University of Udine
Department of Economics & Statistics
Doctoral Dissertation
M
ICRO
-
FOUNDATIONS OF
I
NNOVATION
A
DETAILED STUDY OF INNOVATION ANTECEDENTS
Author:
Saif Maqbool
PhD Cycle XXIX
Supervisor:
Prof. Guido Bortoluzzi
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Page | 1-3 TABLE OF CONTENTS
CHAPTER 1 DISSERTATION INTRODUCTION ... 1-9 1.1 DISSERTATION DESCRIPTION ... 1-9 1.2 RESEARCH BACKGROUND, SCOPE AND MOTIVATION ... 1-11 1.2.1 Innovation Capability ... 1-11 1.2.2 Micro-foundations of innovation ... 1-12 1.2.3 Empirical study of individual attributes for determining innovative work behavior ... 1-14 1.3 STRUCTURE OF THE DISSERTATION ... 1-16 1.4 CONTRIBUTION OF THE STUDY... 1-17 1.5 REFERENCES: ... 1-17 CHAPTER 2 MICRO-FOUNDATIONS OF INNOVATION CAPABILITIES- A MULTI-DIMENSIONAL FRAMEWORK BASED ON A SYSTEMATIC REVIEW ... 2-23
2.1 ABSTRACT ... 2-23 2.2 INTRODUCTION ... 2-24 2.3 THEORETICALBACKGROUND ... 2-25 2.4 METHODOLOGY ... 2-28 2.5 DESCRIPTIVEANALYSIS ... 2-31 2.6 RESULTS ... 2-33 2.7 DISCUSSION ... 2-39 2.7.1 Innovation Capabilities - Explore ... 2-40
2.7.1.1 R&D Capability ... 2-40 2.7.1.2 Market Capability ... 2-41 2.7.1.3 Entrepreneurial Orientation Capability ... 2-42
2.7.2 Innovation Capabilities - Organize ... 2-42
2.7.2.1 Organizational Capability ... 2-42 2.7.2.2 Strategic Capability ... 2-43 2.7.2.3 Network Capability ... 2-44
2.7.3 Innovation Capabilities - Develop ... 2-45
2.7.3.1 Manufacturing Capability ... 2-45 2.7.3.2 Technological Innovation Capability ... 2-46 2.7.3.3 Information Technology Capability ... 2-47
2.7.4 Innovation Capabilities - Exploit ... 2-47
2.7.4.1 Absorptive Capacity ... 2-47 2.7.4.2 Resource Exploiting Capability ... 2-49 2.7.4.3 Combinative capability ... 2-50
2.8 CONCLUSION ... 2-50 2.8.1 Theoretical Implications ... 2-50 2.8.2 Managerial Implications ... 2-51 2.8.3 Limitations of the Study ... 2-51 CHAPTER 3 MICRO-FOUNDATIONS OF INNOVATION: A SYSTEMATIC REVIEW OF DRIVERS AND
DETERMINANTS OF CREATIVITY & INNOVATION AT INDIVIDUAL AND TEAM/GROUP LEVEL ... 3-68 3.1 ABSTRACT ... 3-68 3.2 INTRODUCTION ... 3-69 3.3 THEORETICALBACKGROUND ... 3-69
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3.4 METHODOLOGY ... 3-73 3.5 DATAANALYSIS&DATASYNTHESIS ... 3-77 3.5.1 Theories of Creativity & Innovation: ... 3-78
Activation theory ... 3-79 Cognitive Stress-coping Theory - Lazarus theory ... 3-79 Goal orientation theory ... 3-80 Job characteristics theory... 3-80 Path-Goal theory of leadership ... 3-81 Role identity theory ... 3-81 Self-monitoring theory ... 3-82 Social identity theory ... 3-82 Theory of emotion ... 3-83 Transactional leadership theory ... 3-83
3.5.2 Individual level factors of creativity and innovation ... 3-84 3.5.3 Team/group level factors of creativity and innovation ... 3-91 3.6 DISCUSSION ... 3-95 3.6.1 Theoretical Implications ... 3-98 3.6.2 Managerial Implications ... 3-99 3.6.3 Suggestions for further research ... 3-99 3.6.4 Limitations of the Study ... 3-100 CHAPTER 4 MICRO-FOUNDATIONS OF INNOVATION: EMPLOYEE SILENCE, PERCEIVED TIME PRESSURE, FLOW AND INNOVATIVE WORK BEHAVIOUR ... 4-130 4.1 ABSTRACT ... 4-130 4.2 INTRODUCTION ... 4-131 4.3 THEORETICAL BACKGROUND AND HYPOTHESIS DEVELOPMENT ... 4-134 4.3.1 Employee Silence... 4-135 4.3.2 Flow at Work ... 4-137 4.3.3 Perceived Time Pressure and its Interaction with Individual and Relational Factors Influencing IWB .. 4-139
4.4 METHODOLOGY ... 4-144 4.4.1 Research Setting, Participants and Procedures ... 4-144 4.4.2 Measures ... 4-145
Flow ... 4-145 Perceived time pressure ... 4-145 Innovative work behaviour... 4-145
4.5 RESULTS ... 4-146 4.5.1 Descriptive Statistics, Validity and Reliability ... 4-146 4.5.2 Results of Regression Analysis ... 4-150 4.6 DISCUSSION ... 4-153 4.6.1 Theoretical Contributions ... 4-153 4.6.2 Managerial Implications ... 4-155 4.6.3 Limitations and Suggestions for Future Research ... 4-156 CHAPTER 5 CONCLUSION ... 5-167 5.1 THEORETICAL IMPLICATIONS OF THIS STUDY ... 5-169 5.2 MANAGERIAL IMPLICATIONS OF THE STUDY ... 5-171
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5.3 LIMITATIONS OF THE STUDY ... 5-171 5.4 SUGGESTIONS FOR FURTHER RESEARCH ... 5-172 5.5 APPENDIX ... 5-185
LIST OF TABLES
Table 1. Number of relevant articles found during each stage of review ... 2-31 Table 2: Top journals of selection set for innovation capability: 2004–2014 ... 2-33 Table 3: Innovation capabilities discussed in literature sample set 2004-2014 ... 2-35 Table 1. Number of relevant articles found at each level of search ... 3-77 Table 2: Journals of the selection set for innovation/creativity from 1990–2015 ... 3-78 Table 3: Individual level (personal) variables linked to creativity/innovation ... 3-87 Table 4: Individual level (Job related) variables linked to creativity/innovation ... 3-89 Table 5: Individual level (social & contextual) variables linked to creativity/innovation ... 3-90 Table 6: Team/group level creativity/innovation variables ... 3-93 Table 7: Theories discussed in creativity and innovative work behavior of individuals and teams
literature ... 3-100 Table 1: Discriminant analysis ... 4-146 Table 2: Means, standard deviations, and correlations ... 4-148 Table 3: Stepwise regression analysis ... 4-149
Page | 1-6 LIST OF FIGURES
Figure 1: Publication trend for keyword “Innovation” and “Capabilities” in Topic ... 2-29 Figure 2: Publication trend for keyword “Innovation” AND “Capabilities” in Title ... 2-30 Figure 3: Breakdown of selection set as per type of articles ... 2-32 Figure 4: Yearly publication trend of the selection set ... 2-32 Figure 4: Mind mapping diagram of innovation capabilities from literature 2004-2014 ... 2-34 Figure 5: Classification of innovation capabilities ... 2-40 Chart 1: Publication trend of results obtained ... 3-75 Chart 2: Citations trend of results obtained ... 3-75 Chart 3: Publication trend of articles of the selection set ... 3-77 Figure 1: Framework presenting factors effecting individual level creativity/innovation ... 3-86 Figure 2: Framework presenting team level variables affecting innovation ... 3-92 Figure 1: Theoretical framework demonstrating all hypotheses ... 4-143 Figure 2: Plot of interaction between employee silence and perceived time pressure in predicting innovative work behavior ... 4-151 Figure 3: Plot of 3-way interaction between employee silence, flow and perceived time pressure in predicting innovative work behavior ... 4-152
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C
HAPTER
1
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Chapter 1 Dissertation Introduction
1.1 Dissertation Description
The concept of innovation has been an emerging phenomenon of discussion over several decades. Since today the literature of innovation has undoubted consensus that the fundamental determinant of peak organizational performance and long-term survival is creativity and innovation (Anderson et al., 2014). The rapidly growing organizations of the global market are the ones that respond quickly and timely to the market changes with their offerings of innovative products/services, aligned with management’s ability to utilize internal and external expertise (D. J. Teece, Pisano, & Shuen, 1997).
