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.     

The Role of Suppliers in Market Intelligence Gathering for Radical and Incremental Innovation*

Drawing on transaction cost economics theory, this study addresses the following research questions: (1) Does supplier involvement in market intelligence gathering activities have a greater impact on innovation success in predesign or commercialization activities? and (2) Does supplier involvement in market intelligence gathering activities have a greater impact on success in radical or incremental product innovation? Hypotheses are tested using both subjective and objective measures of success from a study of 205 incremental and 110 radical new product development projects. Results from the estimation of a two‐group path model suggest that this theoretical framework is useful in providing guidance as to when product developers should emphasize the gathering of market intelligence through suppliers. Consistent with conventional wisdom, the findings suggest that supplier involvement in market intelligence gathering activities are positively related to success in incremental innovations across predesign and commercialization activities. However, supplier involvement in market intelligence gathering activities is found to have no significant impact on market share and is negatively associated with perceived product performance in radical innovations in predesign tasks. Also, while there was no significant difference in market share for supplier involvement in market intelligence gathering activities between radical and incremental innovation in commercialization activities, supplier involvement in these activities did have a greater impact on perceived product performance in radical innovation than it did in incremental innovation. Although current practice suggests that teams allocate fewer resources to the gathering of market intelligence through their suppliers during predesign activities in incremental innovation projects compared with radical innovation projects, the findings in this study suggest that they should do the opposite. Shifting resources allocated for engaging suppliers in market information gathering activities in predesign activities from radical innovation projects to incremental innovation projects could increase the return on these investments. Alternatively, these resources currently allocated to the gathering of market intelligence through suppliers in predesign activities of radical innovation projects could also provide greater benefits if allocated to commercialization activities of radical innovation projects, where they have the greatest positive impact.     

Coopetition and product innovation performance: The role of internal knowledge sharing mechanisms and formal knowledge protection mechanisms

Coopetition is an important new product development strategy; yet, studies addressing the impact of collaboration with competitors on product innovation performance provide mixed evidence. Conducting Tobit analyses on a sample of 627 manufacturing firms that responded to the fifth wave of the Flemish Community Innovation Survey, we find that the innovation performance implications of competitor collaboration depend on fine-grained intra-organizational design characteristics. In particular, our results show that competitor collaboration has a significant positive impact on product innovation performance only when internal knowledge sharing mechanisms and formal knowledge protection mechanisms are present. These findings contribute to the emerging contingency perspective on coopetition and provide specific recommendations to managers that are involved in coopetitive endeavors.     

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.     

The impact of value congruence on marketing channel relationship

Organizational values guide acceptable behavior and provide motivational dynamism. Marketing channel literature has yet to address the impact of values on interfirm exchanges. We propose that value congruence between cooperating firms can be an effective governance method. This research examines the impact of value congruence between manufacturers and their primary distributors. Survey data from 278 manufacturing firms demonstrate that perceived value congruence has a positive effect on distributors' performance. Moreover, information sharing and joint problem solving serve as mechanisms that partially mediate the main effect. This research calls for integration of organizational values into partner selection and marketing channel governance.     

When to Use Loose or Tight Alliance Networks for Innovation? Empirical Evidence

This study examines the impact of different degrees of organizational coupling among the members of innovation alliance project networks on the commercial performance of collaborative innovations. Specifically, we study how type of innovation (modular vs. architectural innovation) moderates this relationship. Using data from 664 product innovation networks from five different industries in the United States, we find that the degree of organizational coupling among innovation network members significantly affects the commercial performance of collaborative innovations and that the type of innovation has a significant moderating effect. More specifically, the impact on commercial innovation performance of organizational coupling is positive for modular innovations and negative for architectural innovations.     

