Article

The impact of service R&D on the performance of Korean information communication technology small and medium enterprises

Authors:
  • Gyeonggi Institute of Science & Technology Promotion
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Abstract

In recent years, research and development (R&D) in the service industry has attracted a great deal of attention from both academia and industrial firms. However, compared to the manufacturing sector, little research exists on the implications of R&D for the financial and/or non-financial performance of firms in the service industry. The purpose of this study is to examine the impact of service R&D on the performance of information communication technology (ICT) firms. We identify five categories of R&D activities and investigate their impact on the financial and non-financial performance of 100 ICT firms, with a focus on small and medium enterprises (SMEs) in South Korea. We postulate positive relationships between R&D efforts and a firm's performance. However, the findings only partially support our hypotheses; unexpected results demonstrate that the presence of R&D management negatively influences a firm's performance. We present detailed statistical results and discuss the implications of the study.

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... Thus, in this article, we aim to contribute to the literature by studying the relationship between KM practices and organizational performance (OP). Specifically, we seek to establish the incidence of KM practices on financial organizational performance (FP) as proposed by Judge and Douglas (1998) and nonfinancial organizational performance (nFP), according to Lee et al. (2011). The KM practices that will be included in the study are four: knowledge creation practices (KCP), continuous learning practices (CLP), knowledge and feedback systems (KFS), and management of employees' individual competencies. ...
... In the literature, it is common to find OP measurements in financial terms or with the use of constructs that mix financial and nonfinancial indicators. Therefore, dealing with FP and nFP independently is a novel approach, since it is not common to find works that analyze the constructs in a completely independent manner (Lee et al., 2011;Saunila et al., 2014). Next, the four KM practices proposed by Alegre Vidal and Lapiedra Alcamí (2005) will be related and the work hypotheses will be proposed regarding the use of processes, techniques, and systems necessary for KM to have the desired effect on OP (Alavi and Leidner, 2001;Grant, 1996;Leonard-Barton, 1992;Sengupta and Abdelhamid, 1993;Sengupta and Te'eni, 1993). ...
... For nFP, we used the scale proposed by Lee et al. (2011). The four variables of the construct were measured with a 5-point Likert scale going from 1 ¼ very inferior in comparison with other companies in the sector to 5 ¼ very superior in comparison with other companies in the sector. ...
Article
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The relationship between knowledge management (KM) and firm performance is an interesting field for both scholars and practitioners. Despite the extant literature, more studies are required in order to clarify the abovementioned relationship. The purpose of this article is to examine the impact of KM practices on financial and nonfinancial performance. KM practices are knowledge creation practices, continuous learning practices (CLP), knowledge and feedback systems (KFS), and management of employees’ individual competencies. Methodologically the study uses partial least squares structural equation modeling. The results show that KFS affect firms’ financial performance and that CLP do not influence oneither financial or nonfinancial performance.
... Por lo anterior, el objetivo del presente artículo es analizar la mediación de la CAB, en la relación entre CTI y DO, pero en un sentido amplio en el que las CTI se conciban con sus tres dimensiones: capacidad de infraestructura de TI, capacidad de TI para la expansión del negocio y capacidad de proactividad de TI (Lu y Ramamurthy, 2011). Igualmente, por el lado del DO se consideran aspectos financieros, pero también de manera específica los no financieros como la satisfacción del cliente, la imagen corporativa, el valor de las marcas y la productividad de los empleados (Lee et al., 2011;Camisón y Villar-López, 2014). ...
... El desempeño organizacional (DO) se compone de desempeño financiero (DF) y desempeño no financiero (DnF): el primero comprende el retorno de la inversión, el crecimiento de las ganancias, el crecimiento de las ventas y el aumento de la participación en el mercado (Judge y Douglas, 1998;Richard et al., 2009). Por su parte, el segundo alude al aumento de la satisfacción del cliente, el mejoramiento de la imagen corporativa, el aumento del valor de las marcas y de la productividad de los empleados (Lee et al., 2011). ...
... En cambio, para la medición del DF se utilizó la escala propuesta por Judge y Douglas (1998), y para el DnF la desarrollada por Lee et al. (2011); en ambos casos se emplearon cuatro ítems (ver anexo), y se utilizó una escala Likert que va desde muy inferior en comparación con otras empresas del sector (1), hasta muy superior en comparación con otras empresas del sector (5) (ver anexo). ...
Article
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El objetivo de este artículo es analizar el efecto mediador de la Capacidad de Absorción (CAB) en la relación entre las Capacidades de Tecnologías de Información (CTI) y el Desempeño Organizacional, particularmenteel desempeño financiero (DF) y el desempeño no financiero (DnF). El modelo de hipótesis se contrastó en una muestra de empresas manufactureras y de servicios, para ello, se utilizaron ecuaciones estructuralespor el método de mínimos cuadrados parciales. Se encontró que existe una mediación total de CAB en la relación entre CTI y DF, y parcial entre CTI y DnF. En conclusión, para que las CTI logren incidir sobre losresultados empresariales, es necesaria su articulación con habilidades organizacionales blandas como la CAB.
... Sumado a esto, se integran tres constructos (CI, DI, DO) con lo cual se busca evidenciar cómo se relacionan y cómo influyen uno sobre el otro, planteamiento que no se ha establecido de manera clara en la literatura científica y que puede ser de gran importancia para la gestión de la innovación. Final-mente en el planteamiento de la influencia del DI en el DO, se aborda este último desde dos constructos independientes: Desempeño Financiero (DF) que emplea indicadores financieros y Desempeño no Financiero (DnF) que emplea variables no financieras, lo cual presenta también un grado de novedad dado que la mayoría de estudios evalúan el desempeño con indicadores financieros o con la mezcla de estos con no financieros; y son pocos los que lo evalúan con dos constructos independientes (Lee et al., 2011;Saunila et al., 2014). ...
... En la literatura científica uno de los campos que ha acaparado la atención es la relación entre las CI y el DO, en su gran mayoría abordándolo en el contexto de las empresas pertenecientes al sector industrial y tratando de explicar el desempeño desde varias perspectivas. Algunos autores han abordado esta relación considerando el desempeño solo en función de indicadores financieros, como es el caso de la investigación realizada por Sher y Yang (2005) Por el contrario, otros académicos han buscado realizar una distinción en el DO separando las variables en financieras y no financieras explorando como lo plantea Lee et al. (2011) tener información de los indicadores no financieros de manera independiente ya que estos ayudan a la toma de decisión puntual y a focalizar la atención de los administradores. Saunila et al. (2014) siguen este mismo enfoque: separan las variables financieras de las que apuntan al desempeño operacional, y de esta forma pueden tener resultados más precisos del impacto verdadero de las CI en cada uno de estos grupos de indicadores. ...
Article
Full-text available
El objetivo del artículo es analizar la incidencia de las capacidades de innovación (CI) sobre el desempeño innovador (DI), y de este último sobre el desempeño organizacional (DO). Las CI se abordan desde la perspectiva de la innovación en servicios, el DI desde el lanzamiento de productos, y el DO se divide en financiero y no financiero. En la metodología, se utilizaron ecuaciones estructurales. Los resultados muestran que sólo las CI con orientación al cliente y al marketing influyen sobre el DI y éste a su vez lo hace sobre el DO, aunque en mayor proporción sobre lo no financiero. En conclusión, estos hallazgos contrastan con estudios realizados en empresas manufactureras, en los que resultan más importantes las CI tecnológicas.
... Teirlink (2017) uses the research data of SMEs from 2010 to 2013 and uses the method of qualitative comparison to think that managers of SMEs should pay more attention to the R & D method of functional structure in the process of strategic R & D, so as to improve financial performance [12]. Lee et al. (2011) focused on the R & D performance of small and medium-sized service enterprises in South Korea and found that the existence of R & D management had a negative impact on the company's performance [13]. Dong et al. (2010) empirically tested the impact of R & D and patents on the financial performance of venture enterprises by using random and fixed effect models and found that R & D investment will play an important role in the patent situation [14]. ...