Previous literature on innovation is quite fragmented. Plenty of studies have been published every year on innovation drivers, antecedents, types of innovation, and across different levels. There is an intense need to combine all related antecedents and drivers in one study that demonstrates a broader overview of the organizational innovation capabilities; individual and team level determinants of creativity and innovation; and empirical groundings of innovative work behaviour of individuals. This study develops and integrates theoretical and empirical evidences of organizational innovation capabilities across levels in the first phase. In the second phase, we divert our attention from organizational level to individual and team level innovation antecedents. Lastly, we empirically test negative/positive influencers of individual creativity and innovation and suggest ways to enhance creativity and innovation. The theoretical middle title that connects all three parts of this study is “a detailed study of innovation antecedents across levels” that also covers the micro and macro level aspects of creativity and innovation.
Innovation believed as a dynamic capability of the organization (Sáenz, Aramburu, & Rivera, 2009) and dynamic capability conceptualized as management innovation (Eisenhardt & Martin, 2000). The study of D. J. Teece et al. (1997) illustrates that dynamic capability helps organizations to integrate, develop and reform its internal and external expertise to face market uncertainties. As per Barney (1991), organizational ability to acquire such resources and capabilities; that are valuable, rare, inimitable and
Page | 1-10 non-substitutable (VRIN resources); can help to achieve competitive advantage. In this dynamic capability perspective; innovation capability is the ability to create new ideas, explore new market opportunities and identify marketable innovation by leveraging on existing resources and capabilities. Innovation capability is a multi-dimensional construct and it is an amalgamation of several types of capabilities (Catherine & Pervaiz, 2004; Saunila & Ukko, 2014). We grouped those innovation capabilities in chapter 2 into four major groups and each group comprises three types of capabilities.
Individual creativity has obtained enormous attention and value not only in art, science, technology but in all the spheres of economic activity (Batey & Furnham, 2006). Creativity and innovative work behaviour of individuals is the foundation to produce organizational innovation (Amabile, 1988), and associated to efficient organizational performance (Nystrom, 1990). Individual behavioural interactions and knowledge considered as prime raw material for creativity and innovation directed our concentration to the role of individuals for creativity and innovation that is discussed as micro-foundations of firm level innovation.
Micro-foundations of innovations demonstrate how individual level properties contribute to the firm level creativity and innovation (Grigoriou & Rothaermel, 2014). Not so many studies so far have discussed how micro-foundations could impact on the collective level performance of innovation in firms. Several researchers tried to establish the significance of individuals’ creative behaviour and attempted to explore factors that influence the creative behavior of individuals and teams (J.-S. Yang & Ha Viet, 2015). There are very few review and meta analysis that synthesize somehow these micro level antecedents of innovation. There is an intense need to systematically synthesize current literature with particular concentration on micro-foundations of innovation. For a deeper understanding of micro-level determinants of technological and non-technological innovation, a systematic literature review conducted for 26 year of individual and team level innovation determinants and presented in the second phase.
In the 3rd phase, an empirical study has been conducted to test the micro level determinants of innovation. The core micro-level determinants; employee silence, flow, and time pressure were tested and
Page | 1-11 analyzed using statistical tools to determine individual innovative work behavior. This study contributes key findings to innovative behavior literature and multilevel research in organizational behavior. The current study provides further research guidelines in unexplored areas of innovation.
1.2 Research Background, scope and motivation
Starting from the earliest studies on innovation by Schumpeter (1942), increasing evidence has corroborated the view that innovation represents a driving force of a firm’s performance. In the current rapidly changing markets, only organizations with the ability to sense and respond to the changing market need with their creative offerings can survive. Thus, over time a lot of effort has been devoted in trying to understand what drives and support firms to be more innovative at the organizational level (Eisenhardt & Martin, 2000; King, Fowler, & Zeithaml, 2001; Rothaermel & Hess, 2007; Stalk, Evans, & Shulman, 1992).
1.2.1 Innovation Capability
A fundamental element of any innovative organization is the ability to manage creativity and innovation. An organization’s competitiveness is largely dependent on its ability to innovate (Saunila & Ukko, 2012). In this perspective, organization’s capabilities to innovate can assure it to be competitive in this challenging working environment. The organization’s concentration for growth and development of their innovation capabilities can assure it long term survival and competitive advantage.
Apart from the large number of publication discussing innovation capabilities each year; still there are plenty of question needs explanations, including: what concretely enhance organizational innovation capabilities (Gryszkiewicz, Giannopoulou, & Barlatier, 2013); more precisely to technological innovation capabilities, product/service innovation capabilities, and process innovation capabilities? What are the essential innovation capabilities needed for an organization at different levels of analysis? What is the current gap and research trend in innovation capability literature?
The current innovation capability literature is widely fragmented and there are very few empirical evidences of how companies can improve their innovation capabilities (Romijn, 2002). A simple
Page | 1-12 unconditional search in any literature database demonstrates hundreds of relevant but loosely connected results. There is an intense need for a systematic review to synthesize current available literature to portray broader representation of the discussed innovation capability phenomenon
In this study, we carefully selected 460 articles based on a rigorous algorithm for inclusion and exclusion. We selected these articles from three authentic databases; ISI web of knowledge, Scopus, and Google scholar for the specific period of ten years from 2004 to 2014. The primary objective of this study is to enrich knowledge about innovation by exploring all types and dimensions of innovation capabilities. In this perspective, our aim is to synthesize innovation capabilities according to the type of innovation as well as level of analysis. We presented all moderating and intervening attributes (e.g; knowledge acquisition and absorptive capacity (Liao, Wu, Hu, & Tsui, 2009); intangible assets (Saunila & Ukko, 2014); etc.) that have possible relation with innovation capabilities to foster organizational innovation performance. The second intended contribution of this study is the representation of innovation capabilities in an extensive framework.
