Developing Innovation Capabilities: A Longitudinal Study of a Project at Volvo Cars

Many large firms are struggling to alter and develop their organizational capabilities. There are several discussions in the literature on what these capabilities comprise, and that there is a need to develop them. However, less attention has been paid to how companies can develop these capabilities in practice. The purpose of this paper is to contribute to organizational capability theory by providing insights derived from an empirical study of how organizational capabilities for innovation are developed in large firms, and how these findings compare to the theory. The paper is based on a longitudinal study of Volvo Cars conducted as a long‐term collaborative research project. The authors were involved in a project called Vision 2020, which extended over a period of two and a half years, the findings from which highlight several activities that enabled the changes required for the development of organizational capabilities. The need to develop ‘management capability’ in terms of both cognition and the propensity to act is especially highlighted.     

An examination of the trade-off between internal and external IT capabilities

The business case for hiring external IT consultants is compelling. Consultants can represent a rich source of valuable, short-term capabilities. From a resource-based perspective, however, the fungible nature of these capabilities argues against their long-term strategic value. Furthermore, IT consultants may be at odds with existing internal capabilities. Institutional theory suggests that external consultants may not share the same norms and beliefs held by the internal staff and consequently their efforts in achieving organizational goals may be diluted or compromised. This paper explores the tension between internal and external IT capabilities on the realization of enhanced IT productivity. Drawing on telephone survey data on the adoption of Internet business solutions, the results of the study show that firms see tangible benefits from using external IT consultants, but these benefits are moderated by the level of existing internal IT capabilities.     

Exploring the relationships between IT competence,innovation capacity and organizational agility

Business environments today are characterized as being very dynamic and hyper competitive. Organizations in these environments have to be agile in order to adapt their strategies and actions to be successful. While it is recognized that information technology can enable firms to be agile, there is a limited understanding of the mechanisms through and the contexts in which Information Technology (IT) enhances agility. This study examines two key antecedents of organizational agility, namely the IT competence of a firm and its innovation capacity and, examine their independent and joint effects on agility. We test our model using data collected from large firms in the US. The results provide strong support for our model. We found that firms with superior IS capabilities coupled with an aggressive IT investment orientation create digital platforms that enable them to be agile. We also found that the innovation capacity of the firm has a positive relationship with organizational agility and that firms with higher innovation capacity are better able to leverage their digital platforms to enhance agility. Our results indicate that organizational agility has a strong positive impact of firm performance. We interpret and discuss these results and their theoretical and practical implications.     

Core capabilities for practitioners in achieving e-business innovation

The rapid advance of information technology and its penetration into the core elements of the business model and organizational structures is enabling profound and significant organizational changes. In such a dynamic environment, firms must be able to continually evolve their capabilities to facilitate electronic business (e-business) innovation. Yet, current research pays little attention to the core capabilities that contribute to e-business innovation in general. This research seeks to identify the core capabilities that are necessary for achieving e-business innovation. We propose a tri-core model of e-business innovation adopted from Swanson (1994), which knits together three cores: business technology, the business model and the value network. We use this model initially to specify the functional areas of the capabilities. Based on data collected through an intensive literature review and an exploratory Delphi study, thirteen essential capabilities were considered as the keys to e-business innovation exploitation and exploration. Firms can facilitate their e-business solutions over time through the successful development of these capabilities. These findings provide great insights for practitioners and scholars alike to better understand the core capabilities for achieving e-business innovation. It can also help practitioners form a template of the requisite in-house management for identifying knowledge gaps and developing action plans.     

Ties with government,strategic capability,and organizational ambidexterity: evidence from China’s information communication technology industry

Organizations that are capable of pursuing exploration and exploitative innovation strategies simultaneously have demonstrated superior performance. For information and communication technology (ICT) firms, it is especially critical to achieve such organizational ambidexterity in order to both allocate limited resources and pursue different innovation strategies appropriately. As the ICT industry in China faces higher environmental uncertainty, a less developed institutional framework, and increased power of market competition, we explore the antecedents of ambidexterity conjointly, considering the effects of institutions and organizational capabilities. Building on ambidexterity literature, we develop a capability-building framework to explore firms’ strategic choice-making between exploratory innovation strategy versus exploitation innovation strategy, and their orientation to pursuit one, or both. With survey data from China’s ICT industry, we find that ties with government promote an ambidextrous focus on both types of innovation strategies. In addition, we find that strategic capability partially mediates the main effects of ties with government on both exploratory and exploitative innovation strategies. Implications for organizational ambidexterity in China’s ICT industry are discussed.     