... Lee et al. (2011) focused on the R & D performance of small and medium-sized service enterprises in South Korea and found that the existence of R & D management had a negative impact on the company's performance [13]. Dong et al. (2010) empirically tested the impact of R & D and patents on the financial performance of venture enterprises by using random and fixed effect models and found that R & D investment will play an important role in the patent situation [14]. Alam et al. (2019) studied the impact of R & D investment on enterprise environmental performance by using enterprise data of G6 countries from 2004 to 2016 and found that higher R & D investment will bring environmental performance [15]. ...
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The electric power and electric industries are basic and strategic emerging industries in China’s national economy. Based on the data of listed companies in China’s electric power and electric industries from 2015 to 2019, this paper empirically studies the impact of research and development (R & D) attention on corporate profitability. The results show that attention to R & D by listed companies in electric power and electric industries will significantly improve enterprise’s profit performance, and this kind of effect has yearly heterogeneity. From 2015 to 2017, R & D attention gradually improved the profit performance of enterprises, but the profit spillover effect of R & D investment in recent years needs to be further strengthened. Further study found that R & D attention has a significant effect on corporate profitability in the private enterprise group, the R & D attention of state-owned enterprises and R & D structure adjustment should be paid more attention; R & D investment can significantly improve the profitability of the electrical industry, but the promotion effect was relatively slow in recent years, and R & D investment has a significant effect on the profitability of listed companies in the electric power industry. Although the promotion effect is not obvious, it shows a steady improvement trend. After variable and model replacement, the empirical regression conclusion of this paper is still robust. The results of this paper help to deepen the understanding of the stage characteristics of the impact of R & D attention on profit performance, and it is of great significance to optimize the efficiency of R & D investment and pay attention to the adjustment of R & D structure in the electric power and electrical industries.
... This is particularly relevant to the information and communication technology sectors in which costs have been rising consistently. In an era of information and technology, it is found that the efficiency measurement is prevalently studied by several literatures ( FernándezMenéndez, López-Sánchez, Rodríguez-Duarte, and Sandulli, 2009;Goto, 2010;Lee, Kim, and Hyejin, 2011). In simple, technical efficiency of an organization can measure either input-oriented or output-oriented approach for an operational process. ...
... As the regression of super-efficiency and OLS model, there are four variables that differently show the significant parameters. The operative efficiency scores of the studied companies could be significantly increased by enhancing the number of external boards, research and development, and subsidiaries ( Lee, Kim, and Hyejin, 2011), while they could be significantly decreased by establishing many years of those companies. Finally, the discussion is able to draw from the analysis that an adopting of super-efficient DEA as an alternative approach effectively presents the three advantages as follows: (1) the mentioned approach has clearer empirical results than the traditional DEA; (2) the mentioned approach is sound; (3) it is easy to implement and achieve a good result. ...
Conference Paper
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A popular technique to measure efficiency comprise of a two-stage approach, consisting Data Envelopment Analysis (DEA) with Tobit regression. Since the highest efficiency score of DEA is censored at one, this method has some weakness of covering additional information at the upper bound of the efficiency scores. This research adopts the super-efficiency model as an alternative of DEA-based approach for a two-stage efficiency measurement. The super-efficiency is quite different from the traditional DEA model because its bound is extended more than one. The cross-section data of information and communication technology companies in 2010 was conducted from the Department of Internal Trade in Thailand, studying how the operating efficiency scores are affected by the number of the internal boards, external boards, stakeholders, patents, research and development, established years, subsidiaries, and products. The empirical results of super-efficiency offer the advantages over the traditional DEA. It also provides some useful information to improve the operating efficiency scores.
... Sumado a esto, se integran tres constructos (CI, DI, DO) con lo cual se busca evidenciar cómo se relacionan y cómo influyen uno sobre el otro, planteamiento que no se ha establecido de manera clara en la literatura científica y que puede ser de gran importancia para la gestión de la innovación. Final-mente en el planteamiento de la influencia del DI en el DO, se aborda este último desde dos constructos independientes: Desempeño Financiero (DF) que emplea indicadores financieros y Desempeño no Financiero (DnF) que emplea variables no financieras, lo cual presenta también un grado de novedad dado que la mayoría de estudios evalúan el desempeño con indicadores financieros o con la mezcla de estos con no financieros; y son pocos los que lo evalúan con dos constructos independientes (Lee et al., 2011;Saunila et al., 2014). ...
... En la literatura científica uno de los campos que ha acaparado la atención es la relación entre las CI y el DO, en su gran mayoría abordándolo en el contexto de las empresas pertenecientes al sector industrial y tratando de explicar el desempeño desde varias perspectivas. Algunos autores han abordado esta relación considerando el desempeño solo en función de indicadores financieros, como es el caso de la investigación realizada por Sher y Yang (2005) Por el contrario, otros académicos han buscado realizar una distinción en el DO separando las variables en financieras y no financieras explorando como lo plantea Lee et al. (2011) tener información de los indicadores no financieros de manera independiente ya que estos ayudan a la toma de decisión puntual y a focalizar la atención de los administradores. Saunila et al. (2014) siguen este mismo enfoque: separan las variables financieras de las que apuntan al desempeño operacional, y de esta forma pueden tener resultados más precisos del impacto verdadero de las CI en cada uno de estos grupos de indicadores. ...
Article
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The objective of this research was to evaluate the incidence of innovation and technology in the competitiveness of exporting SMEs in Guayas-Ecuador. The investigation was mixed quantitative - qualitative. Quantitative research was developed through a survey of 126 SMEs and qualitative research using in-depth interviews with six SMEs. The results show that technology is positively related to competitiveness while no evidence was found to relate innovation with competitiveness
... In exchanging theories, the strong link between individual commitment to an organization or occupation is implying that employees are more committed after they weigh the pros and cons following resignation (Rothrauff et al., 2011). Thus, OC is an effective and highly influential mechanism Dimension Example of past measures Authors MO Customer orientation, competitor orientation, and interfunctional coordination Narver and Slater (1990) Intelligence generation, intelligence dissemination, and responsiveness Jaworski and Kohli (1993) Responsive MO, proactive MO, and emerging MO Beck et al. (2011) OC Affective commitment, continuance commitment, and normative commitment Meyer and Allen (1991) Morally, calculatively and alienatively committed Penley and Gould (1988) Belief, effort and desire Porter et al. (1974) OP Finance, internal business processes, customers, and learning and growth Kaplan and Norton (1996) Financial: market share extension, process improvement, sales growth, and cost saving in production Lee et al. (2011a) Non-financial: customer satisfaction improvement, capacity improvement, brand value, and corporate image improvement Product or service quality, product or service innovation, employee attraction, employee retention, customer satisfaction, management and employee relation, and employee relations Kuo (2011) Organizational commitment connecting employees and the organization It also provides cohesion and motivates employees to devote long-term effort to address external influences and meet customer demands. Meyer and Allen (1991) proposed that OC has three distinguished components, namely affective commitment, continuance commitment, and normative commitment. ...
... Kuo and Ye (2009) suggested that past researches have combined many dimensions to comprehensively assess organizational effectiveness and performance (see Table I for some sample measures of OP). For example, Lee et al. (2011a) assessed OP in two aspects: financial and non-financial. Market share extension, process improvement, sales growth, and cost saving in production are the indices of financial performance, whereas customer satisfaction improvement, capacity improvement, brand value, and corporate image improvement are the indices of non-financial performance. ...
Article
Purpose ‐ The purpose of this paper is to investigate the effect of market orientation (MO) on organizational performance (OP) through organizational commitment (OC) in the intensely competitive environment of high-tech industrial clusters. The relationships among MO, OC, and OP are also examined. Design/methodology/approach ‐ Structural equation modeling (SEM) was used to analyze the questionnaires completed by employees of 91 high-tech enterprises (n=335) located in the four science parks in northern, central, and southern Taiwan. Findings ‐ The results indicate that MO and OC have positive and direct effects on OP. The effect of MO on OP is significantly increased by enhanced OC. Practical implications ‐ This study provides corporate managers with valuable knowledge, which can enhance OC and OP. That is, successful organizations must combine the strengths and motivations of internal employees and respond to external changes and demands promptly to demonstrate the organization's value. Social implications ‐ Regardless how the industrial environment becomes increasingly complex and diverse, OC of employees is still crucial. Only long-term retention of human capital can sustain operations and enhance OP. Originality/value ‐ The most valuable contribution of this study is the understanding of OC as a mediator of MO and OP. This indicates that the only factors that guarantee OP are the talents who are willing to commit to the organization. Faced with increasingly severe challenges in the future, the results of this study contribute to existing literature by demonstrating that MO can sustain competitive advantages.
