Conference Agenda

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Session Overview
Session
21-PM1-06: ST5.4 - Global Innovations From and to Emerging Countries
Time:
Friday, 21/Jun/2019:
1:00pm - 2:30pm

Session Chair: Max von Zedtwitz, Kaunas University of Technology
Session Chair: Marine Hadengue, SKEMA Business School & École Polytechnique (CRG)
Session Chair: Monika Petraite, Kaunas university of technology
Session Chair: Dan Prud’homme, Pôle universitaire Léonard de Vinci
Session Chair: Tiago Ratinho, GLORAD
Location: Amphi Curie

Session Abstract

Economic globalization since the middle of the 20th century has led to a growing body of knowledge about how multinational corporations (MNC) leverage different geographies and organize functions and processes across locations (Vernon, 1966; Bartlett & Ghoshal, 1989; Gassmann & von Zedtwitz, 1999; Doz et al., 2001; see Forsgren, 2013 for a review). The globalization of innovation within MNCs is one of the latest to evolve and one of the most recent to be studied (Boutellier et al., 1999; Doz and Wilson, 2012, Ben Mahmoud-Jouini et al., 2015).

MNCs have often targeted emerging new economies as new markets and, occasionally, as local capabilities improved, as hosts for new R&D and innovation (Vernon, 1979). It is, however, a recent phenomenon that developing nations without much history of advanced science and technology have made significant inroads in the global distribution of innovation. These countries -- with limited resources, huge needs and low-cost local competition -- have pushed global companies to seek new ways to innovate for these new markets. The notion of the “fortune at the bottom of the pyramid” (Pralahad, 2005) has reinforced the drive for frugal innovation. Performance and cost-reduction imperatives drove what has since been dubbed “reverse innovation” (Govindarajan and Trimble, 2012). Many traditional companies (such as Intel, ABB, or Siemens) have reassigned R&D control to centers in emerging countries, and innovation no longer flows exclusively from the center to the periphery but also in the other direction. The innovation process may be centered on an emerging market, but the process itself is intrinsically distributed and truly global (von Zedtwitz et al., 2015). Renault, for instance, discovered that the development of a low-cost, high-quality car delegated to its Romanian acquisition Dacia, exceeded local competencies. The Romanian project was discontinued, and ultimately the Logan model was engineered by Renault’s major innovation center in France (Jullien et al., 2012).

Even more recent is the emergence of global innovators indigenous to emerging economies (von Zedtwitz, 2005), and we are still in the early stages of this latest wave of globalization of innovation. Firms such as Huawei, Infosys, or Embraer are establishing themselves as leaders in their respective markets, and start using R&D resources outside their home countries -- and specifically in the industrialized home countries of those traditional MNCS – to globalize their innovation processes.

The rise of emerging markets (EMs) and their significant middle-class consumers have forced these organizations to reconsider not only their market's boundaries but also their go-to- market strategies. Differences between these EMs and the historical developed markets are so large that continuing to act as nothing has changed would unlikely lead to success (Meyer, Mudambi, & Narula, 2011). Indeed, EMs are characterized by specific constraints that did not exist in the context of advanced markets (AMs) (Govindarajan & Trimble, 2012). On the one hand, all these constraints change the demand to which MNCs were used to respond. EM customers are demanding products that are optimized for their own local environment. On the other hand, EMs today own a growing local system of innovation composed of very skilled labor force (Mudambi, 2011). New local MNCs are growing fast, representing at the same time potential partners and aggressive competitors on both local and advanced markets. These elements, coupled with the decreasing level of wealth in developed countries, represent the opportunity for MNCs to put forth novel new solutions of great value for EMs as well as for more advanced ones. In other words, MNCs now have to optimize their local R&D in EMs while also ensuring the global integration of the innovations developed in that context, i.e. to also successfully transfer EM innovations into AMs.

This aspect of global business has not been well examined yet, let alone understood in its various implications for international business and innovation theory. In addition to the R&D conducted by these newly emerging MNCs, this phenomenon will likely affect innovation by traditional MNCs, and the science and technology capacity of host countries in markets of various industrial maturity.

