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.     

Management practices of Australian manufacturing firms: why are some firms more innovative?

Whilst many studies have focused on the adoption of individual or sets of innovative management practices (e.g. lean production), fewer studies have evaluated a diverse set of management practices and firm contextual factors which may limit (or enable) the accumulation of groups of innovations in organisations. The Australian manufacturing sector is a novel setting to investigate such issues due to, among other reasons, a protracted decline of the competitive position of the sector. In this paper, we use a data-set from the Australian government funded management practices benchmarking project which was part of the World Management Survey and empirically evaluate why some companies have more innovative management practices than others. The conceptual model developed draws mainly on innovation diffusion theory and prior empirical findings. We find that (1) firms which adopt clusters of better management practices have greater performance; and (2) several firm characteristics explain the adoption of better management practices, such as education level of employees and managers, firm size, ownership by a multinational firm, and diffused ownership structure. The study has practical implications for policy-makers and stakeholders who are interested in supporting the adoption of better management practices by firms to enhance productivity in the manufacturing sector.     

Strategizing by firms in the presence of markets for resources

Strategizing by firms from the resource-based view is concernedwith the process through which firms acquire a distinctive bundleof resources that is costly and time-consuming for competitorsto duplicate or imitate. A central question facing any firm,therefore, is its strategy for accumulating the resources thatunderpin its production activities. In this article, the processof resource accumulation is discussed as one involving potentiallyboth internal resource development and external resource acquisition,from the perspective of the strategic issues involved in makinga choice between these options. Emerging markets for technologiesand know-how, through licensing and other forms of resourceexchange, have opened up new avenues through which firms mayjostle for advantage. The article is concerned with three majoraspects of this process, illustrating the discussion with casesfrom biotechnology and pharmaceuticals. First, the strategizingby firms around the ‘internal development’ vs. ‘externalsourcing’ issue is discussed, as informed by the practicesof leading firms, and how these lend greater variety of strategicoptions for firms; second, the potential competitive advantagesas well as disadvantages to be secured by firms through theprocess of external sourcing (as compared with the well-knownpotential advantages accruing to incumbents through internaldevelopment, such as time compression diseconomies and causalambiguity); and third, the criteria to be used by firms to strategicallyevaluate resources individually, as contrasted with the strategicevaluation of the resource bundle, or totality. These criteria,it is argued, turn on the issues of marginal value contribution,resource complementarities and synergies, resource variety andtransferability (involving intellectual property issues). Successfulfirms, it is argued, expand their options through blending internalresource accumulation with external resource leverage, therebydeepening their distinctive dynamic capabilities. This approachextends the framework of the RBV, enabling it to encompass resource-drivenSchumpeterian competition and such aspects of industrial dynamicsas specialization, modularization and imitative challenge.     

Supply chain information technologies and organisational initiatives: complementary versus independent effects on agility and firm performance

This research investigates the roles of supply chain information technologies (SCIT) and supply chain organisational initiatives (SCOI) in engendering agility and business performance in manufacturing firms. We examine two competing models, both of which incorporate agility as a mediator between the use of SCIT or SCOI and firm performance; the models differ in how the impacts of SCIT and SCOI are manifest. In one model, SCIT and SCOI are hypothesised to have separate effects on agility, which then impacts firm performance; in the second model, complementarities, or the interaction of SCIT and SCOI, impacts agility directly. Structural equation modelling results show that agility is full mediator, related to firm performance in both models. Further, the model with complementary interactions fits better. These results have implications for how manufacturing firms can position their investments in SCIT and SCOI to enhance agility and overall performance.     

Organizing the Innovation Process: Complementarities in Innovation Networking

This paper contributes to the developing literature on complementarities in organizational design. We test for the existence of complementarities in the use of external networking between stages of the innovation process in a sample of UK and German manufacturing plants. Our evidence suggests some differences between the UK and Germany in terms of the optimal combination of innovation activities in which to implement external networking. Broadly, there is more evidence of complementarities in the case of Germany, with the exception of the product engineering stage. By contrast, the UK exhibits generally strong evidence of substitutability in external networking in different stages, except between the identification of new products and product design and development stages. These findings suggest that previous studies indicating strong complementarity between internal and external knowledge sources have provided only part of the picture of the strategic dilemmas facing firms.     