... Suh and Kim (2012) indicated that technology acquisition is the most efficient type of collaboration for R&D of service SMEs, while networking is not significantly related to any type of R&D performance. Yeonhee, Sooyoung, and Hyejin (2011) investigated whether R&D efforts influence the financial and nonfinancial business performance of ICT business with a by guest on October 12, 2016 Downloaded from focus on SMEs in South Korea. The authors postulated positive relationships between R&D efforts and a firm's performance. ...
Article
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This work is aimed at establishing key organizational strategies that push small and medium-sized enterprises (SMEs) in the information and communication technologies (ICT) services sector to be more innovative. Following an input and output approach, a theoretical model is built that helps determine such key factors. Then the model is validated with fieldwork carried out on a representative sample in Castile-Leon region (Spain). According to this model, the decision to innovate (and the trigger for research and development [R&D] activities in SMEs in the ICT services sector) is the result of needs that are presented by customers (public or private sector) in tailored projects. All the same, the factors leading to innovation are in order of importance, the technological level of the company, the effort made by the company in R&D, and finally, systems of incentives.
... Chen, Lin, & Chang, 2009;Efrat & Shoham, 2013;Forni & Reichlin, 1998;Gonzalez, Huang, Xu, & Espejo, 2011;Hajipour, Talari, & Shahin, 2011;Christian Homburg, Klarmann, & Schmitt, 2010;C. Homburg & Rudolph, 2001;Kuo, 2011;Kuo, Ho, Lin, & Lai, 2010;Lee, Kim, & Lee, 2011;Martinez-Caro, 2011;Raghavan, Xia, Breitkopf, Rassineux, & Villon, 2013 Kim & Frazier, 1997;F. Lai, Zhao, & Wang, 2006;Leonidou, Palihawadana, & Theodosiou, 2006;Leonidou, Talias, & Leonidou, 2008;Medlin, Aurifeille, & Quester, 2005;Perols, Zimmermann, & Kortmann, 2013;Riedl et al., 2013;Tsai, Lee, & Wu, 2010;Vinodh & Joy, 2012;Wagner, Eggert, & Lindemann, 2010;T. ...
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Modeling the cause and effect is traditionally solved using some regression technique when the independent and dependent variables are continuous or measurable. Often, however, the variables are constructs or dimensions and their measurement is given by several other variables, such as in the case of industrial productivity and then traditional methods do not apply. For solve that problem, the structural equation modeling is applied in social sciences and engineering, and recently there is reported a lot industry applications.
... They expected that the proposed approach for TCSI could be implemented as guidance for an ideal match of technology with technology developer and technology receiver. Lee et al. (2011) investigated the impact of service R&D on the performance of Korean information communication technology small and medium enterprises. Lin (2009) investigated the business value of information technology as measured by technical efficiency. ...
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Information technology plays an important role on increasing productivity in many organizations. The primary objective of the present survey is to study the impact of information technology on productivity and find a positive and significant relationship between these two factors. Structural equations technique and LISREL software are used for analysis of the questionnaires distributed among managers and some employees of Iran Behnoush Company. Organizations try to improve their performance by investment in information technology. However, many of the previous studies indicate insignificance of the impact of information technology on productivity of the organizations. The present survey studies the impact of information technology on organizations' productivity through the collected data from the above company. Results confirm existence of a positive relationship between information technology and productivity.
... Non-financial performance has received much attention because it helps decision makers predict future financial performances (Low and Siesfeld, 1998). In context of service innovation, service quality improvement is the critical competitive performance criteria rather than profitability or market share (Gebauer et al., 2008;Lee et al., 2011). For these reasons, we developed three perceptual measures, namely, responsiveness to customer needs, customer satisfaction, and service customization, to assess the degree of firm performance (De Jong et al., 2003). ...
Article
Service innovation is considered a new way to gain competitive advantage and enhance firm performance. However, service innovation does not always guarantee the desired outcome. The effective organization and management of well-planned service innovation practices, which are consistent with the firm`s business environment, become a critical challenge for service innovation success. In addition, an increasing number of studies have focused on the role of information technology (IT) capability in service innovations. Most studies on service innovation have focused on the influences of the strategic alignment and IT capability separately. In contrast, the current study combines them by investigating the positive moderating effect of IT capability on the alignment between business strategy and service innovation strategy. Based on data collected from 183 service firms in Korea, we first explore the effect of service innovation strategies when coupled with different business strategies on better firm performance. We then investigate the moderating effect of IT capability on the relationship between strategic alignments and firm performance. Empirical evidence indicates that a synergistic effect between alignment and IT capability on firm performance exists. Firms that have aligned service innovation strategy with business strategy should consider improving their organizational IT capability to ensure substantial leverage.
... Method -- [12], [45] Knowledge [37], [11], [4], [44], [42], [27], [41], [26], [40], [33] [20], [15], [31], [29], [9] Tool -- [3], [ To assess the quality of primary studies we checked if the publications were been subjected to a rigorous review process. It was found that 17 items were presented at scientific conferences and remaining in indexed journals (See Table 12). ...
Article
(ANTECEDENT) The main responsibility of the Information Technology Service Management (ITSM) as an organization is to provide services in high level quality. That implies that the services will be an appropriate service and it will ensure continuity. In this context, the organization needs to adopt the best practices in service management to be more efficient and competitive. Some ITSM models collect the best practices of recognized organizations. These models are mainly applied by large organizations. (OBJECTIVE) The objective of this study is to gather experiences in the application of ITSM models in small organizations. (METHODS) To achieve this objective a systematic literature review was performed. (RESULTS) We found primary studies applied to IT areas from some large and medium companies but there is a few in small companies' context. (CONCLUSION) During the SLR we have identified some improvements and difficulties in many organizations, we have founded when applying ITSM models. The principal difficulty was the lack of knowledge of its personnel and consultants have, for adopting a model. On the other hand, companies who succeeded in the application of an ITSM model, had founded some benefits, such as processes improvement, higher user satisfaction, and service cost and time reduction.
... In product R&D, business owners improve their products, while in process R&D marginal costs are reduced (van Egeraat, 2010). Absence of an R&D system could lead to lower SME competitiveness and performance (Lee et al., 2011). Companies often need external sources such as collaboration with other companies, partnerships with universities, and R&D initiatives to enhance innovation (Kroll & Schiller, 2010). ...
Article
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COVID-19 is affecting the development of the global economy and threatening the survival of SMEs worldwide. In light of the current situation, this paper examines the factors affecting product and process innovation in SMEs during the COVID-19 crisis. We carried out a simple random sample of 185 SME entrepreneurs in Ardakan, Iran, using a multivariate regression analysis. The results showed that experience is one of the most important factors affecting innovation. Organization size and age were negatively associated with process innovation during the current crisis. Moreover, the findings reveal that training to facilitate cooperation as well as higher commitment to R&D can lead to greater innovation. An important conclusion is that, during the COVID-19 pandemic, government efforts to encourage SMEs to create new products helped them to withstand the crisis. The study suggests that, during the COVID-19 crisis, embracing innovation as a core organizational value helped SMEs to remain competitive.
... According to Lee et al. [183], research and development (R&D) projects are important factors in the field of information technology (IT). This is due to the fact that innovations are crucial to ensure the profitability of a company in the IT sector; selecting the best R&D projects is therefore an important part of the decision making processes within companies. ...
Thesis
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The objective of the research conducted was to explore how fuzzy ontologies could facilitate the exploitation and mobilisation of tacit knowledge and imprecise data in organisational and operational decision making processes. This thesis shows the benefits of utilizing all the available data one possesses, including imprecise data. By combining the concept of fuzzy ontology with the Semantic Web movement, it aspires to show the corporate world and industry the benefits of embracing fuzzy ontologies and imprecision.
