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Corresponding author Inga Stankevice
E-mail: lixis6@nottingham.ac.uk, inga.stankevice@ktu.edu
INSTITUTIONAL VS. SECTORAL DIMENSION
OF INNOVATION STRATEGIES OF FIRMS
Inga STANKEVICEa, Giedrius JUCEVICIUSb
aNottingham University Business School, University of Nottingham,
Jubilee Campus, NG8 1BB, Nottingham, United Kingdom
a, bDepartment of Strategic Management, Kaunas University of Technology,
Donelaičio g. 20, 44239 Kaunas, Lithuania
Received 08 April 2012; 22 June 2013
Abstract. In light of the controversy of the dispute about the role of national institutions in shaping
innovation strategies of rms, and in light of the lack of explicitness of the notion of innovation
strategy within the dispute, this paper aims at ascertaining if national institutional subjection of a
rm is fateful in shaping its innovation strategy. e sample companies represented two distinct sets
of institutions – Lithuanian vs. Swiss, and two distinct sectors – laser producers vs. contact centres.
Warm-house conditions were ensured to eliminate other potentially disruptive factors. Following
methods were used to analyse the data: exploratory case study, correlation analysis, test of dierence,
cluster analysis, and cross-tabulation. e survey highlighted the most important, with regard to
national and sectoral disparities, characteristics of innovation strategy.
Keywords: innovation strategy, institutional environment, sectoral environment, Lithuania, Switzer-
land, laser producer, contact centre.
Reference to this paper should be made as follows: Stankevice, I.; Jucevicius, G. 2013. Institutional
vs. sectoral dimension of innovation strategies of rms, Technological and Economic Development
of Economy 19(Supplement 1): S360–S382.
JEL Classication: L14, L21, L23, O14, O31, O32, P52.
Introduction
It might be true that, in countries which have experienced relatively recent large-scale changes,
despite initial eagerness to adopt new institutional frameworks and ways of management,
the potential for an adverse reaction is strong. For example, the former regime in Eastern
Europe served to reduce uncertainty; however, this experience, according to Schneider and
TECHNOLOGICAL AND ECONOMIC DEVELOPMENT OF ECONOMY
ISSN 20294913 print/ISSN 2029-4921 online
Copyright © 2013 Vilnius Gediminas Technical University (VGTU) Press
http://www.tandfonline.com/TTED
2013 Volume 19(Supplement 1): S360–S382
doi:10.3846/20294913.2013.879752
Barsoux (2003), “created a sense of learned helplessness, a sense of being unable to make an
impact, as well as a strong fear of making mistakes”. If so, national institutions in Eastern
Europe can easily become scapegoats on which low rates of innovativeness and poor ability
of facilitating competitive innovation strategies are blamed.
However, there are a number of indirect scientic arguments and evidence both for and
against the idea that national institutional environment (NIE) is a decisive factor determining
the character of innovation strategy of a rm originating from and operating largely in that
environment. For instance, the key assumption of the varieties of capitalism approach (Hall,
Soskice 2001) is the comparative institutional advantage (CIA). It implies that rms focus
on innovation strategies that are supported by the dominant national institutional frame-
work (Casper 2009). A clear example of that are Whitley’s (2000) ve dierent innovation
strategies which are most likely to appear in certain market economies. According to the
institutionalisation theory (Lewin, Volberda 2005), environments with dominating technical
and economic demands favour radical innovations, whereas environments with dominating
social demands foster incremental ones. e approach of national systems of innovation
(Lundvall 1992) conrms the idea of CIA, though it is more specialized in respect of indus-
trial sectors (Amable 2000). e notions of regional innovation systems (Doloureux 2002)
and other geographies of production, such as industrial districts, innovative milieus, new
industrial spaces and clusters (Malakauskaitė, Navickas 2011), are allied to those of varieties of
capitalism and national systems of innovation because they not only emphasize that the core
of production is still heavily concentrated in particular regions and that globalization does
not necessarily lead to de-territorialisation, but support the assumption that local capabilities
are, to some extent, always dependent on national opportunities (Fromhold-Eisebith 2007).
Other scholars support the paradigm of CIA by stressing its importance to factors which are
closely related to innovation strategies: entrepreneurship (Hall, Sobel 2008), competitiveness
and innovativeness (Koen 2005). e ideas are supplemented by omsen’s (2008) research
in transition and post-transition economies. In general, admittance of the idea of CIA leads
to a conclusion that innovation strategy is “path dependent, locally embedded and institu-
tionally shaped” (Köhler 2008).
In the other camp, the concept of CIA is seriously questioned. Lange (2009) states that
institutional heterogeneity (Allen 2004; Schneiberg 2007) and trans-nationalisation (Fuller
2009) are two pivotal challenges to the notion of varieties of capitalism. Market economies
are characterized by institutional heterogeneity and relative openness, which means that
rms can make their innovation strategies competitive by relying on inputs provided by
alternative institutions, be they domestic or part of foreign business systems (Lange 2009).
Lane (2008), in view of global production and innovation networks, argues that, under the
impact of global markets, the notions of national institutional reproduction and CIA need
to be re-conceptualized to reect the complexity of global eects. Similarly, Amable (2000)
suggests that the approach of social systems of innovation is preferable due to its indierence
to the question of a territory over which the gamut of inter-organizational and inter-insti-
tutional networks operates. Furthermore, Herrmann (2008) illustrates that rms do not
inevitably get mileage out of CIAs: they can also bypass institutional constraints. It might
even be purposive for rms to circumvent institutional restraints because governments, under
certain circumstances, can block innovation and suppress growth (Chaudhry, Garner 2007).
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S361
Hence, one might conclude that the assumption about the subjection of rms’ innovation
strategies to national institutions, which they are supposed to be embedded within, can be
regarded to as a dangerously widespread fallacy.
However, the problem addressed in this paper arises from not solely the debate over
the signicance of national institutions to rms and their innovation strategies. Today, it
is increasingly dicult to clearly distinguish the concept of innovation strategy because
the existing variety of attitudes towards both innovation and strategy has unfortunately led
to a lack of scrutiny in using the term. Accordingly, the debate introduced above over-in-
terrelates the impact of institutional environment on innovation strategies with its impact
on, for example, general management strategy (Herrmann 2008), or competitiveness and
success (Casper 2009), or innovativeness (Fromhold-Eisebith 2007), or processes by which
organizations gather and interpret information about strategic issues, etc. thus making the
comprehension of the interaction between national institutional context and corresponding
rms’ innovation strategies even more vague and fragile.
In light of the controversy of the debate about the role of national institutional environment
in shaping rms’ innovation strategies, and in light of the lack of explicitness of the notion of
innovation strategy within the debate, this paper aims at ascertaining if national institutional
environment is the most decisive factor determining the character of innovation strategy of a
rm originating in that particular national institutional environment. In addition to literat-
ure review regarding the delineation of the concepts of national institutional environment
and innovation strategy, the research methodology rests on the application of the rened
integrated theoretical framework of innovation strategy to an exploratory research of four
companies. e companies represent an intersection of two distinct sectors and two distinct
sets of national institutions. Special warm-house conditions were ensured in order to highlight
results of this intersection. Both qualitative and quantitative methods were used to analyse
the data. Finally, conclusions are drawn.
