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The organizational impact of technological change: A comparative theory of national institutions factors
Abstract
This paper offers a parsimonious theory of national institutional factors that promote or inhibit the formation of start-up firms in the USA and Japan. Three factors are proposed: the technical labor market, the venture capital market and the structure of buyer-supplier ties. Complementarities between these factors cause them to work as a system, while their differences elevate or reduce the level of incentive constraints and appropriability constraints acting on incumbent and start-up firms respectively. As a result, incumbents might be displaced in an industry in one country while incumbent firms in the same industry in another country might persevere, due to the presence or absence of start-up firms. This suggests that there may be no single best way to organize for innovation in different institutional settings; rather, firms must seek to exploit the virtues of their environment, even as they act to mitigate the hazards it poses.
... Firms may find it more costly or less efficient in developing and accumulating strategically valuable resources internally unless strategic factor markets exist to provide these firms with an opportunity to acquire external resources such as human and financial capital. Moreover, our study recognizes that the extent to which external strategic resources are available to all firms across industries in a certain country varies considerably by country (e.g., Chacar & Vissa, 2005; Chesbrough, 1999; Khanna & Palepu, 1997). When countries are more richly endowed with strategic factor markets such as capital and labor markets , meaning that such strategic factor markets are more munificent, firms embedded in these countries are better able to gain access to the external resources necessary to implement product market strategies, thereby creating a competitive advantage more effectively (e.g., Khanna & Palepu, 1997; Kim et al., 2015; Porter, 1990). ...
... Consistent with the RBT, one would argue that the firm pursues a profitable innovation strategy by engaging in internal R&D activities, including new product development, to generate its competitive advantage. While firms are intent on developing an efficient internal labor market to facilitate the utilization of human resources who specifically conduct R&D activities (Lado & Wilson, 1994), they may not achieve their ambitions without purchasing some of human resources from strategic factor markets (e.g., Chesbrough, 1999; Khanna & Palepu, 1997). For example, Khanna and Palepu (1997) suggest that because the United States is endowed with better external labor markets than India, firms in the United States are more capable of and more efficient at obtaining external human resources compared to their counterparts in India. ...
... Therefore, established textile firms in Brazil and Mexico could maintain their market power for far longer periods than their counterparts in the United States creating stiffer competition in the industry because more firms had easy access to capital in U.S. financial markets. Another study by Chesbrough (1999) found the extent to which dominant incumbents in the same industry based in different countries were able to sustain a competitive advantage depended on differences in their countries' strategic factor markets. Specifically, incumbent U.S. firms in the hard disk drive industry failed to sustain their competitive advantage in the face of disruptive technological change affecting the industry's 109 A Resource Environment View of Competitive Advantage competitive dynamics. ...
Our study proposes a resource environment view (REV) of competitive advantage by unpacking the environmental origins of a firm’s competitive advantage. The key tenet of the REV is that the heterogeneity and imperfect mobility of strategic factor markets and institutions across countries explain how firms based in different countries would likely both create and sustain a competitive advantage. In particular, our study introduces the notion of “the paradox of environmental embeddedness.” The paradox lies in the fact that the same environmental conditions—in terms of strategic factor markets and institutions—that enable firms to create a competitive advantage can paradoxically also create a situation in which it is more difficult for these firms to sustain an advantage. Another important aspect of our study is that, to enhance our understanding of how firms manage the paradox of environmental embeddedness, our study specifies the resource environmental conditions under which firms’ internal and external resource-oriented strategies—i.e., the development of dynamic capabilities and interventions in the country resource environment—are more beneficial when managing the environmental paradox. Overall, our theorizing has important implications for strategic management theory and practice.
... Nonetheless, these two established models still fall short of providing a more complete answer to one of the four fundamental questions of strategy identified by Rumelt, Schendel, and Teece (1994, p. 2, italics added): " What determines the success or failure of the firm in international competition? " The implication is that, although firms and industries are nested in larger external environments, the two established models assuming away differences in external country resource environments of industries and firms have paid relatively scant attention toward understanding how the external resource environment affects not only the industry (e.g., Capron & Chatain, 2008; Chesbrough, 1999; Markman, Gianiodis, & Buchholtz, 2009) but firm-level competitive advantage (e.g., Ahuja & Yayavaram, 2011; Ingram & Silverman, 2002; Khanna & Palepu, 1997; Kim, Hoskisson, & Lee, 2015; Oliver, 1997; Peng, Wang, & Jiang, 2008; Porter, 1990 Porter, , 1991 Wan, 2005; Wan & Hoskisson, 2003). We define competitive advantage as a unique advantage that helps a firm earn higher returns than its competitors in an industry. ...
... Although some strategy scholars have recognized the importance of the external resource environment (e.g., Hoskisson, Wright, Filatotchev, & Peng, 2013; Wan & Hoskisson, 2003), there are two important gaps that remain unfilled. First, scholarship has become bifurcated into the two camps associated with two distinct types of resource environments—i.e., strategic factor markets (e.g., Barney, 1986; Chesbrough, 1999; Khanna & Palepu, 1997; Kim et al., 2015; Porter, 1990) and institutions (e.g., Ingram & Silverman, 2002; Oliver, 1997; Peng et al., 2008). Little scholarly engagement between the two camps may yield an incomplete understanding of the environmental origins of competitive advantage. ...
... Firms may find it more costly or less efficient in developing and accumulating strategically valuable resources internally unless strategic factor markets exist to provide these firms with an opportunity to acquire external resources such as human and financial capital. Moreover, our study recognizes that the extent to which external strategic resources are available to all firms across industries in a certain country varies considerably by country (e.g., Chacar & Vissa, 2005; Chesbrough, 1999; Khanna & Palepu, 1997). When countries are more richly endowed with strategic factor markets such as capital and labor markets, meaning that such strategic factor markets are more munificent, firms embedded in these countries are better able to gain access to the external resources necessary to implement product market strategies, thereby creating a competitive advantage more effectively (e.g., Khanna & Palepu, 1997; Kim et al., 2015; Porter, 1990). ...
Our study proposes a resource environment view (REV) of competitive advantage by unpacking the environmental origins of a firm’s competitive advantage. The key tenet of the REV is that the heterogeneity and imperfect mobility of strategic factor markets and institutions across countries explain how firms based in different countries would likely both create and sustain a competitive advantage. In particular, our study introduces the notion of “the paradox of environmental embeddedness.” The paradox lies in the fact that the same environmental conditions—in terms of strategic factor markets and institutions—that enable firms to create a competitive advantage can paradoxically also create a situation in which it is more difficult for these firms to sustain an advantage. Another important aspect of our study is that, to enhance our understanding of how firms manage the paradox of environmental embeddedness, our study specifies the resource environmental conditions under which firms’ internal and external resource-oriented strategies—i.e., the development of dynamic capabilities and interventions in the country resource environment—are more beneficial when managing the environmental paradox. Overall, our theorizing has important implications for strategic management theory and practice.
... A myriad of studies have sought to identify the factors in the institutional environment that impact upon new and innovating firms (Busenitz, Gomez, and Spencer 2000; Acs and Karlsson 2002). These factors include: (1) access to funding (Bartholomew 1997; Chesbrough 1999); (2) taxation and the labour market (Bartholomew 1997; Chesbrough 1999; Davidsson and Henrekson 2002; Michael and Pearce 2009); (3) patent rights (Nelson 1982); (4) collaboration-enhancing infrastructure (Casson 1990); and (5) shared cognitive schemas (Busenitz and Lau 1996). There have also been a plethora of studies focusing on the impact of culture on entrepreneurship and innovative activities (Davidsson 1995; Drakopoulou-Dodd and Patra 2002; Hayton, George, and Zahra 2002; Frederking 2004; Hofstede et al. 2004; Kessler 2007). ...
... A myriad of studies have sought to identify the factors in the institutional environment that impact upon new and innovating firms (Busenitz, Gomez, and Spencer 2000; Acs and Karlsson 2002). These factors include: (1) access to funding (Bartholomew 1997; Chesbrough 1999); (2) taxation and the labour market (Bartholomew 1997; Chesbrough 1999; Davidsson and Henrekson 2002; Michael and Pearce 2009); (3) patent rights (Nelson 1982); (4) collaboration-enhancing infrastructure (Casson 1990); and (5) shared cognitive schemas (Busenitz and Lau 1996). There have also been a plethora of studies focusing on the impact of culture on entrepreneurship and innovative activities (Davidsson 1995; Drakopoulou-Dodd and Patra 2002; Hayton, George, and Zahra 2002; Frederking 2004; Hofstede et al. 2004; Kessler 2007). ...