... Organizations with research and development need to be very focused on time and investment, including the determination of the organizations to have the capacity to dedicate research and development as well as the creativity obtained from new research and development capacity [24,25]. The research and development capacity can be classified as follows: 1) Product Research and Development is the development and improvement of products and innovation in the organizations for increasing the research and development capacity occurring in the organizations [25,26,27,28], 2) Process Research and Development is the development and improvement of processes and innovation to increase the research and development capacity to occur in the organizations [26,28,29], 3) Research and Development Management is the creation and stipulation of an organization's goals to allow everyone to work altogether in order to increase the research and development capacity and allow it to occur in the organizations efficiently [26,30,31]. ...
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This study concerned clusters as well as research and development affecting the competitive advantage of the Thai automotive industry’s mould and die sector. The study of development, examination of the consistency of the structural equation model, and the direct influence of linkage and association of cluster, as well as research and development for competitive advantage of operational locations in the Thai automotive mould & die sector was carried out as well. Data was collected from 320 mould and die industry operators in Thailand with the goal of obtaining key information to align the business direction in response to market opportunities. An additional goal was to elevate the competitiveness of the Thai automotive mould and die industry toward positive growth and continual sustainability.
... Among these studies [36] who studied the impacts of using ICTs on productivity. [37] Investigated the effect of ICTs on the performance of small and medium organizations. They revealed that the increasing use of ICTs plays important roles in increasing workforce productivity. ...
Article
Present study aims to investigate the influence of ICTs dimensions: Information Technology, Management Information System, Office automation, Intranet and Internet on workforce productivity for a group of industrial organizations in Alexandria, Egypt. The study findings revealed that the specified dimensions of ICTs positively affect workforce productivity of industrial organizations in Alexandria, Egypt
... Among these studies is [36] where the impacts of using ICTs on productivity are studied. [37] investigates the impact of ICTs on the performance of small and medium enterprises. They reveal that the increasing use of ICTs plays important roles in increasing workforce productivity. ...
... Knowledgebased service industry, as publishing, advertising, audio-visual and web services, is a pertinent field research due to the importance given to intangibles, as R&D efforts, and talented human capital ( Benghozi and Salvador, 2016) and its composition of scientific human capital (Subramanian et al., 2013) helping to integrate new knowledge from other companies and universities, as in STPs, and then acting as drivers of firm competitiveness and survival. Also, and compared to manufacturing industries, little research exists considering service industries (Lee et al., 2011), and this is another motivation to choose this type of industry. ...
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Purpose This paper aims to propose that firms located in science and technology parks (STP) developing corporate social responsibility practices can attract talented workers as an effective knowledge management spillover mechanism. Design/methodology/approach A longitudinal study has been carried out from the Spanish Panel of Technological Innovation database (PITEC). The statistical method used for data treatment has been a logistic regression for panel data. Findings Empirical results show a positive moderating effect of corporate social responsibility practices on the relationship between the firm’s belonging to a STP and talent attraction. Originality/value This research follows previous claim for additional research on the phenomenon of talent management and clusters and STP. In that sense, and to the best of the authors’ knowledge, there is no previous empirical research about the complementarily effect of corporate social responsibility practices and the belonging to a STP in talent attraction.
... Cefis and Marsili (2006) found that innovation capability strongly influences a firm's performance, growth and survival. Finally, scholars such as Lau et al. (2010), Sok andO'Cass (2011), Tseng et al. (2012) and Xie et al. (2013) have analyzed innovation capability from the perspective of technology, finding that it has a positive impact on innovation performance, which in turn is an antecedent to firm performance (Atalay et al. , 2013;Chong et al., 2011;Lee et al., 2011). ...
Article
Purpose Based on the theory of dynamic capabilities, the purpose of this study is to examine how generation influences the effect of innovation capability on family business performance. To achieve this purpose, a moderation model is tested using the generational level as the moderating variable. Design/methodology/approach This study used a sample of 106 family businesses CEOs who were surveyed by mail using the Limesurvey 2.5 platform. The results obtained were analyzed using the second-generation partial least squares (PLS) structural equation model. The MICOM (Measurement Invariance of Composite Models) approach was used to analyze the moderating effect. Findings This research sheds lights on the innovation capacity to influence the family businesses performance, and on the generational level moderating this effect. As a result, the influence of the innovation capacity in second generation family businesses performance is higher than in the first generation. Research limitations/implications This study reveals the influence that the generational level has on the effect of innovation capacity on the family business performance. A greater dispersion of ownership, more participatory decision-making, and greater CEOs commitment to leadership in second- and later-generation family businesses, are the main key drivers of this result. Originality/value In comparison to previous studies, this research provides insights into the moderating effect of the generational level on the influence of innovation capacity on the family businesses performance through the MICOM approach (Measurement Invariance of Composite Models).
... However, scholars generally agree with the definition from OECD (1997,2008) 'R&D comprises of creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications'. There are three activities included in the definition of R&D: basic research, applied research and experimental development (Lee et al., 2011). Competitiveness in the business environment is more increasing, which makes firms invest more in R&D to promote technological innovation and their R&D capacity. ...
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The impact of research and development (R&D) investment on firm performance is interesting, but it is not easy to conduct this topic in emerging markets due to the data unavailability. We investigate this topic in the context of Vietnam, a fast-growing developing country with impressive progress in economic and social development by employing a unique panel data set of 343 listed companies during the period 2010–2018. We estimate the panel data with two different techniques, including the fixed effect model and the two-stage least squares (2SLS) model. We find that investment in R&D has positive impacts on revenues, profits, return on assets (ROA) and return on equity (ROE). In addition, regression results suggest that firms with high R&D outperform those with low R&D in terms of profit, revenue and ROA. To the best of our knowledge, this is the first paper examining the impacts of R&D on firm performance in Vietnam. We propose that Vietnamese firms should invest more on R&D activities, such as the production of fundamental research and applied research to have better performance and enhance their competitiveness in the future.
... Lee at al., 2020). the past 12 months have you introduced... a new or significantly improved product or service to the market?Data shown on chart 4 with an average of about 30% of enterprises that have introduced a new product or service can be compared with the data of chart 5 below with an average of about 20-25 % of enterprises that have introduced a new production methods. ...
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SME-s role in the economic development and economic structure is changing drastically, as it is gaining new dimensions the role they have as social agents. This becomes particularly present in the paradigm shift of the EU funding schema and priorities, for member and candidate states, indicating that from catalysts of development they are now considered as important and active agents of Innovation by their R&D potential. The article provides a comprehensive literature review on different aspects of R&D processes in SMEs under the support of the funding programs of European Union collected from the reputed publications. The purpose is to provide an outline on the structure and dynamics of R&D in SMEs to highlight its role in the performance of these businesses in particular and in national and regional economies at the macro level. This paper aims to contribute to current discussions within the field of innovation by further exploring how EU R&D funding policies work in practice.
Conference Paper
Aggregation operators play a fundamental role in decision making, especially when there are numerous (conflicting) criteria present. In case of uncertain data, an important task is to develop appropriate solutions for the aggregation process. In many applications the knowledge and data provided by the experts tend to be vague, as experts express their knowledge in non-structured and ambiguous ways, for instance by using linguistic terms. We combine interval-valued fuzzy sets and OWA operators to create new aggregation methods and we prove that the new operators satisfy some important properties. In this article we present novel approaches for aggregating vague and imprecise information.
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R&D resources and capability is expected to affect company performance, especially those of high technology. Highlights of the work shows companies with high R&D expenditure and manpower resources typically influence company performance. Therefore, in order to improve the company's performance it is important to take into account the elements of R&D resources and capability. Given the fact that these elements are important to the technology-based companies, this study was conducted to examine whether R&D resources and capability influence business performance. A set of questionnaire was distributed among 138 technology-based companies and statistical analyses were employed to analyze gathered data from the survey. Findings indicate that the elements do influence the business performance of the companies.
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The Resource-Based View (RBV) posits that a firm can leverage the effect of existing resources on firm performance via resources configuration and integration. In the process of technological innovation, internal marketing resource and external government R&D support are resources which may, respectively, cause an interaction effect with the internal technological innovation. Drawing upon a sample of 666 Chinese listed manufacturing companies, the study formulates hypotheses concerning the main effect of technological innovation and the interaction effects between technological innovation, marketing and government R&D support on firm performance. Hierarchical regression is conducted. The results prove the positive interaction effect between technological innovation and marketing on a firm's performance. The lagging effect in the impact on firm performance of technological innovation and government R&D support is confirmed. However, the main effect of technological innovation is not significant. The findings especially provide more evidence about the role of government R&D support.