In the context, companies from countries with decades of global R&D experience are meeting MNCs that are beginning to follow this path. These firms often need to collaborate but compete as well, both indirectly in their home and host markets, and directly in joint efforts to develop technology standards or to deliver multi-partner solutions to local customers. More importantly, it requires knowledge management and integration skills, so that the valuable resources anchored in various parts of the firm and the firm’s networks can be leveraged despite the structural and cultural boundaries. This trend may prefigure a more networked, center-less and emergent process as the next challenge, and indeed the gateway to global innovation.

The management of global innovation therefore becomes only more important for firms and is increasingly at the heart of competitive advantage.

In this track we welcome papers addressing these issues. Some of the themes that are related are listed below :

- Internationalization of front-end innovation

- Coupling processes between markets and technological knowledge at the inception stage and emerging markets

- Cross-disciplinary pre-competitive globalization of R&D

- Open global innovation

- Localization of frugal innovation

- Reverse innovation as a source of strategic disruption

- Global vs. local innovations: exclusive or dual strategies

- Knowledge integration and combination across various R&D centers and subsidiaries

- Managing multi-actor networks of innovators in different countries

- Subsidiary initiated innovation and their diffusion

- New roles for entities in the diffusion of global innovation

- Reverse innovation

- Special-purpose subsidiaries for leveraging capabilities in unique environments.

- Open innovation in emerging markets


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Presentations

The Role of Firms and Individuals in South Korean and Chinese Catch-up Processes: A Systematic Literature Review

Helen Mengis

University of Hohenheim, Germany

Context

This paper systematically analyzes the literature on catch-up processes of South Korean and Chinese firms from a management perspective. The findings will outline the role of the firm and individuals in catch-up processes.

Literature

Catch-up processes have been subject of academic research for many decades, aiming at understanding when catch-up cycles occur (e.g. Kang & Song, 2017; Lee & Malerba, 2017) and how successes of latecomer countries can be explained (Hobday, 1995; Mathews & Cho.1999; Wang et al., 2014; Zhang & Zhou, 2016). Industries typically studied in catch-up theories are predominantly characterized by dynamic Schumpeterian competition such as the earlier catch-up stories of Japanese, Korean and Chinese firms in the automotive or consumer electronics industry as well as more recent examples from the markets for lithium ion batteries or artificial intelligence. Especially the catch-up cases of Korean and Chinese firms have gained considerable attention in recent years. Their catch-up stories, including successes and failures, provide numerous approaches for further investigation – on the country, industry, firm and individual level.

Literature Gap

The majority of catch-up analyses examines the phenomenon on the country or industry level leaving many managerial questions open. Firm level factors as well as the role of individuals, e.g. managers or key inventors, constitute an under-investigated topic (see Miao et. al., 2018).

Research Questions

This paper aims to contribute to the understanding of catching-up from a management perspective by systematically reviewing the literature on catch-up processes addressing the following questions: Which of the catch-up studies address determinants on the organizational and individual level? What are the underlying theories and which methods have been applied?

Methodology

The paper uses a systematic review approach following Tranfield et al. (2003). The included literature has been identified through a keyword search in the databases Scopus and Web of Science. Searching for peer-reviewed journal articles within the subject areas business and management revealed 262 documents. Screening the abstracts of these for firm or individual related elements resulted in a final sample of 94 documents for an in-depth analysis. These 94 papers have been reviewed with the use of the qualitative data analysis software MAXQDA (see Brhel et al., 2015) by coding passages that contain firm and individual related elements.

Empirical Material

A theoretical approach has been employed.