1. Brief delineation of main concepts
1.1. National institutional environment
1.1.1. Conceptual delineation
At least two kinds of institutions can be distinguished (Rolfstam 2009): rst, formal insti-
tutions at the economic, legal and political level; second, informal institutions, ingrained in
the social and cultural area. However, there is no explicit agreement on which institutions
are more important than others for factors related to innovation strategy (e.g. prosperity,
growth, entrepreneurship), or which institutions do or do not belong to national systems of
innovation (Hollingsworth 2000). ough some scholars (Acemoglu, Robinson 2010) insist
that the main determinants of dierences in prosperity, long-run technological progress, and
innovativeness across countries are dierences in economic and political institutions, others
(Redding 2005) argue that social and cultural dimensions within the institutionalist literature
have long been neglected or even ignored, and advocate a multidisciplinary approach towards
institutional environment surrounding innovations.
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
S362
Hence, the arguments and ndings mentioned above make this paper conned to a broad
understanding of institutional environment, which encompasses a number of dimensions
of national institutional environment, and regardless of their level of (in-) formality. Insti-
tutional Proles Database allows for a structured and professional comparison of national
institutional contexts. e Database 2009 (Crombrugghe et al. 2009) covers 123 countries,
including Lithuania and Switzerland, and contains 368 indicators for a wide range of insti-
tutional characteristics. ese are broken down into nine institutional functions: 1)Political
institutions; 2) Safety, Law and order, Control of violence; 3) Functioning of public adminis-
trations; 4)Free operation of markets; 5) Coordination of actors, Strategic vision, Innovation;
6) Security of transactions and contracts; 7) Market regulations, Social dialogue; 8) Openness
to the outside world; and 9) Social cohesion and mobility. e nine institutional functions are
then crossed with four sectors: A) Public institutions and civil society; B) Market for goods
and services; C) Capital market; D) Labour market and social relations. us, the Institutional
Proles Database 2009 relies on a broad denition of institutions, both formal and informal,
and a non-normative approach (Crombrugghe et al. 2009). is is also the case of this paper.
1.1.2. Innovation strategy from dierent angles of institutionalist literature
e approach of varieties of capitalism (VoC) has largely been criticized for its unreliability in
predicting rms’ innovativeness (Lane 2008; Lange 2009), despite the fact that the opponent
statements have not been silenced (Casper 2009). ough Hall and Soskice (2001) dene
institutions as a set of formal and informal rules, which are predominantly followed by actors
for normative, cognitive or material reasons, they are not consistent enough, for further they
rely on regulative institutions and rules, which actors follow for material reasons only (Lange
2009). For the authors, the institutions are comprised of nancial, industrial relations, edu-
cation and training, and intercompany systems, which form either type of economy – liberal
market economy or coordinated market economy. e former enables short-term relations
and market-based coordination, so it is conducive to radical innovations, whereas the latter
promotes long-term relations and coordination, based on non-market mechanisms, and
therefore, coordinated market economy fosters incremental innovations.
Similar distinction is identied by the proponents of institutionalization theory: environ-
ments with dominating technical and economic demands favour eectiveness and novelty,
and are conducive to radical innovations; contrarily, environments with dominating social
demands favour organizations for an endorsement of values, rules, trust and, consequently,
incremental innovations (Lewin, Volberda 2005). However, the dichotomy does not explain
innovativeness of a great variety of intermediate economies. Moreover, there is evidence
that Germany, which was considered a typical coordinated economy, is characterized by
heterogeneous institutions, which tolerate strategic leeway of rms (Lange 2009); and in the
United States, which stood for a model liberal market economy, many radically innovative
sectors have become such due to precisely public investment (Lane 2008).
Another related approach is that of national systems of innovations (NSI) (Lundvall 1992).
Here, a spectrum of understandings of institutions is distinguished: from the narrow one,
which includes science, research, technology, and sometimes education, to the broad one,
which encompasses all institutions that aect production and innovation (Amable 2000).
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S363
ere are several weaknesses of the approach: rst, dierently from the varieties of capital-
ism, it does not imply institutional complementarity; second, most of the studies concern
one country at a time; third, when international comparisons are made, they are limited to
a small number of sectors. Within the frames of namely NSI, the most of the contributions
to the debate, revealed in the introductory part of the paper, emerged. us, it is dicult to
identify any rigid patterns of institutional or sectoral embeddedness of innovation strategies
of rms within this approach, as the fragmented research lead to fragmented results. What
unites the proponents of the approach is the recognition of the importance of science, re-
search, technology and education to innovativeness, and, to a lesser extent, to a choice of
innovation strategy.
While the approach of national systems of innovation is too fragmented, that of social
systems of production is criticized for its overall comprehension of institutions, which disarms
empirical research. Whitley (2000) attempted to integrate the three approaches by introdu-
cing ve types of innovation strategies. Dependent innovation strategies organize relatively
well-known product qualities within widely understood frameworks, they rarely involve the
development of radically new elements, and goods and services from current and closely
related components are combined and targeted to specic user groups. e strategies are
typical to rms that focus on exibility and manage market uncertainty by rapid adjustments
to change. ese rms do not need to develop long-term organizational capabilities, therefore,
dependent innovation strategies tend to appear in countries with low state coordination,
weak intermediary associations and unions, and limited trust in formal institutions. On
the contrary, complex, risky innovation strategies involve developing new product qualities
that have a wide range of uses and may lead to market restructuring as previous products
become obsolete. Firms developing these strategies seek to dominate markets by introducing
new products, and a wide variety of sources are usually necessary. Hence, the rms are oen
encouraged to cooperate with local associations, unions, colleges, etc. and risky innovation
strategies are most likely to survive in environments with considerable state coordination,
pretty strong labour unions, and credit-based nancial systems.
Similarly, Whitley (2000) describes the relationship between national institutional
environment and the remaining three innovation strategies. However, his arguments are
contradictory to some extent. On the one hand, he states that dierent rms pursue the dis-
tinguished innovation strategies to varying degrees in dierent institutional contexts, and this
leads to variation in innovative performance. On the other hand, the innovation strategies are
associated with concrete business systems, which develop in particular institutional contexts,
meaning that a certain institutional conguration is not that likely to support variation of
rms’ innovation strategies. One might object to the critics by pointing to that the two sides
of the contradiction concern dierent levels in the argumentation (i.e. institutional context
and business system). However, the argumentation concerns the same level – the institutional
one. In other words, when the relationship between innovation strategy and institutional en-
vironment is considered straightforward (i.e. the “black box” is blank), rms pursue dierent
innovation strategies to varying degrees in dierent institutional contexts, and the variation
is accepted. On the other side, when the “black box” contains business systems, the variation
is denied, as a certain institutional setting supports a certain type of business system, and a
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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certain type of business system supports a certain type of innovation strategy. Can the same
institutional setting include dierent business systems? Whitley (2000) answers dubiously
positively, thus supporting the statement about the varied innovation strategy. Still, the au-
thor’s (Whitley 2000) model is not supportive of the existence of dierent business systems
within the same institutional context, and thus, the positive answer is more a proviso than
a part of the developed model.