This study is relevant because it provide a complete overview of the innovation capability literature by highlighting under developed areas as well as new research streams that need further research. This study offer significant contribution to current body of innovation literature. In practice, this research study provides support material to organizations for internal evaluation of their essential innovation capabilities needed for a certain type of innovation at the specific level. This study demonstrates current emerging research streams of innovation capability literature that would help researchers to proceed further in this area. Chapter 2 demonstrates the key finding of this research.
1.2.2 Micro-foundations of innovation
Workplace creativity and innovation research have gained burgeoning growth for last forty years. A great number of studies have been published every year on creativity and innovation; focusing on various types, contexts, dimensions, drivers, barriers, promoters, at and across inter/intra organizational levels. More recently, an emerging stream of literature has been focusing more precisely on individuals,
Page | 1-13 on their characteristics, beliefs and behaviours (Grigoriou & Rothaermel, 2014) as primary performance drivers of firm level innovation. Such drivers are also known as “micro-foundations” and despite being micro the main assumption is that their impact on a firms’ innovation outcomes is other than irrelevant (Grigoriou & Rothaermel, 2014). In general terms, the theme of Micro-foundations of competitiveness is getting steam in the strategic and organizational literature (Eisenhardt, Furr, & Bingham, 2010; Felin & Foss, 2005; Greve, 2013; Grigoriou & Rothaermel, 2014) and is attracting increasing scientific interest (Barney & Felin, 2013; Felin, Foss, & Ployhart, 2015; Foss, 2010; Foss & Lindenberg, 2013).
Not so many studies so far have been discussing how micro-foundations could impact on the collective level of innovation in firms (Felin et al., 2015). The study of Grigoriou and Rothaermel (2014) is an exception. The authors conducted a research that highlight the significance of individual skills (e.g; knowledge-based thinking; social networks), that drive organizational performance heterogeneity and innovation outcome. The study of Dixon, Meyer, and Day (2014) discussed micro-foundations of adoption (e.g; knowledge acquisition, knowledge internationalization, knowledge dissemination, resource reconfiguration, resource divestment, resource integration) and innovation (e.g; search-exploration, experimentation, risk taking) for building dynamic capabilities that sustain competitive advantage. The handbook of micro-foundations for innovation policy concentrated on individual and organizational contributors and their interactions for various dimensions of innovation, more precisely for policy interventions (Nooteboom & Stam, 2008).
The main purpose of micro-foundation studies is to identify whether and how individual level factors, or the interactions between individuals, influence the collective level of the performance of an organization (Felin et al., 2015; Ployhart & Hale, 2014). The scientific spectrum of micro-foundations is particularly wide since the concept has been adopted in several research areas, including strategic management (Coff & Kryscynski, 2011; Molina-Azorin, 2014), organization theory (Eisenhardt et al., 2010; Felin et al., 2015; Gavetti, 2005; Greve, 2013), knowledge management (Haas & Ham, 2015; Turvani, 2001), and innovation (Grigoriou & Rothaermel, 2014).
Page | 1-14 The current innovation literature is widely fragmented across diversified research streams and very few systematic reviews (Anderson, De Dreu, & Nijstad, 2004; Anderson, Potočnik, & Zhou, 2014; Crossan & Apaydin, 2010) and meta analysis somehow consolidates widely discussed drivers of innovation at individual, team, organizational and societal level at various time intervals. These reviews based on generic selection criteria potentially exhibit biased results and do not actually demonstrate clear picture of ongoing micro-level research trend. Although, previous research on innovation is quite rich with novel contribution; however a very little concentration has been devoted to micro-level of innovation. A simple unrestricted search of creativity and innovation in web of science database produces tens of thousands of loosely connected results. There is an intense need to systematically synthesize past and current ongoing literature with particular concentration on micro-foundations of innovation.
The primary objective of the study is to bring together broadly discussed micro-level drivers and determinants of creativity and innovation. The purpose of this study is to consolidate the literature of 1990 to 2015 with a special concentration on micro level aspects of innovation including relevant dimensions and determinants. Following the step by step systematic review procedure (Pickering & Byrne, 2014); author rigorously and thoroughly reviewed titles and abstracts of seven thousand articles and selected 403 best relevant articles related to individual and team level innovation determinants. Author presents a comprehensive framework of individual and team level innovation constructs, variables and dimensions in 3rd chapter of this dissertation.
1.2.3 Empirical study of individual attributes for determining innovative work behavior
The 4th chapter of the dissertation is based on an empirical study of individual level attributes to determine innovative work behavior. Creativity and innovative work behavior (IWB) originates from the individuals’ creative behavior that helps to generate, modify, communicate and implement novel ideas. Innovative initiatives tend to rely on individual level employee characteristics and behavior at work (Chen & Huang, 2009; Hirst, Van Knippenberg, & Zhou, 2009). The interactionist perspective of individual level creativity and innovation assumes that contextual and personal factors interplay with IWB to
Page | 1-15 promote or hinder creativity at work (Ford, 1996; Janssen, 2005; Oldham & Cummings, 1996; Woodman, Sawyer, & Griffin, 1993). Organizations are trying to explore how to stimulate individual creativity and IWB in an attempt to remain competitive over time (Hirst et al., 2009; Oldham, 2003). In particular, there has been a thrilling concentration of social science researchers to find out determinants that influence employee IWB (Ma Prieto & Pilar Pérez-Santana, 2014; Scott & Bruce, 1994; Woodman et al., 1993). Yet, despite this foregoing discussion, our understanding of the individual drivers of IWB and their interplay with relational and contextual factors remains limited and momentous agenda for researchers (Cerne, Nerstad, Dysvik, & Skerlavaj, 2014; Shalley & Zhou, 2008).
Despite a variety of personal and contextual factors at work have been discussed in extant literature (Aleksić, Černe, Dysvik, & Škerlavaj, 2016; Amabile, 1996; Shalley & Gilson, 2004; Woodman et al., 1993), relatively very little concentration has been devoted to uncover the consequences of employee silence (Van Dyne, Ang, & Botero, 2003), perceived time pressure (Putrevu & Ratchford, 1997) and flow (Bakker, 2008) with individuals’ IWB. This is unfortunate because two sets of theories inform us about their salience for creativity and IWB: flow theory (Csikszentmihalyi, 1991, 1997) describes the psychological state of flow as total absorption and focus, and as such pins this factor as a crucial predictor of IWB; and the relational model of employee silence (Donaghey, Cullinane, Dundon, & Wilkinson, 2011; Milliken, Morrison, & Hewlin, 2003; Van Dyne et al., 2003), which, in accordance with the social perspective on creativity (Ohly, Kase, & Škerlavaj, 2010; Perry-Smith & Shalley, 2003), prevents bits of ideas in the idea generation phase and social support in the implementation phase of IWB. This research aims to contribute to the current discussion by providing a better understanding of the situational cues or conditions - and their interactive role - that facilitates innovative work behaviour of individuals (Hirst et al., 2009; Rothaermel & Hess, 2007; Scott & Bruce, 1994; Taggar, 2002). Building upon the theories of flow and the relational theory of employee silence and combining their logic, our research delves not only into the two specific paths to IWB, but also examines their multiple effects. Furthermore, we pin both factors (silence and flow) under the contextual influence of perceived time
Page | 1-16 pressure, a typical “problematic” contextual variable in this stream of studies, but an ever-present phenomenon in today’s dynamic work environment. We examine how they simultaneously (at different levels of each of the three factors) influence IWB.
