Innovation Strategies: Are Knowledge-Intensive Business Services Just Another Source of Information?

The objective of this paper is to contribute to the empirical literature on innovation strategies and services, by analysing the use of knowledge-intensive services, and their impact on innovation, in manufacturing firms. The analysis is carried out at the firm level, on the basis of a survey covering 804 manufacturing establishments in the Province of Quebec (Canada). We investigate the extent to which existing internal capabilities and their interaction with external sources of knowledge, in particular the use of knowledge-intensive business services (KIBS), affect the level of innovativeness of manufacturing firms. Then we examine the extent to which different innovation strategies, and the way KIBS are integrated into these, are associated with innovation. We show that manufacturing firms adopt a variety of innovation strategies, none of which preclude innovation, even introverted strategies whereby firms interact little with outside agents. However, those strategies that incorporate KIBS have a considerably greater chance of leading to innovation.     

In the vanguard of openness: which dynamic capabilities are essential for innovative KIBS firms to develop?

Abstract

In this paper, we examine whether the innovativeness of knowledge intensive business services (KIBS) firms is affected by their inherently high rate of interactions with clients and partners. Even if such firms do not deliberately follow an open innovation strategy, they are exposed to knowledge flows from other organisations. A particularly interesting issue is the connection between openness and the need to develop dynamic capabilities for distinct phases of knowledge processing. Building on resource-based views, we have developed hypotheses on the respective importance of KIBS firms’ dynamic capabilities and their inclination to engage in open innovation. Since clients and partners can contribute to activities especially at the beginning and end of the innovation value chain, KIBS should consider focusing on developing a ‘conceptualizing’ capability for translating raw ideas into marketable service propositions. The importance of this capability is confirmed by our regression analyses on survey data from 125 KIBS in the Netherlands. By contributing to the literature on KIBS and open innovation, we shed light on strategically balancing capability development and external capability sourcing.     

Innovation and growth in KIBS: the role of clients’ collaboration and service customisation

In this paper, we analyse KIBS firms and posit that two core attributes of KIBS, namely collaborative relationships with clients and product customisation, foster the ability to develop successful, new product innovations. We disentangle the role of customisation and collaboration choices by looking at how they jointly affect the impact of innovation over firms’ performance, asking to what extent and how firms should collaborate with clients and customise their services. We test our hypotheses on a sample of Italian KIBS firms. Our results show that product innovations that are new to the industry are relevant and, counter intuitively, show that most growing KIBS firms do not have the highest service customisation and collaboration breadth with their clients. Most growing firms develop mass customisation strategies and they leverage on focused collaboration strategies with clients.     

Growth in Knowledge-Intensive Business Services: Evidence from Lombardy

This paper studies the growth patterns in knowledge-intensive business services (KIBS) in Lombardy on the basis of original firm-level survey data. The aim is to investigate in particular the role of and interplay between age and size of firms and the modes of innovation in the process of growth. Our findings indicate that younger firms tend to outperform incumbents for sales growth and that larger firms tend to grow more than smaller companies. However, the effects of firm size and age vary substantially according to the firm's specific pattern of innovation. In particular, highly innovative firms tend to outperform competitors regardless of their age or size, while for conservative KIBS, size is a prerequisite for growth. Investment in human capital and the service distribution network are important drivers of competition for growing KIBS.     

Not too close,not too far: testing the Goldilocks principle of ‘optimal’ distance in innovation networks

This paper analyses how the formation of collaboration networks affects firm-level innovation by applying the ‘Goldilocks principle’. The ‘Goldilocks principle’ of optimal distance in innovation networks postulates that the best firm-level innovation results are achieved when the partners involved in the network are located at the ‘right’ distance, i.e. ‘not too close and not too far’ from one another, across non-geographical proximity dimensions. This principle is tested on a survey of 542 Norwegian firms conducted in 2013, containing information about firm-level innovation activities and key innovation partners. The results of the ordinal logit regression analysis substantiate the Goldilocks principle, as the most innovative firms are found among those that collaborate with partners at medium levels of proximity for all non-geographical dimensions. The analysis also underscores the importance of the presence of a substitution–innovation mechanism, with geographical distance problems being compensated by proximity in other dimensions as a driver of innovation, while there is no support for a potential overlap–innovation mechanism.     

