Conference Agenda

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Session Overview
Session
20-PM2-10: G8 - Innovation Performance and Policy
Time:
Thursday, 20/Jun/2019:
2:45pm - 4:15pm

Session Chair: Svenja Sommer, HEC Paris
Location: Room PC 18

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Presentations

Effects of cognitive proximity and collaboration breadth on innovative performance

Muhammad Ismail, Alejandro Bello-Pintado, Teresa García-Marco

Universidad Publica de Navarra, Spain

Context

The aim is to develop a theoretical framework of strategies based on combination of collaboration breadth (number and types of formally engaged partners) and cognitive distance. Study starts by exploring the underlying reasons for choosing a particular combination of these variables and test their combined impact on innovation performance.

Literature

Innovation carried out through collaborative efforts is becoming increasingly important within the literature of open innovation (Bogers, 2011; Hottenrott & Lopes-Bento, 2016), as a number of studies suggest that collaboration derives higher gains from joint innovation (Faems et al., 2005, Hottenrott & Lopes-Bento, 2016). The selection of these external actors for collaboration is sometimes influenced by proximities amongst which cognitive dimension holds a special place (Boschma & Lambooy, 1999), being one of the prerequisites for effective coordination amongst firms (Boschma, 2005). Firms try to strengthen their cognitive dimension by investing significant amounts to build social capital (Adler & Kwon, 2002). However, too much similarity in the cognitive dimension of social capital can reduce innovative opportunities and too much distance can limit the understanding and interpretation of external knowledge (Cowan et al., 2007). The work thus studies open innovation with a focus on cognitive and collaborative dimensions.

Literature Gap

Existing studies test effects of collaboration (Belderbos et al., 2004; Nieto & Santamaría, 2007) and cognitive distance (Bertrand & Mol, 2013; Nooteboom et al., 2007) on innovation performance in isolation and there remains a gap regarding the combination of knowledge sources for optimal innovation performance (Criscuolo et al., 2017).

Research Questions

we aim to:

•develop a framework of strategies based on combination of collaboration breadth and cognitive distance & theoretically studying the reasons for choosing a particular combination.

•test the effect of these combination of collaboration breadth and cognitive distance on the innovative performance.

Methodology

We aim to theoretically differentiate innovation strategies with regard to collaboration depth and cognitive distance, by preparing a 2X2 matrix of four pure and one mixed strategy to show purpose of choosing a particular strategy and its outcomes.

Further perform quantitative analysis for testing the direct and interaction effects of cognitive distance, and collaboration breadth (i.e. the number and types of formally engaged partners) on innovative performance. For purpose of analysis, the study incorporates: the definition of collaborative breadth used by Laursen & Salter, (2014) and scale of cognitive distance established by Criscuolo et al. (2017).

Empirical Material

The study uses panel data that is built on information collected from more than 12,000 Spanish manufacturing and service firms from the year 2003 to 2015. The source is Technological Innovation Panel (PITEC—Panel de Innovación Tecnológica) that is the Spanish contribution to the Community Innovation Survey (CIS) (Garcia Martinez et al., 2017). The data set includes thorough information regarding firms R&D activities and collaborations with different actors. Being panel data, it over comes the limitation faced by previous studies that used CIS data, i.e. simultaneity between innovation input and outputs, by lagging independent variables (Mairesse and Mohnen, 2010) also, this data set allows for reduction of common method bias.

Results

The theoretical part will answer the questions like which combination of cognitive distance and collaboration breadth is most effective for achieving different strategies like exploitation or exploration or other objectives, including minor technical changes or fundamental changes in technology. Since high cognitive distance, as hypothesized is linked to exploration of novel opportunities, and low cognitive distance to exploitation, however when combined with high or low number of partners, the innovation outcome may alter.

The quantitative analysis will test these hypotheses and check the validity of different claims regarding with which combination leads to desired outcome in terms of goals set by firms.

Contribution to Scholarship

The work particularly takes into account the need for development of literature regarding the combination of knowledge sources and their effect on innovation performance (Criscuolo et al.,2017). Both, collaboration and cognitive distance are highly significant to the literature of open innovation, as collaboration derives higher gains from joint innovation (Faems et al.,2005) and cognitive distance enables organizations to engage in dissimilar open innovation practices by altering their choice of external partner in terms of the cognitive distance (Gavetti & Levinthal, 2000).