The intended contributions to the literature on IWB are three-fold. The first intended contribution can be found in developing and testing the existence of direct relationships between two individual level factors–employee silence and work related flow– and innovative work behavior. The two are assumed to impact on the innovative work behavior of individuals in an opposite way. The second intended contribution of this study is related to the moderating role exerted by the perceived time pressure. Indeed, time pressure has been found to be both positively (i.e., Schmitt et al., 2015) and negatively (i.e., Baer and Oldham, 2006) related to the realization of innovative outcomes. Our additional contribution is to situate perceived time pressure as a variable that does not have a clear direct effect on the innovative work behavior of individuals. And that, on the contrary, will accentuate (or exacerbate) the impact of other variables. The third intended contribution this study attempts to make is related to the three-way interaction. In effect, it deals with combining the theories of employee silence and flow into a model that explains the interaction (multiple effects) of contextual (time pressure), relational (employee silence) and personal (flow) factors. Such an approach complements the interactionist perspective on creativity and IWB (Woodman et al., 1993) by expanding the nomological net of the antecedents of IWB and bringing together ideas from previously unrelated theories that supplement each other on their relational and personal side. The methodology and findings of this study are presented in 4th chapter of the dissertation. This study contributes key findings to innovation and organizational behaviour literature. The theoretical and managerial implications provide key guidance to stimulate innovative work behavior of employees. 1.3 Structure of the dissertation
The aim of the research is to synthesize and explore the fragmented literature of innovation across multiple levels, innovation capabilities, and micro-foundations of innovation. I have prepared three chapter based on three papers.
Page | 1-17 Chapter 2 consists of a systematic literature review of innovation capabilities across all levels discussed in a decade of innovation literature. The findings are presented in a multi-dimensional framework and future research directions of the field are discussed. Chapter 3 consists of a systematic literature of micro-foundations of innovation. This part covers only individual and team level attributes, factors and drivers of innovation and the findings are presented in a framework. Chapter 4 discusses the in-depth empirical analysis of few individual level attributes that contribute to innovative work behavior of the individuals. Chapter 5 summarizes the overall research findings.
1.4 Contribution of the study
The intended contributions of this dissertation are the following. Firstly, it presents innovation capabilities literature into a framework that is a guiding pattern for organizational manager and theoretical research development for future researchers. Secondly, the study demonstrates key antecedents and dimensions of creativity and innovation literature in a multidimensional framework. The research findings of this study can help organizational managers evaluate and foster their workforce for creativity. In chapter 4, we empirically tested the negative influences of employee silence and time pressure and suggested ways to improve creativity with flow state of individuals. The overall dissertation offers key theoretical and managerial implications for innovation capability, behavioural and psychological studies, and micro-foundations literature.
1.5 References:
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Amabile, T. M. (1996). Creativity in context: Update to "the social psychology of creativity.". Westview press.
Anderson, N., De Dreu, C. K. W., & Nijstad, B. A. (2004). The routinization of innovation research: a constructively critical review of the state-of-the-science. Journal of Organizational Behavior, 25(2), 147-173. doi:10.1002/job.236
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state-of-the-science review, prospective commentary, and guiding framework. Journal of Management, 40(5), 1297-1333. doi:10.1177/0149206314527128
Bakker, A. B. (2008). The work-related flow inventory: Construction and initial validation of the WOLF. Journal of Vocational Behavior, 72(3), 400-414. doi:10.1016/j.jvb.2007.11.007
Barney, J. B., & Felin, T. (2013). What are microfoundations?. Academy of Management Perspectives, 27(2), 138-155. doi:10.5465/amp.2012.0107
Cerne, M., Nerstad, C. G. L., Dysvik, A., & Skerlavaj, M. (2014). What goes around comes around: Knowledge hiding, perceived motivational climate, and creativity. Academy of Management Journal, 57(1), 172-192. doi:10.5465/amj.2012.0122
Chen, C. J., & Huang, J. W. (2009). Strategic human resource practices and innovation performance - The mediating role of knowledge management capacity. Journal of Business Research, 62(1), 104-114. doi:10.1016/j.jbusres.2007.11.016
Coff, R., & Kryscynski, D. (2011). Drilling for micro-foundations of human capital-based competitive advantages. Journal of Management, 37(5), 1429-1443. doi:10.1177/0149206310397772 Crossan, M. M., & Apaydin, M. (2010). A multi-dimensional framework of organizational innovation: A
systematic review of the literature. Journal of Management Studies, 47(6), 1154-1191. doi:10.1111/j.1467-6486.2009.00880.x
Csikszentmihalyi, M. (1991). Flow: The psychology of optimal experience, steps toward enhancing the quality of life. Philadelphia, PA: Harper Collins Publishers.
Csikszentmihalyi, M. (1997). Creativity: Flow and the psychology of discovery and invention. New York, NY: Harper Perennial.
Dixon, S., Meyer, K., & Day, M. (2014). Building dynamic capabilities of adaptation and innovation: A study of micro-foundations in a transition economy. Long Range Planning, 47(4), 186-205. doi:10.1016/j.lrp.2013.08.011
Donaghey, J., Cullinane, N., Dundon, T., & Wilkinson, A. (2011). Reconceptualising employee silence problems and prognosis. Work, Employment & Society, 25(1), 51-67.
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Eisenhardt, K. M., Furr, N. R., & Bingham, C. B. (2010). CROSSROADS—Microfoundations of
performance: Balancing efficiency and flexibility in dynamic environments. Organization Science, 21(6), 1263-1273. doi:10.1287/orsc.1100.0564
Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: what are they?. Strategic Management Journal, 21(10-11), 1105-1121. doi:10.1002/1097-0266(200010/11)21:10/11<1105::aid-smj133>3.0.co;2-e
Felin, T., & Foss, N. J. (2005). Strategic organization: A field in search of micro-foundations. Strategic Organization, 3(4), 441-455.
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organization theory. Academy of Management Annals, 9(1), 575-632. doi:10.1080/19416520.2015.1007651
Ford, C. M. (1996). A theory of individual creative action in multiple social domains. Academy of Management Review, 21(4), 1112-1142. doi:10.2307/259166
Foss, N. J. (2010). Micro-foundations for management research: What, why, and whither? Cuadernos de Economia Y Direccion de la Empresa(42), 11-34.
Foss, N. J., & Lindenberg, S. (2013). Microfoundations for strategy: A goal-framing perspective on the drivers of value creation. Academy of Management Perspectives, 27(2), 85-102.
