Virtual customer environment design and organizational innovation: An exploration–exploitation perspective

ABSTRACT

Many firms are developing virtual customer environments (VCEs) that provide customers the opportunity to submit, discuss, and vote for new ideas. Some studies show that VCEs promote the development of incremental improvements in existing products and services (i.e., exploitative innovation). However, other studies find that customers working in VCEs will often suggest radical ideas for brand new products and services (i.e., exploratory innovation). Exploration and exploitation are often incompatible; thus, we address this paradox by investigating whether the design of a firm’s VCE architecture is related to the firm’s exploratory innovation activity and exploitative innovation activity. Using matched data collected from VCEs and managers, we show that two-way information exchange VCE tools facilitate exploratory innovation, and one-way information exchange VCE tools enhance exploitative innovation. We also find that absorptive capacity positively moderates the latter relationship. Our findings have implications for research and practice in VCEs, organizational innovation, and organizational learning.     

Network effect and subsidiary autonomy in multinational corporations: An investigation of Taiwanese subsidiaries

Considering the lack of empirical evidence on the subsidiary autonomy of firms from Asian developing countries, which are usually smaller in size and have limited international experience, this study investigates the antecedents of subsidiary autonomy from a network perspective. We assess the range and the strength of both internal network (i.e., technological network) and external network (i.e., supplier's and distributor's networks) on subsidiary autonomy. Examining a sample of 1473 manufacturers extracted from a Taiwanese government-maintained database, we find that (1) a firm will grant less autonomy to a subsidiary with more internal network range and stronger internal network strength, and (2) a firm will grant more autonomy to a subsidiary with more external network range and stronger external network strength.     

Innovation and efficiency: It is possible to have it all

A firm that simultaneously engages in a high degree of both innovation and efficiency follows an approach that is often referred to as an ambidextrous strategy. Surprisingly, relatively few firms are able to balance these two emphases. Internal battles for resources often tip the scales in favor of efficiency over innovation, or vice versa. Management gurus frequently warn that simultaneously pursuing both can set the firm up for mediocre performance, yet the turbulent nature of today’s markets and cut-throat competition create a renewed need for firms to reconsider this dual approach for longer-term success. Unfortunately, practical insights from empirical studies regarding performance benefits and implementation issues are still scant. Perhaps this is one reason why few firms are successful in both efficiency and innovation. In this article, we provide evidence—using a cross-industry survey of senior marketing managers in publicly-traded U.S. firms—that firms which successfully employ an ambidextrous strategy outperform those which overemphasize either efficiency or innovation. Furthermore, we highlight marketing’s role as an example of the often overlooked need for successful functional implementation. Finally, we provide useful methods for managers to answer three key questions: (1) Is my firm ambidextrous?; (2) Should my firm be ambidextrous?; and, if so (3) How can my firm become ambidextrous?     

The relationship among psychological need satisfaction,class engagement,and academic performance: Evidence from China

Utilizing self-determination theory, the authors examined the relationship among psychological need satisfaction, class engagement, and academic performance among Chinese accounting students. The structural equation modeling analysis indicated that (a) students’ psychological need satisfaction for autonomy, competence, and relatedness were significantly positively associated with their perceived autonomy support from instructors; (b) students’ class engagement was significantly positively associated with their psychological needs for competence and relatedness; and (c) students’ academic performance was significantly positively associated with their class engagement (i.e., effort and persistence). These findings emphasize the importance of satisfying students’ psychological needs in the learning process. Implications for educators are discussed.     

Making bottom-up and top-down processes meet in public innovation

Innovations in an organisation derive from multiple sources. In the public sector, users and the policy sphere provide important but often unconnected impulses for innovation. These impulses are transmitted to the organisation by grassroots employees who interact with users and managers who implement policy requirements. The paper examines the actors and activities that coordinate bottom-up and top-down initiatives and promote their development into innovations. It creates a theoretical framework that combines the views of employee-driven innovation and strategic reflexivity and supplements them with an analysis of coordination in innovation processes. The functioning of this framework is illustrated in the context of children's day care services. The results highlight the central role of middle managers and provide new knowledge regarding their ‘bridging’ activities in innovation. The adjustment of bottom-up and top-down processes requires the personal involvement of managers, and the creation of communication arenas, networks and mediating tools.     