Amable (2000) pursued to overcome the drawbacks of the presented approaches as well.
He distinguished four types of social systems of innovation and production (SSIP) in ac-
cordance with the interplay of six sub-systems: science, technology, industry, labour force,
education and training, and nance. Each of the four types imposes certain consequences
for products, innovations and industrial specialization. For instance, social-democratic SSIP,
which is characterized by bargaining between social partners, importance of social needs
in the denition of research objectives, egalitarian ideals, centralization of wage bargaining
under the external competitiveness constraint, etc., induces innovations that are linked to
solutions to social and economic problems: hence, the prevailing industrial specialization in
this type of SSIP is health, security, etc. which, actually, can mean a great variety of innovation
strategies. In the case of market-based SSIP, Amable (2000) is more restrictive: as this type of
SSIP is characterized by highly segmented labour force, decentralization of wage bargaining,
and high individual competition, such aspects as knowledge and rapidity are essential in
gaining competitive advantage. erefore, market-based SSIP fosters radical innovations,
where patents and individual rewards to innovation are highly important. Nonetheless, even
though the scholar envisages the dynamics of the social systems of innovation and production
and presents their strengths, weaknesses, conditions for possibility of existence and potential
destabilizing factors, and even though he identies the links with international regime, still,
the indeniteness (i.e. generality) of institutional constituent and, more signicantly, the
narrowness of the delineation of innovation strategy remain.
1.1.3. Institutions vs. sectors in facet of innovation strategy of rm
In order to ascertain if national institutional environment is the most decisive factor determ-
ining the character of innovation strategy of a rm originating in that particular national
institutional environment, it is necessary to intersect the institutionalist approach towards
innovations with the organizational one. Among the notions supporting the organizational
approach, the strongest is that of sectoral systems (Malerba 2002). Despite the recognition of
the signicance of national institutions, the proponents of the institutionalist approach admit
that there are important dierences among industries in the operation of innovation-related
processes (Fagerberg et al. 2009). e sectoral composition of a given national economy
inuences the motion and structure of its national innovation system, even though the na-
tional innovation system aects the operation of its constituent sectoral systems. “Hence, the
relationship between sectoral and national innovation systems is a co-evolutionary one[...]”
(Fagerberg et al. 2009).
In the previous subchapter, we have revealed how social-democratic SSIP relates to health
and security sectors, and market-based SSIP, due to its radical-technological orientation,–
to aerospace, pharmaceuticals, nance, etc. (Amable 2010). en, meso-corporatist SSIP is
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S365
based on principles of solidarity and mobility within a large size economic unit (corporation)
with diversied production. Here, research is predominantly in-house, tacit knowledge is
important, and homogenized general education is needed, while specic skills are developed
within the corporation. e nancial system of meso-corporatist SSIP is characterized by
strong long-term relationships and strong involvement of public authorities. Hence, in
meso-corporatist SSIP, sectors, where coordination is necessary and where competence is
localized and cumulative, progress: automobile, electronics, robotics. e remaining type of
SSIP is the public one, which can shortly be dened as strongly-coordinated capitalism: public
basic research is disconnected from development of new products, strong institutionalization
of employment rules and social protection, importance of banks, slow adaptation to market
changes. Under the conditions of public SSIP, incremental, quality innovation is most likely
to emerge, and sectors are linked to public infrastructures and skilled labour force: aerospace,
mechanics, automobile. Nonetheless, Amable’s (2000) input lacks empirical evidence, which
is impeded by the diculty in distinguishing between dierent types of SSIP, as they lack
geographical dimension and are always subject to institutional complementarity, which
overcomes national and industrial borders.
Probably the most elaborated theoretical approach, which reveals the interaction between
national institutional and sectoral environment, is that of global production and innovation
networks (Lane 2008). e approach passes through the process of relatively early development.
According to it, innovation is neither wholly path-dependent, nor is global leverage invariably
disruptive of national institutional complementarities. “Because global spaces are still anchored
to national territories, institutional constraints have been loosened, but not abandoned” (Lane
2008). Hence, the degree, to which domestic institutional environment conditions innovation
strategies of rms, varies according to industry. Conceivably, the variance partly explains the
ndings of Frenz and Lambert’s (2010) research, which, despite integration of a number of
characteristics of innovation (e.g. level of uncertainty, source of knowledge, etc.) beyond the
extent to which product qualities are dierentiated, failed groping any signicant embeddedness
at neither country nor sector level, except for technological and patent modes of innovation.
is is precisely the reason for why this paper attempts to look for the patterns of institu-
tional and sectoral embeddedness at the level of elements of innovation strategy, and not at the
level of types of innovation strategies, as Frenz and Lambert did (2010). Still, the typologies
of innovation strategies are presented in the chapter below, and they are incorporated in the
empirical survey of this paper. Nonetheless, the paper diers from the previous extensive
research as well, which, yes, explored the patterns at the level of elements of innovation strategy
(characteristics of innovation) alike, but while doing so, the characteristics were separated
from each other and did not form the integrated concept of innovation strategy, which was
the driver of this paper and is presented in the next chapter.
1.2. Conceptual framework of innovation strategy of rm
Innovation-related literature has largely remained conceptually frozen around the ideas of
radical vs. incremental and product vs. process. Obviously, these dichotomies are not sucient
enough to be referred to as innovation strategies. Unfortunately, they oen are, and the re-
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
S366
search has mainly endured fragmented as sensitive to current external circumstances as well
(Tvaronavičienė et al. 2009). erefore, this paper relies on an integrated conceptual frame-
work of innovation strategy (Stankevice, Jucevicius 2010). Reasoning behind the framework is
as following: radical vs. incremental, product vs. process, open vs. secretive, novelty vs. imitation,
etc. do not form a versatile comprehension of a strategy. Hence, these types of innovation
and characteristics of innovation need to be structurally and purposively interconnected.
e methodology for the composition of the framework rests on the application of the
conceptual model of strategy, developed by Hambrick and Fredrickson (2005) within the
area of general strategic management, to relevant studies on innovation. e framework, as
well the original model, is comprised of ve elements: 1) the varieties of possibilities about
what to innovate, i.e. object of innovation (e.g. product, process, organization); 2) how to
enable innovation, i.e. vehicles of innovation (importance of networks (Fagerberg et al. 2009),
partners (Radziszewska-Zielina 2010) and level of openness should be taken into account);
3) speed (e.g. incremental, radical, revolutionary) and scope (e.g. novelty, modication,
imitation) of innovation; 4) how to bring innovation to target customers (e.g. traditional vs.
innovative marketing, low-end vs. high-end users); 5) the h element represents the general
logic of an innovation strategy and ensures the viability of the link between all the elements,
as well as between the objectives and the content of the innovation strategy, and between the
innovation strategy and the respective general strategy. Let us consider each of the elements
separately, based on our previous research (Stankevice, Jucevicius 2010). While doing so, a
number of typologies of innovation strategies are presented.