Innovation and Firm Growth: Is R&D Worth It?

The paper contributes to an emerging literature that critically questions the degree to which R&D, at the centre of national and transnational innovation policies, results in firm growth. The differences in how innovation affects firm growth is explored for small and large publicly quoted US pharmaceutical firms between 1950 and 2008. We observe that the positive impact of R&D on firm growth is highly conditional upon a combination of firm-specific characteristics such as firm size, patenting and persistence in patenting. For small firms, R&D boosts growth for only a subset of firms: namely, those that patent persistently for a minimum of five years. For large pharmaceutical firms, on the other hand, R&D may have a negative impact on growth; potentially resulting from the low R&D productivity these firms have suffered from since the mid-1990s. These results raise important issues around the R&D and firm growth relationship for small and large firms as well the role of persistence in innovation for boosting firm performance.     

Technology Strategy and Knowledge Dynamics: The Case of Biotech¹

This study starts with the lack of clarity revealed in the literature so far as to whether technology is a source of differentiation between firms. The use of patent data allows the evolution of the technological profiles of 99 firms active in biotechnology-related applications to be traced. It is tested whether firms converge or diverge in terms both of their technology portfolios and of the way in which they combine their sets of technologies. It is found that the sources of technological heterogeneity between firms change over time, even when controlling for inter-sectoral differences (as in such sectors as pharmaceuticals, food processing, or chemicals). In brief, firms rely on an increasingly similar scientific corpus, the exploitation of which is gradually becoming firm specific.     

Owl meets beehive: how impact assessment and governance relate

This article analyses the complex relationship between impact assessments (IAs) of all types (such as comprehensive, regulatory, economic, social or environmental IAs) and their governance environment, using an analytical framework based on the concepts of governance styles and metagovernance. It is argued that each governance system builds on specific values, traditions and history and produces specific mixtures of hierarchical, network and market styles of governance (with or without an explicit metagovernance approach). Although governance can be considered as a non-normative perspective on polity and politics, the normative dimension of governance practice results in, for example, conflicting convictions about which type of knowledge or ‘evidence’ is valid for IA processes. This is particularly relevant because IAs have an important role in improving the knowledge base of governance. The concrete governance system in a specific country or other administrative entity influences the design and governance of IA systems positively or negatively, which leads to a variety of challenges. The conclusion is drawn that understanding the governance context and its dynamics can help improving IA governance.     

Adoption framework for advanced manufacturing technologies

The paper examines the adoption of advanced manufacturing technology (AMT). The general proposition is that the adoption of AMT reflects an interactive learning process, which is described by the extant use of AMT, firm-specific AMT knowledge accumulation, and the transfer of AMT ideas among networks of firms, suppliers, industry associations and government. This general proposition was specified as a structural equation model of Adoption of AMT. Data were based on the experiences of 224 Australian manufacturing companies that have invested and succeeded in using AMT. The results suggest that the adoption of AMT is primarily a function of a firm's assets for AMT, which comprise the resources, capabilities, and competences for developing and using AMT. The relationship between the adoption of AMT and assets for AMT was reciprocal, which implied a process of dynamic accumulation of both technology and human assets — a view consonant with the competence perspective of the firm. Overall, assets for AMT represent the AMT knowledge base of firms, and were shown to have a crucial role in determining the adoption of AMT.     

Public R&D as a Standard-Setting Device

We propose a simple two-firm model with complementarities and imperfect knowledge about the optimal technology. Firms receive two signals about the technology, a public and a private one. We show that with complementarities public signals can serve as a coordination device between firms, even if the private signal is more precise. Our results point to an important function of standard-setting organizations and public R&D: providing a focal point for firms that might not coordinate otherwise.     