When Is Open Innovation Beneficial? The Role of Strategic Orientation

Various scholars have accomplished a great deal to better understand open innovation effectiveness. Case studies have detailed its performance effects, while other studies showed the effectiveness of an aspect of open innovation, such as collaboration with third parties, external technology commercialization, and cocreation. Though most studies report a positive relation between open innovation and innovation performance, some studies indicate possible negative effects. This has resulted in a call for research on what kind of organizational context suits open innovation best. This study therefore addresses two questions: (1) does performing open innovation activities lead to increased innovation performance, and to which aspects of innovation performance is open innovation most strongly related? (2) what is the moderating impact of various kinds of strategic orientation on the relation between open innovation and innovation performance? In this study, we investigate three types of strategic orientations: entrepreneurial orientation, market orientation, and resource orientation. In a survey among 223 Asian service firms, we first develop and test a comprehensive measurement scale for open innovation that captures the entire range of open innovation activities, including outside‐in activities, inside‐out activities, and coupled activities. The final scale comprises of 10 items and indicates to what extent a firm has implemented open innovation activities. Next, we study the relation between open innovation and innovation performance. The results indicate that performing open innovation activities is significantly and positively related to all four dimensions of innovation performance: new product/service innovativeness, new product/service success, customer performance, and financial performance. The impact of open innovation is not limited to a particular aspect of innovation performance; it positively affects a broad range of innovation performance indicators. Though open innovation is positively related to all four dimensions of innovation performance, the effect sizes are not equal. The impact on new service innovativeness and financial performance is relatively stronger. Regarding the influence of a firm's strategic orientation, we find that all significant moderation effects are positive. This suggests that, in general, having a more explicit strategic orientation enhances the effectiveness of open innovation. When comparing the three strategic orientations, entrepreneurial orientation strengthens the positive performance effects of open innovation significantly more than market orientation and resource orientation do. In turn, market orientation has a significantly stronger moderation effect than resource orientation. These findings provide empirical evidence of the context dependency of open innovation. Especially an entrepreneurial orientation, which is associated with proactive and entrepreneurial processes, seems to create a fertile setting for open innovation.     

Customer and Supplier Involvement in Design: The Moderating Role of Incremental and Radical Innovation Capability

More and more firms are leveraging design as a resource to gain the upper hand in today's competitive business market. To this end, this study draws on the resource‐based view (RBV) of the firm to examine the relationship between customer and supplier involvement in the design process and new product performance. The research also extends the RBV to a contingency lens by introducing product innovation capability (incremental and radical) as a moderator to draw the boundary conditions of the impact of customer/supplier involvement in design on new product performance. Using data collected from Canadian high‐tech companies, the findings provide strong support for the hypotheses in that customer involvement in design helps new product performance under high incremental innovation capability but harms new product performance under high radical innovation capability. In contrast, supplier involvement in design was beneficial to new product performance under both high incremental and radical innovation capability. The managerial implications for the role of design under different innovation capabilities are discussed.     

Connecting Interfirm and Intrafirm Collaboration in NPD Projects: Does Innovation Context Matter?

Interfirm collaboration is an important strategy for firms to generate new products and services. Whereas existing research emphasizes the importance of interfirm collaboration engagement to realize synergistic benefits in interfirm NPD projects, it remains surprisingly silent on the potential impact of intrafirm relational processes and how they can impact the interfirm setting. In this article, we therefore explore the impact of intrafirm collaboration engagement on the relationship between interfirm collaboration engagement and new product development (NPD) performance in interfirm NPD projects. Relying on insights from information processing theory, the authors hypothesize that intrafirm collaboration engagement increases firms' capacity to process complex information flows in the case of extensive interfirm collaboration engagement. Moreover, it is expect that the added value of extensive intrafirm collaboration engagement depends on the innovation objective (i.e., incremental versus radical new product development) of the interfirm NPD project. In particular, we hypothesize that the positive moderating impact of intrafirm collaboration engagement on the relationship between interfirm collaboration engagement and NPD performance is stronger for radical interfirm projects than incremental interfirm projects. Analyzing 195 interfirm NPD projects, a negative interaction effect between interfirm and intrafirm collaboration engagement is observed in radical interfirm NPD projects, whereas significant interactions between them remain absent in incremental interfirm NPD projects. Jointly, these findings provide first evidence that intrafirm relational processes can substantially impact partners' ability to realize relational rents in interfirm settings. Moreover, the negative interaction effect between interfirm and intrafirm collaboration engagement points to potential trade‐offs between inward‐looking and outward‐looking absorptive capacity.     