Results

Although the role of the firm or individual persons are not the main object of investigation in most of these studies, they are still not completely neglected so that I regularly found elements of these two levels describing how they affect the catch-up probability. Repeatedly mentioned factors on the organizational level are: organizational structure, diversification, R&D strategy, unlearning ability, learning ability, collaborations, marketing and failure. First identified elements on the individual level include: education, experience abroad, industry experience, co-inventorship, entrepreneurial skills, power, culture and failure. 22% of the articles do indeed study the firm as their main subject of investigation. The majority of these employ a qualitative case study approach. Only one paper addresses the role of individuals as main research subject (Kenney et al., 2013). In accordance with the findings of Miao et al. (2018), I found most quantitative research designs within the country and industry-level catch-up studies. Theories applied in the studies range from the product life cycle theory (Vernon, 1966) to the theory of evolutionary economics (Nelson & Winter, 1982). However, most of the studies including firm-related theories, 70%, base their argumentation on the absorptive capacity theory (Cohen & Levinthal, 1990).

Contribution to Scholarship

A large share of catch-up analyses include explanations for success and failure stories on the organizational and individual level. I have thoroughly examined these factors regarding their theoretical and methodological approaches and unexpectedly found multiple new explanatory approaches that should be further elaborated. The findings of this paper outline a detailed agenda for future management research regarding theory, methodology as well as relevant research questions with the objective to better understand the role of the firm and individuals in catch-up processes.

Contribution to Practice

This paper addresses the role of individuals as e.g. managers and inventors in catch-up process and will conclude with managerial implications by explaining success and failure stories within various industries.

Fitness

Firms from emerging countries, especially South Korea and China, have been successful in catching-up in industries such as mobile phones and semiconductors and managed to even outperform former incumbent firms (Lee & Malerba, 2017). The novelty of my paper includes explanations for this phenomenon on the firm and individual level.

Bibliography

Brhel, M., Meth, H., Maedche, A., & Werder, K. (2015). Exploring principles of user-centered agile software development: A literature review. Information and Software Technology, 61, 163–181.https://doi.org/10.1016/j.infsof.2015.01.004

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly 35(1), 128–152. https://doi.org/10.2307/2393553

Hobday, M. (1995). East Asian latecomer firms Learning the technology of electronics. World Development, 23(7), 1171-1193. https://doi.org/10.1016/0305-750X(95)00035-B

Kang, H., & Song, J. (2017). Innovation and recurring shifts in industrial leadership: Three phases of change and persistence in the camera industry. Research Policy, 46(2), 376–387. https://doi.org/10.1016/j.respol.2016.09.004

Kenney, M., Breznitz, D., & Murphree, M. (2013). Coming back home after the sun rises: Returnee entrepreneurs and growth of high tech industries. Research Policy, 42(2), 391–407. https://doi.org/10.1016/j.respol.2012.08.001

Lee, K., & Malerba, F. (2017). Catch-up cycles and changes in industrial leadership: Windows of opportunity and responses of firms and countries in the evolution of sectoral systems. Research Policy, 46(2), 338–351. https://doi.org/10.1016/j.respol.2016.09.006

Mathews, J. A., & Cho, D. S. (1999). Combinative capabilities and organizational learning in latecomer firms: The case of the Korean semiconductor industry. Journal of World Business, 34(2), 139–156. https://doi.org/10.1016/S1090-9516(99)00013-9

Miao, Y., Song, J., Lee, K., & Jin, C. (2018). Technological catch-up by east Asian firms: Trends, issues, and future research agenda. Asia Pacific Journal of Management, 35(3), 639–669. https://doi.org/10.1007/s10490-018-9566-z

Nelson, R.R. and Winter, S.G. (1982). An Evolutionary Theory of Economic Change. Harvard University Press, Cambridge, MA.

Tranfield, D., Denyer, D., & Smart, P. (2003). Towards a Methodology for Developing Evidence-Informed Management Knowledge by Means of Systematic Review. British Journal of Management, 14, 207–222. https://doi.org/10.1111/1467-8551.00375

Wang, F., Chen, J., Wang, Y., Lutao, N., & Vanhaverbeke, W. (2014). The effect of R&D novelty and openness decision on firms’ catch-up performance: Empirical evidence from China. Technovation, 34(1), 21–30. https://doi.org/10.1016/j.technovation.2013.09.005

Vernon, R. (1966). International investment and international trade in the product cycle. The Quarterly Journal of Economics, 80(2), 190–207. https://doi.org/10.2307/1880689