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Gavetti, G. (2005). Cognition and hierarchy: Rethinking the microfoundations of capabilities' development. Organization Science, 16(6), 599-617. doi:10.1287/orsc.1050.0140
Greve, H. R. (2013). Microfoundations of management: Behavioral strategies and levels of rationality in organizational action. Academy of Management Perspectives, 27(2), 103-119.
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Grigoriou, K., & Rothaermel, F. T. (2014). Structural microfoundations of innovation: The role of relational stars. Journal of Management, 40(2), 586-615. doi:10.1177/0149206313513612 Gryszkiewicz, L., Giannopoulou, E., & Barlatier, P. J. (2013). Service innovation capabilities: what are
they? International Journal of Services, Economics and Management, 5(1/2), 125. doi:10.1504/ijsem.2013.051857
Haas, M. R., & Ham, W. (2015) Microfoundations of knowledge recombination: Peripheral knowledge and breakthrough innovation in teams. Vol. 32. Advances in Strategic Management (pp. 47-87). Hirst, G., Van Knippenberg, D., & Zhou, J. (2009). A cross-level perspective on employee creativity: Goal orientation, team learning behavior, and individual creativity. Academy of Management Journal, 52(2), 280-293.
Janssen, O. (2005). The joint impact of perceived influence and supervisor supportiveness on employee innovative behaviour. Journal of Occupational and Organizational Psychology, 78(4), 573-579. doi:10.1348/096317905X25823
King, A. W., Fowler, S. W., & Zeithaml, C. P. (2001). Managing organizational competencies for competitive advantage: The middle-management edge. Academy of Management Executive, 15(2), 95-106.
Liao, S.-h., Wu, C.-c., Hu, D.-c., & Tsui, K.-a. (2009). Relationships between knowledge acquisition, absorptive capacity and innovation capability: an empirical study on Taiwan's financial and manufacturing industries. Journal of Information Science, 36, 19-35.
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Ma Prieto, I., & Pilar Pérez-Santana, M. (2014). Managing innovative work behavior: the role of human resource practices. Personnel Review, 43(2), 184-208. doi:10.1108/pr-11-2012-0199
Page | 1-20 Milliken, F. J., Morrison, E. W., & Hewlin, P. F. (2003). An exploratory study of employee silence: Issues
that employees don't communicate upward and why. Journal of Management Studies, 40(6), 1453-1476.
Molina-Azorin, J. F. (2014). Microfoundations of strategic management: Toward micro-macro research in the resource-based theory. BRQ-Business Research Quarterly, 17(2), 102-114.
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Nooteboom, B., & Stam, E. (2008). Micro-foundations for innovation policy. Amsterdam University Press. Ohly, S., Kase, R., & Škerlavaj, M. (2010). Networks for generating and for validating ideas: The social
side of creativity. Innovation, 12(1), 41-52. doi:10.5172/impp.12.1.41
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C
HAPTER
2
M
ICRO
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FOUNDATIONS OF
I
NNOVATION
C
APABILITIES
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A
MULTI
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DIMENSIONAL
FRAMEWORK BASED ON A SYSTEMATIC
REVIEW
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Chapter 2 Micro-foundations of Innovation Capabilities- A multi-dimensional framework based on a systematic review
2.1 ABSTRACT
In this current technological and challenging environment, innovation capabilities are fundamental determinants for firms to be innovative, competitive and competent for sustainable development. Current literature on innovation capabilities is extremely fragmented as a simple unconditional search in any research database demonstrates hundreds of relevant but loosely connected results. The purpose of this paper is to consolidate and synthesize the state of the art literature of innovation capabilities through a systematic review of published material in the last decade. We indicate widely discussed and proposed innovation capabilities and their proposed relation with moderating attributes that result in fostering business performance. We also suggest development and evaluation measures of organizational innovation capability as well as essential capabilities needed at different levels within the organization. This study illustrates implications for managerial practices as well as research directions for further investigation of the phenomenon.
Keywords: Innovation, capabilities, systematic review, microfoundations
Note:
The modified version of this paper in Italian language publication in Journal – “Economia & Società Regionale” as an “invited paper”
Citation as:
Bortoluzzi, Guido & Maqbool, Saif (2016). Le 12 fonti della Innovation Capability tra letteratura accademica e pratica managerial. Economia e Società Regionale (ESR), XXXIV(3), 48-67. doi:10.3280/ES2016-003004
Page | 2-24 2.2 INTRODUCTION
The innovation capability concept has attained considerable attention among organizations, researchers, and policy makers in the last decade. A fundamental element of any innovative organization is the ability to manage creativity and innovation. An organization’s competitiveness is largely dependent on its ability to innovate (Saunila & Ukko, 2012). In this perspective, organization’s capabilities to innovate can assure it to be competitive in this challenging environment. The organization’s concentration for growth and development of their innovation capabilities can anticipate in getting success for the long run.
Many of the researchers have discussed innovation capabilities and their significance for the firm. But still there is no consensus on a single definition of innovation capability (Zawislak, Alves, Gamarra, Barbieux, & Reichert, 2011). Apart from the great number of studies on innovation capabilities; there is quite few empirical evidences of how companies improve their innovation capabilities (Romijn, 2002)? The current innovation capability literature is widely fragmented into different streams, levels of analysis, and types of innovation. According to Anderson, Potočnik, and Zhou (2014) and Hennessey and Amabile (2010) creativity and innovation can take place at different levels, such as individual, work team, organization or at more than one of these combined levels but current innovation capability literature does not precisely anticipate these levels of analysis. To date, there are a great number of questions looking for explanations including; what concretely enhance organizational innovation capabilities (L. Gryszkiewicz, E. Giannopoulou, & P. J. Barlatier, 2013b); more precisely to technological innovation capabilities, product/service innovation capabilities, and process innovation capabilities? What are the essential innovation capabilities needed for an organization at different levels of analysis? What is the current research gap and trend of innovation capability literature? A simple unconditional search in any literature database demonstrates hundreds of relevant but loosely connected results. There is an intense need for a systematic review to synthesize current available literature to portray broader representation of the discussed innovation capability phenomenon.
Page | 2-25 In this study, we carefully selected 458 articles based on a rigorous algorithm for inclusion and exclusion. We selected these articles from three authentic databases; ISI web of knowledge, Scopus, and Google scholar for the specific period of ten years from 2004 to 2014. The primary objective of this study is to enrich knowledge about innovation by exploring all types and dimensions of innovation capabilities. In this perspective, our aim is to synthesize innovation capabilities according to the type of innovation as well as level of analysis. We presented all moderating and intervening attributes (e.g; knowledge acquisition and absorptive capacity (Liao, Wu, Hu, & Tsui, 2009); intangible assets (Saunila & Ukko, 2014); etc.) that have possible relation with innovation capabilities to foster organizational performance. The second intended contribution of this study is the representation of innovation capabilities in a comprehensive framework.