... In conclusion, it seems that Japanese banks and venture capitalists offer relatively little support to the formation of new, technology-based firms (Darby and Zucker 1996; Whittaker 2001; Kenney, Han, and Tanaka 2002). It is therefore not surprising that established firms sponsoring their spin-off subsidiaries (noren wake or kogaisha) may effectively function as a substitute for an efficient venture capital market by sponsoring their own spin-off subsidiaries (Ogadiri 1992; Ito and Rose 1994; Chesbrough 1999; Lazonick 1999; Pascha and Mocek 2002 ). In addition, publicsector organizations, such as the Ministry of Trade and Industry and the Industrial Structure Improvement Fund, have introduced measures to promote restructuring through spin-offs (Wright, Kitamura, and Burrows 2005). ...
This study explores the impact of the national institutional environment on the listing of firms on stock exchanges in Japan, the US, and the UK. In particular, the study compares the incidence of: (1) independent firm initial public offerings (IPOs); and (2) the subsidiaries of established corporations being spun-off to stock markets. An empirical analysis is conducted on a sample of 9118 IPOs extracted from the Securities Data Company New Issue Database. The results show that Japan and the UK are more active in incubating new innovative ventures within large corporations and spinning them to the stock markets than their general entrepreneurial activity would suggest. These results direct our attention to different forms of industrial renewal in different institutional environments.
... This ITP model focuses mainly on promotion of technological start-up. Our focus on such start-ups is justified for a number of reasons related to the constraints of incumbent companies in undertaking major or radical innovation (Chesbrough, 1999; Gompers & Lerner, 1999 ). This means that effective exploitation of the new technological opportunities opened up by the information and communication technology (ICT) revolution requires large numbers of high quality start-ups. ...
... VC emergence (phase 3, 1993phase 3, – 2000 is reflected in the rapid quantitative growth of VC and start-up activity and the eventual emergence both of a VC industry and of a start-up-intensive high-tech cluster. It begins with a fluid sub-phase (1993 – 1995 followed by an accelerated growth process (1996 –1998 in Israel) that eventually leads to overshooting (1999. During the fluid sub-phase The Israeli Experience 83 significant experimentation and collective learning takes place with respect to VC strategies and organization. ...
... However, we think that an EITP model seems to be an attractive first step within that broader innovation-based economic development strategy. This is reasonable due to the assumption that large numbers of high quality innovative start-ups are required for effective exploitation of the new technological opportunities opened up by the ICT revolution (Chesbrough, 1999; Gompers & Lerner, 1999); and based on the vital role start-up companies have in the development of a high-impact high-tech cluster (Bresnahan et al., 2001; Bresnahan & Gambardella, 2004; Feldman, 2001). Therefore, the overall strategy of an EITP model should be the promotion of a significant segment of innovative start-ups and a sub-segment of fast growing start-ups that eventually will became large high-tech companies with very high impact on the regional economic growth and development. ...
This paper presents a five-phase innovation and technology policy (ITP) profile based on the Israeli experience of the last four decades. This paper adds two additional phases to a previous paper. This ITP profile refers only to one specific start-up-oriented plan of action out of a multi-pronged strategy for innovation-based economic development. The goal of the ITP profile is promotion of a significant segment of start-ups within the high-tech cluster and to create a sub-segment of fast growing start-ups that eventually will became large companies with very high impact on the economic growth and development. A significant part of the ITP profile is triggering a venture capital (VC) industry, which has been recognized as a vehicle for latching into the information and communication technology (ICT) revolution. We suggest that the Israeli phase ITP profile presented here is a systematic and attractive approach to ITP design in general.
... Despite being considered an important driver for national innovation systems, the development of venture capitals market might only be one of several factors that determine the favorability of a financial institutional environment since funding does not necessarily need to come in the form of private capital. In his study, Chesbrough (1999) compared, for example, the venture capital markets in the United States and Japan, discovering that while new U.S. businesses are predominantly start-ups financed through external capital, their Japanese peers often represent subsidiaries funded by parent firm's internal capital markets. While Chesbrough (1999) acknowledged that these distinct companies do not necessarily pursue the same objectives in terms of pioneering innovations, it is important to note that funding through an internal capital market may similarly address national innovation requirements. ...
... Specifically, besides different R&D measures he used, for example, the percentage of people in third-level education, the percentage of engineering students in the population, growth rates in electronics, and telephone lines as quantitative factors to compare national innovations systems. Chesbrough (1999) argued that the technical labor market, buyer-supplier relationships as well as the development of venture capital markets are among important institutional factors that explain technological change. Furthermore, in their study on institutional drivers of innovation in the information technology industry, King et al. (1994) concluded that governments are the most powerful institutions in shaping national innovation systems as government entities heavily intervene in innovation processes . ...
Combing institutional theory and research on innovation, we focus on alternatives and extensions of Pudelko and Büechl (2010)’s model of the socio-cultural context and suggest dimensions derived from institutional theory and the innovation literature as alternative approaches for analyzing innovation systems. Specifically, we propose dimensions, which have been suggested in the literature and which we deemed important for analyzing national innovation systems. Moreover, we believe that a more theoretically founded analysis of the “environment” may lead to further implications to enhance Korea’s innovativeness. Finally, in order to complement Pudelko and Büechl (2010)’s qualitative approach, we also present measures, which have been frequently used to quantify and operationalize these rather abstract dimensions. Altogether, we argue that an analysis based on established frameworks such as institutional theory may further expand the implications of Pudelko and Büechl (2010)’s model and provide a valuable starting point for improving the development of national innovation systems.
... One of the unique advantages of using MARA is that it allows us to model the variance in the effect size distribution in light of country-level institutional variables that were not included in the primary studies (Carney et al., 2011). We used MARA to test the effect of two important institutional variables, as recent innovation literature has increasingly accounted for institutional moderators that affect firm innovation input and output (Barbosa & Faria, 2011; Chesbrough, 1999; Hoskisson, Covin, Volberda, & Johnson, 2011; Lundvall, 2010; Nelson, 1993). First, we controlled for the level of minority shareholder protection. ...
... " Strong anti-director laws prevent insiders from engaging in selfbenefitting transactions and decision making based on their own utility function (Dyck & Zingales, 2004). Second, structural differences among countries regarding the education level of the workforce might influence firms' ability to efficiently convert innovation input into output (Chesbrough, 1999). Since human capital–related arguments play an important role in our baseline Hypothesis H1b, studying the effect of the education level of the workforce appears particularly reasonable. ...
An increasing stream of research has started to investigate innovation behavior in family firms, which is expected to be distinct from that of other types of firms; however results have been mixed so far. Conducting a meta-analysis of 110 studies covering 42 countries we synthesize prior work and extend prior knowledge on the precise linkages of family control and innovation behavior. We find that innovation input is lower in family as compared to non-family firms, yet innovation output is enhanced. We argue that lower input can be explained by the investment and decision making preferences of family owners. Higher output can be explained by family-firms’ capabilities to efficaciously manage R&D resources. We further discuss and test the effect of important family-, firm-, and institutional-level contingencies. Based on the results from our meta-analytical analysis we develop new insights into the sources of competitive advantage of family firms and propose new directions for further research.
... For example, to the extent that antitrust laws make it costly to collude, the competitive intensity facing firms will be greater. Since the construct of national institutional context is very broad, we focus here on the regulations that influence the market process in product markets and factor markets for labor and capital which are most relevant for firm performance persistence to help us gain theoretical traction (Chesbrough, 1999;Khanna and Palepu, 1997). While prior research has focused primarily on persistence of superior performance (see Roberts and Dowling, 2002, for an exception), we show below that separately examining the drivers of persistence of poor and superior performance sheds new light on the importance of the institutional context. ...