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This research develops principles for an evaluation criterion of the performance of a service firm. The aim of this article is to provide an analysis on the relationship between information technology (IT) adoption and its usage and firm performance (banking and software firm) in India. Firm performance was measured with the help of three important variables: efficiency, effectiveness and profitability. Each one of the above has been described with a set of pretested questionnaires. Banks in India in particular are geared for comprehensive banking solutions with extensive branch networks. The result from statistical analysis was validated with that achieved from artificial neural network (ANN) modelling.
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This study aims to examine the impact of ownership structure (i.e. family ownership, government ownership, and foreign ownership) on firm performance, viz. Tobin’s Q and return on assets. The impact of R&D on the relationship between ownership structure and firm performance is also assessed using a sample of 201 Malaysian public listed companies for the period of 2002-2011. Findings show that family ownership and foreign ownership positively relate to firm performance, but not government ownership. More importantly, R&D strengthens the relationship between family ownership and foreign ownership with firm performance respectively. While prior studies have shown that ownership structure is related to firm performance, this paper contributes to a new understanding of the role of R&D in moderating the relationship between ownership structure and firm performance. © 2016, Faculty of Economics and Administration. All rights reserved.
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This study constructs a framework describing the impact of the design and use of a performance management system (PMS) on researcher motivation. The analysis is based on an in-depth case study of a large European pharmaceutical company. The results reveal that in order to account for antecedents to researcher motivation, a PMS should distinguish between its design and use, as well as account for idiosyncrasies of research work. The study contributes to literature by a) emphasizing the need to consider both in PMS studies and practice and b) identifying PMS-specific antecedents to researcher motivation.
Conference Paper
Thanks to their exceptional capabilities to store and to communicate digital information, Information Systems (IS) and Information and Communication Technologies (ICT) play a primordial role in both the operation and management of organizations (enterprise, administration, etc.) and constitute then their main uses of New Technologies (NT). The IS expresses, according to the systemic approach, the organization ability to store and to manage (manipulation, security, etc.) the digital data necessary for a total or partial management of its activities whereas the ICT represent communication media used to exchange the organization digital data and information. However, the uses of the NT within organization still face some ambiguities which generate many questions mainly related to the 'NT-Organization digital information' relations and to the digital information specificities (nature, location, etc.). Moreover, other precision questions on IS an ICT specificities (borders, impacts on profitability, relations with digital communication, etc.) have not yet clear answers. The present paper proposes a simplified theoretical model to illustrate the possible contributions of the IS and ICT to the organization digital communication and to facilitate understanding some fundamental concepts of this large field.
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This study explores the potential strategic determinants of firm performance, with an emphasis on R&D investment and operational efficiency in leading U.S. manufacturing firms. In particular, it investigates R&D as a driver of technological innovation, and operational efficiency and as an indicator of the best-practice operations, for their impact relative to Tobin's Q and Market value. The study jointly uses ordinary least square multiple regression (OLSMR) and backpropagation neural network (BPNN), not only to measure the statistical significance of factors, but also to explore new insights into their relative importance, and to determine the differential impact of each factor following the varying performance levels. A major finding is that proactive R&D investments and operational excellence are the most impactful factors on both metrics of performance as compared to other conventional factors used in this study. Another encouraging finding is that both R&D intensity and operational efficiency are even more influential in the above-average performers and yield higher returns in market valuation. Through a combined OLSMR-BPNN approach, this study presents insightful findings on this intriguing subject and highlights prospective research opportunities.
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Notes that measurement of R&D performance has always posed great problems due to the nature of R&D activity and the difficulties in identifying a tangible output. Also that performance measurement systems have often been built on input variables or on qualitative evaluation of the output. Attempts to identify quantitative measures of R&D performance and to single out those related to activities under complete and partial control of R&D managers. Takes as a starting-point the concept of economic value creation as a firm’s normative objective and the analysis of the contribution of R&D to it. Builds on this a performance measurement system that leads to identify proxy measures of both R&D effectiveness and efficiency.
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ERIS, an energy-systems optimization model that endogenizes learning curves, is modified in order to incorporate the effects of R&D investments, an important contributing factor to the technological progress of a given technology. For such purpose a modified version of the standard learning curve formulation is applied, where the investment costs of the technologies depend both on cumulative capacity and the so-called knowledge stock. The knowledge stock is a function of R&D expenditures that takes into account depreciation and lags in the knowledge accumulated through R&D. An endogenous specification of the R&D expenditures per technology allows the model to perform an optimal allocation of R&D funds among competing technologies. The formulation is described, illustrative results presented, some insights are derived, and further research needs are identified.
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Recent studies have shown evidence of a positive relationship between market orientation and performance. However, some scholars have suggested that competitive environment could moderate this relationship. The authors investigate how competitive environment affects the strength of the market orientation-performance relationship and whether it affects the focus of the external emphasis within a market orientation-that is, a greater emphasis on customer analysis relative to competitor analysis, or vice versa, within a given magnitude of market orientation. Their results provide very limited support for a moderator role for competitive environment on the market orientation-performance relationship. The benefits of a market orientation are long term though environmental conditions are often transient, and thus being market oriented is cost-effective in spite of any possible short-term moderating effects of the environment.
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In recent years, a market-oriented corporate culture increasingly has been considered a key element of superior corporate performance. Although organizational innovativeness is believed to be a potential mediator of this market orientation - corporate performance relationship, much of the evidence to date remains anecdotal or speculative. In this context, a systematic framework is presented to test the postulated market orientation-innovation-performance chain. To this end, the direct causality assumption of market orientation on organizational performance is examined with Narver and Slater's (1990) market orientation framework. Moreover, a componentwise approach is taken, and an examination is conducted of how the 3 core components of market orientation affect the 2 core components organizational innovativeness en route to affecting corporate performance. Using banking industry data, innovation's mediating role in the market orientation-corporate performance relationship is empirically tested and substantiated.
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Manufacturing Process R&D activities are one of the target areas of Irish industrial development agencies in their quest towards embedding pharmaceutical companies in Ireland. This paper analyses the changing role of Ireland in the global process R&D networks of the pharmaceutical companies. The paper is based on data collected in an email survey of all pharmaceutical establishments in Ireland and face-to-face interviews with 13 companies. The article outlines the various stages of the process R&D cycle and assesses the involvement of the Irish establishments at each stage. Far from a uniform undifferentiated activity, process R&D comprises a range of activities. The results show that although Irish plants are increasing their involvement in process R&D, this involvement tends to be concentrated in the last stages of the cycle.
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To enhance traditional financial reporting, academics and policymakers have suggested that financial statement users be provided with nonfinancial performance information that may enhance users? ability to evaluate and predict financial performance. This study tests this proposition by examining whether timely nonfinancial performance information is a useful predictor of financial performance in the airline industry. From analysts? written pronouncements and financial press articles we identify a number of fundamental metrics, including customer satisfaction, purportedly used by analysts and investors to assess airline performance. We empirically examine these metrics and find that on-time performance, mishandled baggage, ticket oversales, and in-flight service are significantly associated with our proxy for customer satisfaction. Using an instrumental variable for customer satisfaction, we find that customer satisfaction, load factor, market share, and available ton miles are contemporaneously associated with operating income and revenues and that customer satisfaction and available ton miles are contemporaneously associated with expenses. Finally, using one and two months of nonfinancial data, we find that nonfinancial performance information appears to be useful in predicting quarterly revenues, expenses, and operating income.
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The purpose of Financial Accounting is to provide users of financial statements with information that is useful for efficient decision making. According to the FASB [1978, par. 34], financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. Consequently, any event that is likely to affect a firm's current financial position or its future performance should be reported in its annual accounts. In order to provide the users of financial statements with relevant information for investment and credit decision making, standard setting bodies should develop guidelines for the identification of intangible elements, a set of criteria for their valuation and adequate standards for financial reporting. This paper intends to provide a starting point for that endeavor by reviewing the literature published to date in three areas: (i) the economic nature, definition and classification of intangibles, (ii) the relevance of intangibles for investment and lending decisions, and (iii) the ways in which the current accounting model may be modified in order to provide useful information on the determinants of the firms' financial position in their financial statements.