Zhang, G., & Zhou, J. (2016). The effects of forward and reverse engineering on firm innovation performance in the stages of technology catch-up: An empirical study of China. Technological Forecasting and Social Change, 104, 212–222. https://doi.org/10.1016/j.techfore.2016.01.010



Global Innovation, Outbound International Patenting and Emerging Countries

Kelvin Wayne Willoughby

Skolkovo Institute of Science and Technology, Russian Federation

Context

Debate in the literature about the role of intellectual property (IP) rights in either facilitating or impeding endogenous innovation in emerging countries has begun to address the phenomenon of outward-bound international patenting, which may be viewed as the IP counterpart of “reverse innovation.”

Literature

A formal distinction has recently been made in the internationally oriented patent literature between “Mode One” patenting (domestic patenting), “Mode Two” patenting (inward-bound international patenting), and “Mode Three” patenting (outward-bound international patenting) (see Willoughby 2018). The nascent literature on Mode Three patenting (e.g., Arora and Gambardella 1994; Licht and Zoz 1998; Yang and Kuo 2008; Archontakis and Varsakelis 2011) is concerned largely with identifying the factors that cause variations in the level of outward-bound international patenting between countries and companies. Willoughby’s research (2018), in contrast, investigates the economic effects of variations in levels of outward-bound international patenting between nations, and has demonstrated that: Mode Three patenting now accounts for more than half of all patenting worldwide, and that countries whose residents exhibit a relatively high proclivity for obtaining foreign patent protection for locally generated inventions are likely to enjoy relatively high levels of wealth per person.

Literature Gap

This paper explores the differences between emerging countries, wealthy countries, and poor countries in the changes over time in their relative levels of domestic patenting and outward-bound international patenting. It also explores differences between countries in the relationship between outward-bound international patenting and international trade in innovation-intensive products and services.

Research Questions

How do the absolute and relative levels of outward-bound international patenting vary between emerging countries and other countries?

How have those differences changed over time?

What is the relationship between outward-bound international patenting, innovation and international trade, and how does this relationship vary between emerging countries and other countries?

Methodology

The methodology consists primarily of exploratory quantitative empirical research. To address the research questions, data on domestic patent applications by home-country residents and foreign patent applications by home-country residents were obtained for a sample of 78 countries over 14 years. These data were transformed in to a measure of Mode Three patenting using an index designed to enable meaningful comparison of the outward-bound international patenting behavior of countries that may be dissimilar in size, wealth, technological capabilities, economic openness, or their domestic IP regimes. The index for each country was then compared with appropriate economic and trade data.

Empirical Material

To address the research questions, data on domestic patent applications by home-country residents and foreign patent applications by home-country residents were obtained from the IP Statistics Data Center of the World Intellectual Property Organization (WIPO), covering 14 years from 2000 onwards, for all countries for which reliable data were available. Data of sufficient quality and reliability for the analysis were found for 78 countries. Economic and demographic data for the same set of countries for the same years were obtained the World Bank’s World Bank Open Data online information service. Data on high technology exports, revenue from international licensing or sale of IP rights, and net outflows of foreign direct investment, were obtained from the World Trade Organization and other sources, accessible through the published data sets of the Global Innovation Index (2018).

Results

There appears to be a positive relationship between the relative level of a country’s relative level of outward-bound international patenting and its performance in innovation-intensive international trade.

The group of countries labelled here as “emerging” countries — i.e., the mid-tier or “developing countries” — in general exhibit a different profile to both the wealthy (developed) countries and poor (less developed) countries. A significant proportion of the emerging countries have gone through a noticeable transition during the last two decades represented by a big growth in Mode Three patenting, a substantial increase in innovation-intensive export-oriented international trade, and a significant boost to national economic development.

Contribution to Scholarship

This paper builds on the recent trend in scholarship related to technological innovation, international trade, international patenting and national economic development, by augmenting our current knowledge about the relative importance of the three basic modes of patenting to trade and economic development of emerging countries.