Despite increase in number of studies carried out to examine the effects of collaboration and cognitive distance on innovation performance, most of these test their effects in isolation. By bringing together these two aspects, the present study aims to advance the understanding of the how the joint effect of these variables of open innovation model can lead to varied performance outcomes and provides relevant recommendations regarding collaborative innovation practices.

Contribution to Practice

Managers can use this study to identify best combination of variables to come up with strategies they need to devise for obtaining firm’s long term goals. Firms which are aiming for varied goals, like product or process innovation require distinct combination of collaboration breadth and cognitive distance. This study will help them in deciding the optimal combination needed to achieve different goals.

Fitness

The study is in purely carried out in the theme of open innovation. It will add to the literature by evaluating the joint effect of collaboration breadth and cognitive distance on innovation performance. In light of literature, these are highly significant for altering innovation performance (Nooteboom, 2000;Laursen & Salter, 2014)

Bibliography

Adler, P. S., & Kwon, S.W. (2002). Social Capital : Prospects for a New Concept. The Academy of Management Review , 27(1), 17-40.

Belderbos, R., M. Carree, and B. Lokshin (2004). Cooperative R&D and Firm Performance, Research Policy 33(10), 1477–1492.

Bertrand, O., & Mol, M. J. (2013). The antecedents and innovation effects of domestic and offshore R&D outsourcing: the contingent impact of cognitive distance and absorptive capacity. Strategic Management Journal 34, 751–760.

Bogers, M. (2011). The open innovation paradox: Knowledge sharing and protection in R&D collaborations. European Journal of Innovation Management, 14(1).

Boschma, R. A. (2005). Proximity and innovation: A critical assessment. Regional Studies, 39(1), 61–74.

Boschma, R. A., & Lambooy, J. G. (1999). Evolutionary economics and economic geography, Journal of Evolutionary Economics 9, 411–429.

Cowan R., Jonard N. and Zimmermann J. B. (2007) Bilateral collaboration and the emergence of innovation networks, Management Science 53, 1051–1067.

Criscuolo, P., Laursen, K., Reichstein, T., & Salter, A. (2017). Winning combinations: search strategies and innovativeness in the UK. Industry and Innovation 25(2), 115-143.

Faems, D., B. Van Looy, and K. Debackere. (2005) Interorganizational Collaboration and Innovation: Toward a Portfolio Approach. Journal of Product Innovation Management, 22(3), 238–250.

Gavetti, G., & Levinthal, D. (2000). Looking Forward and Looking Backward: Cognitive and Experiential Search. Administrative Science Quarterly, 45(1), 113.

Hottenrott, H., & Lopes-Bento, C. (2016). R&D Partnerships and Innovation Performance: Can There Be too Much of a Good Thing? Journal of Product Innovation Management, 33(6), 773–794.

Laursen, K., & Salter, A. (2014). The paradox of openness: Appropriability, external search and collaboration. Research Policy, 43(5), 867–878.

Mairesse, Jacques and Pierre Mohnen (2010). Using Innovation Surveys for Econometric Analysis. In Handbook of Innovation, Handbook of Economics, 1.

Nieto, M. J., & Santamaría, L. (2007). The importance of diverse collaborative networks for the novelty of product innovation. Technovation, 27(6–7), 367–377.

Nooteboom, B. (2000). Learning by interaction: Absorptive capacity, cognitive distance and governance. Journal of Management and Governance, 4(1–2), 69–92.

Nooteboom, B., Van Haverbeke, W., Duysters, G., Gilsing, V., & van den Oord, A. (2007). Optimal cognitive distance and absorptive capacity. Research Policy, 36(7), 1016–1034.



How do firms adapt their external collaboration vehicles to changing internal organizational attributes? The moderating role of firm age

Farid Mammadaliyev1, Victor Gilsing1,2, Ine Paeleman1

1University of Antwerp, Belgium; 2Free University Amsterdam

Context

Our study employs the behavioral theory of the firm to explain a focal firm's behavior, when it's innovative performance goes below and above innovative aspiration level.