1.2.1. Object of innovation
Hambrick and Fredrickson (2005) identify arenas by asking: “Where will we be active?”
ey suggest also supporting questions which apply to decisions about product categories,
technologies, geographic areas, markets and value-creation stages. If to convert the original
question into a question about innovation, one would ask: “Where will we innovate?” ree
answers have been derived from relevant classications applied to innovations in scientic
literature. e distinction between product technology and production technolog y is well known.
e former type can be dened as knowledge about how to create or improve products, and
the latter as knowledge about how to produce them. Similarly, the terms product innovation
and process innovation have been used to characterize the occurrence of new or improved
goods or services, and improvements in the ways to produce these goods and services, re-
spectively. In the literature, it is also suggested dividing the category of process innovation into
technological process innovations and organizational process innovations, the former related
to new types of machinery, and the latter to new ways to organize work. us, we get three
categories: product, process, and organization.
1.2.2. Vehicles
e second part of the concept of strategy is, according to Hambrick and Fredrickson (2005),
vehicles, and is dened by the question: “How will we get there?” e suggested answers
include internal development, joint ventures, licensing/franchising and acquisitions. If to
convert the main question into a question of innovation strategy, it would sound like: “What
will enable us to become/remain innovative?” With no doubt, the answers can be found in the
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S367
academic literature of two major approaches. On the one side, system perspective is relevant.
e dening characteristics of a system of innovation require that its components are con-
nected for dierent invention and innovation purposes. In a healthy economy, there would
be a good number of specialized innovation systems generated at the microlevel, “systems
that are born and decay as new innovation problems are posed and solved” (Foray 2009).
On the other side, the answers are also linked with the resource-based view of a rm, which
stresses the relevance of resources (both internal and external, both human and material)
for an innovation strategy (Whitley 2000). Hence, a company’s innovative capacity is central.
In addition to internal resources of a company (including its absorptive capacity), networks
advantage its innovative capacity through the revelation of new resources and knowledge
dissemination. Accordingly, two major criteria for dening vehicles in the concept of an
innovation strategy can be distinguished: level of openness in regard to new resources, and
level of uncertainty in regard to knowledge dissemination.
As to the level of openness, Visser and Atzema (2007) propose three types of innova-
tion strategies. e stand-alone innovation strategy is characterized by internal sources of
knowledge. e local buzz innovation strategy draws necessary knowledge from external
local resources. Finally, the global pipeline strategy uses knowledge from multiple glob-
ally external resources. Similarly, Srivastava (2006) leans on dierences between national,
European and global R&D approaches (and national, European and global innovation
policies) in Switzerland, and indicates three innovation strategies within telecommunica-
tions’ sector, respectively: secretive innovation strategy, cautious innovation strategy and
sharing innovation strategy. e rst strategy is dened by single relationship, integrated
value chain between terminal equipment and incumbent telecom operator, 100% govern-
ment ownership, monopoly, as well as control, build and develop principles in R&D(100%).
e second strategy reects a higher level of openness: multilateral collaboration along
the value chain, disintegrated value chain, progressive “regulated” competition, more than
50% government ownership, build and buy in R&D (50%). Finally, the third strategy is
characterized by global partnerships and R&D hubs, converging value chain within the
industry, competitive market, less than 30% government ownership, partnerships and
outsourcing in R&D. What is also important within the framework of this paper is Srivast-
ava’s (2006) attempt to establish connections between the two elements of the concept of
innovation strategy – arenas and vehicles. She ties in secretive innovation strategy with
product innovation model, cautious innovation strategy with process innovation model
across the value chain, and sharing innovation strategy with business innovation model, or
organizational innovation. is fact conrms that, regardless of what the object of analysis
is – either general strategy or innovation strategy, – the elements in the model must anyway
demonstrate a sucient interplay.
1.2.3. Speed and scope
e third component of the concept of a strategy is staging which is dened by the following
question: “What will be our speed and sequence of move?” (Hambrick, Fredrickson 2005). If
we convert the main question to “what will the speed and scope of innovation be?”, literature on
innovations provides us with a couple of sequences of the possible answers: from incremental
to revolutionary/disruptive, and from novelty to imitation (Stankevice, Jucevicius2010).
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
S368
Acommon dichotomy distinguishes radical and incremental innovation. Incremental in-
novations are improvements of existing products, processes or services, within the context
of a dominant design, product architecture or existing demand. Radical innovations, on the
other hand, involve a radical break from existing products and processes and oen open up
new industries and new markets. Radical and incremental innovations can be seen as extreme
archetypes, but in practice it may be dicult to distinguish them. Oen a distinction can only
be made ex-post, since the impact that an innovation has on the economic system generally
cannot be known ex-ante, and since all innovations, even radical ones, build to some extent
on the existing knowledge base. Some scholars distinguish revolutionary innovations as a
separate category. ese consist of a cluster of innovations which together have a very far
reaching impact (Fagerberg et al. 2009).
1.2.4. Dierentiators
e fourth element of the concept of a strategy is dierentiators, and the authors (Hambrick,
Fredrickson 2005) ask: “How will we win – by image, customization, price, styling, or product
reliability?” With regard to innovation strategy, the question is: “How will we bring our
innovation to our customers?” In this case, it is a question of marketing. e latter depends
heavily on the objectives of the innovation strategy, as well as its elements. On the other
hand, innovative marketing solutions can be a core of an innovation strategy themselves, but,
again, this might imply innovations in process, organization or technology, as well as alter
the inter-organisational governance structure and/or the level of the company’s openness.
1.2.5. General logic
Finally, the last element of the conceptual model of a strategy is general economic logic
(Hambrick, Fredrickson 2005). In the context of innovation strategy, the general logic ties
together the four other components of the innovation strategy and the strategy’s objectives.
Moreover, general logic secures the meaningful link between a general strategy and a cor-
responding innovation strategy. Hence, innovation strategy of a rm should be understood
as a central, integrated, externally oriented concept of how a rm will achieve its goals of
innovative activity. is comprehension of innovation strategy is strongly supported by the
recently emerging approach towards identifying integrated, and not fragmented, concept of
innovation (Frenz, Lambert 2010; Battisti, Stoneman 2010). In fact, as it follows from the
explored literature, the choice of innovation strategy for a rm depends on many factors,
including national institutions, industry policy, internal resources, organizational culture, etc.
However, this paper covers the question of national institutional vs. sectoral embeddedness
only, without taking into account other factors, even though important as well.
With this statement we do also accept the fact that both the institutional context and
industrial environment of a rm are multi-dimensional variables that are characterized by
a number of links with the factors which are not investigated in this paper, as well as by a
number of inter-links between the two critical variables. e sectoral composition of a given
economy inuences the motion and structure of its national institutional setting, even though
the national institutional setting aects the operation of its constituent sectoral systems.