... These results also indicate that the drivers of poor and superior performance persistence are likely to be different and tend to question the assumption of institutional homogeneity. Our findings thus also lend support to the general argument that, in addition to firm and industry factors, institutional contexts are also important to performance as shown in recent research along the same lines (Chesbrough, 1999;Fauver et al., 2003;Wan and Hoskisson, 2003). ...
The accepted view in the literature is that firms in emerging markets are embedded in institutional environments that do not favor competition, while the 'revisionist' view holds that competition is just as strong and alive in emerging economies. In this paper, we argue that these views can be reconciled, if and only if, the differences between firms with superior (or above-average) performance and firms with poor (or below-average) performance are acknowledged. We claim that the accepted view holds when differences in the persistence of poor performance is considered while the 'revisionist' view is more likely to hold when superior performers are considered. Using secondary data on manufacturing firms in the United States (a developed economy) and India (an emerging economy), we provide empirical evidence that the persistence of poor firm performance in emerging economies is greater than similar firms in developed economies. We also find evidence that there are no systematic differences between emerging and developed economies in the persistence of superior firm performance, which is consistent with the 'revisionist' view. Our study adds to past research on performance persistence and its drivers by focusing on the difference between the persistence of poor and superior performance, and the impact of institutional factors on performance persistence.
... One of the unique advantages of using MARA is that it allows us to model the variance in the effect size distribution in light of country-level institutional variables that were not included in the primary studies (Carney et al., 2011). We used MARA to test the effect of two important institutional variables , as recent innovation literature has increasingly accounted for institutional moderators that affect firm innovation input and output (Barbosa & Faria, 2011; Chesbrough, 1999; Hoskisson, Covin, Volberda, & Johnson, 2011; Lundvall, 2010; Nelson, 1993). First, we controlled for the level of minority shareholder protection. ...
... " Strong anti-director laws prevent insiders from engaging in self-benefitting transactions and decision making based on their own utility function (Dyck & Zingales, 2004). Second, structural differences among countries regarding the education level of the workforce might influence firms' ability to efficiently convert innovation input into output (Chesbrough, 1999). Since human capital-related arguments play an important role in our baseline Hypothesis 1b, studying the effect of the education level of the workforce appears particularly reasonable. ...
Family firms are often portrayed as an important yet conservative form of organization that is reluctant to invest in innovation; however, at the same time, evidence shows that family firms are still flourishing and that many of the world’s most innovative firms are indeed family firms. Our study contributes to disentangling this puzzling effect. We argue that family firms—owing to the family’s high level of control over the firm, wealth concentration, and importance of non-financial goals—invest less in innovation but have an increased conversion rate of innovation input into output and, ultimately, a higher innovation output than non-family firms. Empirical evidence from a meta-analysis based on 108 primary studies from 42 countries supports our hypotheses. We further argue and empirically show that the observed effects are even stronger when the CEO of the family firm is a later-generation family member. However, when the CEO of the family firm is the firm’s founder, innovation input is higher and, contrary to our initial expectations, innovation output is lower than that in other firms. We further show that the family firm–innovation input/output relationships depend on country-level factors, namely, the level of minority shareholder protection and the education level of the workforce in the country.
... On the other hand, national institutional environments can provide incentives for firms active specifically in emerging and in mature industries and influence their performance. In particular, Chesbrough (1999) and Gittelman (2006) provide evidence of how the US institutional environment supports the development of new high-tech firms in biotechnology industry, and how the French and the Japanese institutional environments encourage the exploitation of the new market opportunities by large established firms in the pharmaceuticals industry. ...
... It would be interesting to analyse the extent to which these results can be generalized to other countries given that crosscountry differences may exist between specific academic, industrial and political contexts. Some studies show that some economies have institutional systems that create positive complementarities for new business firms while in others the incentives are aimed at and absorbed by large established firms (Chesbrough, 1999;Gittelman, 2006). ...
As the economies and indigenous technological capabilities of the new industrialized countries improve, national universities and public research organizations are expected to become increasingly important for supporting indigenous firms to move into more dynamic and high-opportunity industries. However, the characteristics of collaboration with universities may be very specific depending on whether the industry partner is engaged in mature or emergent activities. In this study, we explore and discuss the role of university–industry collaboration for the development of innovation in mature and emergent industries in new industrialized countries. Evidence from 24 research groups in science and engineering departments in universities and public research organizations in Brazil provides preliminary empirical corroboration for the proposal that the contexts and role of university–industry collaboration in mature and emergent industries are diverse. Knowledge networks are underdeveloped in emerging industries, and public support for research projects is dispersed. This means that university research and development projects with firms in emergent industries are less likely than projects with firms in mature industries to be the result of academic initiatives and public calls for research projects, or to be wholly financed by major public research sponsors. In emergent industries, the role of students and firm employees is crucial for mediating between public research organizations and companies. The policy implications of these preliminary findings are discussed.
... For example, to the extent that antitrust laws make it costly to collude, the competitive intensity facing firms will be greater. Since the construct of national institutional context is very broad, we focus here on the regulations that influence the market process in product markets and factor markets for labor and capital which are most relevant for firm performance persistence to help us gain theoretical traction (Chesbrough, 1999;Khanna and Palepu, 1997). While prior research has focused primarily on persistence of superior performance (see Roberts and Dowling, 2002, for an exception), we show below that separately examining the drivers of persistence of poor and superior performance sheds new light on the importance of the institutional context. ...
... These results also indicate that the drivers of poor and superior performance persistence are likely to be different and tend to question the assumption of institutional homogeneity. Our findings thus also lend support to the general argument that, in addition to firm and industry factors, institutional contexts are also important to performance as shown in recent research along the same lines (Chesbrough, 1999;Fauver et al., 2003;Wan and Hoskisson, 2003). ...
By drawing a theoretical distinction between the persistence of superior and poor performance, we reconcile the conflicting predictions of the ‘revisionist’ and accepted views on the persistence of firm performance in emerging economies. Using a sample of manufacturing firms in the United States and India, we show that superior firm performance in emerging economies persists only as much as developed economies in line with the revisionist argument. We also provide evidence consistent with the accepted view that poor firm performance persists longer in emerging economies compared to developed economies. Further exploration of the latter shows that, contrary to predictions of extant theories, firms in emerging economies that are affiliated with an MNC or a business group have a greater persistence of poor performance than firms that are unaffiliated with these intermediate governance structures, and hence would be better off operating at arm's length. Copyright © 2005 John Wiley & Sons, Ltd.
... In this paper, we intend to develop such a model, using the TV industry as an illustration. From a thorough review of the literature and a study of the TV industry, it emerged that the cotemporaneous roles of the institutional environment (e.g. Chesbrough, 1999b), related markets (Porter, 1990) and customers (e.g. Danneels, 2003 ), and how they interact with firmlevel capabilities, while clearly acknowledged, has not been not analyzed concurrently nor addressed in a systematic manner. ...
... While there have been important contributions in this domain (e.g. Argote & Beckman and Eppel, 1990; Baum & Ingram, 1998; Chesbrough, 1999a; 1999b; Danneels, 2004; Tripsas, 1997), these have been limited to focusing on a particular dimension, such as the firm, the industry or the national institutional environment. Few studies, if any cut across multiple levels of analysis to provide a more holistic account of ICD. ...
When radical innovations impact an industry, established incumbents are sometimes displaced by new challengers, yet at other times, survive and prosper. What are the factors that influence these possible outcomes? Extensive as the studies are in providing insights into incumbent-challenger dynamics (ICD), the fragmented nature of the literature and the isolated treatment of various constructs at a particular level of analysis, merit a review and analysis. We (1) identify, collate and analyze several constructs from three categories; the industry, the firm and the challenge, (2) discuss the interactions among these constructs and (3) show that incumbent failure or success can be better understood when these constructs are concurrently analyzed. We derive several propositions for stimulating research and develop a holistic multi-level framework for understanding incumbent-challenger dynamics. We pull together strategic management theories at the industry level with those at the organizational and inter-organizational levels in the context of disruptive innovations. We contribute by bringing in the challenge dimension across these levels to inform whether an innovation is disruptive in its effects, not just ex post but also ex ante. For illustrative purposes and to concretize our arguments, we draw on both primary data from the Dutch television industry and archival data from four episodes of disruptive innovations.