This study is relevant because it provide a complete overview of the innovation capability literature by highlighting under developed areas as well as new research streams that need further attention. This study offer significant contribution to current body of innovation literature. In practice, this research study provides support material to organizations for internal evaluation of their essential innovation capabilities needed for a certain type of innovation at the specific level. This study demonstrates current emerging research streams of innovation capability literature that would help researchers to proceed further in this area.
2.3 THEORETICAL BACKGROUND
The notion of innovation has been discussed enormously over numerous decades. The very first concept of innovation and its significance was expressed by Schumpeter in 1930s. So far, literature of innovation has undoubted and comprehensive consensus on innovation as the fundamental determinant of organizational performance and long-term survival (Anderson et al., 2014). The champions of the global market are organizations that can respond timely and quickly to the market changes with flexible product/service innovation; aligned with management’s ability to utilize internal and external expertise efficiently (D. J. Teece, Pisano, & Shuen, 1997).
Page | 2-26 Creativity is believed as a fundamental driver of innovation as to generate unique and useful ideas and innovation is perceived as implementation of that creative idea. A great number of researchers have proposed innovation definitions, but always there remains a lack of agreement between researchers due to the difference of context and circumstances. According to the study of Crossan and Apaydin (2010) “an innovation is production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and the establishment of new management systems. It is both a process and the outcome”. This definition covers most of the aspects of innovation including value-added novelty in product and service; incremental and radical innovation; and exploration or exploitation of internal/external knowledge. Innovation is an iterative process that is a series of continues activities within an organization.
Managing innovation is vital for small and medium enterprises coupled with agility and responsiveness to meet ever changing market demands. Innovation can give a competitive advantage to an organization for the time being but cannot last forever. Innovation capabilities can reinforce organization’s survival in a competitive market for a longer period. Innovation considered as a dynamic capability of the organization (Sáenz, Aramburu, & Rivera, 2009) and dynamic capability conceptualized as management innovation (Eisenhardt & Martin, 2000). Although there is a strong overlap, both concepts of management innovation and dynamic capabilities are studied in isolation with each other (Gebauer, 2011). According to D. J. Teece et al. (1997), dynamic capability permits organizations to integrate, develop and reform its internal and external expertise to face market uncertainties. Dynamic capabilities are considered under the resource-based view (RBV) perspective that is one of the most auspicious theories of strategic management. RBV emphasizes that firm resource heterogeneity is the ultimate differentiator among organizational performance (Wernerfelt, 1984). As per Barney (1991), organizational ability to acquire such resources and capabilities; that are valuable, rare, inimitable and non-substitutable (VRIN resources); can get an edge over its competitors. For evaluative reasons,
Page | 2-27 dynamic capabilities split into three different parts: sensing (ability to observe internal and external organizational opportunities and threats), seizing (ability to handle those opportunities and threats efficiently) and reconfiguring resources (maintaining competitiveness by acquiring and developing new and existing internal and external resources when needed) (David J. Teece, 2007).
In this dynamic capability perspective; innovation capability is the ability to create new ideas, explore new market opportunities and identify marketable innovation by leveraging on existing resources and capabilities . Innovation capability is a multi-dimensional construct and it is an amalgamation of different type of capabilities (Catherine & Pervaiz, 2004; Saunila & Ukko, 2014). This innovation capability construct includes: absorptive capacity (Castellacci & Natera, 2013; Chao, Lin, Cheng, & Liao, 2011; Gebauer, Worch, & Truffer, 2012; Lichtenthaler & Lichtenthaler, 2009) technological innovation capability (Annavarjula & Mohan, 2009; Cannson & Villar-Lopez, 2014; J. Shan & Jolly, 2013; Wang, Lu, & Chen, 2008; Yam, Guan, Pun, & Tang, 2004), product innovation capability (Alegre & Chiva, 2008; Menguc & Auh, 2010; Peerally & Cantwell, 2006; Yalcinkaya, Calantone, & Griffith, 2007; Kevin Zheng Zhou & Wu, 2010), service innovation capability (Cheng, 2011; L. Gryszkiewicz, E. Giannopoulou, & P.-J. Barlatier, 2013a; Gryszkiewicz et al., 2013b; Poppelbuss et al., 2011), process innovation capability (J.-S. Chen & Tsou, 2012; Frishammar, Kurkkio, Abrahamsson, & Lichtenthaler, 2012), marketing capability (Lei, Xing, & Xiaoyan, 2008; Mariadoss, Tansuhaj, & Mouri, 2011; Sok, O’Cass, & Sok, 2013), manufacturing capability (X. Gao, Zhang, & Liu, 2007; Laosirihongthong, 2007; Wallin, Parida, & Isaksson, 2015), Strategic innovation capability (Ambrosini & Bowman, 2009; Branzei & Vertinsky, 2006; Di Benedetto, DeSarbo, & Song, 2008; Kodama & Shibata, 2014; J. Liu, Baskaran, & Li, 2009; Raymond & St-Pierre, 2010), organizational innovation capability (Björkdahl & Börjesson, 2011; Fruhling & Siau, 2007; Hoonsopon & Ruenrom, 2012; Kelley, O'Connor, Neck, & Peters, 2011; Leskovar-Spacapan & Bastic, 2007; Maritan, 2001; Tuominen & Hyvönen, 2004), R&D capability (Branzei & Thornhill, 2006; Kim, Lee, Park, & Oh, 2011; Yao, Xu, & Zhang, 2011; Zhang, Wu, Zhang, & Zhou, 2009), entrepreneurial orientation capability (Alegre & Chiva, 2013; Y.-C. Chang, Chen, Lin, &
Page | 2-28 Gao, 2012; Lanza & Passarelli, 2014; Meng, 2013; Zahra, Sapienza, & Davidsson, 2006), networking capability (Branzei & Thornhill, 2006; M.-H. Chen & Wang, 2008; Konsti-Laakso, Pihkala, & Kraus, 2012; Mohannak, 2007; Parida & Örtqvist, 2015; Rothaermel & Hess, 2007), and combinative capability (Biedenbach, 2011; S. J. Gao & Xu, 2001; Gebauer et al., 2012; Kogut & Zander, 1992).
The current study attempts to review all aforementioned capabilities and their measurement variables discussed in previous literature. We further move to the methodological part of data collection and data analysis.
2.4 METHODOLOGY
An analytical review is essential to do a systematic quantitative assessment. The systematic review technique proposed by Pickering and Byrne (2014) used to conduct quantitative review of published papers for the period of 2004 to 2014. This review technique is more systematic, analytical, explicit, quantitative and without priori assumptions (Pickering & Byrne, 2014; Pickering, Grignon, Steven, Guitart, & Byrne, 2015). This review technique requires comprehensive selection criteria for inclusion and exclusion of relevant studies including choice of keywords based on research questions of the study, publication period and selection of databases. The findings generated through this technique are unbiased and cannot be extracted with traditional review method. A systematic review uses more algorithmic and heuristic approach to search articles, to synthesize all relevant facts and to do critical analysis. This approach is not without challenges as the difficult part is to filter relevant articles based on title, abstract and detailed reading and then to synthesize various aspects into a detailed representation (Crossan & Apaydin, 2010).