Hence, the relationship between institutional and sectoral cannot be considered completely
hierarchical; instead, it is co-evolutionary (Fagerberg et al. 2009). Without doubt, the two
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S369
critical factors of the paper are inter-related, but whereas a part of innovation strategy of a
rm is more classed by its institutional environment, the other part falls under the greater
inuence of its industrial environment. In the paper, it is revealed which elements of innova-
tion strategy of a rm are associated with the sectoral dimension, and which ones – with the
institutional context, though the overlap, due to the co-evolutionary nature of the relationship
between institutional and sectoral, cannot be denied either.
2. Methodology
2.1. Preparatory stage: two dimensions of the sample
e sample stands for two dierent sectors: two service rms (contact centres) and two high-
tech rms (laser producers). e sectors are dierent in innovation management, and industry
policy is dierent even in the same country. is is precisely the reason of the choice: we need
an intersection – an intersection of sectors within a country and an intersection of countries
within a sector. According to the explored literature, contact centres would typically represent
incremental, process innovations, and laser producers – radical, product innovations; the
literature suggests also that the sectors would have dierent innovation management policies,
dierent structures of networking, dierent marketing policies, etc., i.e. everything which
precisely is dictated by the aim of the paper.
e sample represents two dierent market economies as well – Swiss and Lithuanian. Both
countries are European market economies and democratic republics, they are relatively small
and surrounded by a number of neighbours, among which one would nd vastly inuential
ones. However, the countries contrast sharply with each other due to the dramatically unlike
historical paths. Aer 1990, the transition process in Lithuania has generated an institutional
vacuum, and new institutions needed to be introduced. erefore, the presumption, that the
level of incompatibility between formal and informal institutions (Rolfstam 2009) is high in
Lithuania, is sound. On the contrary, Switzerland is the oldest democratic republic in Europe
distinguished for its stability and political neutrality. erefore, incompatibility between formal
and informal institutions in Switzerland is presumably small or absent. Given the topic of the
article, one more distinction is essential: according to Summary Innovation Index, innovation
performance is one of the best in Switzerland, whereas Lithuania is steadily somewhere in the
end. Hence, commonalities and dierences of the countries, described in this paragraph, serve as
a basis of the choice of Lithuania and Switzerland. Admittedly, the possibility for the Lithuanian
authors to perform the research in precisely Switzerland played its role as well.
However, for reliability’s sake, the sample national institutional environments were com-
pared empirically in order to validate their statistical discrepancy. e data provided by the
International Proles Database 2009 was divided into four sections in accordance with the
sectors of the database (Crombrugghe et al. 2009):
– public institutions and civil society (N = 191 variables);
– market for goods and services (N = 81 variables);
– capital market (N = 45 variables);
– labour market and social relations (N = 51 variable).
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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en, the data was analysed with PASW Statistics 17.0. To measure correlations between
the variables in the four groups, Kendall’s tau_b coecient was used because the data were
ordinal (Crombrugghe et al. 2009). e results are demonstrated in Table 1. A reader should
note that in this table, we compare Lithuanian and Swiss national institutional environments,
and not innovation strategies of the sample companies. Hence, for Table 1 the data from IPD
2009 (the database is described in subchapter 1.1.1. in more detail) is used, and not the data,
which was collected from the four top-managers. is step of analysis is required because,
prior to comparing the innovation strategies, we need to compare the countries statistically
in order to conrm that the countries’ institutional proles are really, not presumably (the-
orizing-based), dierent – in this paper, we need dierent institutional proles in order to
guarantee the intersection of countries and sectors.
Dierence-between-samples tests were carried out as well, as a conrmatory tool. e
results are shown in Table 2. Again, we used the data of the IPD 2009, which describes insti-
tutional proles of countries via 368 variables, and not the data, assessed due to the responses
of the top-managers of the four sample rms, as we compare institutional proles here, and
not the innovation strategies (preparatory stage). is step of analysis was required in order
to conrm the results, which are presented in Table 1 – in applied statistics, conrmatory
analyses are typically more than welcome, especially in social sciences.
2.2. Methodology for comparing the sample innovation strategies
In order to analyse the intersection of national institutions with sectoral environment in
the most advantageous way, one needs to reduce the impact of other potentially disruptive
factors to a minimum. erefore, the sample rms resembled each other in terms of formal
characteristics, such as the year of establishment, number of employees, global presence,
average annual turnover, average turnover invested in innovation-related activities, global
market share in selling specic innovative products.
A top-manager of each sample firm was interviewed, hence, the number of the
interviewed top-managers equals four. ree top-level managers of the companies lled
in questionnaires which they had previously received by-email. The fourth manager
preferred a structured face- to-face interview to other means of contribution. e research
instrument involved 36 questions in total, regarding: 1) innovation strategy; 2) factors
inuencing the structure of innovation strategy; 3) general information and performance.
Representatives of the sample companies had to provide relative percentages from 0% = “Not
true at all” to 100%=“Completely true” in integral numbers only. e 36 questions were
composite/ complex, therefore, when they had been decomposed, they converted into 334
simple questions and corresponded to 334 cases in the soware (N = 334: N = 285 – innovation
strategy, N = 44–factors inuencing innovation strategy, N = 5 – performance), while the
sample companies stood for variables, that is, the four rms (variables) were compared along
334 characteristics of innovation strategy.
e data became subject to correlation analyses, dierence-between-samples tests were
carried out as a conrmatory method. e correlation analyses were required in order to
indicate if the correlations between rms from same country, but dierent sectors were
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S371
greater or smaller than the opposite. is let us verify the hypothesis if national institutional
environment was fateful factor determining the structure of innovation strategies of the
investigated rms. And again, because methods of applied statistics require conrmation,
especially in social sciences, we carried out dierence-between-samples tests. e results of
both correlation analyses and the dierence-between-samples tests are shown in Table 4. It
is important to note that our analysis can be dened as a comparative analysis of four case
studies, which are supplemented by the statistical analysis of some elements of the cases. By
emphasizing this, we address the question of the reliability of the results, when only four
rms are investigated. In fact, what are analysed statistically are 368 variables of IPD 2009
and 334 features of an innovation strategy. us, the statistical analysis is reliable with regard
to the sample sizes. en, the results along the four sample rms are compared qualitatively.
Now, is a case study reliable? For some reasons, it is an important part of both research and
teaching. Hereby the comparative analysis of four cases is even more reliable than a case
study taken alone.
We have not discussed the Table 3 yet. Why was this step of analysis required? e clue is
that both correlation analysis and dierence-between-samples test can be based on a number
of measures: for example, Pearson correlation or Spearman correlation, Student-t criterion
or Wilcoxon? In order to get the answer, one not only need to evaluate the data (e.g. if it
is integral, nominal or ordinal), but the sample as a whole as well – if it is compatible with
normal distribution or not, because in every case dierent equations are used by the soware.
For this reason, we had to perform the analyses, the results of which are presented in Table 3.