German Industrial Structure in Comparative Perspective

This paper analyses German manufacturing structure in comparison with other EU member states. The paper analyses trends in R&D expenditure and export market shares in the OECD countries, discussing how differences between national institutional frameworks may impact on the innovation strategies that domestic firms follow. It has recently been argued that there is an ‘innovation crisis’ within Germany. The available evidence shows that although Germany is maintaining an overall comparative advantage in R&D intensive industries, this is no longer the case in very high-technology industries.     

Mission impossible? Entrepreneurial universities and peripheral regional innovation systems

As part of their ‘third mission’ to commercialise research and cultivate growth in local economies, universities have been accorded a central role in regional innovation systems. This paper takes issue with this policy emphasis. It presents empirical evidence suggesting the entrepreneurial spillovers from universities have been greatly exaggerated, especially in some peripheral regions. The explanation offered for this poor performance hinges on the substantive disconnect between universities and their surrounding local entrepreneurial and innovation ecosystems. Despite their marginal economic contribution, the paper claims that ‘policy entrepreneurs’ play a powerful role in cumulatively reinforcing the dominant role of universities through a process of ‘institutional capture’, the outcome of which results in a form of ‘policy lock-in’. The implications of these findings for public policy are outlined.     

Patterns of Innovation Capabilities in KIBS Firms: Evidence from the 2003 Statistics Canada Innovation Survey on Services

The aim of this paper is to shed light on complementarities and substitutions between various types of innovation capabilities in knowledge-intensive-based service (KIBS) firms. The data used in this study are the responses of 2,625 innovative firms to the 2003 Statistics Canada Innovation Survey on services. The empirical results suggest the presence of three patterns of complementary innovation capabilities, one pattern of substitute activities and finally, four patterns of innovation capabilities that are independent from each other. Hence, the results suggest the presence of complementarities: first, between internal R&D, external R&D, acquisition of equipment and machinery, and marketing activities; second, between external R&D, acquisition of equipment and machinery, acquisition of external knowledge and marketing activities; third, between acquisition of equipment and machinery, acquisition of external knowledge and marketing activities. Such complementarities lead to the conclusion that, in practice, managers of KIBS firms consider the consolidation of these capabilities jointly instead of separately. The paper also discusses issues related to patterns of capabilities that are substitutes and independent from each other. The results of this study also show significant heterogeneity in the determinants of the different patterns of innovation capabilities.     

Is there a fallacy of composition of external R&D? An empirical assessment of the impact of quasi-internal,external and offshored R&D

Empirical studies at the individual firm level often find a positive impact of external R&D on innovation. However, external R&D sourcing might produce an impoverishment of the local knowledge base and thus damage innovation production at the regional level. To address this possible fallacy of composition, we first review the various forms of ‘external’ R&D. We then use the French R&D survey to assess the impact of four different ways of transacting or collaborating on R&D: onshore affiliate external R&D, offshore affiliate external R&D, onshore non-affiliate and offshore non-affiliate external R&D. We then estimate knowledge production functions on the 94 metropolitan French NUTS3 regions observed between 1997 and 2008, differentiating internal R&D and these categories of external R&D. We obtain that the impact of onshore non-affiliate external R&D is significantly negative. The other external R&D categories are non-significant and we do not detect any complementarity between internal and external R&D.     

Sourcing Knowledge and Innovation in a Low-Technology Industry

This paper investigates the relationship between knowledge sourcing and innovation in a select low- to medium-technology industry, the forest sector. It is based on data from the Statistics Canada Survey of Innovation 2005. Econometric models are developed and tested, specifically logistic regression analyses, in order to probe the relationship between select forms of embodied and disembodied knowledge and levels of innovation intensity. Differences between single establishment Canadian firms, multi-establishment Canadian firms, Canada–USA multi-establishment firms and establishments belonging to multinational firms are studied in terms of the relationship between innovation and sources of knowledge. Findings indicate that establishment innovative performance is related to knowledge sourcing strategies and furthermore that organization ownership/structure impacts significantly upon this relationship.     