Complementarity in alliance portfolios and firm innovation

This paper assesses the impact on firm innovation of combining alliance-specific and partner-specific attributes within a firm’s alliance portfolio. In a panel data analysis of the innovation performance of 119 firms operating in the pharmaceutical industry during 1985–2007, we test whether firm’s alliance portfolio displays complementarities across four dimensions. The results suggest that specific combinations of attributes may diminish innovation by decreasing the efficiency of diversity management or by generating redundancies. On the other hand, other alliance portfolio practices are mutually reinforcing and thus foster innovation.     

The interaction mode and geographic scope of firms’ technology alliances: implications of balancing exploration and exploitation in R&D

This paper proposes that the interaction mode, i.e. interactive and iterative, and geographic scope, i.e. domestic and international, of technology alliances generate sources of exploration and exploitation for firms. An implication of this idea is that firms can use these sources for balancing its internal focus on exploratory and exploitative research and development activities (R&D). Then, the paper suggests that the use of this balancing strategy has positive effects on a firm’s innovative performance. Using panel data based on Spanish manufacturing companies for the period 2004–2012, the empirical results confirm that firms balancing their internal exploration or exploitation in R&D with sources of external exploitation or exploration in their technology alliances are the firms with better prospects to produce innovation streams. Implications for the literature on complementarities in innovation, ambidexterity and R&D alliance formation are derived from the analysis.     

Adoption of green supply chain management practices and their impact on performance: an exploratory study of Indian manufacturing firms

Research on green supply chain management (GSCM) or sustainable supply chain management (SSCM) has attracted increased attention in recent years. Although GSCM/SSCM has been studied for developed and developing countries, there has been little information about the adoption of GSCM/SSCM practices in India. This article presents one of the earliest surveys on GSCM practices in Indian manufacturing firms. The items for the survey were developed based on the extant literature and feedback from corporates. Some of the major findings of the survey are as follows. We found that the state of adoption of GSCM practices by Indian firms was still in its infancy, the awareness of environmental sustainability was quite low among consumers, and the regulatory framework was also lacking in terms of promoting environmental sustainability. Results of data analysis showed that supplier collaboration for environmental sustainability had a positive impact on environmentally sustainable product design and logistics, which in turn was positively related to competitiveness and economic performance of the firm. We compared the results with the observations made by other researchers for developed and developing countries and provided managerial implications for the government and manufacturers as to what steps need to be taken to generate awareness towards environmental sustainability and facilitate the adoption of GSCM practices among Indian firms to a greater extent. We conclude the paper by indicating directions for future research on GSCM/SSCM.     

Stress‐enhanced clonal selection algorithm for structural topology optimization

Recently, numerous modified versions of immune algorithms (IAs) have been adopted in both theoretical and practical applications. However, few have been proposed for solving structural topology optimization problems. In addition, the design connectivity handling and one‐node connected hinge prevention, which are vital in the application of population‐based methods with binary representation for structural topology optimization, have not been applied to IAs in the literature. A stress‐enhanced clonal selection algorithm (SECSA) incorporating an IA with a dominance‐based constraint‐handling technique and a new stress‐enhanced hypermutation operator is proposed to rectify those deficiencies. To demonstrate the high viability of the presented method, comparisons between the presented SECSA and genetic algorithm‐based methods were made on minimum compliance and minimum weight benchmark structural topology design problems in two‐dimensional, three‐dimensional, and multiloading cases. In each case, SECSA was shown to be competitive in terms of convergence speed and solution quality. The main goal of this study is not only to further explore the capabilities of IAs, but also to show that an IA with appropriate enhancements can lead to the development of attractive computational tools for global search in structural topology optimization. Copyright © 2011 John Wiley & Sons, Ltd.     