A reader should also note that we performed the same actions with the data from IPD 2009
(the data about institutional proles of the countries); however, we presented the results in
text, without including a table, because the analysis of the institutional data was needed as
a preparatory stage, which just conrms the statistical dierence between Lithuanian and
Swiss institutions.
Now, let us go back to the data on the innovation strategies and explain the origin of
Table5. In order to highlight the most important elements of innovation strategy in respect
of the sample rms, hierarchical cluster analysis with four nal solutions was employed.
Ward’s method was used, and Squared Euclidian Distance was used to measure the dier-
ences. For the cluster analysis, the answers of the respondents were used, and according to
these answers, each of the 334 cases was assigned (by the soware) to one of the 4 clusters,
which emerged. e number of clusters corresponds to the number of investigated rms,
for each of the rms represents a unique combination of institutional-sectoral intersection
and has a unique innovation strategy, which is dened by a certain combination of char-
acteristics of innovation activities (answers to the questions about innovation strategies).
Because the clusters emerged from the answers, provided by the respondents, the results
are entitled clusters by answers. On the other hand, each of the cases is dened by a certain
question, which originated from the explored scientic literature. e authors have already
pointed out that the questionnaire included 36 complex questions, which were decomposed
and formed 334 simple questions, i.e. cases. us, each of the cases corresponds to a certain
complex question, and cases which correspond to the same complex question, form a cluster
by questions (the variable of questions).
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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Because both the variable of questions and clusters by answers are nominal variables, their
interrelation can only be veried by sign independence analysis, i.e. cross-tabulation, and the
variable of questions and the variable of the saved clusters were cross-tabulated. However,
independence hypothesis could not be veried because 91.7 % of the cells counted less than5.
Still, Cramer V coecient was used to measure the relationship between the variables. e
observed counts let to indicate the most decisive questions, i.e. those which had a bigger count
in one specic cluster than in the other ones; in other words, questions, where the greatest
interdependence between questions and clusters by answers was identied, were distinguished
as the most decisive. Finally, the four innovation strategies were qualitatively compared along
these questions, thus resulting in the emergence of Table 5.
3. Findings
3.1. Comparing Swiss and Lithuanian national institutional
environments: tight results
e foremost analysis to implement was to assure of the existence of signicant dier-
ence between Swiss and Lithuanian national institutional environments. e normality of
distribution of the variables (Switzerland = CH; Lithuania = LT) within each of the four
data groups was veried by histograms, normal P-P plots and Kolmogorov-Smirnov tests
(p=[0.000;0.010] <α=0.05), and appeared to be inconsistent with normal distribution.
Table1 illustrates the results of the tests.
Table 1. Results of Kolmogorov-Smirnov tests
Public institutions
and civil society
(N= 191)
Market for goods
and services
(N = 81)
Capital
market
(N = 45)
Labour market
and social relations
(N = 51)
Switzerland
(CH)
K-S Z 5.607 2.031 2.222 2.447
p 0.000 0.001 0.000 0.000
Lithuania
(LT)
K-S Z 3.230 2.031 1.624 1.634
p 0.000 0.001 0.010 0.010
Because the distributions were not compatible with normal ones, Wilcoxon signed-rank
tests were performed instead of pared Student’s t-tests. e Wilcoxon tests conrmed that
Swiss and Lithuanian national institutional environments could not be assumed as statistically
indierent despite existing statistically signicant correlations (Table 2) within the samples.
Table 2. Correlation analyses and Wilcoxon tests: comparison of Swiss and Lithuanian NIEs
Public institutions
and civil society
(N=191)
Market for goods
and services
(N = 81)
Capital market
(N = 45)
Labour market and
social relations
(N = 51)
Wilcoxon |Z| 6.958 2.600 3.252 2.822
Wilcoxon p 0.000 0.009 0.001 0.005
Kendall’s rt au_b 0.403** 0.534** 0.751** 0.312*
* Correlation is signicant at the 0.05 level (2-taled); ** Correlation is signicant at the 0.01 level (2-taled).
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S373
4.2. National institutional vs. sectoral context: tight results
In this section, the foremost analysis to implement was to assure of the existence of signicant
dierence between the innovation strategies.
e normality of distribution of the variables (CH_Laser, LT_Laser, CH_Service and
LT_Service) was veried by histograms, normal P-P plots and Kolmogorov-Smirnov tests
(p = 0.000 < α = 0.05), and appeared to be inconsistent with normal distribution. Table3
illustrates the results of Kolmogorov-Smirnov tests (N = 285).
Table 3. Kolmogorov-Smirnov test results for the sample companies
CH_Laser LT_Laser CH_Service LT_Service
K-S Z 3.475 2.408 8.147 5.537
K-S p 0.000 0.000 0.000 0.000
Because the distributions were not compatible with normal ones, Wilcoxon signed-rank
tests were performed instead of pared Student’s t-tests. e Wilcoxon tests conrmed that
the innovation strategies could not be assumed as statistically indierent despite existing
statistically signicant correlations (Table 4) within the samples.
Table 4. Correlation analyses and Wilcoxon tests: comparison of the innovation strategies
LT_Service
CH_Service
CH_Laser
LT_Laser
CH_Laser
CH_Service
LT_Laser
LT_Service
LT_Laser
CH_Service
CH_Laser
LT_Service
W |Z| 5.420 4.805 7.719 7.126 10.404 2.917
W p 0.000 0.000 0.000 0.000 0.000 0.004
r 0.527** 0.327** 0.283** 0.190** 0.177** 0.120*
rtau_b 0.483** 0.370** 0.222** 0.151** 0.143** 0.078
rs0.525** 0.375** 0.260** 0.185** 0.171** 0.096
* Correlation is signicant at the 0.05 level (2-taled); ** Correlation is signicant at the 0.01 level (2-taled).
However, it is necessary to amplify that the correlations between the innovation strategies
of rms from the same sectors but dierent countries are bigger than the correlations between
the innovation strategies of rms from the same countries but dierent sectors. is nding
can be treated as the following assumption: the national institutional environments are not
fateful factors determining the structures of innovation strategies of the investigated rms; rather,
the more decisive factors are the sectoral subjections. It is interesting to note that the innovation
strategies of the service rms only are characterized by a stronger correlation (r=0.527>0.5),
whereas the remaining comparisons point to the existence of the uniqueness of each of the
investigated strategies. Naturally, each of the rms represents a unique combination of in-
stitutional-sectoral intersection and has a unique innovation strategy, which is dened by a
certain combination of characteristics of innovation activities. is is also one of the reasons
for why further analysis (see 3.3. and 3.4.) is needed and why only 15 elements of innovation
strategy emerged during it (see 3.4.).