Supply chain management information systems capabilities. An exploratory study of electronics manufacturers

Supply Chain Management Information Systems (SCM IS) play an increasingly critical role in the ability of firms to reduce costs and increase the responsiveness of their supply chain. This paper develops an empirically supported model of the organizational capabilities enabled by SCM IS. The model integrates and enriches theoretical and empirical studies of competitive strategy, supply chain management, and interorganizational information systems. Evidence from an exploratory case study of three large firms in the electronics manufacturing industry is examined to build a better-supported theory of SCM IS capabilities. The findings suggest the organizational capabilities enabled by SCM IS can be conceptualized as the level of support provided for: operational efficiency; operational flexibility; internal planning and analysis; and external planning and analysis. The theoretical model furthers an understanding of SCM IS capabilities and is sufficiently developed to permit operationalization for future studies evaluating the effectiveness of SCM IS.     

A survey of business process reengineering practices in Singapore

The changing economic environment has led to an increasing interest in improving organizational processes to enhance business performance. This paper presents the results of a survey of the business process reengineering (BPR) practices followed by firms in Singapore. The paper highlights the status of BPR projects, motives behind their efforts, the functional areas targeted for reengineering, roles of various organizational members in BPR programs, use of IT in BPR, and the main problems faced in the efforts of Singapore firms. The results show that about 50% of firms surveyed were engaged in BPR projects, with as many as 37% of the firms indicating their intention to take up BPR projects in the next few years. Main problems faced by the Singapore firms are the lack of human and financial resources, lack of internal IT expertise and capabilities, and lack of a champion for BPR efforts. These findings are compared to prior studies in the US and elsewhere. The paper concludes with a discussion of the implications based on the findings of the survey.     

Application of multivariate statistics and 3D visualization analysis in tacit knowledge diffusion map

Tacit knowledge is an important factor for enterprises and institutions to enhance their knowledge innovation and value-added capabilities, and it is also a basic link to enhance organizational learning capabilities. With the development of technology, the dissemination of tacit knowledge has increasingly shown complex and dynamic trends. In order to make the tacit knowledge in the enterprise better circulate and generate greater economic value, therefore, this paper proposes a study on the diffusion map of tacit knowledge based on multivariate statistics and 3D visualization analysis. First of all, this paper analyzes the internal relationship between organizational learning and organizational tacit knowledge integration and organizational tacit knowledge innovation, and combines multiple statistical methods to propose an organizational tacit knowledge integration method based on tacit knowledge management. Secondly, we combine 3D visualization and generative confrontation network methods to analyze the data of tacit knowledge dissemination, and visualize the distribution of knowledge dissemination in three dimensions. In the simulation experiment test, this paper reveals that the spreading efficiency of tacit knowledge in the network is affected by related factors. Through this model, we hope to explore the behavioral laws of different types of nodes in the network and propose effective countermeasures to improve the efficiency of knowledge dissemination.     

Towards a theoretical framework of strategic decision, supporting capability and information sharing under the context of Internet of Things

The effective strategy of Internet of Things (IoT) can help firms to grasp the emerging opportunities from the IoT and then improve their competitive advantage. In this article, based on organizational capability perspective, we provide a theoretical framework which classifies IoT strategies into four archetypes from two dimensions of managers’ strategic intent and industrial driving force, and propose that market-based exploratory capabilities play a more important role for firms adopting get-ahead strategy, and market-based exploitative capabilities play a more important role for firms adopting catch-up strategy in market. The technology-based exploratory capabilities play a more important role for firms adopting get-ahead strategy in technology, and technology-based exploitative capabilities play a more important role for firms adopting catch-up strategy in technology. Especially, external industry information sharing more efficiently contributes to the enhancement of both market-based and technology-based exploratory capabilities, and internal industry information sharing more efficiently contributes to the enhancement of both market-based and technology-based exploitative capabilities.     

