How Elephants Learn the New Dance When Headquarters Changes the Music: Three Case Studies on Innovation Strategy Change

Does a product innovation strategy change at company headquarters resonate the same way at different strategic business units (SBUs)? What factors play a role in differing implementation of new innovation strategies? A collective case study was conducted at three SBUs of an international conglomerate to investigate why the SBUs implement the same corporate innovation charter in vastly different manners, both in strategic processes and in organizing for new product development (NPD). This study's contribution to the literature is twofold. First, it develops initial insights into how three SBUs implement diverse SBU‐level innovation strategies in response to the same product innovation charter. Second, it extends the findings of previous studies on NPD strategy by presenting how three SBUs reshape their structure and resource allocation, changing various dimensions of their innovation strategy while also fitting the competitive structure in their individual, non‐high‐tech, traditional manufacturing industries as they respond to the corporate mandate. In this study, several factors were observed to influence a firm when formulating a new product innovation strategy. First, past performance and strategic typology constrain the innovation paths available. Poor past performance limits available resources whereas the strategic typology managers use limits their ability to recognize other opportunities. Next, capacity constraints provide a catalyst in moving toward process improvements. Third, management involvement in the day‐to‐day implementation of change is necessary to ensure that the new processes are implemented. Finally, corporate performance metrics are quite influential in how SBUs adapt to change. This study identifies that even with the immense power corporate has over these SBUs, some still dance to their own tune, ignorant of their deviation from the corporate mandate because the metric is not sufficient to detect these deviations. This study suggests the use of multiple types of metrics to minimize the likelihood of nearsighted responses to innovation charter changes.     

Expenditure Competition

Given the temptation by government officials to use some of their budget for "perks," residents face the problem of inducing officials to reduce such "waste." The threat to vote out of office officials who perform poorly is one possible response. In this paper, we explore how the competition for residents induced by fiscal decentralization affects "waste" in government. We find that such competition reduces waste, raises the utility of residents, and increases the desired supplies of public goods (potentially above the levels that jurisdictions would choose if they could coordinate). These results are in sharp contrast to the presumed effects from "tax competition," and suggest an additional advantage of fiscal decentralization.     

The role of lean launch execution and launch timing on new product performance

There is a substantial literature on the product development process but comparatively little on the impact of lean launch execution and launch timing on new product performance. Given the costs and risks involved in product commercialization, this research gap is surprising. Delays in product launch can lead to poor channel cooperation and coordination, missed market opportunities, and lost competitive opportunities, yet timing of the launch has not been included in many reported studies. In addition, managers at many firms have prioritized supply chain activities such as integration of logistics with other functional areas in order to obtain cost efficiencies and accelerate time to market; the role of lean launch execution in improving new product performance has also received little research attention. In this study, we build a conceptual model in which lean launch, launch timing, and quality of marketing effort are modeled as precursors to new product performance; we assess the role of market orientation and cross-functional integration in lean launch execution as well as indirect and direct effects of launch timing on performance. We empirically test our model with a sample of 183 U.S.-based corporate managers actively involved in new product launch. We find evidence that execution of a lean launch and effective marketing significantly improve new product performance, and that correct launch timing positively moderates the effect of lean launch on performance. These variables therefore should be carefully considered by managers of new product processes.     

Bank Debt and Corporate Governance

In this paper, we investigate the disciplining role of banksand bank debt in the market for corporate control. We find thatrelationship bank lending intensity and bank client networkhave positive effects on the probability of a borrowing firmbecoming a target. This effect is enhanced in cases where thetarget and acquirer have a relationship with the same bank.Moreover, we utilize an experiment to show that the effectsof relationship bank lending intensity on takeover probabilityare not driven by endogeneity. Finally, we also investigatereasons motivating a bank's informational role in the marketfor corporate control.     

Host country characteristics and agglomeration in foreign direct investment

By combining unique data on Swedish multinationals with industry data for 18 countries, the influence of host country characteristics on the location of foreign production is analysed. Particular attention is directed towards agglomeration tendencies in firms' location. The sample selection incorporates countries where firms have no affiliate production, which is an extension of previous research in this area. The results suggest that agglomeration effects are present, predominantly in technologically advanced industries. It is also shown that market size, the supply of skilled labour and earlier exports pattern, affect the location of overseas production.     

Growth effects of carbon policies: Applying a fully dynamic CGE model with heterogeneous capital

The paper develops a new type of computable general equilibrium (CGE) model in which growth is fully endogenous, based on the increasing specialization of sector-specific capital varieties. The model is used to simulate the effects of carbon policies on consumption, welfare, and sectoral development in the long run. The benchmark scenario is calculated based on endogenous sector-specific gains from specialization, which carry over to the simulations of a carbon policy following the 2 °C target. Applying the model to the Swiss economy, we find that carbon policy leads to growth rates of knowledge intensive sectors that are higher than in the benchmark and that all the non-energy sectors show positive growth rates. Compared to a state in which climate change has no negative effect, consumption in 2050 is reduced by 4.5% and entails a moderate but not negligible welfare loss.     

Ordered to Innovate: A Longitudinal Examination of the Early Periods of a New Product Development Process Implementation in a Manufacturing Firm

Firms can generate rather long‐lasting growth spurts through continuous innovation. Moreover, literature suggests that, when growing organically, firm performance is enhanced through a revenue expansion emphasis encompassing new‐to‐the‐world or new‐to‐the‐firm physical goods or service augmentations. This organic approach usually outperforms cost‐reduction programs, which often yield minor improvements to existing products; or an emphasis on simultaneous revenue expansion and cost reduction. While this finding has the major implication that firms should focus and generate more radical new products for long‐term success, there is need for research that investigates how firms should implement the strategy change to organic growth via innovation. The authors present a case study, which suggests that in the short run, it might be better to commence a revenue expansion strategy by focusing on incremental new product development (NPD) efforts, rather than focusing too much on new‐to‐the‐world or new‐to‐the‐firm products. Moreover, analyses of the rich, multimethod data, collected over a two‐and‐a‐half‐year interaction with the focal firm, illustrates that to increase success prospects of an organic innovation strategy, managers should not only engage incrementally innovative new product projects initially, but also ensure proficiency in commercializing the new product with cross‐functional NPD teams. Thus, in early stages of organization transformation, the merits of the organic growth strategy will be swiftly demonstrated, the cross‐functional teaming skills are learned and tested, and the new strategy becomes institutionalized. While somewhat contradictory to other studies on this topic, this more evolutionary exploration provides a new perspective for organizational change, especially when a firm is ordered to innovate. In conclusion, the insights gleaned in this study shed light on the journey from stagnating firm to a successful serial innovator via formalized NPD process implementation.