Contribution to Practice

The practical implications of this research for public policy are that governments of emerging nations who wish to improve their countries’ economic wellbeing through innovation policy and trade policy ought to place emphasis on incentives and support mechanisms to facilitate outward-bound international patenting by home-country inventors and innovators. The practical implications of this research for the management of technology-intensive firms in emerging nations is that such firms ought to place high priority on pursuing international patent protection for their inventions, and on cultivating internal organizational competence in managing intellectual property at an international level.

Fitness

This paper examines an under-explored factor that affects the ability of research organizations to translate their discoveries and inventions in to international innovation though international trade. It is also addresses the distinctive international patenting profiles and innovation profiles of emerging countries.

Bibliography

Archontakis, F., & Varsakelis, N. C. (2011). US patents abroad: Does gravity matter? The Journal of Technology Transfer, 36(4), 404–416.

Arora, A., & Gambardella, A. (1994). Evaluating technological information and utilizing it. Journal of Economic Behavior & Organization, 24(1), 91–114.

Licht, G., & Zoz, K. (1998). Patents and R & D an Econometric Investigation Using Applications for German, European and US Patents by German Companies. Annales d'Économie et de Statistique, 49/50, 329-360.

Willoughby, K. W. (2018). “Endogenous innovation, outward-bound international patenting and national economic development,” The Journal of Technology Transfer, published online 15 October 2018. https://doi.org/10.1007/s10961-018-9705-1

Yang, C.-H., & Kuo, N.-F. (2008). Trade-related influences, foreign intellectual property rights and outbound international patenting. Research Policy, 37(3), 446–459.



Emerging Telematics Community in China (TCC): the Origins and Formation of Alibaba’s Ecosystem in Automotive R&D in China

PIN ZHOU, Dimitris Assimakopoulos

emLyon Business School

Context

Based on a long-standing interest in Cops and informal links in R&D, the authors investigate the key drivers to develop the business ecosystem. The primary author has spent ten years on building TCC, a Cop for cross-sector innovation and thus have a unique and unparalleled data set including informal links.

Literature

The existing literature discusses many cases of how Cops fuel R&D and innovation ecosystems, many of them were from Dimitris Assimakopoulos.

1. Dimitris Assimakopoulos, Sean Everton and Kiyoteru Tsutsui: The semiconductor community in Silicon Valley: a network analysis of the SEMI genealogy chart (1947-1986).

2. Dimitris Assimakopoulos and Jie Yan: Social Network Analysis and Communities of Practice

3. Dimitris Assimakopoulos: Technological Communities and Networks – International, national and regional perspectives

The paper is inspired by the above 3 literature, which made the primary author recall the Cop that he built since 2008.

Robert A. Hanneman and Mark Riddle introduced how to use the two-mode network in his social network methods literature.

Regarding the Industry Platforms and Ecosystem Innovation, Annabelle Gawer and Michael Cusumano had good literature, which can identify the most promising pathways and drawing roadmaps to build a new ecosystem.

Literature Gap

There is less discussion on how SNA methods and theories can contribute to the further development of Cops and valuable informal links for innovation ecosystems in the US and Europe. So far, no literature analyzes the contributions of emerging Cops in China by SNA 2-mode network approach.

Research Questions

How the genesis and formation of TCC and its informal links emerged and contributed to the quick success of Banma? What were the values and underlying culture in the TCC events? How did TCC help its members? What can be improved for future ecosystem establishment?

Methodology

The research contains both quantitative and qualitative methods, which is based on a unique data set and working experiences in the past ten years (and may use corroborating evidence such as archival data). The methodology of the paper is a multi-pronged approach facilitating triangulation as follows

1. The case study of the Cop and its informal links

2. SNA 2-mode network approach to analyze the TCC events in the past ten years

3. 50 interviews with key informants TCC members based on the results of SNA

Empirical Material

After completing six consulting projects for the automotive makers from 2005 to 2008, the primary author identified a huge demand for a new community of Telematics in China automotive industry. Thus, he founded TCC in 2008 and organized more than 200 telematics related events, the size of which ranges from 10 attendees to 1500 attendees, in 10 years. TCC and Telematics Update are the Top 2 telematics communities in the world, and both organized various events under a different topic and in different places every year. TCC organized more events than Telematics Update and changed the theme of each event according to the survey beforehand. Therefore, TCC built the informal links and generated the social network in different subgroups in terms of interests under the big Telematics theme. When most stakeholders worldwide were attracted to the platform of TCC to discuss various topics of the cross-sector innovation, the founder of TCC became the center of the social network of telematics world and thus gained insightful knowledge much quicker than others.