Agglomeration and innovation of knowledge intensive business services

ABSTRACT

For some time now, the research focusing on Knowledge Intensive Business Services (KIBS) has been very active. Observing that knowledge as a production factor is only becoming more and more pronounced, this focus is well-grounded. It is therefore important to examine how these knowledge-hubs gain and propagate their knowledge. We hypothesize that KIBS (as many other sectors) benefit from intra-industry knowledge spillovers facilitated by geographical concentration. Our focus is the innovative capacity of KIBS, which we measure through trademarks registered by KIBS firms. While there may be several mechanisms facilitating knowledge spillovers, we can identify local intra-sectoral labor mobility as one. Accessibility measures are used to assess the geographical attenuation of the spillover effects. Results show that the distance decay of spillovers is fast. Only local concentrations of KIBS seem to be of importance. Over longer distances, we instead observe negative consequences for trademarking, indicating possible spatial competition effects.     

AHP‐IFM Target: An Innovative Method to Define Reliability Target in an Aerospace Prototype Based on Analytic Hierarchy Process

Reliability target definition is a crucial aspect of any reliability analysis. In literature, there are two types of analysis. The first one, called ‘bottom‐up’, goes back to the system's target using data of units through a fault tree analysis. Reliability data of components could be only partially available, particularly in the case of innovative systems. In the second type of analysis, called ‘top‐down’, starting from similar systems, the target of each unit is defined, by applying allocation techniques. Also, in this case, reliability data of similar systems might not be available, and the choice of the most appropriate technique could be tricky. The purpose of the present research is to combine the advantages of both usual approaches. The newly developed approach is based on the integrated factors method, whose values are adjusted trough a multicriteria method, the analytic hierarchy process, depending on the importance of each factor and each unit. The innovation of the proposed model consists in its dynamism, as most of the literature methods use constant weights for the factors involved in reliability allocation. No method takes into account the assignment of a different level of significance (weight) to different units of the system, simultaneously with the considered factors. The developed approach has been applied on an aerospace prototype system. The results show the goodness of the new method and its ability to overcome the problems noted in literature. Copyright © 2017 John Wiley & Sons, Ltd.     

Internal barriers to innovation and university-industry cooperation among technology-based SMEs in Brazil

ABSTRACT

This paper investigates the association between internal barriers to innovation and the propensity of technology-based SMEs to cooperate with universities and research institutes (URIs). We examine empirically two types of internal company barriers – financial and knowledge obstacles to innovation. The data source is the latest edition of the Brazilian Innovation Survey (PINTEC). We analyse the full sample of technology-based SMEs as well as the subsamples of high-tech manufacturing companies and knowledge-intensive business services (KIBS). Financial obstacles are shown to be strongly related to the propensity of KIBS to collaborate with URIs. Knowledge obstacles are moderately related to the propensity of high-tech manufacturing SMEs to collaborate with URIs. We conclude that while URIs have other important roles in the techno-economic system, their perceived contribution to alleviating internal innovation barriers for technology-based SMEs may be less prominent than policy decision-makers in emerging economies may expect.     

For the southern half of the globe

The proposal is made that an international design school is set up for peripheral countries. This postgraduate school would be staffed originally by Faculty members from metropolitan countries. Students would be graduates with ‘real world’ experience. Schools would be small, based at regional centres, and possibly periphatetic in nature.     

Isomorphic Pressures, Peripheral Product Attributes and Emerging Market Firm Export Performance

• Drawing upon the neo-institutional theory of mimetic isomorphism and the concept of the extended product, we identify and empirically evaluate two potential product strategies that emerging market firms (EMFs) may use to improve their export performance while also addressing the financial, managerial expertise, and international experience limitations that they frequently face.
• Hierarchical regression is used to test our proposed peripheral product adaptation strategies on a unique dataset of 106 Chinese and Romanian exporters.
• We find that EMFs that change either of two visible peripheral product attributes (the brand name or the packaging) to conform to local market norms, on average, are more satisfied with their export performance than those that pursue other strategies. Our results also suggest that changing the brand name to conform to local market norms has more than twice the impact on EMF performance than does changing the packaging.
• Consistent with the tenets of neo-institutional theory, EMFs managers may be able to improve their firms’ export performance by changing the peripheral attributes of their products to conform to local market norms.