The methodology used in this study for a systematic review illustrated under Table 1. We used keyword “innovation” with ‘*’ to cover all of its derivatives, like (innovation*) and “capabilities”. The keyword “capability” in plural (capabilities) also covers the articles using keyword capability. On the other hand, if we use keyword “capability”, it gives fewer results than the results obtained with “capabilities”. At initial we selected “ISI Web of Knowledge (WoK)” and “Scopus” database for
Page | 2-29 exploring relevant results. WoK covers peer reviewed journals and Scopus covers journals as well as conference papers. Later on we realized that there are some very relevant papers (Working Papers/Thesis/Conference papers) which are not available in both of these databases so we added “Google Scholar” as a third database for our selection set.
A search of primary academic literature was carried out using the selected keywords. The following terms were used as search criteria: keywords “innovation*” and “capabilities” in ‘topic’ (article title, abstract, keywords) with time limitation of 2004 to 2014, that produced thousands of results as displayed at stage A in Table 1. Figure 1 illustrates the publication trend of the studies containing above keywords in topic according to WoK and Scopus database. To limit down the search to specific and more relevant studies, query changed to article Title instead of Topic. Table 1 – stage B demonstrate the results obtained in all three databases and Figure 2 display the publication trend of studies containing the following keywords in title as per WoK and Scopus database. Each chart shows publication found in WoK and Scopus database. The both charts illustrate a gradual increase of publications each year. The downward effect during the year 2014 is due to the short period of the first ten months.
Figure 1: Publication trend for keyword “Innovation” and “Capabilities” in Topic
0 100 200 300 400 500 600 700 800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 N u m b e r o f P u b li ca ti o n s
Publication Year from 2004 - 2014
Scopus ISI WOS
Page | 2-30 Figure 2: Publication trend for keyword “Innovation” AND “Capabilities” in Title
Figure 1 illustrates 5010 articles of WoK and 4382 articles of Scopus. Figure 2 covers 312 articles of WoK and 583 of Scopus. To find out articles using Google Scholar; ‘Publish or Perish’ software used with the same selection criteria carried out for other databases. The Stage A/B of Table 1 demonstrates a great number of articles that cannot be reviewed. To further limit down the number of studies, we refined the search by document types (journal article, conference paper and review (not book review)), language (English) and search domain/area (social sciences, science & tech). Table 1 – stage C demonstrate the results obtained after the application of above mentioned limitations. Stage D manifest the studies selected based on title. Finally, all the selected studies through three databases were imported to our dataset, eliminated duplicate studies and reviewed all the abstracts to select the appropriate and most relevant studies for our analysis. Stage E demonstrates the final selection set of 458 studies obtained through all three databases.
0 10 20 30 40 50 60 70 80 90 100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 N u m b e r o f P u b li ca ti o n s
Publication Year from 2004 - 2014
Scopus ISI WOS
Page | 2-31 Table 1. Number of relevant articles found during each stage of review
Stage Results Total Selected ISI WOS Scopus G. Scholar
A 6,101 10,284 1,180,000 -
B 342 842 1240 -
C 254 511 743 -
D 223 335 336 894
E 135 239 84 458
Stage A: Keyword ‘Innovation*’ and ‘Capabilities’ in Topic (Article Title, Abstract, Keywords) Unconditional search
Stage B: Keyword ‘Innovation*’ and ‘Capabilities’ in Title
Stage C: Restriction Applied to Filter: Publication Year: 2004-2014, Document Type: Journal article, conference article and review (not book review), Language: English, Search Domain/Area: Social Sciences, Science & Tech.
Stage D: Selection based on title and imported to Endnote database.
Stage E: Final selection based on abstract reading and dealing with duplication
The imposition of refiners to limit down the search result was done to obtain most relevant and a quite reasonable selection set that can be used to project the broader picture of the aforesaid objectives. There may be some of the relevant studies we have missed due to application of refiners; however the selection set demonstrate that we have obtained some the most relevant, most cited papers from a vast majority of journals. We have reviewed and selected all papers that somehow deals with capabilities related to innovation.
2.5 DESCRIPTIVE ANALYSIS
A total number of 458 articles obtained through the rigorous selection process including journal articles 337 (74%), conference papers 107 (23%) and unpublished work 14 (3%) as displayed in Figure 3. Unpublished work includes thesis, reports and working papers. The major portion of selection set is journal articles that are spanning 183 journals. The quite large number of papers belongs to peer reviewed journals that justify the reliability and credibility of the results. Figure 4 illustrates yearly publication trend for complete selection set and for journal papers. Table 2 demonstrates top 35 journals of the selection set based on number of articles selected.
Figure 3: Breakdown of selection set
Figure 4: Yearly publication trend 74% 23% 3% 0 10 20 30 40 50 60 70 2004 2005 2006 2007 2008
Figure 3: Breakdown of selection set as per type of articles
of the selection set Journal Articles Conference Paper Unpublished Work
2008 2009 2010 2011 2012 2013 2014
Full Selection Set Journal Paper
Page | 2-32
Full Selection Set Journal Paper
Page | 2-33 Table 2: Top journals of selection set for innovation capability: 2004–2014
Journal # of Articles
International Journal of Technology Management 12
Technovation 11
Industrial Marketing Management 10
International Journal of Innovation Management 8
Journal of Engineering and Technology Management 8
Journal of Product Innovation Management 8
Research Policy 8
Asian Journal of Technology Innovation 7
International Journal of Knowledge Management Studies 6
European Journal of Innovation Management 5
Industry & Innovation 5
International Journal of Business Innovation and Research 5
Journal of Knowledge Management 5
Journal of Small Business Management 5
Technology Analysis & Strategic Management 5
International Journal of Innovation and Learning 4
Journal of technology management & innovation 4
Actual Problems of Economics 3
African Journal of Business Management 3
Baltic Journal of Management 3
Creativity and Innovation Management 3
IEEE Transactions on Engineering Management 3
Interdisciplinary Journal of Information, Knowledge, and Management 3
International Journal of Entrepreneurship and Innovation Management 3
Journal of Business Research 3
Journal of International Marketing 3
Journal of Science and Technology Policy in China 3
Knowledge and Process Management 3
R & D Management 3
Strategic Management Journal 3
Technological Forecasting and Social Change 3
World Academy of Science, Engineering and Technology 3
Innovation: Management Policy & Practice 2
International Journal of Entrepreneurship and Small Business 2
International Journal of Innovation and Technology Management 2
2.6 RESULTS
The systematic analysis of the identified variables presented in a detailed framework and some tables.