On the Shoulders of Giants: Co-location with Dominant Firms in the Emerging Fiber Optics Industry

In this study we investigate the location choices of start-ups and established firms relative to dominant firms in the US fiber optics industry from 1976 to 1994. We test the propensity to co-locate with dominant firms and whether proximity to a dominant firm impacts the strategic choices made by start-ups and established firms. Contrary to our predictions, we find that both start-ups and established firms are equally likely to co-locate with dominant firms. We also find that start-ups exhibit greater new product adoption rates and greater product-line breadth than established firms. This implies that start-ups are relatively more likely to realize greater strategic gains with entry into emerging markets.     

Adoption of the Multidivisional Structure: Analyzing History from the Start

The multidivisional structure represents one of the most studiedand important organizational innovations. Chandler's historicalaccount stresses the imitation effects of industry adoption,and of firm efficiency, as influenced by such characteristicsas size and diversification, on the diffusion of the divisionalstructure. Recent statistical work in the marketing literaturehas, however, found either no imitation or no firm characteristiceffects on adoption. Studies in organizational sociology havequestioned the role of efficiency in the adoption process. Bycollecting data from the time of the first adoption to 1980,the following study is able to analyze the critical early historyof diffusion. A hazard model with imitation and firm covariatesis used to predict the hazard rates. A sample of 62 firms issplit into fast and slow adopters, and an inverse Gaussian hazardmodel is estimated to compare the drift among the split samples.The results largely confirm Chandler's historical account, butwith some important qualifications that point to the importanceof the local nature of information within industries.     

The effect of innovation on productivity: evidence from Turkish manufacturing firms

This paper systematically explores the effects of firms’ innovation activities on their productivity changes for Turkish manufacturing firms, differentiating between different typologies of innovation. We employ endogenous switching methodology, controlling for endogeneity and selection bias issues, as well as analysing counterfactual scenarios. The main finding of the study points to firm heterogeneity in terms of propensity both to innovate and to benefit from innovation activities. Our results indicate that all types of innovation activity have positive effects on the productivity of firms when compared with non-innovating firms. We find robust evidence for the differential impact of innovation on firm productivity across different innovation types. Further, this relationship alters across different phases of the economy with respect to the 2008 financial crisis.     

What determines how long an innovative spell will last?

This paper is set out to examine the temporal pattern of innovative activities: what might have affected a firm??s patenting from one period to the next. Based upon data on ??information technology?? (IT) manufacturing firms in Taiwan covering the years 1990?C2001, we develop a survival model to analyze the underlying drivers of patenting duration. Our results indicate that the level of the patent stock at the onset of the patent spell, defined as the number of successive years during which a firm produced at least one patent per year, has a non-linear effect on spell duration. Other factors, such as industrial growth, firm size and firm profitability, have a positive effect on patenting duration, while firm age and spell sequence affect negatively to spell duration. We conclude that state dependence is demonstrated by innovative behavior, yet the advantages gained from such creative accumulation can easily be dissipated, thereby illustrating the transient nature of dynamic capabilities.     

New Firm Growth: Exploring Processes and Paths

This paper provides an approach to new firm growth that views this as an unfolding developmental process. This approach is based on a Penrosean (1995) model of the firm. We find that new firm growth is non-linear and prone to interruptions and setbacks to an extent overlooked in the literature. From the model of development used, five propositions are drawn concerning measurable features of new firms' growth paths; these relate to patterns of survival, continuousness of growth, turning points, reversals and cumulative growth. These propositions are examined in the light of data on the growth paths of new firms in three countries, with aggregate comparisons of firms' growth paths effected by graphical representations and sequence analysis.     

The impact of diversifying and de novo firms on regional innovation performance in an emerging industry: a longitudinal study of the U.S. ethanol industry

There is growing interest among strategy scholars and policy makers regarding the influence of diversifying and de novo firms on regional innovation activities in emerging industries. This paper examines how the population, entry, and exit of diversifying and de novo firms in regions influence regional innovation output in an emerging industry. Using longitudinal data from the U.S. ethanol industry, we find that the local population and exit of diversifying and de novo firms have differing impacts on regional innovation output. Our findings contribute to the literature on firm heterogeneity, agglomeration, and regional innovation systems.