Open innovation: Are absorptive and desorptive capabilities complementary?

While recent studies in open innovation emphasize the synergies between in-bound and out-bound knowledge flow, empirical results are inconsistent. In this study, we argue that in order to engage simultaneously in both “buying” and “selling” activities, firms need to develop specific capabilities to manage knowledge inflows and outflows, e.g., absorptive and desorptive capacities. We build on key aspects of open innovation and knowledge management literature, arguing that absorptive and desorptive capacity are complementary rather than substitute, and engaging simultaneously in both activities should allow firms to develop their financial performance. We test our model using a sample of 541 New Zealand firms that are deeply involved in international collaborations and find empirical evidence that absorptive and desorptive capacity are not independent and the balanced development of these capabilities has higher impacts on firm’s performance. Further, our findings indicate that technology licensing capability is not a stand-alone task, and its interplay with absorptive capacity plays a key role in the development of a firm’s performance.     

Unpacking the effect of strategic ambidexterity on performance: A cross-country comparison of MMNEs developing product-service innovation

This study tests whether strategic ambidexterity improves Product-service innovation (PSI) outcomes for manufacturing multinational enterprises (MMNEs). It also tests successful pathways to develop PSI properly by organizing exploitation and exploration activities. Data from a survey of 338 MMNEs are analysed through Structural Equations Modelling. The sample contains firms from five world regions, including emerging economies. This approach enables contrast to determine cross-country heterogeneity in PSI outcomes. The results show that, to maximise firm performance, PSI must be developed through a sequential Exploitation-Exploration pathway. Although this optimal sequence is consistent across all world regions (except Japan), noticeable contextual differences emerge in the relative importance of exploration and exploitation to firm performance. Our findings show that exploitation (i.e., cost efficiency through PSI design) and exploration (i.e., PSI R&D) capabilities are equally important in emerging economies.     

The Driver of Green Innovation and Green Image – Green Core Competence

This study proposed a novel construct – green core competence – to explore its positive effects on green innovation and green images of firms. The results showed that green core competences of firms were positively correlated to their green innovation performance and green images. In addition, this research also verified two types of green innovation performance had partial mediation effects between green core competences and green images of firms. Therefore, investment in the development of green core competence was helpful to businesses for the enhancement of their green innovation and green images. Furthermore, this study found that green core competence, two types of green innovation performance, and green images of medium & small enterprises (SMEs) were all significantly less than those of large enterprises in the information and electronics industry in Taiwan. Therefore, there was the advantage of firm size for the green core competence in this industry, and it was imperative for SMEs to develop and create their green core competences to strengthen their green innovation performance, and green images.     

Optimal low-price guarantees with anchoring

Many low-price guarantees are offered by small local firms who compete against much larger rivals. The prices of these larger rivals are often set nationally and thus are independent of local market conditions. Our objective in this paper is to explain why small firms in such environments might nevertheless adopt low-price guarantees. We characterize when offering a low-price guarantee is profitable, and assess which form it should take (i.e.,?conditional on offering a low-price guarantee, should the small firm offer to match or beat its larger competitor??s prices). We also assess the implications thereof (i.e., do the low-price guarantees benefit or harm the small firm??s customers).     

Performance expectations of small firms considering radical product innovation

Performance expectations influence business decisions such as investment decisions and demand for supplies, particularly in small firms with limited strategic planning. Despite widespread use of performance expectations by firms and governments when making sales forecasts and economic outlooks, surprisingly little research exists about how small firms form performance expectations. This paper contributes to reduce this knowledge gap by analyzing performance expectations of small firm managers operating in markets with radical product innovations. This paper proposes a model and hypotheses, which explain performance expectations of small firm managers based on firms' current success, radical product innovation, and variables that indicate firms' ability to respond to customer needs for radical product innovation. Data from 200 decision-makers in a real decision-making context support the model. The results show that performance expectations in small firms are only to a limited extent a naïve extrapolation of current success: radical product innovation and small firm's ability to respond to customer needs for radical product innovation influence performance expectations.     