... At the macro level, geographic dimension is a matter of differences between nations. Differences between countries with respect to language, institution, and culture may form obstacles regarding communication and coordination between firms (Kress, 1992; Lundvall, 1992; Nelson, 1993; Chesbrough, 1999; Oliver, 1997; Hofstede, 1980; Herrera and Nieto, 2008 ). The literature on international business has found inconsistent evidences for the role of country difference on firm performance (Park and Ungson, 1997; Meschi and Riccio, 2008). ...
... First of all, language plays an important role to ensure good communication between technical personnel and managers from different firms and to cultivate an innovative culture (Kress, 1992). Second, countries also differ regarding institutional factors, which are also found to be crucial for innovation (Lundvall, 1992; Nelson, 1993; Chesbrough, 1999; Oliver, 1997). Finally, Hofstede's (1980) culture parameters, which have been widely used in strategic management studies, measure national culture difference in a unique manner. ...
Innovations are critical driving forces for firms to engage in corporate growth and new business development. Innovating firms are increasingly generating new knowledge in collaboration with partners. In this paper, we analyze how the knowledge differences between the innovating firms and their suppliers in Canada are likely to result in pioneering innovations. The knowledge difference is decomposed into two dimensions: the inter-industrial dimension and the geographic dimension in national context. Using the Canadian Innovation database, we found the inter-industry difference has a positive effect and the country difference has a negative effect on the likelihood of generating pioneering innovation. The findings of this paper suggest that for generating pioneering innovation, it is important not only to search for suppliers from different industries to get access to various complementary external knowledge sources but also to find suppliers from the same or nearby countries for the sake of communication and coordination.
... Forcing MNCs to hire local labour, making their technologies available to local entrepreneurs, restricting imports, requiring them to avail suppliers locally are some of the impositions of the host country that affect the MNC's profit maximizing behaviour thus depressing the amount of technology transfer (Kokko, 1992). Berry, 2014), host country market size (Gunnar, 1996), GDP and fixed entry costs (Hayakawa et al., 2010) the laws, rules and regulations, systems and policies, customs, 1104 traditions and norms of the host country (Chesbrough, 1999), Intellectual Property Rights (William, 2014 & Bilir, 2014), FDI supportive environment (Shujiro et al., 2006), tax policies and tax credits (James, R., 1994; Maskus, 2004), economical and technological advancements (Cantwell, 1998), technology policies technology licensing payments , capital market restrictions, R&D expenditures (Maskus, 2004) and domestic competition (Sinani and Meyer, 2004). ...
Technological innovations have emerged as crucially significant factor for sustaining market competition and achieving competitive advantage in the 21 st century. The Multinational Corporations (MNCs) as celebrities of innovation play significant role in diffusing technological knowledge throughout firms both nationally and internationally. Although numerous studies exist on technology transfer the majority of existing literature addresses the issues related to inter-firm transfer of technology only while the area related to intra-firm transfer of technology has been largely underexposed; study of which is believed to be ideal for fruitful exploration of profitability in technology transfer projects. Using data from MNCs in Malaysia the current study for the very first time would attempt to empirically find the effect of host-country traits on the performance of technology transferred by the MNCs and its subsequent impact on competitive advantage. Findings of this study are expected to contribute both theoretically in the body of knowledge and also in terms of practical implication for policy makers and MNCs and hence enriching the existing literature simultaneously.
... This generates the possibility that as open innovation practices become more prevalent, they at once become less risky and perhaps less costly, by enabling firms to substitute more arms-length governance arrangements for more hierarchical ones. Prior research has devoted considerable attention to exploring institutional differences across nations and industries, and how they shape firm behavior and performance in the area of innovation (e.g., Alexy, Criscuolo, & Salter, 2009; Chesbrough, 1999 ). Among the implications of such work is the notion that the optimal organization for innovation differs across nations and industries. ...
Firms tend to transfer more knowledge in technology joint ventures compared to contractual technology agreements. Using insights from new institutional economics, this chapter explores to what extent the alliance governance association with interfirm knowledge transfer is sensitive to an evolving industry norm of collaboration connected to the logic of open innovation. The chapter examines 1,888 dyad-year observations on firms engaged in technology alliances in the U.S. information technology industry during 1980-1999. Using fixed effects linear models, it analyzes longitudinal changes in the alliance governance association with interfirm knowledge transfer, and how such changes vary in magnitude across bilateral versus multipartner alliances, and across computers, telecommunications equipment, software, and microelectronics subsectors. Increases in industry-level alliance activity during 1980-1999 improved the knowledge transfer performance of contractual technology agreements relative to more hierarchical equity joint ventures. This effect was concentrated in bilateral rather than multipartner alliances, and in the software and microelectronics rather than computers and telecommunications equipment subsectors. Therefore, an evolving industry norm of collaboration may sometimes make more arms-length governance of a technology alliance a credible substitute for equity ownership, which can reduce the costs of interfirm R&D. Overall, the chapter shows that the performance of material practices that constitute innovation ecosystems, such as interfirm technology alliances, may differ over time subject to prevailing institutional norms of open innovation. This finding generates novel implications for the literatures on alliances, open innovation, and innovation ecosystems.
... Morten and Bjorn (2004) found that established informal relations also affect transfer of technology by neutralizing the harmful consequences of expanded geographical distances as teams tend to steer far from physically remote affiliates possessing relevant technological abilities and usually chose to approach known people for their technology needs instead of unfamiliar ones who held required technological expertise. External environment variables which include laws of the land, rules and regulations, systems and policies, customs, traditions and norms of the host community, are also factors considered by MNCs before transferring any technology to the developing markets (Chesbrough, 1999). Shujiro et al., (2006) stated that FDI supportive environment that influences MNCs to stay in host nations for a longer period which in turn improve the quality of human resources by means of training and education plays important role in intra-firm transfer of management technology. ...
Since the world has evolved as a Global Village, new technological innovation has become crucially important for sustaining market competition and gaining competitive edge irrespective of size and sector of any organization. Multinational Corporations mostly enjoying technologically advanced positions play vital role in disbursing technological knowledge throughout firms globally. This paper would enrich existing literature by observing different aspects related to technology transfer and outlining the relationship between multinational corporations and technology transfer that is, the role played by MNCs in relocating technological knowledge worldwide. This review would stimulate plots for prospective researchers to recognize and explain technology transfers by multinational corporations specially focusing on the parties and the process involved in intra inter-firm and intra-firm transfer of technology at the same time.
... Additionally, political implemented incentives or regulations directly supporting innovation, financing activities, and intellectual property tend to differ in various countries [Nelson (1983)]. Countries often have unique institutional features in relation to other countries; therefore it is quite possible that factors associated with effective managerial responses to radical innovation in one country may not apply in other contexts [Chesbrough (1999; Schanz et al. (2011)]. Although the national context is often perceived to be loosing relevance due to increasing globalization and integration of regions and the world economy, this perception might be too simplistic and not universally true for innovation processes in all industries and regions such as China and its innovation policy, which calls for " independent innovation, " targeting specifically the development of domestically developed innovations [Kai (2006)]. ...
This paper addresses the ongoing discussion in the literature on innovation typologies, taxonomies, terms, and measurement. It also put forth a proposal for a novel concept and typology for radical innovations based on a holistic and dynamic innovativeness understanding on the level of the individual innovation project with respect to different context levels and process stages. By differentiating between the degrees of innovativeness at the stages of concept, realization, and impact, the so-far neglected process dimension of innovation is now considered in the proposed radicalness typology called "Total Project-Radicalness Matrix". In order to illustrate this approach, the case of the "ROBIN" innovation project was analyzed, which later became the nucleus of the new "Toll Collect System" for electronic road pricing in Germany. This novel approach tries to support managers and researchers alike in enhancing the categorization, monitoring and measurement of innovation projects during the innovation process.
... Explaining these comparative differences requires linking the institutional economics literature to the organizational literature. This not only allows to better understand national institu-tional factors that promote or inhabit the formation of start-ups (Chesbrough, 1999), but even how these factors affect their learning process. National institutional factors affect the level of organizational constraints. ...