Literature

1. The behavioral theory of the firm (Cyert and March, 1963)

2. Performance-induced change (Ocasio, 1995)

3. Performance feedback models (Greve, 2003)

4. Organizational learning (Levit and March, 1988)

5. Environmental uncertainty (Grant and Baden-Fuller, 2004; van de Vrande, Vanhaverbeke, & Duysters, 2009).

6. Transaction cost theory (Williamson, 1975; Geykens, Steenkamp and Kumar, 2006)

Literature Gap

Until now studies have largely focused on how exogenous uncertainty afftects a firm's governance mode choice. However, little attention has been paid to endogenous uncertainty arising from the gap between performance and aspirations set up for this performance influences a firm's governance mode choice.

Research Questions

How does innovative performance relative to aspiration level set up for this performance affect a firm's trade between less (i.e. non-equity strategic alliances) and more integrated governance modes (i.e. joint ventures)

Methodology

Our study is quantitative (longitudinal panel study). In particular, using data from different sources (SDC Platinum Joint Ventures and Alliances database, Compustat, USPTO, CRSP, NBER's public data) we constructed a unique database for firms from 12 hi-tech industries for the period of 1990-2010.

Empirical Material

We used multiple sources in the data collection. Data on firms’ external knowledge sourcing vehicles were collected from the SDC Platinum Joint Ventures and Alliances database. SDC tracks a very wide range of agreement types including research & development agreements, sales and marketing agreements, banking agreements, manufacturing agreements(Schilling, 2009).

We extracted patent data from The National Bureau of Economic Research (NBER) paper (Kogan, Papanikolaou, Seru and Stoffman, 2017), in which the authors used extensive name-matching tools to assign USPTO patents to focal firms. However, these firms were classified by a “permno” identifier. Thus, we employed a CRSP/Compustat merged database (linking table) to obtain more common identifiers such as gvkey and cusip for each patent. Consequently, we matched our sample firms with their joint venture and alliance data from SDC, patent data and financial data from Compustat using gvkey and/or cusip.e also constructed a large, cross-firm and cross-industry sample of t Compustat firms for the period of 1990 – 2010 in 12 high-tech industries.

We only used agreements whose purposes were developing/improving technoloy (or at least one of the alliance purposes).We ended up with more than 7.000 firm-year observations from more than 800 firms in 12 hi-tech industries.

Results

H1: Firms performing below innovative aspiration level are more likely to source knowledge through less integrated governance modes (i.e. non-equity alliances).

Only historical aspiration model we don’t find a significant relationship between below aspiration and likelihood of undertaking non-equity alliances.

Only social aspiration model we find a positive relationship (at the 10%) between below aspiration and likelihood of undertaking non-equity alliances. This is a partial support for the first hypothesis.

To sum up, the results show that if a firm is below social aspiration, it will more likely tosource technological knowledge through less integrated governance modes (i.e. non-equity alliances).

H2: Firms performing above the aspiration level are more likely to source knowledge through more integrated governance modes (i.e. equity joint ventures).

Only historical aspiration model we find a significant relationship between above aspiration and likelihood of undertaking JVs.

Only social aspiration model we find a positive relationship between above aspiration and likelihood of undertaking JVs. This is a full support for the second hypothesis.

To sum up, the results show that if a firm is above aspiration (both historical and social), it will more likely to source technological knowledge through more integrated governance modes (i.e. JVs).

Contribution to Scholarship

1. Our main contribution is that we find a relation between innovative performamce and a firm's trade off between non-equity strategic alliances and joint ventures. Previous studies have only focused on exogenous factors which can not be decreased by a firm's actions. We conclude that a firm's behavior in governance modes also depends on factors which can be controlled by its actions.

2. We move beyond the focus on collaboration with individual partners (the dyadic perspective) that has been the dominant emphasis in the literature until now. In this study the unit of the analysis is a focal firm.

Dyadic governance mode choice studies assume that a firm has to choose one of potential modes. However, we consider that a firm has 3 options at its disposal :

choosing either one of less and more integrated modes, both of them or neither of them.

Contribution to Practice

Our study makes a distinction between two types of governance mode:

1. non-equity atrategic alliances

2. joint ventures

we find that firms above innovatiove performance prefer joint ventures, because we find such alliances are better equiped to protect technological knowledge. Firms below aspiration prefer non-equity strategic alliances, as they have less to lose.

These findings might give some ideas to top managers how to behave in bad (below aspiration) and good (above aspiration) situations depending on their pupose (to protect technological knowledge or swim in a pool with full of knowledge).