     

What hampers green product innovation: the effect of experience

ABSTRACT

Based on representative firm-level survey data for Austria, Germany, and Switzerland, this study systematically analyses the relevance and drivers of barriers to green product innovation using the example of green energy technologies. ‘Low willingness to pay’, ‘high development costs’, ‘high commercial uncertainty’, and ‘lack of favourable political framework’ are identified as the most important barriers. Moreover, we find that the firms’ innovation experience is an important driver of the level of green innovation barriers. Green innovation barriers are more accentuated for firms with green innovation activity than for firms with no green innovation activity. However, experience from different fields of green innovation and experience from non-green innovation activities help to limit these barriers.     

How to motivate vendor’s RFID adoption beyond mandate? A retailer’s perspective

Wal-Mart’s mandate of vendors’ RFID adoption has speeded the implementation of RFID, creating an innovative way of managing products and ushering in a new era of supply chain efficiencies. However, Wal-Mart’s action is widely controversial and hits troubles due to vendors’ protests. This research analyses how a retailer firm can stimulate its vendor to adopt this emerging innovation of supply chain management by using an incentive contract rather than a mandate. Such a contract should motivate the vendor to make costly efforts to adopt RFID, truthfully report the information of adoption cost, and execute RFID’s adoption at the retailer’s preferred timing. Established on the framework of the principal–agent theory (In economics, the principal–agent problem refers to the dilemma of how one party (the ‘principal’) could motivate the other party (the ‘agent’) to act in the best interests of one party (the ‘principal’) when both parties have different interests and information) and the real options theory (A real option theory investigates how valuable the flexibility (the ‘real options’) such as to the timing of the contract is when there is uncertainty in the contract), this paper derives such an incentive contract, discusses the effects of agency concerns and sheds substantive light on RFID’s adoption in a retailer–vendor dyad.     

Evolutionary paths of change of emerging nanotechnological innovation systems: the case of ZnO nanostructures

This paper puts forward a quantitative approach aimed at the understanding of the evolutionary paths of change of emerging nanotechnological innovation systems. The empirical case of the newly emerging zinc oxide one-dimensional nanostructures is used. In line with other authors, ‘problems’ are visualized as those aspects guiding the dynamics of innovation systems. It is argued that the types of problems confronted by an innovation system, and in turn its dynamics of change, are imprinted on the nature of the underlying knowledge bases. The latter is operationalized through the construction of co-citation networks from scientific publications. We endow these co-citation networks with directionality through the allocation of a particular problem, drawn from a ‘problem space’ for nanomaterials, to each network node. By analyzing the longitudinal, structural and cognitive changes undergone by these problem-attached networks, we attempt to infer the nature of the paths of change of emerging nanotechnological innovation systems. Overall, our results stress the evolutionary mechanisms underlying change in a specific N&N subfield. It is observed that the latter may exert significant influence on the innovative potentials of nanomaterials.     

Entrepreneurial acquisitions,open innovation and UK high growth SMEs

This paper examines the dynamics of entrepreneurial acquisitions undertaken by UK high growth small and medium enterprises (SMEs). While entrepreneurial acquisitions are increasingly deployed by SMEs, little is known about their antecedents, motivational drivers and organisational outcomes. Drawing on detailed case study evidence from Scotland, the key factor found to be driving these acquisitions was the desire to augment and exploit technological complementarities between the acquiring and acquired firms. Acquisition can therefore be conceptualised as an advanced stage of the outside-in ‘open innovation’ strategies proactively used within these innovative SMEs. Firms executing this strategy typically have an acute propensity for risk, a desire for close customer engagement, effective business models and strong external orientation. The work suggests that greater attention should be paid within M&A theory to the dynamics of these types of smaller scale entrepreneurial acquisitions.