... The more radical the changes that technological innovations promise to bring, the stronger the social and political tensions that build up between incumbents and new entrants (Fig. 1 ). The established copyright institutions are inherently designed to support the operation of existing technologies and incumbent firms while conflicting against, or oppressing, the business activities of new entrants' applying innovative technologies (Aldrich and Fiol, 1994; Chesbrough, 1999; Hargadon and Douglas, 2001). Incumbent firms try to constrain the rise of new ventures by relying on existing copyright rules, norms, and regulations (Hargadon and Douglas, 2001 ). ...
In order to understand how IT impacts at the industry level, this paper adopts a theory of the coevolution of technological innovations and copyright institutions and applies it to examine how the mobile music business in Japan and Korea has developed. In Japan, mobile music business is controlled by incumbent recording companies and is complementary to offline CD sales. In Korea, however, the online music business (including mobile and fixed-internet) is dominated by mobile carriers and has replaced offline businesses, which has caused disruptive changes in the music industry structure. This paper suggests that diverging national copyright institutions give rise to the contrasting industrial changes, which in turn emphasizes how political processes drive the interactions between technologies and institutions.
... a superior technology compared to the Universal Mobile Telecommunications System (UMTS), but it is inferior if geographical range is chosen. Fourth, socio-economic and cultural factors make a difference. Technologies might prove disruptive in one region but not in another. There are different regional effects from the same technology or innovation. Chesbrough (1999), for example, argues that the disruptive effects described by Christensen in the US hard-disk drive industry did not occur the same way in Japan, and Henten et al. (2004) claim that the results of VoIP might be different for poor and rich countries, depending on the different supply conditions of old technologies. Fifth, the results are ...
Information and communication technology innovations (ICT) are considered to be of central importance to social and economic developments. Various innovation theories offer classifications to predict and assess their impact. This article reviews the usefulness of selected approaches and their application in the convergent communications sector. It focuses on the notion of disruption, the comparatively new distinction between disruptive and sustaining innovations, and examines how it is related to other innovation-theoretical typologies. According to the literature, there is a high frequency of disruptive changes in the field of internet protocol-based innovations in combination with wireless technology. A closer analysis reveals that these classifications and assessments not only differ in detail but are even contradictory. The article explains these differences by highlighting delicate choices that have to be taken by analysts applying the disruption concept. It argues that its applicability is comparatively low in the convergent communications sector and generalizations of single-firm assessments are hardly valid.
... a superior technology compared to the Universal Mobile Telecommunications System (UMTS), but it is inferior if geographical range is chosen. Fourth, socio-economic and cultural factors make a difference. Technologies might prove disruptive in one region but not in another. There are different regional effects from the same technology or innovation. Chesbrough (1999), for example, argues that the disruptive effects described by Christensen in the US hard-disk drive industry did not occur the same way in Japan, and Henten et al. (2004) claim that the results of VoIP might be different for poor and rich countries, depending on the different supply conditions of old technologies. Fifth, the results are ...
Information and communication technology innovations (ICT) are considered to be of central importance to social and economic developments. Various innovation theories offer classifications to predict and assess their impact. This article reviews the usefulness of selected approaches and their application in the convergent communications sector. It focuses on the notion of disruption, the comparatively new distinction between disruptive and sustaining innovations, and examines how it is related to other innovation-theoretical typologies. According to the literature, there is a high frequency of disruptive changes in the field of internet protocol-based innovations in combination with wireless technology. A closer analysis reveals that these classifications and assessments not only differ in detail but are even contradictory. The article explains these differences by highlighting delicate choices that have to be taken by analysts applying the disruption concept. It argues that its applicability is comparatively low in the convergent communications sector and generalizations of single-firm assessments are hardly valid.
... hoice that senior teams made regarding when to act on technological discontinuities and/or when to act on creating a dominant design ( Van de Ven & Garud. 1994). While there are different rates of technological change for highversus low-technology industries. managerial and community action shape the timing, pacing. and nature of technology cycles (Chesbrough. 1999;Rosenkopf & Tushman. 1998;West. 2000). ...
The article discusses the issue of time as it pertains to organizational research. The author believes that looking at research in terms of time is a powerful tool in assessing organizational phenomena. According to the author, temporal research allows researchers to gain more perspective when looking at organizational issues such as decision making, group performance and organizational transformation. The author notes that the field of temporal research is translated into concepts including pacing, timing and sequencing.
... The institutional setting affects the nature of high-technology labor markets, venture capital markets, and the structure of buyersupplier ties. These markets and ties are highly relevant for the incentive and appropriability constraints that affect incumbent and start-up firms, respectively (Chesbrough, 1999; Casper, 2007). For example, institutions that support a fluid labor market, a well-developed venture capital market, and loose buyer-supplier ties allow new firms to rapidly assemble and deploy experienced engineering talent, and to move quickly to commercialize advanced technology. ...
In this paper we investigate the spatial aspects of the conditions of entrepreneurship on the one hand, and the consequences of entrepreneurship on the other hand. The consequences are the effects of individual interactions that may lead to the emergence of complex systems that are largely the "result of human action, but not of human design" (Hayek, 1967). These emergent systems have spatial coordinates and localized effects on the growth of knowledge and economic activity. The emergent systems - new organizations, institutions, industrial clusters, cities, and regions - in turn form the context for subsequent entrepreneurial actions. We show the strengths and opportunities of Austrian economics for the indeterminate dynamic analysis of entrepreneurship and evolving selection environments, and the spatial aspects of these processes and structures. We explicitly investigate the bridge between evolutionary economic geography and Austrian economics. The paper is structured as follows: in the second section, we introduce Austrian as well as evolutionary geographic treatments of entrepreneurship. In the third section we investigate entrepreneurship and its conditions of space and place. In the fourth section, we elaborate on the urban aspects of the conditions of entrepreneurship as it is approached in evolutionary theories. The fifth section centers on the spatial aspects of the consequences of entrepreneurship, with a particular focus on its impact on urban and regional development.
... Emergence of the new VC industry and market took place during the 1960's and early 1970's in the US -during the beginnings of the 'entrepreneurial phase' of the ICT Revolution. 4 Since then, young start up companies would play increasingly important roles in the 'exploration' activities involved in the creation of new innovation-based industries and markets. 5 This was due to the enormous new opportunities for experimenting and applying the new technologies and the flexibility and high power incentives' possibilities offered by such companies (Chesbrough, 1999). 6 However, for a number of reasons-asymmetrical information, high technological and market risk, frequently unknown entrepreneurs and relative absence of tangible assets-traditional financial institutions (banks) were not adapted to provide finance to these enterprises (Gompers and Lerner, 1999 and). ...
Venture capitalism is an outcome of the ICT Revolution, which made its appearance first in the US during the late 1970s and early 1980s and then in other countries including Israel during the 1990s. It explains the new pervasive role of small firms in the introduction of technological innovations and the rise of research and development expenditures in the US in the last decade of the XX century. Venture capitalism is a major institutional innovation based upon the identification of economies of scope in the transactions of technological knowledge bundled with managerial competence, reputation, screening procedures and equity. It has paved the way to the emergente of new surrogate markets for knowledge, i.e. financial markets specialized in the trade of knowledge intensive property rights. The emergence of venture capitalism has important effects in national system of innovation of advanced countries, and it is a powerful mechanism for the production, dissemination and integration of knowledge in advanced capitalistic economies, and thereby a main driver of a 'knowledge-based' growth. �(�(�(�(�(�(�(�( �(�(�(�(�(�(�(�( �(�(�(�(�(�(�(�( �( �(�(�(�(�(�(�(�( �(�(�(�(�(�(�(�( �(�( �(�(�(�(�(�(�(�( �(�(�(�(�(�(�(�(
... Mowery & Rosenberg, 1998). Among the many contributing conditions for the rapid increase in the extent and nature of technological innovation, we note the emergence and availability of venture capital to fund new ideas (Chesbrough, 1999; Florida & Kenney, 1988b; Hsu & Kenney, 2005; Kortum & Lerner, 2000). Venture capital allows entrepreneurs to explore the merits of various technologies outside the sometimes rigid confines of large corporations (Florida & Kenney, 1988a), permitting uncertain but interesting ideas to be tested in practice. ...