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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3.3. Attitudes towards factors which most inuence
the sample innovation strategies
Each of the sample managers had a rather unique view of what factors inuenced the respective
innovation strategy. e representative of the Swiss contact centre indicated networking with
clients and Swiss regional innovation system as the most important factors. e service-ori-
ented company’s concern with clients is easily understandable, and the rm’s gratitude to the
regional innovation system can be associated with the Swiss tradition of establishing sectoral
and related associations which help to gain knowledge and get into fruitful partnerships,
mostly on a regional level.
e representative of the Swiss laser company referred to Swiss political-institutional
environment, and Swiss national and regional innovation systems as to positive forces, and to
poor access to venture capital as to a negative factor. e manager’s position can be explained
by the existence of National Centre of Competence in Research Quantum Photonics (NCCR
QP). Acting as a network within Switzerland, the Centre’s mission is to carry out fundamental
research in areas of strategic relevance to science and society, to foster education and training
in the eld of photonics and to contribute to technology transfer towards industrial partners
(National Centre … 2011). e Swiss laser producer would have hardly survived without the
help of NCCR QP with regard to funding, research infrastructure and provision of links to
human capital and potential customers. For example, the Centre is under the directorship of a
university research institution which allows research groups based at the home institution to
network with other teams working throughout Switzerland. e further development of the
Swiss laser producer was fostered by an acquisition of a foreign European company which,
in turn, acquired one more company – a Swiss one.
e Lithuanian laser company’s representative indicated national system of innovation
and the company’s name and reputation as two factors which have a clearly expressed in-
uence on the rm’s innovation strategy. e Lithuanian company’s situation is similar to
that of the Swiss laser company: it is also a university’s spin-o, thus, the university provides
the company with the research infrastructure and human capital. With the development of
national system of innovation and the inow of European structural funds, the company has
also got a better access to funding resources. However, the Lithuanian specics are that there
was no institution like the Swiss NCCR QP. erefore, the company’s (and its leaders’) name
and reputation were also of a great importance when establishing industrial networks and
commercializing the very rst products. Finally, the representative of the Lithuanian contact
centre noted the importance of the company’s inner resources (nancial, material, human
and leadership) and openness of business systems globally. e company serves mainly foreign
customers; therefore, the openness of global systems is essential to its activities in general.
However, almost like in the case of the Lithuanian laser company, the service-oriented rm
could not rely on external help in nding customers. e eort was taken by the owner and
CEO in order to pull in foreign capital: hence, the success originated from the extensive
network of their personal contacts. However, the major obstacle in the company’s innovative
activities remains the lack of proper external local recourses.
Hence, the Swiss rms can be collated for the infusion of their innovative activities into
the broader regional and (or) national context. On the other hand, the laser producer, being
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S375
a high-tech company, was supported by the political-institutional environment more than
the contact centre, which alone, due to its performance, is characterized by smaller input
into the national economy. Moreover, a contact centre is in less need of venture capital per se.
en, the attitudes of the Lithuanian managers can be paralleled in terms of relatively poor
access of the rms to external local resources. ough, again, the laser producer could better
make advantage of the opportunities proposed by the national institutional environment.
Otherwise, the disparities between the Lithuanian views could be compared to those of the
Swiss ones, as arising out of the sectoral specics. However, in general, each of the managers
had a rather individual view of factors which inuenced innovation strategies of their rms.
3.4. e most decisive characteristics and a comparison
of the sample innovation strategies along them
e relationship between clusters by answers and the variable of questions was rather weak
(Cramer V = 0.368) but statistically signicant (p = 0.000 < α = 0.05). is can be explained
by an insight that, not by a long shot, all the questions were important in clustering the given
answers. e observed counts showed there were 15 questions of a decisive importance. e
innovation strategies, as well as the attitudes towards factors inuencing them and general in-
formation about the companies, were analysed in consonance with the 15 questions (Table 5).
As Table 5 illustrates, the dierence-making questions, which are assigned to cluster 1,
describe mostly networking patterns and reveal predominantly sectoral contrasts. Interest-
ingly, company’s performance is also included in this cluster. is can probably be explained
by an insight that performance can only be groped in comparison – therefore, networks stand
for a space which enables evaluation. Characteristics of cluster 2 embrace a number of the
elements of innovation strategy and, again, exhibit predominantly sectoral dierences. It is
worth noting that the cluster is clearly associated with products and/or services: what they
are, how they are produced, how they get into markets, etc. In addition, the aim of innovation
strategy, which is one of its binding elements, is also included in this cluster.
Unlike the two already discussed clusters, cluster 3 displays national specics. Cultural
informal institutions could account for the dierent approaches towards R&D. e Swiss
assume that people are basically good, whereas Lithuanians have doubts about the essence of
human nature; the Swiss are more publicly-oriented and more collectivist than Lithuanians.
Hence, Lithuanians are more reserved and prefer to rely on themselves. ese arguments
are based on the ndings of a study of cultural features of the Swiss and Lithuanians, which
included interviews with experts and researchers in the area, who served as evaluators of
the cultural specics in accordance with the model developed by Schneider and Barsoux
(2003). On the other hand, Lithuania cannot brag for its extensive network of intermediate
institutions, such as Swiss NCCR QP, or Swiss sectoral associations and numerous non-prot
organizations (see 3.3.). erefore, external local sources of knowledge serve for the Swiss
companies, whereas the Lithuanian ones rely, again, on themselves and take pleasure in using
advantages of globally increasing openness of business systems.