Figure 4: Mind mapping diagram of innovation capabilities from literature 2004 Figure 4: Mind mapping diagram of innovation capabilities from literature 2004-2014
Page | 2-35 Table 3: Innovation capabilities discussed in literature sample set 2004-2014
(Explore) Capability
Type of
Innovation Dimensions
Eg. Publications 1. R&D capability Technological &
Non-Technological
Number of patents owned, experimental development, number of science and technology center, R&D expenditure, R&D input intensity, ratio of R&D personnel, innovation strategy, project
implementation, portfolio management, number of new product development projects
(Biedenbach, 2011; Branzei & Thornhill, 2006; Capaldo & Petruzzelli, 2011; J. C. Guan, Yam, Mok, & Ma, 2006; Kim et al., 2011; Y. Liu, 2011; Sosa, 2009; Stüer, Hüsing, & Biala, 2010; Wang et al., 2008; Yam et al., 2004; Yao et al., 2011; Zhang et al., 2009) 2. Market
capability
Mixed 1. Market orientation: customer orientation, competitor orientation, inter-functional coordination
2. Marketing capability: market share, degree of new product competitiveness, integration of marketing activities (development & execution of creative marketing strategies, test marketing, launching new products, distribution management, and sales management), skill to segment and target markets, effectiveness of advertising programs, channel-bonding capabilities
(Breznik & D. Hisrich, 2014; J. Guan & Ma, 2003; Hii & Neely, 2000; Huhtala, Sihvonen, Frosen, Jaakkola, & Tikkanen, 2014; Leskovar-Spacapan & Bastic, 2007; Menguc & Auh, 2006; Morgan, Vorhies, & Mason, 2009; Ngo & O'Cass, 2012; O’Cass & Sok, 2012; Sok et al., 2013; Vorhies & Morgan, 2005; Wang et al., 2008; Yam et al., 2004)
3.Entrepreneurial orientation capability
Process / Product innovation
Ability to sense market opportunities, high level of risk propensity, ability to manage goals and skills, high risk of proclivity, proactive towards external opportunities and uncertainties, initiator in the industry, change management ability, technological leadership
(Alam, 2011; Alegre & Chiva, 2013; Y.-C. Chang, Chen, et al., 2012; H Forsman, 2008; Helena Forsman, 2009; Jeong, Pae, & Zhou, 2006; Y. Li, Liu, & Zhao, 2006; H. Liu, Hou, Yang, & Ding, 2011; Richard, Barnett, Dwyer, & Chadwick, 2004; Ryan & Giblin, 2012; Zahra et al., 2006; K. Z. Zhou, Yim, & Tse, 2005)
Page | 2-36 Organize Capability Type of Innovation Dimensions Eg. Publications 4. Organizational capability Radical, incremental and breakthrough innovation
1. Knowledge: organizational knowledge base, regeneration, external knowledge sources
2. Organization: level of decentralization, liaison resources and communication system, level of risk, work climate, financial capacity, profitability and revenue forecasting, integration capability, experimentation capability, organization structure flexibility, diversification, vision,
3. Human Factor: employee recognition, incentives, leadership, openness, social practices, participatory leadership culture, employee wellbeing, individual creativity, performance appraisal system
(Akman & Yilmaz, 2008; Y.-C. Chang, Chang, Chi, Chen, & Deng, 2012; Y. Chen et al., 2009; C. H. Fang, Chang, & Chen, 2011; Freel, 2005; J. Guan & Ma, 2003; Hoonsopon & Ruenrom, 2012; Hull & Covin, 2010; Kelley et al., 2011; Knight & Cavusgil, 2004; J. Li & Kozhikode, 2009; Martinez-Roman, Gamero, & Tamayo, 2011; Olsson, Wadell, Odenrick, & Bergendahl, 2010; Saunila, Pekkola, & Ukko, 2014; Subramaniam & Youndt, 2005; Uhlaner, van Stel, Duplat, & Zhou, 2013)
5. Strategic capability
Mixed Support system for technological innovation, planning & assessing technological innovation, legal support to technological innovation, and acquiring support from government to finance and protect technological innovation, goals and competency, business strategy, decision system, entrepreneur spirit, enduring risk, realizing foreign competitors, adjusting innovation strategy as per market needs
(Branzei & Thornhill, 2006; Branzei & Vertinsky, 2006; Di Benedetto et al., 2008; J. Guan & Ma, 2003; Helfat & Peteraf, 2003; Kashan & Mohannak, 2014; Kodama & Shibata, 2014; Koivisto, 2005; J. Liu et al., 2009; Raymond & St-Pierre, 2010; Song & Montoya-Weiss, 2001; Zambrano & Velásquez, 2011; Kevin Zheng Zhou & Wu, 2010)
6. Network capability
Mixed Network visioning capability, network constructing capability, network operating capability and network centering capability; coordination activities, relationship skills, partner knowledge, partner diversity, network size, learning and collaborative networks, mutual dependence, mutual commitment, business connection, shared resources, interpersonal networks, social networks, network density
(Capaldo, 2007; G. Fang, Ma, Ren, & Zhou, 2014; Ismail, Rose, Uli, & Abdullah, 2012; Konsti-Laakso et al., 2012; Lawson & Samson, 2001; Mohannak, 2007; Parida & Örtqvist, 2015; Powell, Koput, White, & Owen-Smith, 2005; Ray, Barney, & Muhanna, 2004; Romijn, 2002; Rothaermel & Hess, 2007; Saenz & Perez-Bouvier, 2014; Salman & Saives, 2005; Tseng, Lin, Pai, & Tung, 2016; X. Zheng & Zhao, 2013)
Page | 2-37 Develop Capability Type of Innovation Dimensions Eg. Publications 7. Manufacturing capability
Product & Process Innovation
Cost control capability, manufacturing flexibility for innovation, equipment operating skill, production regulations and system, total quality management, manufacturing cost of dominant products, advanced manufacturing technology, product quality, commercialization success rate, production staff quality, product life time, design technology
(Auramo & Mefford, 2012; S. J. Chang, Wang, Hu, & Gao, 2014; Corbett & Claridge, 2002; X. Gao et al., 2007; J. Guan & Ma, 2003; Laosirihongthong, 2007; Lau, Baark, Lo, & Sharif, 2013; Peng, Schroeder, & Shah, 2011; Wang et al., 2008; Yam, Lo, Tang, & Lau, 2011; Yusr, Mokhtar, & Othman, 2014) 8. Technological
capability
Mixed Technological investment capability, resource allocation capability, technological development sensing capability, technological sourcing & accumulation capability, ability to quickly respond technological changes
(Annavarjula & Mohan, 2009; Berger & Diez, 2006; Berkhout, Hartmann, & Trott, 2010; Brown & Fai, 2006; Cannson & Villar-Lopez, 2014; J. Guan & Ma, 2003; J. C. Guan et al., 2006; Huang, 2011; Lahovnik & Breznik, 2014; Lu, Chen, & Wang, 2007; Juan Shan & Jolly, 2012; Wang et al., 2008; Wei, Hou, Wang, & Wang, 2011; Yam et al., 2004; Yam et al., 2011; Kevin Zheng Zhou & Wu, 2010) 9. Information
Technology capability
Mixed Organizational IT system, inter-organizational IT system, IT system for market knowledge creation, departmental & functional integration, possession of information technology for new product development
(Agarwal & Selen, 2009; Atoche-Kong, 2009; DeSarbo, Di Benedetto, Song, & Sinha, 2005; Di Benedetto et al., 2008; Dibrell, Davis, & Craig, 2008; Galy, Liao, Adams, & Thatcher, 2007; Hutter, Hautz, Fueller, Mueller, & Matzler, 2011; Plattfaut et al., 2015)