Inter-organizational innovation and cloud computing

Firms are increasingly shifting from the ‘closed’ innovation paradigm, in which their innovation design and implementation activities were based on their own internal knowledge resources, skills and production facilities, towards the inter-organizational ‘open’ innovation paradigm, which is based to a significant degree on collaboration with other organizations, aiming at the exploitation of external knowledge resources, skills and production facilities as well. This paper investigates empirically the effects of firm’s inter-organizational collaboration for the design and implementation of innovations, and also use of ICT for supporting this collaboration, on firm’s propensity to adopt cloud computing (CC), and in this way it examines in an ‘objective’ manner to what extent firms regard CC as a cost-effective means of supporting inter-organizational collaboration for the design and implementation of innovation. Our study is based on a dataset collected in the e-Business Survey of the European Commission from 676 European firms from the glass, ceramics and cement manufacturing sectors. It has been concluded that firms of these sectors regard CC as a cost-effective means of supporting collaboration with other firms for the design of innovations in their products, services and processes, and also of reducing the costs and increasing the capabilities and flexibility of already existing electronic support of inter-organizational innovation design collaboration. Furthermore, our results indicate that firms find CC useful for the reduction of the costs and the increase of the capabilities and flexibility of their existing electronic support of the complex operations required for the inter-organizational implementation of innovations.     

Strategic aspirations for net-enabled business

The net-enabled business innovation cycle (NEBIC) model describes a path by which firms employ dynamic capabilities to leverage net-enablement. Some firms strategically aspire to follow this path in a more gradual fashion striving for business process improvements (incremental strategy) while others aspire to exploit rapidly net-enablement to achieve business innovation (leapfrogging strategy) that offers completely new market opportunities. Study results suggest that firms adopt accelerated leapfrogging strategies when faced with more severe external competitive pressures. This combined with strong leadership, a propensity to embrace internal user involvement, IT maturity, and an accommodating firm structure, as indicated by path accelerators, result in higher aspirations for business innovation. Firms shying away from leapfrogging strategies tend to protect existing customers and employees from more radical changes. These firms sometimes lacked the internal capability to enact more aggressive strategies and thus had to acquire the necessary capabilities before aspiring for business innovation.     

Successful Patterns of Internal SME Characteristics Leading to High Overall Innovation Performance

Small and medium‐sized enterprises (SMEs) struggle with the paradox of developing new products and technologies on the one hand and minimizing costs on the other. These SMEs must be innovative to survive and grow. However, compared to large firms, SMEs have several problems in their innovation process, which negatively influence their overall innovation performance. This research explores successful patterns of internal SME characteristics that lead to high overall innovation performance. Cluster analyses were conducted to find patterns in the internal characteristics of SMEs with high overall innovation performance. We find that companies that focus on incremental innovation and that achieve high overall innovation performance indeed share a pattern in their internal organization, when controlling for innovation type. The paper adds to the current body of knowledge by comparing high‐ and low‐performing companies based on competence differences. Because real‐life organizations consist of multiple organizational characteristics, we also contribute to management practice by simultaneously addressing multiple organizational characteristics for the successful organization of innovation.     

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

Antecedents of Network Capability and Their Effects on Innovation Performance: An Empirical Test of Hi‐tech Firms in China

A firm's competitive advantage can come not only from internal resources but also from inter‐firm innovation networks. This paper shows that network capabilities (i.e., network visioning capability, network constructing capability, network operating capability and network centring capability) are special skills that enable values residing in network resources. Based on a sample of 211 Chinese hi‐tech firms and by applying structural equation modelling, network capabilities are found to have a positive relationship with innovation performance. Four antecedents of network capabilities – IT maturity, openness of culture, the management system involved and experience with network activities – are also identified in the research and empirically tested. The results of this study provide a new framework that describes how networked firms can gain a competitive advantage.     