Entrepreneurial firms’ network competence,technological capability,and new product development performance

Successfully developing new products is critical to an entrepreneurial firm’s continued success. Based on the resource management model, this study aims to answer the key research question: how entrepreneurial firms leverage network competence and technological capability to enhance their new product development (NPD) performance in a turbulent environment. Using data collected from 134 entrepreneurial firms in China, we investigate the performance effects of network competence and technological capability, and the moderating effects of technological turbulence and market turbulence. Our findings show that network competence has a positive impact on NPD performance and technological capability plays a mediating role between network competence and NPD performance. Technological turbulence enhances the performance effects of network competence and technological capability; market turbulence advances the performance effect of network competence, but fails to exert significant negative impact on that of technological capability. We discuss managerial implications of our findings and offer directions for future research.     

The impact of global and local cohesion on innovation in the pharmaceutical industry

In this paper, we examine how the configuration of intraorganizational networks, and in particular, cohesion among members of an organization, influences organizations' innovative output. We argue that the cohesion among R&D scientists could be at a local level or a global level, and that local and global cohesion may have different impacts on firms' innovation performance. We test our hypotheses by examining the structure of the R&D collaboration networks within firms that operated in the pharmaceutical industry between 1981 and 1989, and their innovative outcomes—patents that led to new product launches. We find that local cohesion has a positive impact on the innovative performance of a firm, and global cohesion has a negative impact. Copyright © 2011 John Wiley & Sons, Ltd.     

Application and performance impact of stage–gate systems – the role services in the firm’s business focus

Although service innovation is important, knowledge of new product and service development, including the positive effect of stage‐and‐gate‐type systems, has been derived almost exclusively from studies in the manufacturing sector. In the present paper, we address two important questions: How do differences in the firm’s business focus, which describes whether a firm puts more emphasis on products or services in its business activities, influence the usage of such formal innovation processes? Is stage‐and‐gate‐type systems’ impact on innovation program performance contingent on the firm’s business focus? Unlike previous studies, we not only differentiate service and manufacturing by industry classification codes but also apply a continuous measure to take into account the blurring of boundaries between the manufacturing and service businesses. Based on a comprehensive discussion of service‐specific characteristics and their implications for innovation management and using a cross‐industry, multi‐informant sample of innovation programs from 272 firms with 1,985 informants, we find empirical support for firms with a stronger focus on the service business being less likely to use stage‐and‐gate‐type systems. Furthermore, the use of stage‐and‐gate‐type systems fosters innovation program performance, and this effect becomes stronger as the business focus shifts toward services. This result implies that service‐based firms can benefit from stage‐and‐gate‐type systems to a greater extent than product‐based firms. Our research also demonstrates the gap between the desired level of innovation process formalization and its current usage in practice, especially for firms with a dominating service business.     

Market-based reforms,synchronization and product innovation

This paper focuses on the multiple dimensions of market-based reforms and their impacts on firms’ product innovation performance in China, the largest emerging country in the world. By analyzing a data set with more than one-half-million observations on firms during China's economic transition during the period 2005–2007, we find that the progress of market-based reforms and the degree to which different dimensions of market-based reforms are conducted simultaneously, referred to as synchronization, have a positive effect on firms’ product innovation. We also find that firms with higher absorptive capacity benefit more from market-based reforms and the synchronization of different dimensions of market-based reforms.     

Empirical Evidence on the Success of R&;D Cooperation—Happy Together?