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We examine the value-relevance to investors of financial (accounting) and nonfinancial information of independent cellular companies and find that, on a stand-alone basis, financial information (earnings, book values, and cash flows) are largely irrelevant for security valuation. Nonfinancial indicators, such as POPS (a growth proxy) and Market Penetration (an operating performance measure), are highly value-relevant. However, combined with nonfinancial information, earnings do contribute to the explanation of prices. The complementarity between financial and nonfinancial data is highlighted in this study.
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The diversity of the service sector makes it difficult to come up with managerially useful generalizations concerning marketing practice in service organizations. This article argues for a focus on specific categories of services and proposes five schemes for classifying services in ways that transcend narrow industry boundaries. In each instance insights are offered into how the nature of the service might affect the marketing task.
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R&D programs are critical for many firms to achieve and sustain competitive advantage. Yet, measuring R&D performance over time can be quite complex due to inherent uncertainty. The paper responds to calls in the R&D literature to explore integrated performance measurement systems that capture financial and nonfinancial performance. We integrate the Stage-Gate approach to R&D management with the Balanced Scorecard to present a framework to show how firms can link resource commitments to these activities and the firm's strategic objectives. In this paper, we provide specific examples of how firms can apply this integrated performance measurement system to the R&D function.
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Many R&D performance measurement techniques have been developed in response to the unique needs of various organizations. An extensive search of the literature from 1956 to 1995 identified over 90 articles, 12 books and two research reports describing various techniques. Integrated metrics that combine several types of quantitative and qualitative measures were found to be the most effective, but also the most complex and costly to develop and use. The choice of an appropriate R&D measurement metric depends on the user's needs for comprehensiveness of measurement, the type of R&D being measured, the available data, and the amount of effort the user can afford to allocate to it. Guidelines are provided for selecting an appropriate measurement method within these parameters.
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We present the results of an empirical study of research and development in the semiconductor industry. The study aimed to understand the drivers of innovation performance in an environment characterized by close links to science and a combination of technical novelty and manufacturing complexity. The data reveal substantial differences in research and development (R&D) performance, and R&D performance improvement, between firms. Analysis of our field observations suggests that these differences are associated with the use of experimentation and experience in guiding technology choices, matching options provided by scientific developments with the complex requirements of evolving production environments. We describe the technology choice process in some detail, and examine its nature in both U.S. and Japanese industrial settings.
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"Quadrads" (double dyads) of interviews, each conducted with a pair of marketing executives at a Japanese vendor firm and a pair of purchasing executives at a Japanese customer firm, provided data on corporate culture, customer orientation, innovativeness, and market performance. Business performance (relative profitability, relative size, relative growth rate, and relative share of market) was correlated positively with the customer's evaluation of the supplier's customer orientation, but the supplier's own assessment of customer orientation did not correspond well to that of the customer. Japanese companies with corporate cultures stressing competitiveness (markets) and entrepreneurship (adhocracies) outperformed those dominated by internal cohesiveness (clans) or by rules (hierarchies). Successful market innovation also improved performance.
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Recent studies report an increasing use of nonfinancial measures such as product quality, customer satisfaction, and market share in performance measurement and compensation systems. A growing literature suggests that because current nonfinancial measures are better predictors of long‐term financial performance than current financial measures, they help refocus managers on the long‐term aspects of their actions. However, little empirical evidence is available on the relation between nonfinancial measures and financial performance, and even less is known about performance impacts of incorporating nonfinancial measures in incentive contracts. Using time‐series data for 72 months from 18 hotels managed by a hospitality firm, this study provides empirical evidence on the behavior of nonfinancial measures and their impact on firm performance. The results indicate that nonfinancial measures of customer satisfaction are significantly associated with future financial performance and contain additional information...
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There is wide acceptance of the precept that market orientation is associated with superior firm performance. However, empirical support for the proposition in prior literature is weak. This study examines the relationship between market orientation and performance with data from 201 international hotels and finds that market orientation is positively associated with both judgmental measures of performance – service quality, customer satisfaction, and employee satisfaction, and objective measures of performance – occupancy rate, gross operating profit, and market share. Specifically, the study finds that the immediate impact of market orientation is to spur innovation, which, in turn, enhances judgmental performance, which, in turn, enhances objective performance.
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Top management routinely accuses the investment community of being too “short-term, bottom-line-oriented” in its assessments of share value. The difficulty of making strategic investments in such an environment is widely bemoaned. A new study by the Ernst & Young Center for Business Innovation, however, yields a surprising finding: major investors' decisions are in fact significantly influenced by non-financial performance information. It turns out that over a third of the typical investor's allocation decision is attributable not to the Financials but to other information on performance areas perceived to be leading indicators of future profitability. These include perceptions of a company's strategic vision and the company's ability to execute against it, the credibility of management, the prospects of innovations in the pipeline, the ability to attract talented people, and so on.
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Market value of biotech firms is important to investors and venture capitalists who keep this industry alive and dynamic. It is a particularly valuable index of investors' estimate of current and future success of the firms in this industry because other conventional indices of performance and success are inappropriate. Our hypothesis is that market value in this industry can be explained in terms of funding strategies and R&D expenditures. Using all sixty publicly-held biotech firms, that are included in a national directory for such firms engaged in the research of biotech products for human use, we estimate multiple regression models that explain most of the variance in market value using funding strategies and R&D expenditures (R-squared = 0.93). Our models also demonstrated that small biotech firms (< $10 million in total revenue) are substantially different from larger ones.
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This research addresses three questions: (1) Why are some organizations more market-oriented than others? (2) What effect does a market orientation have on employees and business performance? (3) Does the linkage between a market orientation and business performance depend on the environmental context? The findings from two national samples suggest that a market orientation is related to top management emphasis on the orientation, risk aversion of top managers, interdepartmental conflict and connectedness, centralization, and reward system orientation. Furthermore, the findings suggest that a market orientation is related to overall (judgmental) business performance (but not market share), employees' organizational commitment, and esprit de corps. Finally, the linkage between a market orientation and performance appears to be robust across environmental contexts that are characterized by varying degrees of market turbulence, competitive intensity, and technological turbulence.
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Are there economic benefits to improving customer satisfaction? Many firms that are frustrated in their efforts to improve quality and customer satisfaction are beginning to question the link between customer satisfaction and economic returns. The authors investigate the nature and strength of this link. They discuss how expectations, quality, and price should affect customer satisfaction and why customer satisfaction, in turn, should affect profitability; this results in a set of hypotheses that are tested using a national customer satisfaction index and traditional accounting measures of economic returns, such as return on investment. The findings support a positive impact of quality on customer satisfaction, and, in tum, profitability. The authors demonstrate the economic benefits of increasing customer satisfaction using both an empirical forecast and a new analytical model. In addition, they discuss why increasing market share actually might lead to lower customer satisfaction and provide preliminary empirical support for this hypothesis. Finally, two new findings emerge: First, the market's expectations of the quality of a firm's output positively affects customers' overall satisfaction with the firm; and second, these expectations are largely rational, albeit with a small adaptive component.
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The limitations of financial metrics in assessing performance in the new economy generate demand for non-financial measures appropriate for evaluation of shareholder value creation. The suitability of non-financial measures for external reporting continues to be explored by professional accountants, capital market regulators, and academics. Investigates research developments and their applicability to the biotechnology industry. Examines the externally published information of public Canadian biotechnology companies with a view to the development of measures appropriate for evaluating corporate performance. Represents the findings from the first of a two-phase research project designed to explore the techniques used to gauge the effectiveness of communication regarding performance in the Canadian biotechnology industry.
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Notes that measurement of R&D performance has always posed great problems due to the nature of R&D activity and the difficulties in identifying a tangible output. Also that performance measurement systems have often been built on input variables or on qualitative evaluation of the output. Attempts to identify quantitative measures of R&D performance and to single out those related to activities under complete and partial control of R&D managers. Takes as a starting-point the concept of economic value creation as a firm’s normative objective and the analysis of the contribution of R&D to it. Builds on this a performance measurement system that leads to identify proxy measures of both R&D effectiveness and efficiency.