Using an organizational learning perspective, we link the decision by venture capital (VC) firms to invest early in a new
high-technology industry to three experiential learning mechanisms: the familiarity associated with accumulation of early
funding decisions, the shaping or imprinting effect of the firm’s very first such decision, and the decay or “forgetting”
associated with the dormancy of prior such decisions. We find support for these learning patterns using data on the investments
made by US VC firms between 1962 and 2004.
... Localized technological knowledge is highest where both the receptivity to nonlocal information and regional network connectivity provide access to and absorption of external information, combining it with internal competence (Antonelli 1999;MacPherson 1997). The combination of a critical mass and diversity of firms together with a set of fast-growing firms at technological frontiers appears to be the key to success at the level of a region (Chesbrough 1999). ...
Complementing existing approaches on national innovation systems (NISs) and regional innovation systems (RISs), the proposed spatial innovation systems (SISs) approach incorporates a focus on the path-dependent evolution of specific technologies as components of technological systems and the intermingling of their technological paths among various locations through time. SISs utilize spatial divisions of labor among several specialized RISs, possibly in more than one NIS. The SIS concept emphasizes the external relations of actors as key elements that transcend all existing systems of innovation. The integrating role of these relations remains inadequately understood to date. This poses a challenge for future research.
... 3 Finally, innovation management within the firms has built on integral product architectures, which lead to a distinct weakness in giving birth to modular product architectures. The latter are often cited as a prerequisite for new, more open innovation processes (Chesbrough, 1999; McGuire & Dow, 2003). Interfaces. ...
The Japanese innovation system is said to possess distinct weaknesses. One indicator is that in most new key industries, Japan is underrepresented on the world market. Given Japan's success until the beginning of the 1990s, this development was quite unexpected and has induced comprehensive reforms of the Japanese innovation system. Apparently, those institutions that were responsible for the economic success of the 1980s now hinder Japan's ability to adapt to and create new industries. This paper argues that while some reforms of the Japanese innovation system may be necessary, a paradigm change is not. Mainly one argument is provided for a more optimistic stance towards the sustainability of Japan's competitiveness: the plasticity of innovation systems. With reference to one new and 'cool' industry, the Japanese game software sector, the relevance of the concept of plasticity is illustrated.
... There is no single model for the development of new technologies. For instance, no one type of organisation can be said to be the best, as is the case for products, there is need for room for experimentation in organisational structures (Chesbrough, 2000). Nevertheless, both theory and the available empirical evidence suggest that the vehicles for the penetration of new technologies tend to bear strongly on new firms and/or old firms with new management and organisation (Hobjin and Jovanovic, 1999). ...
The economic performance of the EU has taken on a new dimension with the notion of a "new economy". While ICT has become a major factor in explaining the prolonged, non-inflationary boom in the United States, the EU is lagging behind in most aspects of ICT. Arguing that the impact of ICT is inter-related with a range of factors, including innovation, human capital and organisational change, this paper concludes that systemic weaknesses limit the ability of the EU to adjust and capitalise on new economic and technological opportunities. The direction of remedial action is considered in the areas of: market segmentation; science-industry linkages; ICT infrastructure and services; labour markets and skills; and financial markets, venture capital and entrepreneurship. Capitalising on the agenda set by the Lisbon summit 2000 will greatly hinge on the extent to which there will be improved conditions both for co-ordination between policy areas and complementarity between measures at the national and Community levels.
... One of the correlations they observed was that disk-drive manufacturers' volume in one generation of disk-drive products was strongly and positively correlated with their volume in the next generation of disk-drive products, which is seemingly contradictory to my findings that leaders in one generation generally got disrupted by entrants in the next generation. What King and Tucci (2002) did not see, because their methods could not give them visibility, is that the dominant vertically integrated disk-drive manufacturers (i.e., IBM, Control Data, and Japanese manufacturers ) set up autonomous business units to manufacture the smaller form-factor drives (Chesbrough, 1999; Christensen, 1992 Christensen, , 1997). During most of the years in King and Tucci's study these manufacturers accounted for well over 60% of the volume in the market. ...
A unique opportunity presented to examine the process of building the theory of disruption, is discussed. The development of the theory of disruption is built in two major stages such as the descriptive and the normative stage. The descriptive stage of theory building is a preliminary stage, because researchers generally must pass through it before developing normative theory. The theory of building process will create the opportunity for scholars to improve the crispness of definitions, the salience of the categorization scheme, and the methods for measuring the phenomena and the outcomes of interest.
... Accordingly, Taiwan's financial systems were not a resource for HDD businesses, which need a large element of low-visibility investment (Tylecote et al., 1998, pp. 424; Chesbrough, 1999a). Having introduced the failure of Taiwan's national institutional structures in evolving the HDD technology , we now explore how the structures were employed within the context of the liquid crystal display industry. ...
In this paper, we examine the different evolutionary processes and outcomes of the hard disk drive and liquid crystal display industries in Taiwan. To this end, we make two general theoretical claims. First, that an appreciation of the globalization of technology is as important as national institutions in understanding industry development in catch–up economies such as Taiwan. Second, in addressing both industrial survival and failure, that national institutions can have either a positive or a negative impact on sectoral activities. Empirically, we show that, in Taiwan, rigid social institutions conflict with the hard disk drive technology. This conflict, in turn, produces obstacles to Taiwanese firms’ search for new markets and skills in hard disk drives. On the other hand, Taiwan’s institutional structures provide a source of technical efficiency and market opportunity for the emerging liquid crystal display trajectory. This, in turn, drives Taiwanese industry towards adopting new practices in the manufacture of liquid crystal displays.
... There are also studies which look at knowledge factors which strongly influence success or failure of the pre-startup phase within a business (Gelderen, Thurik and Bosma 2006). A technological change causes a structural change in the production and decision making process towards a firm's struggle to adapt itself to a competitive environment (Chesbrough 1999) for survival. Following a similar route, Geert Hofstede looks at national cultural differences in mapping the cultural structure of a country. ...
The Taiwanese venture capital industry has played a critical role in the development of the Taiwan it industry. The purpose of this study is to construct and prioritize the intellectual capital measures of venture capital in Taiwan and to formulate a strategy map based on these measures. A thorough interview was used to collect the data, while the content analysis method and the analytic hierarchy process were used to analyze the data. Intellectual capital can be categorized into three dimensions: Human Capital, Relational Capital and Structural Capital. The research also developed twelve indicators to assess business intellectual capital, as well as a strategy map for the venture capital industry. Measuring intellectual capital can help to formulate business strategies and allocate business resources.
... There are also studies which look at knowledge factors which strongly influence success or failure of the pre-startup phase within a business (Gelderen, Thurik and Bosma 2006). A technological change causes a structural change in the production and decision making process towards a firm's struggle to adapt itself to a competitive environment (Chesbrough 1999) for survival. Following a similar route, Geert Hofstede looks at national cultural differences in mapping the cultural structure of a country. ...
The paper presents research results obtained during the process of modeling a system (processes) for providing satisfaction of a company’s customer needs. The cybernetic model assumes a process approach and appropriate marketing research at the beginning and corresponding evaluation at the end; it is also harmonised with the conditions in which Serbian companies (production and services) work and it is created to enable easier managing of these processes with the aim of achieving business excellence.
... There are also studies which look at knowledge factors which strongly influence success or failure of the pre-startup phase within a business (Gelderen, Thurik and Bosma 2006). A technological change causes a structural change in the production and decision making process towards a firm's struggle to adapt itself to a competitive environment (Chesbrough 1999) for survival. Following a similar route, Geert Hofstede looks at national cultural differences in mapping the cultural structure of a country. ...
The purpose of this paper is to examine whether national cultural differences and/or economic, macroeconomic indicators are dominant in explaining business startups in selected EU countries. Among Hofstede’s national cultural differences, we have used the individualismcollectiveness indexmeasuring preference behavior that promotes one’s self interest, while the power distance index measures tolerance of citizens in terms of social inequality in terms of superiors or subordinates; the uncertainty avoidance index reflects tolerance towards uncertainty and ambiguity among citizens, while the masculinity index measures whether the society is male centered (Hofstede 2003). The last variable in the model related to culture is the corruption index (Transparency International 2008), which reflects how sensitive the nation is towards corruption. Among the macroeconomic indicators we have looked at whether the firm birth rate in an economy is strongly influenced by the given average wage rate, overall productivity level among nations, index for profitability and real per capita GDP growth. Findings show that with some exclusion, cultural factors are as important as economic indicators in explaining national business startups. Towards this end we have used factor and principle component analysis towards explaining the strength of the relationship among the variables.