Fitness

This study only focuses of R&D agreements. In particular, how a firm's behavior in R&D agreements is driven by performance feebacks. Moreover, our focus is a firm's innovative performance, not financial performance. These two factors make this study so relevant to this conference.

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What impacts Corporate Innovation Processes: System-Static Considerations on Interdependent Influence Factors

Kevin Reuther

University of the West of Scotland, United Kingdom

Context

Innovation is perceived as an important factor for organizations to thrive (Chesbrough, 2003; Gemünden et al., 2017). In recent years, researchers studied single factors that impact innovation processes (e.g. Corral et al., 2017; Keum & See, 2017). This paper discusses interdependencies amongst such factors using a systems theory approach.

Literature

The origin of the scientific discussion of systems theory goes back to Bertalanffy (1951) and his article on general systems theory. According to Capra (2015), “systems thinking is 'context-related', and […] means that something is placed in the context of a larger whole” or in other words, it shifts the emphasis of analysis from individual elements to their interactions (Jantsch, 1972, 103). It is suggested that systems theory therefore can be related to the study of phenomena in organizations (Skyttner, 2006) and particularly the study of innovation (Colapinto & Porlezza, 2013) that requires researchers to look at individuals’ interaction in organizational processes and the framework and influence factors around them (Vester, 2000).

Literature Gap

This paper argues that the focus of innovation research on a corporate level has been on understanding how single influence factors impact innovation. Little attention has been on the interaction of such influence factors and how an innovation system with a network of interdependent influence factors might behave.

Research Questions

This leads to the research questions a) what influence factors on corporate innovation processes can be identified and b) how are these influence factors interdependent when understood as elements of a corporate innovation system?

Methodology

Based on the work of Parsons (1970), Luhmann (1984) and Vester (2000), a sensitivity analysis based approach is adopted. It follows six steps: 1) a description of the system, including facts, data, problems, goals and a first system map, 2) the identification of influence factors and indicators to gain a set of variables, 3) the evaluation of these variables’ relevance for the system, 4) questioning the interconnections of influence factors using an influence matrix, 5) the description of the systemic roles of the variables in the system and 6) interlinking the variables as well as examining the overall interconnection.

Empirical Material

As the data collection for this project is still in progress, preliminary results are presented in the course of this conference paper. The data basis for this analysis is initially a systematic literature review to assess the influencing factors on innovation processes discussed in the literature. Building on this, qualitative data is gathered using two focus groups and ten in-depth semi-structured interviews. Following the idea of systems theory that underlying mechanisms of systems exist in different environments, the study focuses on a single industry (Information Technology) in a single country (Germany). The study focuses on companies with a certain size that requires some kind of organisational complexity (e.g. different departments) and that requires some planning of innovation processes and the respective communication.

Results

In the results of the paper, a system description based on the literature and the preliminary data pool is introduced and explained. A draft model describing the corporate innovation system based on the data is set out, distinguishing five categories of influence factors/system elements that are 1) processes, 2) Actors, 3) Traits, 4) Ressources and 5) Internal and External System Environment. These influence factors are critically discussed and single interdependencies that provide first insights on the system behaviour are introduced as 'if-then-relations'. The paper then focuses on explaining the further steps in the course of the project and lays out directions for future research based on the system model, that could include a) simulations and system dynamics, but also b) validation of single interdependencies through quantitative studies.

Contribution to Scholarship

Systems theoretical approaches show new possibilities to investigate innovations beyond traditional, purely empirical methods. They offer a holistic perspective on the field of research and improve the understanding of the relationships between the influencing factors on innovation, as they shift the focus from researching single elements and their impact on innovation towards how such elements interact in something one could refer to as 'corporate innovation system'. Due to its transdisciplinary, the systems approach in general and sensitivity analysis in particular can be used for a variety of related research topics.

Contribution to Practice

Understanding the relationships of factors influencing innovation is not only beneficial from a scientific point of view, but also supports the practical application of the results obtained, since organizations can understand how certain parameters are interdependent and thus need to be aligned with the goal of optimizing innovation conditions.

Fitness

Systems theory has a wide range of roots in different academic fields (Kleve, 2010) and therefore is transdisciplinary in nature (Pohl & Hirsch Hadorn, 2008). It includes linkages of industry and society in a narrower and wider sense and might be an insightful contribution for this year’s R&D Management Conference.

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