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A review of the evidence for and against the proposition that self-serving biases affect attributions of causality indicates that there is little empirical support for the proposition in its most general form. Some support was found for the contention that individuals engage in self-enhancing attributions under conditions of success, but only minimal evidence suggested that individuals engage in self-protective attributions under conditions of failure. Moreover, it was proposed that the self-enhancing effect may not be due to motivational distortion, but rather to the tendency of people to (a) expect their behavior to produce success, (b) discern a closer covariation between behavior and outcomes in the case of increasing success than in the case of constant failure, and (c) misconstrue the meaning of contingency. (60 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Article
We present the results of an empirical study of research and development in the semiconductor industry. The study aimed to understand the drivers of innovation performance in an environment characterized by close links to science and a combination of technical novelty and manufacturing complexity. The data reveal substantial differences in research and development (R&D) performance, and R&D performance improvement, between firms. Analysis of our field observations suggests that these differences are associated with the use of experimentation and experience in guiding technology choices, matching options provided by scientific developments with the complex requirements of evolving production environments. We describe the technology choice process in some detail, and examine its nature in both U.S. and Japanese industrial settings.
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Examining the innovation process in the servicesector and positing a model of the process are the goals of thisreport.Specifically, this analysis looks to identify areas of improvementfor the RD-1 survey instrument created by the National Science Foundation(NSF). Currently, institutional definitions of research and development (R&D)are not entirely applicable for the service sector because the historicaldefinitions and examples have evolved primarily to characterize manufacturingsector R&D activities.Case studies were conducted for fourservice-sector industries: telecommunications, software, financial services,and research development and testing. The purpose of the case studies was to determine the nature of theinnovation process therein and from that information glean an understanding ofwhether there are areas of significant over- or underreporting of R&Dactivities and to assess issues of misclassification. The model created is composed of the following components: strategicplanning, entrepreneurial activity, technology development, science base,infrastructure technologies, and risk reduction.With respect to theimprovements to the NSF's RD-1 instrument, recommendations are put forth formodifications to existing questions and for new questions that could beadded. (SRD)
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Recent studies report an increasing use of nonfinancial measures such as product quality, customer satisfaction and market share in performance measurement an compensation systems. A growing literature suggests that nonfinancial performance measures are better predictors of long-term performance and, therefore, are used to help refocus managers on the long-term aspects of their actions. However, little empirical evidence is available on the relation between nonfinancial and financial performance measures, and even less is known about performance impacts of incorporating nonfinancial measures in incentive contracts. Using time-series data for 72 months from 18 hotels managed by a hospitality firm, this study provides empirical evidence on the behavior of nonfinancial measures and their impact on firm performance. The results indicate that nonfinancial measures are significantly associated with future financial performance. The results also suggest that nonfinancial measures contain additional information not reflected in the past financial measures. Furthermore, both nonfinancial and financial performance improve following the implementation of an incentive plan which includes nonfinancial measures.
Article
The rising costs of Research and Development (R&D) and the increasing dependence of companies on technology for competitive advantage are causing both external investors and managers to seek better measures of R&D productivity and effectiveness. One major difficulty in evaluating R&D performance is that it is simply one of several activities in successful product development. However, notwithstanding the practical difficulties and limitations of R&D evaluation, the use of financial appraisal methods can assist communication, build consensus and provide a context which decision-makers can use to evaluate the more subjective dimensions of projects. The case study reported here exemplifies the relevance of features generally associated with good performance measurement; it also highlights the role of management accounting, especially target costing, when cost is a critical design parameter. The longitudinal view of the specific product development project examined in this case highlights a fusion of management accounting and design techniques as well as the role of accounting as an integrating vernacular that links all project team participants.
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In this paper we describe a framework for analysing the creation and justification of Research & Development. The 4S framework is developed for analysing the scope, scale, skills and social network aspects of Research & Development value. The framework is based on social system theory, a process contingency model, and recent Research & Development metrics. ?We present a first empirical assessment based on a workshop using the 4S framework for leveraging Research & Development. Results that assist in the assessment of value creation utilising R & D within networks are very relevant in high tech industries. The multi¿dimensional process approach of this framework seems promising for understanding and managing R&D value creation, but needs further operationalisation. Case studies are described and a Dutch network on leveraging R&D has been initiated.
Article
The objective of this paper is to foster research on recent innovations in performance measurement by providing a rich description of emerging measurement practices and suggesting directions for future research. Using survey data collected by consulting firms and government organizations, we examine three measurement trends: (1) economic value measures, (2) non-financial performance measures and the balanced scorecard, and (3) performance measurement initiatives in government agencies. Existing research on these topics is reviewed and research opportunities are highlighted.
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We examine the future sales implications of product quality measures for 11 plants of a manufacturing group in a Fortune 500 firm. Our results indicate that both financial quality measures, such as external failure costs incurred due to product failures at customer sites, and non-financial quality measures, such as defect rates and on-time deliveries, are leading indicators of future sales. While changes in defects and on-time deliveries affect sales in the subsequent quarter, changes in external failure costs are negatively associated with sales two and three quarters hence. Corroborating popular claims about the importance of external failure costs, we find that a $1 increase in external failure costs is associated with a cumulative sales decrease of $26, or approximately $10.40 in lost profits.
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The share of business research and development (R&D) expenditure stemming from the services sector of the economy has been growing rapidly in many (though not all) OECD countries, according to official statistics. The same data sources also indicate, however, that services contribute less to R&D than would be expected given their large shares of employment and output in national economies. In part, incomplete sampling of services in R&D surveys may lead to some underestimation of their R&D activity, but this is unlikely to account for their apparently poor performance. This paper draws on an analysis of existing statistical sources, and on interviews and workshops with service firms' managers. It finds difficulties associated with the ways in which R&D has been operationalised in survey questions. Examination of survey questionnaires suggests that the formulation of these questions, focusing on technological R&D and ruling out much social scientific R&D, disproportionately reduces the reporting of R&D by service firms. But beyond this, the R&D concept itself has some problematic features where it comes to documenting innovation in service firms. This was investigated through a programme of interviews and workshops with service firms, where a lack of familiarity with the R&D concept and R&D management practices was found to be commonplace. R&D performance and innovation activities vary across services of different sorts, even though most service subsectors appear to be low R&D investors. It is thus important to examine services' innovation patterns and processes, to establish what types of R&D-like activity are underway in these subsectors. While some modification in R&D measurement would be desirable to capture services' activities, effort to understand the non-R&D elements of services innovation is also important – for management and for policy (given that governments are seeking to create R&D incentives and targets for services and other sectors).
Article
R&D programs are critical for many firms to achieve and sustain competitive advantage. Yet, measuring R&D performance over time can be quite complex due to inherent uncertainty. The paper responds to calls in the R&D literature to explore integrated performance measurement systems that capture financial and nonfinancial performance. We integrate the Stage-Gate approach to R&D management with the Balanced Scorecard to present a framework to show how firms can link resource commitments to these activities and the firm's strategic objectives. In this paper, we provide specific examples of how firms can apply this integrated performance measurement system to the R&D function.
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This article examines the adequacy of the “rules of thumb” conventional cutoff criteria and several new alternatives for various fit indexes used to evaluate model fit in practice. Using a 2‐index presentation strategy, which includes using the maximum likelihood (ML)‐based standardized root mean squared residual (SRMR) and supplementing it with either Tucker‐Lewis Index (TLI), Bollen's (1989) Fit Index (BL89), Relative Noncentrality Index (RNI), Comparative Fit Index (CFI), Gamma Hat, McDonald's Centrality Index (Mc), or root mean squared error of approximation (RMSEA), various combinations of cutoff values from selected ranges of cutoff criteria for the ML‐based SRMR and a given supplemental fit index were used to calculate rejection rates for various types of true‐population and misspecified models; that is, models with misspecified factor covariance(s) and models with misspecified factor loading(s). The results suggest that, for the ML method, a cutoff value close to .95 for TLI, BL89, CFI, RNI, and Gamma Hat; a cutoff value close to .90 for Mc; a cutoff value close to .08 for SRMR; and a cutoff value close to .06 for RMSEA are needed before we can conclude that there is a relatively good fit between the hypothesized model and the observed data. Furthermore, the 2‐index presentation strategy is required to reject reasonable proportions of various types of true‐population and misspecified models. Finally, using the proposed cutoff criteria, the ML‐based TLI, Mc, and RMSEA tend to overreject true‐population models at small sample size and thus are less preferable when sample size is small.