Considering the companies’ attitudes towards innovation-related partnerships, only the
Lithuanian rms demonstrate correspondence (cluster 4). However, each of the companies
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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Table 5. e sample innovation strategies along their characteristics which make most of dierence
Cluster Characteristics CH Laser LT Laser CH Service LT Service
1: Networking (sectoral dimension)
Major networks in
innovation-related
activities (strength
and quantity)
✓Universities
✓Private research
organizations
✓Firms from other
sectors
✓Clients
✓Non-prot
organizations
✓Universities
✓State funded
research institutes
✓Firms from other
sectors
✓Firms from the
same sector
✓Customers
✓Suppliers
✓External
consultants
✓Customers
✓Suppliers
✓Firms from
the same sector
✓External
consultants
Dominating
information-
sharing structure
in networking
Processes and
mechanisms
favour solution
seekers in sourcing
intellectual
property from
external parties
Processes and
mechanisms
favour solution
seekers in sourcing
intellectual
property from
external parties
Varied, can favour
either seekers,
solvers, or both,
depending on the
business model
implemented
Varied, can favour
either seekers,
solvers, or both,
depending on the
business model
implemented
Who species
a problem when
looking for
a solution
Seeker species
problems
Intermediary helps
solution seekers
specify the problem
Seeker species
problems
Seeker species
problems
Strength of
relationship
between seeker
and solver
Strong, usually
a medium to
long-term
relationship
Weak or strong,
varies based on
the processes of
the intermediary
involved
Varies from solver
to solver
Varies from solver
to solver
Firm’s
performance
Successful Very successful Very successful Very successful
2: Elements of innovation strategy (sectoral dimension)
Aim of innovation
strategy
Meet clients’ needs
and maintain
existing positions
by intensively
oering new
products and
slightly modifying
existing ones
Maintain existing
positions by
intensively oering
new products and
slightly modifying
existing ones
Maintain existing
positions by
mostly modifying
existing products
Maintain existing
positions by both
oering new
products/services
and modifying
existing ones
What is innovated Mainly products
and organization
of work
Mainly products
and processes
Organization
of work and
processes
Organization
of work and
processes
Level of novelty
in innovations
Completely new
products; some
modications
Predominantly new
products, some
modications
Modications and
imitations
Modications and
imitations, some
novelty
Ways of bringing
products/services
to markets
Predominantly
based on existing
external local
networks
Based on existing
external networks
and personal
contacts of leaders
Predominantly
based on personal
contacts of
leaders, some
traditional
marketing
Predominantly
based on existing
external local
networks, some
traditional
marketing
Collaborative
arrangements
Mainly multilateral
collaboration along
the value chain
Mainly multilateral
collaboration along
the value chain
Mixed (single
relationship
+ multilateral
collaboration
along the value
chain + global
partnerships)
Mixed (single
relationship
+ global
partnerships)
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S377
Similarities between the two laser companies
Similarities between the two service companies
Neither nationally or sectorally structured similarities
Similarities between the two Swiss companies
Similarities between the two Lithuanian companies
Cluster Characteristics CH Laser LT Laser CH Service LT Service
2: Elements of
innovation strategy
(sectoral dimension)
Type of value
chain
Disintegrated value
chain (multilateral
collaboration in
the process of value
creation)
Mostly
disintegrated value
chain (multilateral
collaboration in
the process of value
creation)
Mix of integrated
value chain
throughout the
whole process of
value creation and
convergent within
the respective
industry
Mix of integrated
value chain
throughout the
whole process of
value creation and
convergent within
the respective
industry
3: Institutional environment
Where knowledge
for innovation
strategy comes
from
Mostly external
local sources of
knowledge
Internal sources
of knowledge and
multiple globally
external sources
Mostly external
local sources of
knowledge
Internal sources
of knowledge and
multiple globally
external sources
Contribution
to external
innovativeness
beyond company’s
boundaries
Leading in
contribution
to formation
of new markets
(9% of workforce),
creation and
diusion of new
knowledge, supply
of resources
Leading , esp. in
guidance of the
direction of search,
supply of resources,
creation of positive
external economies
Shaping prole
innovation
strategy
Learning
innovation
strategy
4: Uniqueness
Attitudes towards
innovation-related
partnerships
Reduce negative,
avoid dierence
Promote positive,
tolerate dierence
Promote positive,
avoid dierence
Promote positive,
tolerate dierence
appeared to have mixed relationships, if to measure them in accordance with Fowles’ and
Clark’s (2005) distinction of behaviours of partners. For example, a company can both focus
on learning and continuous improvement, and rely on clear communication and conrmed
understanding. us, the mean positions of the companies in respect of reasons for partner-
ing and view of dierence (Fowles, Clark 2005) are unclear. It is dicult to generalize the
attitudes in consonance with their either national or sectoral subjection. Inter alia, this is not
surprising: since a rm’s attitude towards networking partners depends, to some extent, on its
both national and sectoral subjection (besides inner factors), the investigated companies act
as a spectrum of the possible results originating from the two-by-two intersection (twosets
of institutions by two industrial sectors).
Continued Table 5
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
S378
Concluding remarks
e debate about the role of national institutional environment in shaping the correspond-
ing rms’ innovation strategies is highly controversial. Both the proponents of the notion of
comparative institutional advantage and their challengers have provided solid argument and
evidence to make out their cases. Moreover, the concept of innovation strategy has remained
conceptually under-structured within the debate, thus making the comprehension of the
interaction between national institutional environment and rms’ innovation strategies even
more vague and fragile.
In this paper, the signicance of national institutional environment to innovation strategy
has not been denied. On the contrary, the results show that the lack of an extensive network
of intermediate institutions between a rm and national level conditions that the rms, in
their search for innovation-related knowledge, rely on their internal sources and multiple
globally external sources, whereas the companies, which have access to more generous, in
this regard, national institutional environments, can advantage from using external local
sources of knowledge. Furthermore, national cultural institutions inuence a way in which
research and development is managed. When a surrounding culture of a company is more
publicly-oriented, more collectivist and more positive about others, it is likely that the mode
of research and development is based on outsourcing and partnerships; otherwise, a company
prefers to control, build and develop the activities itself.
However, the role of national institutional environment in shaping the respective rms’
innovation strategies is not that decisive: the rms’ sectoral subjection seems to be more
inuential hoc sensu. e latter governs a type of a rm’s networks in its innovation-related
activities: for the high-tech companies, collaboration with universities and dierent research
institutions is essential, whereas the service companies concentrate on clients, suppliers and
external consultants. en, in laser industry, processes and mechanisms predominantly favour
solution seekers in sourcing intellectual property from external parties, whereas within the
area of activity of the contact centres these processes and mechanisms depend heavily on
the implemented business model. Finally, the sectoral subjection is rmly associated with a
number of elements of innovation strategy. us, the high-tech companies mostly create new
products or modify the existing ones in an innovative way, whereas the service companies’
innovations take place when rening organization of work or processes. e ways in which
innovative products are produced or innovative services are infused dier as well. While the
high-tech companies rely on multilateral collaboration in the process of value creation, the
service companies bucket inspiration from either their inner sources or, in case of an imitative
innovation, convergence of value chain within the respective industry.
Notwithstanding the question of the interaction of national institutional and sectoral
environments with rms’ innovation strategies remains open for further renement. is
paper covers four statistically and qualitatively explored and compared case studies; therefore,
any generalizations should be weighed responsibly. However, in further research, a proper
comprehension of innovation strategy, as well as institutional and sectoral environments, is
particularly desirable. Neither can innovation strategy be limited to a couple of its elements
or characteristics, nor can the environments be squeezed into a couple of formal indicators.
Technological and Economic Development of Economy, 2013, 19(Supplement 1): S360–S382 S379
Acknowledgements
is paper draws on the projecte innovation strategies of organizations in the emerging
economic-institutional environment(agreement No. MIP-024/12), sponsored by the Research
Council of Lithuania. We would also like to express our deepest gratitude to Prof.MichelOris
for guidance and support, as well as Prof Lucio Baccaro, Prof Susan Schneider and
Prof LucGauthier during Inga Stankevice’s research stay at the University of Geneva in 2011.
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Inga STANKEVICE. Researcher, Nottingham University Business School, University of Nottingham.
PhD candidate in Social Science (management and administration), Kaunas University of Technology.
She has 8 scientic awards, she is a member of international scientic DRUID Society. Research interests
include comparative political and social economics, innovation strategy, future forms of economies and
businesses, research methodology.
Giedrius JUCEVICIUS. Professor, Doctor of Social Science (management and administration), Head
of the Department of Strategic Management, Kaunas University of Technology. Author and co-author
of~10books, has more than 40 publications. Research interests include comparative international mana-
gement, innovations, networks and collective learning, transformations of culture, institutions and values.
I. Stankevice, G. Jucevicius. Institutional vs. sectoral dimension of innovation strategies of rms
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