This study investigates the patterns in regional culture that enable and enhance open innovation and drive the transformation towards an open innovation culture. Based on the existing literature on open innovation in regions, a framework of innovation dilemmas is developed to assess how regions can address seemingly conflicting demands and find a dynamic balance that is appropriate for the regional context in order to develop an open innovation culture. The framework is applied to three regions in The Netherlands, representing different types of geographically centred open innovation networks, where empirical research has been conducted of the interaction in open innovation processes between firms, knowledge institutes, regional governments and innovation support agencies. The research shows that different regional contexts result in different requirements for cultures conducive to open innovation. It is concluded that the framework of innovation culture dilemmas can serve as an analytical tool to identify elements in the regional culture conducive to open innovation and/or hampering open innovation, and can be used by regional actors in the innovation system to identify necessary measures to support open innovation.
The innovative strength of the world's two largest economies, the United States and Japan, are based on two different forms of industrial and social organization. For the United States, venture companies play a key role in technical and economic progress, while in Japan they have only a minor role. This book argues that without vibrant new high technology companies, Japanese industry will decline inexorably. At the same time, if the favourable yet delicate environment in America is undermined, America will face collapse of its innovative and economic strength. Japan has done much to improve its environment for high technology ventures. It has some promising new high technology companies and gradually increasing numbers of entrepreneurial scientists and managers. But they continue to swim against the current. One reason is that large, established companies dominate high technology fields and pursue an autarkic innovation strategy-relying on research in-house or in affiliated companies. Another reason is that these same large companies still have preferential access to university discoveries, largely because of government policies. Thus, high technology ventures are deprived of niches in which to grow, skilled personnel, and their natural customer base. In the field of university-industry relations, steps can still be taken to improve the environment for high technology ventures-steps that would also increase the quality of university science. The American-Japanese innovation dichotomy represents a broader dichotomy between so-called liberal and coordinated market economies. The lessons from these two countries' experiences are applicable to many industrialized countries, and to developing countries shaping their innovation systems.
In this book Nicholas A. Ashford and Ralph P. Hall offer a unified, transdisciplinary approach for achieving sustainable development in industrialized nations. They present an insightful analysis of the ways in which industrial states are currently unsustainable and how economic and social welfare are related to the environment, to public health and safety, and to earning capacity and meaningful and rewarding employment. The authors argue for the design of multipurpose solutions to the sustainability challenge that integrate economics, employment, technology, environment, industrial development, national and international law, trade, finance, and public and worker health and safety. This book is essential reading for anyone with a policy or scholarly interest in sustainable development and the critical roles of the economy, employment, and the environment.
For more information see: http://ralphphall.wordpress.com/technology-globalization-and-sustainable-development/
In the aftermath of the financial crisis, Japan drifted into a lasting downturn, which has become known as Japan’s lost decade. Meanwhile, Japan’s Asian neighbors were experiencing a boost in economic growth, and the United States strengthened its comparative advantages and competitiveness in key technologies such as information technology and biotechnology. The emergence of these new industries came along with a dramatic growth of the venture capital industry in the United States over the last decades. Annual inflows to venture funds have expanded from virtually zero in the mid-1970s to nearly $41 billion in 2001.1 Many of most visible new firms — including Apple Computer, Genentech, Intel, Lotus, Microsoft, Google or Amazon — have been backed by venture capital funds.
This paper presents a case history of an Ericsson design centre in the Netherlands, from its founding in 1990 till its dramatic end in 2003. The paper describes the development of the organisation over the years — its origins, the abundant growth, the many organisational and technological metamorphoses it underwent and the eventual downfall. The purpose of this paper is to search for patterns in the dynamics of internationally operating R&D organisations and to clarify the peculiarities in the innovation journey of this Ericsson design centre. In particular, we focus on the actions of local R&D managers, the design of organisational forms, the relation between technology and organisation, and the relation between local design centres and their headquarters.
This paper uses the theoretical perspectives of disruptive innovation, network externalities, and regulation to study the submarket strategies of incumbent firms that operate in a regulated network industry. In this setting, the impact of potentially disruptive innovations might be different because of the tighter regulation of incumbent firms. By analyzing the entry and success patterns of incumbent mobile network operators (MNOs) in the public hotspot markets in 17 Western European countries, we focus on how regulation and network effects as well as disruption factors influence the incumbent firms' strategies. In doing so, this paper departs from prior research that has primarily focused on unregulated industries and combines contradicting explanations from disruptive innovation theory, the motivation/ability framework, regulation theory, as well as network effects to provide a comprehensive analysis on how incumbents behave in a regulated network industry that is being confronted with a potentially disruptive innovation. In particular, while disruptive innovation theory predicts that the incumbents' vast experience in an industry could cause them to avoid entering new submarkets created by potentially disruptive innovations, the desire to avoid regulation could encourage such submarket entry. Furthermore, in regulated network industries, incumbent firms might have a stronger motivation to enter new submarkets as the importance of single customers and high market shares could be substantially different. These contrasting insights are used to develop an integrative research model and to derive hypotheses on incumbents' submarket entry decision and success. Drawing on cross-sectional, multicountry data of 62 MNOs that operate in 17 Western European countries, this study uses logit and tobit regressions to test the impact of disruption factors, regulation, and network externalities on the entry decision and success of incumbent firms. The results reveal that the incumbent MNOs are caught in an area of conflict between the regulated industry context and their international technology strategy. The findings suggest that the incumbent MNOs' motivation and ability to escape regulation positively influenced their submarket entry and success in the public hotspot market. Thus, the potentially disruptive scenario was successfully turned into a potentially sustaining one as the incumbent MNOs could enhance their presence in the mobile broadband market. The testing on a multicountry basis as well as the positive influence of ethnocentric technology strategies for public hotspots, which are devised in the headquarters' location and are then brought out internationally, shed new light on an industry that has typically been characterized by country-by-country decisions. These findings may also reveal challenges for future research on disruptive innovations in multinational industries and expose future challenges for regulative authorities and managers. This paper thereby adds to the theory of disruptive innovation as it includes the influence of regulation on incumbents in network industries. Additionally, this study expands on previous findings on the disruptive potential of wireless local area network technology by employing a multi-country analysis in 17 Western European countries.
Existing frameworks on growth do not distinguish between the managerial challenges of different growth contexts; they place considerable emphasis on the overall quality of companies' portfolios of strategic units, but less on how different units should be managed according to the growth context they are in. The managerial challenges of generating growth in low-growth contexts are very different from those of managing growth in high-growth contexts. This article introduces a matrix framework that incorporates four growth scenarios, which firm-units can map themselves on to, and then outlines the major barriers they face in each of these scenarios as well as the actions needed to overcome them. The results are based on longitudinal research on cross-national samples of small, medium, and large organizations.
Technological progress in an industry is enabled by the collective R&D efforts of suppliers, users and research organizations. In this study, we explore how the pattern of R&D collaboration within the industry community evolves over the technology life cycle. We propose that as the technology evolves from an initial emergence stage to subsequent stages of growth and maturity, there is a corresponding change in the opportunities and challenges confronting industry participants. This results in a shift not only in the relative propensities for internal and collaborative R&D, but also in the distribution of the different types of collaborative interactions involving research organizations, suppliers and users. The context for the study is the global semiconductor manufacturing industry from 1990 to 2010. During this period, the industry experienced exponential technological progress that was fueled by the deep ultraviolet (DUV) manufacturing technology. We draw upon a comprehensive archival dataset of more than 12,000 articles presented in industry technical conferences to analyze the pattern of collaborative R&D during the emergence, growth and maturity stages of the DUV technology. The observed trends in the semiconductor manufacturing industry point to intriguing shifts in the efforts and interactions among suppliers, users and research organizations as they collectively push the technology envelope forward.