Article
Currently, the need for R&D performance measurements that are both practically useful and theoretically sound seems to be generally acknowledged; indeed, the rising cost of R&D, greater emphasis on value management and a trend towards decentralization are escalating the need for ways of evaluating the contribution of R&D to corporate performance. However, although recent research and writing on the subject shows that the challenge of developing such sound measurements has been taken up by many academics and organizations, it is also clear that there is no generally applicable approach. In this review, we consider various approaches for measuring the performance in industrial R&D and identify their key characteristics. We also include a brief summary of the ‘history’ of performance measurement in R&D, which shows that although there are some new ways of looking at the issue there are many examples from the past that can contribute to our current thinking. The approaches found in the literature and practice are very varied in their application, some being more suitable for the project level, others for the R&D department, and some for the development process or for the organization as a whole. Furthermore, the uses of the approaches tend to be different. For example, some approaches are intended to justify the continuation of investment in R&D to upper management, whilst others are more suited to support learning and self-correction by empowered R&D teams. In this paper these uses, or ‘functions’, of performance measurement and a taxonomy of typical subjects of measurement in R&D environments are explored. Finally, we conclude the review with a discussion of some limitations of the growing literature on R&D performance measurement.
Article
In this article the results are presented of an empirical study focusing on the effectiveness of R&D performance measurement practices in the Netherlands. First, a theoretical examination of the subject ‘R&D performance measurement’ is given within the context of performance control. A distinction is made between feedback and feed forward control and between the R&D function and the R&D organisation. Subsequently, a description is given of the current practices of R&D performance measurement in terms of measurement purposes, metrics, measurement techniques, norms setting, etc. Furthermore, the influence of contingencies on measurement system design is explored. The data for this research were gathered by means of a survey and nine in-depth interviews. Generally, managers evaluate their measurement systems as being quite valuable, having a positive impact on performance. The findings described in this paper can be used as references for managers to benchmark their R&D measurement procedures: in this respect we distinguish highly and hardly effective measurement procedures. The most important characteristic that seems to distinguish the most effective systems from the less effective ones is customer focus.
Article
Based on a comprehensive literature review and the activities of numerous case study companies, it is argued in this paper that performance measurement in R&D is a fundamental aspect to quality in R&D and to overall business performance. However, it is apparent from the case companies that many companies still struggle with the issue of R&D performance measurement. Excuses for not measuring are easily found, but there are also empirical examples and literature available with suggestions how it can be done. In this article this literature is reviewed and placed within the context of general performance control and contingency theory. Furthermore, the main measurement system design parameters are discussed and some basic system requirements are described as well as several design principles that can be useful for those who accept the challenge of establishing a meaningful measurement system.
Article
The Organization for Economic Cooperation and Development (OECD) is an intergovernmental economic organization in which the 30 member countries discuss, develop, and analyze economic and social policy and share expertise and exchanges with more than 70 developing and emerging economies. The member countries include Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States. While all of the member countries are considered to be economically advanced and collectively produce three-fourths of the world's goods and services, membership is limited only by a country's commitment to a market economy and a pluralistic democracy. In January 2010, Chile signed protocols to complete its entry into the OECD as the 31st member. The OECD has also extended invitations to Estonia, Israel, Russia, and Slovenia to open discussions for membership and has offered enhanced engagement with a view to possible membership to Brazil, China, India, Indonesia, and South Africa. The member countries rely on the OECD Secretariat in Paris to collect data, monitor trends, analyze and forecast economic developments, research social changes and patterns in trade, environment, agriculture, society, innovation, corporate and public governance, taxation, sustainable development, and other areas to inform their discussions and to assist them in pursuing their efforts to develop common policies and practices. Karen Kornbluh was appointed by President Obama to serve as the U.S. Ambassador to the OECD. Key issues for Congress include OECD work on coordinating national approaches to curtailing bribery and the illicit use of tax havens. Congress appropriated about $117 million to the OECD in FY2008.
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textlessptextgreaterMarketing academicians and practitioners have been observing for more than three decades that business performance is affected by market orientation, yet to date there has been no valid measure of a market orientation and hence no systematic analysis of its effect on a business's performance. The authors report the development of a valid measure of market orientation and analyze its effect on a business's profitability. Using a sample of 140 business units consisting of commodity products businesses and noncommodity businesses, they find a substantial positive effect of a market orientation on the profitability of both types of businesses.textless/ptextgreater
Article
GAAP mandates the full expensing of R&D in financial statements, presumably because of concerns with the reliability, objectivity, and value-relevance of R&D capitalization. To address these concerns, we estimate the R&D capital of a large sample of public companies and find these estimates to be statistically reliable and economically meaningful. We then adjust the reported earnings and book values of sample firms for the R&D capitalization and find that such adjustments are value-relevant to investors. Finally, we document a significant intertemporal association between firms' R&D capital and subsequent stock returns, suggesting either a systematic mispricing of the shares of R&D-intensive companies, or a compensation for an extra-market risk factor associated with R&D.
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Over recent years there has been an increase in global competition, particularly within manufacturing. Many firms faced with increased competition from foreign firms have sought to enhance their competitiveness by employing total quality management (TQM). An important concern in the implementation of TQM is the extent to which TQM should be developed together with managerial performance evaluation systems employing measures of the manufacturing processes. It is argued in this paper that the potential for TQM to enhance the profitability of companies is enhanced when managers are evaluated by using direct measures of manufacturing.The results of a survey of 39 organizational units provided support for the proposition that enhanced performance will be associated with the interaction between well developed TQM programmes and a reliance on manufacturing performance measures. Specifically, higher performance was associated with the combination of TQM and a reliance on manufacturing performance measures compared to TQM without such measures.
Article
This research examines the relative value relevance to investors of non-financial performance variables, traditional accounting variables (earnings and changes in abnormal earnings) and other financial statement information in the airline industry. Consistent with prior research, earnings and changes in abnormal earnings are employed to represent traditional accounting information. The findings suggest that accounting earnings, changes in abnormal earnings and non-financial performance variables are significantly associated with stock returns. When non-financial performance metrics, earnings and changes in abnormal accounting earnings are included in the same model, we find that non-financial performance variables exhibit incremental value relevance over traditional accounting metrics. We do not find the opposite to be true. That is, although we find the traditional accounting variables to be significantly associated with stock returns, we do not find evidence of incremental explanatory power beyond that provided by the non-financial variables. In addition, financial statement details such as revenues, gross profit, assets, etc., are examined as metrics to construct financial statement proxies that reflect value relevance similar to non-financial performance metrics. Findings suggest that such proxies for non-financial metrics, in combination with earnings and changes in abnormal earnings explain approximately as much of the variation in returns as the non-financial metrics.
Article
Designing a performance measurement system (PMS) for R&D activities is a very critical but challenging task for supporting decision making and people motivation. Therefore, the subject is widely discussed in literature, but the use of a PMS for R&D is still uncommon among companies.The paper aims at making a step further in the field, elaborating a reference framework that describes the logical steps for the definition of a PMS for R&D. Moreover, the problem of designing an effective PMS is in-depth studied in a real context, a biotech company that operates in the field of pharmaceutical research.
Article
This note follows and extends Abernethy and Lillis (Accounting, Organizations and Society, 1995) by examining: (i) whether firms which maintain a customer-focused manufacturing strategy also maintain an emphasis on non-financial (operations-based) measures in their performance measurement systems; and (ii) whether such an emphasis is associated with enhanced performance for those firms. Data are obtained via questionnaire survey of a random sample of manufacturing firms in Sydney, Australia. Support is found for the hypothesized association between customer-focus strategy and the use of non-financial performance measures (and hence for Abernethy and Lillis) but not for the link to organizational performance.
Article
This paper applies a value-based management framework to critically review empirical research in managerial accounting. This framework enables us to place the exceptionally diverse set of managerial accounting studies from the past several decades into an integrated structure. Our synthesis highlights the many consistent results in prior research, identifies remaining gaps and inconsistencies, discusses common methodological and econometric problems, and suggests fruitful avenues for future managerial accounting research.