and for this research to contribute to theory by demonstrating why and how such a combination may lead to higher innovation output and how this effect can be actively reinforced. It is suggested that the combination of strong and weak ties should occur at the individual rather than at the project or firm level. The authors distinguish between the additive effects of the respective innovation benefits of strong and weak ties, a positive interaction effect in the portfolio of dyadic ties of an individual and a second multilevel interaction effect of weak ties embedded in the ambidextrous network structure. Referring to previous empirical findings, intellectual property regulation and structural interdependency between network members showed a higher impact than trust with regard to leveraging weak ties and are important sources for achieving the multilevel interaction effect. Managerial implications of this research are that a large network will outperform several smaller, independent networks given that the right structure and processes are in place. Direct implications for the architecture of an ambidextrous R&D collaboration are discussed, and a framework for a new form of technology R&D collaboration called “semi‐open organization” is presented, which places itself between the extremes of traditional R&D in closed organizations and completely “open innovation” approaches.     

A model of corporate innovation management: some recent high tech innovations in Japan

The various models of Japanese corporate innovation management reported in literature are reviewed to identify the major elements of the innovation process. An integrated model is presented examining the recent examples. The Japanese corporate innovation process is highly interactive and involves comprehensive organizational intelligence, quick organizational learning, rapid technology diffusion, horizontal information flow systems, fusion of different technologies to obtain innovations quickly, concurrent engineering and quick utilization of core competence for new business development. The innovation system is quick to respond to competition and concentrates on developing core competence that is used for commercializing new products quickly.     

Can upgrading information infrastructure improve the innovation ability of companies? Empirical evidence from China

The development of information technology has become a new driving force for companies' innovation. Upgrading the information infrastructure lays a foundation for companies to use information technology to innovate; therefore, this study examines the impact of information infrastructure upgrading on companies' innovation ability and the intermediate mechanism. Using a sample of China's listed companies of A-share from 2011 to 2018, this study used the staggered difference-in-difference method to investigate the impact of information infrastructure upgrading on innovation input, innovation output and quality. The results show that upgrading information infrastructure has a ‘double-edged sword’ effect on the innovation ability of companies. Companies' innovation input and output significantly increase, but innovation quality decreases. Additionally, further analysis indicates that financial constraints and managerial myopia are intermediary mechanisms for this effect. Our research results provide theoretical and empirical evidence for companies to enhance their innovation ability.     

Multidimensional social capital as a boost or a bar to innovativeness

Innovation does not only demand new ideas, financial resources and knowledge of supplier and user systems, but is also influenced by social capital which has an impact on the innovativeness in business networks. However, social capital is often vague, at times described as a “catch-all notion”. In this paper definitions of social capital are suggested to support the management of innovation in networks. Three dimensions of social capital are applied in a case study of a regional strategic network – the socio-economic, the structural and the actor-oriented dimensions – while focusing on the last one. Data were collected at two points in time, at the start of the regional strategic network in 2004 and at the end of the project in 2010. The application of the concepts and the comparison between these two points in time highlight the influence of social capital and how it can hinder or be used to promote innovation processes.     

Breakthrough innovations in the U.S. biotechnology industry: the effects of technological space and geographic origin

How are breakthrough innovations created? Our study suggests that the type of external knowledge sourced determines the likelihood of creation of breakthrough innovation. We characterize the external knowledge utilized on two dimensions: its technological space and geographic origin. We draw on the concepts of local search and national innovation systems to identify critical knowledge inputs. We hypothesize that external knowledge characterized by technological distance or proximity and the national or international context can have a differential impact on breakthrough innovation. This is due to the contradictory implications of its value created by distance and to absorptive capacity limitations in effectively utilizing knowledge from a different context. To test our hypotheses we use patent data from the U.S. biotechnology industry. Our findings suggest that technologically distant knowledge of national origin has a curvilinear effect and technologically proximate knowledge of international origin has a positive effect on breakthrough innovation. However, simultaneous exploration along technologically and geographic dimensions is not useful to generating breakthrough innovation; technologically distant knowledge of international origin does not have a significant impact. Copyright © 2006 John Wiley & Sons, Ltd.     

Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries

We study the impact of process and product innovations introduced by firms on employment growth with random samples of manufacturing and services from France, Germany, Spain and the UK for 1998–2000, totaling about 20,000 companies. We develop and estimate a model relating firms' and industry's employment to innovation, that leads us to the conclusions that follow. Trend increases in productivity reinforced by process innovation are an important source of reduction of employment requirements for a given output, but the growth of demand for the old products tends to overcompensate these displacement effects. The switch of production towards new products does not reduce employment requirements, and the growth of the demand for the new products is the strongest force behind employment creation. Reallocation due to business stealing is estimated at a maximum of one third of the net employment created by product innovators. The growth of employment originated from the market expansion induced by the new products can be as important as another third.     

Search behavior of the diversified firm: The impact of fit on innovation

This paper provides a new approach to account for the relationship between diversification and innovation by integrating insights concerning strategic fit. We argue that the type of diversification strategy leads to greater innovation output when the appropriate technological search strategy is employed. Using a longitudinal study of the patenting activity of 258 manufacturing firms, we find that strategic fit is important for innovation output. More specifically, a related diversification strategy leads to greater innovation when firms use a narrow technological search strategy. In contrast, an unrelated diversification strategy leads to greater innovation when a broader technological search strategy is used. Implications for future research are discussed. Copyright © 2013 John Wiley & Sons, Ltd.     

Perspective: Linking Design Thinking with Innovation Outcomes through Cognitive Bias Reduction

“Design thinking” has generated significant attention in the business press and has been heralded as a novel problem‐solving methodology well suited to the often‐cited challenges business organizations face in encouraging innovation and growth. Yet the specific mechanisms through which the use of design, approached as a thought process, might improve innovation outcomes have not received significant attention from business scholars. In particular, its utility has only rarely been linked to the academic literature on individual cognition and decision‐making. This perspective piece advocates addressing this omission by examining “design thinking” as a practice potentially valuable for improving innovation outcomes by helping decision‐makers reduce their individual level cognitive biases. In this essay, I first review the assumptions, principles, and key process tools associated with design thinking. I then establish its foundation in the decision‐making literature, drawing on an extensive body of research on cognitive biases and their impact. The essay concludes by advancing a set of propositions and research implications, aiming to demonstrate one particular path that future research might take in assessing the utility of design thinking as a method for improving organizational outcomes related to innovation. In doing so, it seeks to address the challenge of conducting academic research on a practice that is obviously popular in management circles but appears resistant to rigorous empirical inquiry because of the multifaceted nature of its “basket” of tools and processes and the complexity of measuring the outcomes it produces.