Navigating imposed innovation: A decision-making framework

Modern economies are characterized by the rising role of nonmarket actors (e.g., regulatory agencies, social activists, labor unions, media) that are gaining influence over the behavior of for-profit firms. These nonmarket stakeholders use their clout over industry players to impose innovations that require costly changes in business practices or technological trajectories while lacking firm-level economic justification. How should a company respond when it is pressured to adopt a new practice or change its products, while the economic calculations suggest that this is going to be a pure cost? Our study suggests alternative strategic responses to imposed innovation pressures and explores the factors determining the choice of an optimal strategy. Grounding the argument on the outside-in approach to pursuing imposed innovations, we propose a framework of organizational responses to external pressures to innovate, with varying degrees of firm engagement and different levels of cooperation with other industry actors. We also present a decision tree approach, allowing organizational decision makers to analyze the contextual determinants and ultimately arrive at the most appropriate, context-determined strategy.     

An exploration of multinational enterprise knowledge resources and foreign subsidiary performance

Successful international expansion requires that parent firms simultaneously transfer multiple MNE knowledge resources and their foreign subsidiaries effectively absorb and utilize the knowledge. In this study, we examine the relationships between multiple knowledge resources (technological and marketing knowledge), the relatedness between parents and foreign subsidiaries, and subsidiary performance. Relatedness is specifically linked to the type of knowledge being transferred from the parent (i.e., technological relatedness versus market relatedness). We hypothesize that subsidiary performance improves with (1) the integration of a parent firm's technological and marketing knowledge resources, (2) high technological (market) relatedness between a parent firm and subsidiaries for transfer of parent technological (market) knowledge and (3) the co-presence of high technological and market relatedness. We find general support in our analysis of pooled cross-sectional data on more than 4000 observations of foreign subsidiaries from 572 Japanese MNEs across 47 countries. Theoretical implications and future research are discussed.     

Strategic entry or strategic exit? International presence by emerging economy enterprises

By proposing an integrated strategic choice framework, we theorize the distinctive dynamics of international expansion by emerging economy enterprises. Specifically, we explicate how these firms build international presence based on combined strategic entry (i.e., prompted by internal capabilities such as innovation and diversification) and strategic exit (i.e., pushed out by external handicaps at home such as institutional obstacles and market competition). Further, a firm’s cooperative ties with foreign multinationals in the former’s home country fortify the strategic entry intent, while ties with home government institutions weaken the strategic exit intent. We also demonstrate that building international presence helps bolster firm performance, highlighting the economic catch-up consequence of international expansion. Analyses of a two-year imbalanced panel data of 2136 firms statistically support our hypotheses.     

Practice Makes Profit: Business Practices and Firm Success

Which business practices set successful firms apart from others? We address this question using data from an official survey of almost 3000 New Zealand firms. Questions cover: leadership, planning practices, customer and supplier focus, employee practices, quality and process monitoring, benchmarking, community and social responsibility, innovation, IT use, business structure and the competitive environment. Some of these are internal practices reflecting a firm’s resources and capabilities; some are characteristics of the external environment. We find that capital investment choices, R&;D practices, market research and a range of employee practices are positively associated with firm success; industry structure is also a key determinant of success. The association between specific business practices and firm success is mostly independent of firm size, age and industrial sector, other than for export marketing.     

Validating the innovation prowess framework for firms in emerging economies facing tight regulatory regimes: the case of Indian pharmaceutical firms

ABSTRACT

The purpose is to investigate the generalizability of an innovation prowess framework, developed for firms in developed countries, for firms in emerging economies facing tight regulatory regimes. Using a qualitative approach we investigate key informants in six firms, supported by secondary documents and the business press, as well as in-depth organizational observation within one organization. Academic evidence suggests there are four factors – one external (industry structure) and three internal (economic structure of the firm, organizational structure of the firm, and historical development of the firm) – that drive the innovation prowess of firms. While firms in developed economies take such factors as the norm, firms in developing countries face evolving norms and internal challenges to comply with tighter regulatory regimes; however, the research suggests that impact of these four factors appear to be similar to those faced by firms in developed countries. Our research contributes by seeking to broaden our understanding of innovation prowess in emerging country contexts. Innovation in these markets is generally less well understood, especially as they adapt to the tighter regulatory regimes required to compete in global markets (e.g. WTO).     