In this paper we analyse the effect of past R&D cooperation on current firms’ innovation performance. Success measures are: sales of innovative products, distinguishing between products new to the firm and new to the market, and cost reductions due to innovative processes. Particular attention is paid to the impact of different cooperation partners. The analysis rests on firm-level data of the annual German innovation survey. We find that R&D cooperation with competitors leads to greater cost reductions that are attributable to innovative processes. R&D cooperation with research institutes has a positive influence on a firm’s economic success with market novelties.      

Whom Should We Talk to? Investigating the Varying Roles of Internal and External Relationship Quality on Radical and Incremental Innovation Performance

Research suggests that close relationships with internal and external partners are likely to have a significant impact on new product development (NPD). What is unclear is how the effects of internal and external relationships influence development paths for different types of innovations. Prior literature indicates that the pathways for developing incremental innovations differ considerably from those for radical innovations. Thus it is plausible that the effects of external versus internal relationships vary across these two innovation types. This paper uses the 2012 Comparative Performance Assessment Study (CPAS) data set to investigate the roles of internal and external relationship quality on the development of both incremental and radical innovations. The results find that internal and not external relationship quality is beneficial for the development of incremental innovations. When driven by internal relationships, a flexible NPD process is advantageous for the financial performance of incremental innovations. Meanwhile external and not internal relationship quality is valuable for developing radical innovations. External relationship quality results in process flexibility, leading to project execution success and subsequent financial performance for radical innovations. As expected, project execution success consistently leads to increased financial performance. These findings indicate the critical differences in types of relationship quality required when developing new products based on radical versus incremental innovations.     

The performance implications of resource and pay dispersion: The case of Major League Baseball

Research summary: Building on research in strategic management that has found that high levels of pay dispersion are detrimental to firm performance; we examine the potential dependence of those findings on similar dispersion in the latent potential of those resources to contribute to performance. We find that congruence between resource value dispersion and pay dispersion is positively related to organizational performance. Additionally, we find that this congruence moderates the effects of both organizational resources and organizational pay levels on organizational performance. These findings contribute to a growing line of research that explores the implications of key human resource value and pay combinations for organizational performance. Managerial summary: While differences in income between key employees (i.e., dispersed pay) can instill feelings of inequity and be detrimental to organizational performance, such differences may also increase the odds of attracting star talent and help performance. In the context of Major League Baseball (MLB), we find that performance improves when dispersions in pay are congruent with the dispersion in the contributions that team members make to their organizations. We also find that the positive effects on performance of higher total pay and of level of organizational talent are enhanced by congruent pay and contribution dispersions. These findings suggest organizations may benefit from consistent dispersions in pay and talent and that important contributions by key organizational members need to be visible when organizations have dispersed pay structures. Copyright © 2016 John Wiley & Sons, Ltd.     

The Effects of Mainstream and Emerging Customer Orientations on Radical and Disruptive Innovations

The merits of being customer‐oriented for firm innovation have long been debated. Firms focused on their existing customers have been argued to be less innovative. This paper distinguishes between mainstream and emerging customer orientations and examines their effects on the introduction of disruptive and radical product innovations. Radical product innovations draw on a substantially new technology and could initially be targeted at a mainstream or an emerging market. In contrast, disruptive innovations are initially targeted at an emerging market, and may not involve the newest technology. This paper hypothesizes that mainstream customer orientation is negatively related to disruptive innovation and positively related to radical innovation, and that emerging customer orientation is positively related to disruptive innovation. To test these hypotheses, longitudinal and multiple informant data from senior executives in 128 SBUs of 19 Fortune 200 corporations are analyzed, with technology scanning and willingness to cannibalize as key control variables. The results support the hypotheses, providing evidence for contrasting effects of being oriented to mainstream customers and/or emerging customers on radical and disruptive innovations. Mainstream customer orientation has a positive impact on the introduction of radical innovations but a negative impact on disruptive innovation, while emerging customer orientation has a positive effect on disruptive innovation and is unrelated to radical innovations. Technology scanning is positively related to radical innovation but not to disruptive innovation, supporting the idea that disruptive innovation may not require new technology. In contrast, willingness to cannibalize is positively related to disruptive innovation but not to radical innovation, supporting the idea that radical innovation does not require cannibalization of existing investments. Additionally, mainstream customer orientation is found to have a near‐zero correlation with emerging customer orientation, indicating that the two can coexist and can be pursued simultaneously.     