Designing shared spaces for firm‐community collaborations for innovation: Formal policies and coordination in open source projects

This paper adds to the growing debate on the design of the shared space between firms and communities in co‐innovation processes. We investigate specific organizational design initiatives that firms can take when collaborating with online communities to nurture their joint knowledge creation process and to realize a useful output. We contend that drafting a formal policy, leaving the coordination of the joint project to others and, in case of taking on the coordination duty, dedicating an employee's full time to realize the project administrator task can help increase the amount of useful output of such collaborations. Results based on a sample of 1,099 open source software projects hosted on the platform SourceForge.net support our hypotheses.     

Hierarchical business value of information technology: Toward a digital innovation value chain

Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain.     

Information systems and internal control: evidence from China

Chinese companies are required to disclose weaknesses in their internal control systems, including information system weaknesses. This paper evaluates the impacts of information system weaknesses on firm performance relative to other internal control weaknesses to provide firms guidance on the construction of internal control. The organizational information processing theory suggests that firms with greater operational complexity demand better information systems to meet their greater informational needs, i.e., the quality of information systems has a stronger effect on the performance of more complex firms. We find that the adverse effects of information system weaknesses on performance relative to other internal control weaknesses are stronger for firms with greater operational complexity, consistent with the organizational information processing theory.     

Alliance Addiction: Do Alliances Create Real Benefits?

Although their advantages are well known, technology alliances may not always positively affect innovative performance. Previous studies have found several explanations for this problem. Technology alliances often require excessive resources and capabilities to create and maintain relationships with partners. In addition, they divert managerial attention and functions from internal research and development (R&D) activities. In this study, we hypothesize that firms often execute inefficient technology alliance strategies, thus affecting their innovative capabilities negatively and consequently reducing their subsequent innovation performance. Specifically, we test whether firms with greater prior experience in technology alliance are more likely to execute inefficient technology alliance strategies. Second, we attempt to investigate the negative effects of technology alliances on firms' internal R&D capabilities. To test our hypotheses, we employ data from 1,036 technology alliances in the US nanobiotechnology sector. Implications from the analyses are offered for executives and technology alliance strategies. Specifically, we propose that firms should adopt technology alliance but with due consideration of its negative aspects and the firms' limited resources.     

Supporting Innovation through HR Policy: Evidence from the UK

This paper focuses on the relationship between the importance of innovation for organizations and their human resources policy. Drawing on survey findings, we examine the coherence of organizations’ utilization of HR recruitment, training and performance management policies to support and enhance firms’ innovation performance. Through a social–psychological perspective, we situate our findings in two diverse areas: the psychological literature, exploring the measurement of innovation, and second, with regard to the internal (with each other) and external (with broader organizational objectives) integration of distinct HR policy elements. Our surveyed organizations indicate that, whilst attaching importance to innovation, they fail to consistently translate this importance into coherent HR policies. Typically, HR policy rewarded non‐managerial employees for innovation, whilst managerial staff were expected to do so as a matter of course. This inconsistency is one source of resistance which blocks the generation of new ideas, and their implementation, organization‐wide.     

An Empirical Study of Individual Competencies in Distribution Centres to Enable Continuous Innovation

Individual competencies are the complex combination of knowledge, skills and abilities demonstrated by employees that are critical to the effective and efficient functioning of the organization. As firms pursue strategies and commitment to continuously innovate, the major resource to enable this process lies in the people within the organization. Logistics firms in developed economies such as Singapore and Australia are embarking on these strategies to remain competitive. The key objective of this paper is to investigate the competencies that are inherent in employees of distribution centres as part of the logistic function that are rapidly growing and innovating. The study adopts an iterative process of data collection by conducting ten case studies in Singapore and Australia and interviews with senior managers. The findings show several competencies apparent in employees of the firms studied. These underpinned collective behaviours and organizational capabilities needed for continuous innovation. This study provides important lessons for managers in logistics organizations in Australia and Singapore and demonstrates how differing extents of competencies and behaviours of employees can impact on the operations of firms and their capacities to innovate.