This paper analyzes the impact of WLAN technologies for incumbent MNOs based on an empirical cross-country study of the players in the public WLAN-hotspot market using the theory of disruptive innovation and theoretical extensions for the industry- and country-level. The main research question to be analyzed is whether and why PWLAN has shown a disruptive or sustaining impact trend for incumbent MNOs in the hotspot markets of Germany, the UK, and the USA in recent years. The results imply that incumbent MNOs and new entrants have taken advantage of the opportunity provided by PWLAN, but the market success of both types of players varies between the countries analyzed. Incumbent MNOs dominate in Germany but not in the UK and the USA. The reasons for these country-specific differences were further investigated, and the results suggest that the analysis of disruptive potential in telecommunications needs to include country- and firm-specific factors, which are, again, largely influenced by the local regulation.
Theory and practice of technology transfer and entrepreneurial behaviour of academics are novel. We draw upon the literature of business models, transaction costs, professional and organisational culture and of agency theory to formulate a framework for a technology transfer business model. We present the range of options used by universities and we examine the spin out option, as context and contrast to the MUAS approach. The case of the MUAS is presented. It illustrates the conceptual framework developed and has thus far been successful in its specific environment. Replication might require adaptation, but this particular approach can offer useful lessons. Tentative hypotheses for research on business model adaptation are derived from the study.
Este trabajo da cuenta del surgimiento y desarrollo
de una Industria de Capital de Riesgo en Israel y del rol
que ésta jugó en el crecimiento exitoso reciente del cluster
de alta tecnología de Israel. Discute el proceso coevolutivo
y dinámico que involucra al sector comercial,
políticas de tecnología, capitalistas de riesgo, compañías
individuales y nuevas firmas, y vínculos con el extranjero.
Intentamos mostrar que el surgimiento del CR es
parte integrante de la reconfiguración de una Industria
Electrónica preexistente, que involucra grandes cantidades
de NF y nuevos y poderosos vínculos con los mercados
globales de capitales. Las principales conclusiones
y lecciones de política del trabajo indican que políticas
específicas de tecnología dirigidas al sector de Capital de
Riesgo pueden ser efectivas sólo en la medida que existan,
o sean creadas, condiciones previas favorables.
Abstract
This paper provides an account of the emergence
and development of a Venture Capital Industry in
Israel, and the role it played in the recent successful
growth of Israel’s high tech cluster. The paper discusses
the co-evolutionary and dynamic process involving
the business sector, technology policies, vanture capitalists,
individuals and Startup companies, and foreign
linkages.We attempt to show that VC emergence
is part and parcel of the reconfiguration of a pre-existing
Electronics Industry one involving large amounts
of SU and new and powerful links with global capital
markets. The main conclusions and policy lessons of
the paper are that specific technology policies targeted
to the Venture Capital sector can be effective only
to the extent that favourable background conditions
exist or are created.
This article analyses aspects of high-tech cluster emergence in Israel during the 1990s with focuses on the data security software industry and on strategies of very successful companies dominating such an industry. Most of the industry is concentrated in Tel Aviv and close-by Hertzliya and to a lesser extent Haifa and Jerusalem. It starts by characterizing the industry as a whole and the universe of 19 companies comprising it. It then proceeds with an in-depth analysis of the growth trajectories of very successful companies, some of which are listed in NASDAQ or have been acquired by large multinational corporations. A fast 'IPO' and a 'fast M&A' track have been identified and characterized. The analysis suggests that while globalization could be beneficial to skill intensive peripheral economies like Israel, a significant economic impact may require an appropriate balance between start-up activity and downstream production and marketing activities.
We take a structural approach to assessing innovation. We develop a comprehensive set of measures to assess an innovation's locus, type, and characteristics. We find that the concepts of competence destroying and competence enhancing are composed of two distinct constructs that, although correlated, separately characterize an innovation: new competence acquisition and competence enhancement/destruction. We develop scales to measure these constructs and show that new competence acquisition and competence enhancing/destroying are different from other innovation characteristics including core/peripheral and incremental/radical, as well as architectural and generational innovation types. We show that innovations can be evaluated distinctively on these various dimensions with generally small correlations between them. We estimate the impact these different innovation characteristics and types have on time to introduction and perceived commercial success. Our results indicate the importance of taking a structural approach to describing innovations and to the differential importance of innovation locus, type, and characteristics on innovation outcomes. Our results also raise intriguing questions regarding the locus of competence acquisition (internal vs. external) and both innovation outcomes.
Increasingly, technological innovation creates markets for new products and services. To survive, firms must respond to these new markets. How do firms develop the capabilities necessary to succeed in such changing conditions? Some suggest that experience with previous entry builds such capabilities. Others suggest that capabilities arise from experience producing and selling to existing markets. The role of managers is also debated. Some argue that experience with existing markets causes managers to miss entry opportunities. Others argue that managers enter new markets when their firm possesses the experience needed to compete effectively.
In this paper, we explore these issues by investigating entry patterns in the disk-drive industry. We investigate the effect of experience in existing markets and experience with previous market entry. We find that experience in previous markets increased the probability that a firm would enter a new market. We show that this experience had greater value if the firm entered the new market. We infer that managers chose to enter these markets to obtain this increase in value.
In this article, we review current rationales for policy intervention in innovative activities. Focusing particularly on market and system failure rationales, we disentangle related underlying mechanisms for knowledge exploration and exploitation. We provide a novel contribution to the system failure literature by distinguishing between system-level inertia and inhibited emergence. Our conceptualization of inhibited emergence draws on literatures related to neo-institutional sociology, the social construction of technology, and on organizational cognition and learning literatures, and it presents elemental socio-cognitive mechanisms that influence and direct knowledge exploration and exploitation in innovation systems. We compare related, yet theoretically distinct concepts of market failure, system-level inertia, and inhibited emergence, and show how each addresses distinct coordinative mechanisms and field-level dynamics and related socio-cognitive processes.
In this paper we detail the nature of market-oriented institutional upheaval and its implications for business groups in Korea
during the late 1990s. Employing case study methodology we identify four projects that were nurtured under corporate venture
programs in response to this upheaval: two internal incubating projects and two new venture investment projects. We analyze
these cases employing the concepts of resource fit and organizational misfit. Based upon these in-depth case analyses we generate
a conceptual framework that managers can rely on for the choice of organizing mode of corporate venture projects. We conclude
by discussing managerial implications and future research directions.
KeywordsCorporate venture program-Financial crisis-Market-oriented institutional upheaval-Resource fit-Organizational misfit-Korea-LG CNS-LG Electronics
Japan's employment system is generally characterized as involving infrequent moves between firms, but regular and systematic transfers within the firm. This system might be expected to result in Japanese engineers having smaller interfirm networks of professional contacts than Americans. This could impede the efficient interfirm diffusion of new technology. On the other hand Japanese engineers might be expected to have larger intrafirm networks of professional contacts. This should facilitate the intrafirm transfer of technical information. The research reported here tests the applicability of our images of Japanese career practices to engineering careers, replaces the simple dichotomous characterizations of differences between the U.S. and Japan with data suggesting the degrees of difference, and explores linkages between personnel practices and the transfer of information by engineers in both countries.
This paper proposes an analytical framework that can comprehend how and to what extent the interaction of institutions, industries, and enterprises has contributed to the decline of US competitiveness. The analytical framework builds on the notion that, ultimately, competitive advantage depends on the strategies and structures of the business enterprises on which Americans rely for most of the nation's productive investments. We argue that, over time, to gain sustained competitive advantage, business enterprises in the USA and elsewhere have had to achieve increasingly higher degrees of 'organizational integration'. We argue that, as a general rule, the USA's prime competitors, and particularly the Japanese, have gained competitive advantage by becoming more organizationally integrated than their American rivals. For some industries, moreover, organizational integration is more important than others; hence the variation in the extent to which certain American industries have been affected by foreign competition. And even within the more vulnerable industries such as electronics and automobiles, some American companies have responded to the competitive challenge more quickly and effectively than others. The organizational integration hypothesis argues that an important determinant of differences among American companies in the same industry in the quickness and effectiveness of their strategic responses - whether they are 'first movers', 'fast movers', 'slower movers', 'no movers', or 'removers' - to competitive challenges is the extent to which these companies are organizationally integrated.