Results

In 2014, Alibaba started to develop the internet strategy for the automotive industry and plan to develop the first internet car in the world. Alibaba asked the primary author to facilitate the whole process. Taking advantage of TCC, a strategy was formulated for Alibaba and the largest automotive group in China, SAIC Group, and then helped them form a JV, Banma, in Nov. 2015. Leveraging all resources and connections provided by TCC, Banma could work with the best partners quickly and recruit the best talents easily. Due to the great success of the internet car, Banma raised RMB1.6 billion as pre-A round and its capital value reached USD1.2 billion in Sept. 2018. As the founder of TCC, the primary author profoundly benefited from the informal links of the Cop. Moreover, not only Banma but also other companies, which had actively attended or even sponsored TCC events, and their entrepreneurs benefited from TCC. Such results will be presented after conducting 50 interviews with key informants based on the SNA findings of 2-mode networks. Looking into the future, a better approach to developing a new ecosystem for the automotive industry is expected for Tencent.

Contribution to Scholarship

The paper taking stock of Alibaba ecosystem and Banma will further develop how the theory of Cops and SNA can foster an innovation ecosystem and R&D in China. The case of TCC gives a concrete example of how a Cop can help traditional pre-existing companies such as the SAIC group and the automotive industry to gain knowledge and business innovation benefits quickly (and help the individuals win greater career success easily).

Contribution to Practice

This practice of the TCC has been proved to be effective and efficient in not only China but also related countries. More than 10000 TCC members are not only in China but also in the US, Europe, Japan, and Korea, etc. Such social networks have contributed to the success of Banma and other TCC members. Moreover, the automotive industry has been accelerating the speed to strategic transition and cross-sector innovation. The experience of the TCC in the past ten years can help the industry find the best way to the next stage in the internet era.

Fitness

This paper is associated with this year’s conference theme 5 of Emerging Markets and its Track 5.4 Global Innovations from and to emerging countries. Banma is well acknowledged as one of the most innovative models in global Telematic domain, as well as in the automotive industry.

Bibliography

Annabelle Gawer and Michael Cusumano. (2013). ‘Industry Platforms and Ecosystem Innovation. ' Journal of Product Innovation Vol.31, No.3, pp417-433

https://onlinelibrary.wiley.com/doi/full/10.1111/jpim.12105

Bent Flyvbjerg. (2006). ‘Five Misunderstandings About Case-Study Research.' Qualitative Inquiry Vol.12, No.2, pp219-245

Dimitris Assimakopoulos and Jie Yan. (2006). ‘Social Network Analysis and Communities of Practice. '

Dimitris Assimakopoulos and Jie Yan. (2006). ‘Sources of knowledge acquisition for Chinese software engineers.' R&D Management, Vol.36, No.1, pp97-105

Dimitris Assimakopoulos. ‘Technological Communities and Networks – International, national and regional perspectives’ Chapter 2, 3, 4, 5, 6, pp14-184

Dimitris Assimakopoulos Ilan Oshri and Krsto Pandza. (2015). ‘Managing Emerging Technologies for Socio-Economic Impact.' Part II, ‘Collaboration and Networking in Managing Emerging Technologies.' pp115-152

Kathleen M. Eisenhardt. (1989). ‘Building Theories from Case Study Research.' The Academy of Management Review, Vol.14, No.4, pp532-550

Kathleen M. Eisenhardt & Melissa E. Graebner. (2007). ‘ Theory Building from Cases: Opportunities and Challenges.' The Academy of Management Journal, Vol.50, No.1, pp25-32

Robert A. Hanneman and Mark Riddle. ‘Introduction to social network methods.' Chapter 17, ‘Two-mode networks’, pp263-284



 
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