Effects of innovation on employment: A dynamic panel analysis

This paper estimates the effect of innovation on employment at the firm level. Our uniquely long innovation panel data set of German manufacturing firms covers more than 20 years and allows us to use various innovation measures. We can distinguish between product and process innovations as well as between innovation input and innovation output measures. Using dynamic panel GMM system estimation we find positive effects of innovation on employment. This is true for innovation input as well as for innovation output variables. Innovations show their positive effect on employment with a time lag and process innovations have higher effects than product innovations.     

Organizational Learning Ambidexterity,Strategic Flexibility,and New Product Development

Although organizational ambidexterity has gained momentum in recent innovation research, previous literature still offers a confusing and partial picture about how to leverage ambidexterity for new product development because of two limitations. First, previous research mainly focuses on static resource endowment and thus offers little insight about how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity. Second, conceptual confusion on the notion of the balance dimension of organization ambidexterity still exists. This study seeks to explore how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity for new product development and to bring greater conceptual clarity to the notion of balance. By extending the static resource assumption, which is central to the extant debate in organizational ambidexterity literature, this research unpacks ambidexterity into a relative exploratory dimension and an interactive dimension. We further investigated the moderating effect of resource flexibility and coordination flexibility on the impacts of the two dimensions on new product development performance. Based on the dynamic resource management view and organizational learning theory, we proposed six hypotheses and collected data from 213 firms through a survey to examine the hypotheses. Our results indicate that relative exploratory dimension and interactive dimension have different effects on new product development. Specifically, the relative exploratory dimension has an inverse U‐shaped effect on new product development while the interactive dimension has a positive effect. Furthermore, we find that resource flexibility and coordination flexibility have positive moderating effects on the relationships between the two dimensions of ambidexterity and new product development performance. Our study contributes to the ambidexterity research in three ways. First, from a dynamic resource management view, this study extends previous ambidexterity research from a static view to a dynamic view by exploring the moderating effects of resource flexibility and coordination flexibility. Second, we extend the understanding on ambidexterity by bringing greater conceptual clarity to the notion of balance. Third, this research provides new evidence on the effects of ambidextrous learning on new product development performance in transition economy such as China, where ambidextrous learning is crucial for firms to adapt to a dynamic environment.     

Product radicalness and firm performance in B2B marketing: A moderated mediation model

There has been ambiguity and controversy in establishing the links between the introduction of radical innovations and firm performance. While radical innovations create customer value and grow product sales, they are also fraught with uncertainty due to customer resistance to innovative products and significant costs associated with commercialization. This research aims to explain the contrarian findings between radical innovations and firm performance in a business-to-business (B2B) context by examining two mediating variables – new product advantage and customer unfamiliarity. Using a multi-informant approach, the authors collected survey data from a sample of 170 Spanish B2B firms engaged in new product development, provided by 357 managers. The authors find that, while new product advantage positively mediates the relationship between product radicalness and firm performance, customer unfamiliarity has a negative mediation effect on this relationship. Furthermore, the authors examine the moderated mediation effect by industry type, manufacturing vs. service, and find that it moderates the mediation of customer unfamiliarity: The negative impact of product radicalness on customer unfamiliarity is greater for manufacturing firms than for service firms. With these findings, the authors discuss implications for development and marketing of radical innovations and how those implications facilitate firm performance in the B2B context.