Does environmental underperformance duration affect firms' green innovation? Evidence from China

Does the length of a firm's environmental underperformance shape its green innovation? Drawing on the behavioral theory of the firm, we argue that the duration of a firm's environmental underperformance plays an important role in shaping its green innovation activities. Using the data from Chinese publicly listed firms spanning from 2010 to 2018, we find that the duration of environmental underperformance has a U-shaped effect on a firm's green innovation, possibly due to competing short- and long-term solutions to regain legitimacy. We also find that this relationship is moderated by environmental underperformance intensity and analyst recommendation pressure. Our study contributes to the literature on green innovation and the behavioral theory of the firm. We discuss the implications for policymakers and managers.     

Pseudo-Transformational Leadership: Towards the Development and Test of a Model

We develop and test a model of pseudo-transformational leadership. Pseudo-transformational leadership (i.e., the unethical facet of transformational leadership) is manifested by a particular combination of transformational leadership behaviors (i.e., low idealized influence and high inspirational motivation), and is differentiated from both transformational leadership (i.e., high idealized influence and high inspirational motivation) and laissez-faire (non)-leadership (i.e., low idealized influence and low inspirational motivation). Survey data from senior managers (N = 611) show differential outcomes of transformational, pseudo-transformational, and laissez-faire leadership. Possible extensions of the theoretical model and directions for future research are offered.     

Multinational subsidiaries and green innovation

We address the questions of whether multinational (MNC) subsidiaries are more likely to introduce green innovation (GI) than domestic firms and how intra-MNC resources are likely contribute to this effort. Using the Community Innovation Survey for 14 European countries and adopting a knowledge-based view of the MNC, our results suggest that subsidiaries have an advantage of foreignness in GI as respect to domestic firms, especially when they have an innovation mandate (i.e., competence-creating subsidiaries). Our findings also support that intra-MNC and extra-MNC cooperation for innovation increases subsidiary probability to introduce GIs, the two being substitutes.     

Different determinants at different times: B2B adoption of a radical innovation

This research aims to empirically determine which factors best explain business to business adoption of a radical, high-tech innovation early in the diffusion process. Early lifecycle data collection provides insights about the differences in determinants of adoption at different times in the product diffusion process. The results indicate that differences do exist between the determinants of early adoption, intent to adopt later, and unawareness of the innovation. The influencers of earliest adopters appear to be innovation-focused: the perceived benefits of the innovation as well as the strength of the producer network positively relate to early adoption; early adopters also tend to perceive the technology in the innovation as less different than previous technology than do those who intend to adopt later. The influence of a champion within the adopting firm, the ability of the firm to sense and respond to new technology, and the depth of technology knowledge within the adopting firm are significant influencers across multiple stages of diffusion, showing that firm-internal traits are particularly important influencers of adoption. Laggard firms are missing the critical firm traits that lead to information gathering and understanding of innovations. In addition to contributing to adoption research theory and methodology, this research has implications for innovation-marketing and innovation-adopting firms.     

Women’s Leadership and Firm Performance: Family Versus Nonfamily Firms

We evaluate the relationship between the appointment of women to CEO or Chair positions and firm performance, and shed light on the differences between family and nonfamily firms. By using a propensity score matching approach on a sample of 394 French firms over the period 2001–2010, we find major discordances between women’s leadership style and family business expectations relative to firm performance, as measured by return on assets and Tobin’s q. Notably, our results support the conjecture that family firms, which are more conducive to transformational leadership, offer women a more appropriate climate for exercising the function of Chair than that of CEO. In contrast, women CEOs perform better in nonfamily firms. Our findings move away from the predominant focus on barriers and stereotypes images about the female leadership and support the contingency theory of leadership, which states that the effectiveness of a leadership style depends on the organization and culture in which leaders operate, and on task-related positions