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What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis
Abstract
This paper contributes to the debate on the determinants of business failure and helps to clarify the effect of internal innovation efforts and external knowledge sources in a hazard model of firm exit. Using panel data of manufacturing and service firms in Spain for the period 2009–2015, our findings show that the financial crisis increased the probability of business failure; however, firms with high levels of R&D human capital are better positioned to survive under uncertain financial conditions. In addition, we find evidence that cooperation with vertical partners reduces the effect of business failure in manufacturing sectors. This study provides new insight into the antecedents of business failure and how firms can match their business capabilities to prevailing economic conditions.
... There are several internal factors to consider leading to business failure. Extant literature attributed these to human capital and knowledge or the owner/founder orientations which encompass motivations, skills or management deficiencies, capabilities, characteristics/behavior, and financial knowledge shortcomings (Bushe, 2019; Martinez et al., 2019;Bunyaminu et al. 2019). The competency and the leadership style of the management are significant factors for organizational performance (Davies, C., & van Vuuren, 2021). ...
... Financial resources pertain to the obtainment of monetary funds for the business through one's personal finances, colleagues, and relatives. The two main reasons behind failure lie in having inadequate financial resources but more importantly in lack of adequate managerial competence (Bushe, 2019; Martinez et al., 2019;Bunyaminu et al. 2019;Davies, C., & van Vuuren, 2021). On the other hand, the external factors mainly include government and insufficient government-related policies, complex regulatory requirements and processes, and unexpected environmental events disrupting the business operations (Bushe, 2019; Bunyaminu et al., 2019;Amankwah-Amoah et al., 2021). ...
... Concordant with the literature, as opposed to the notion that businesses will ascribe their failure to external antecedents, empirical findings showed that management deficiency is the primary reason for business failure. It is more of the internal factors why businesses exit and discontinue parallel to the studies reviewed (Bushe, 2019;Martinez et al., 2019;Bunyaminu et al. 2019;Davies, C., & van Vuuren, 2021). Moreover, all the respondents believed that owner/founder orientation, structural or firm issues, and financial conditions are the internal factors that lead to business failure and exit. ...
Business failure and exit are concomitants of business discontin-uance which must be extensively studied as businesses such as tutorial centers can experience unfavorable events. This paper investigated the internal (i.e., owner/founder orientations) and external (i.e., compliance with government policies) antecedents leading to business failure and the eventual exit in the shadow education industry in 2013, particularly of Philippine privately owned tutorial centers which are divided into non-registered and registered services. Using the multiple case study approach, empirical findings showed that business failure is primarily caused by internal factors specifically the owner/founder orien-tations, while non-compliance with government regulations is secondary. The owner/founder orientations were comprised of motivation, characteristics/behavior, skill managerial deficiencies , capabilities, and financial knowledge shortcomings. Non-registered tutorial centers asserted that only skill/managerial deficiencies and capabilities lead to failure while registered tuto-rial services perceived all as reasons for business failure. Not complying with government policies can affect more the registered tutorial services than the non-registered centers. Business exit was chosen by all the owners of tutorial centers as a viable option in case of business failure. Future studies can consider obtaining more participants and comprehensively investigating tu-torial centers from different countries to enrich crosscountry research in shadow education.
... The journals that publish the most articles are Journal of Business Research (12 articles), Research Policy (10), Industrial and Corporate Change (9) and Technological Forecasting and Social Change (5 articles). Journal of Business Research [Hausman, Johnston, 2014;Makkonen et al., 2014;Petrakis, Kostis, Valsamis, 2015;Martin-Rios, Parga-Dans, 2016;Malik et al., 2019;Martinez, 2019;Ngo et al., 2019;Battisti et al., 2019;Brem, Nylund, Viardot, 2020;Osiyevskyy, Shirokova, Ritala, 2020;Ebersberger, Kuckertz, 2021;Weaven et al., 2021] 12 ...
... For example, N. Lee with co-authors [Lee, Sameen, Cowling, 2015] attempted to answer whether the sources of funding for innovative firms changed during a crisis by using Heckman regression. For time-varying explanatory variables associated with event history data, the Cox proportional hazard model was employed by the studies [Jung, Hwang, Kim, 2018;Cefis, Marsili, 2019;Martinez et al., 2019]. A conceptual model linking market orientation, marketing innovation, competitive advantage, and firm survival was tested using structural equation modelling [Naidoo, 2010]. ...
... Prospect theory [McKinley, Latham, Braun, 2014] Overall, the logic of prospect theory implies that managers who are experiencing conditions of organizational decline will be more risk seeking than those who are experiencing conditions of organizational growth. If risk seeking is conducive to innovation, organizational decline should be positively related to innovation Dynamic capabilities view [Lichtenthaler, 2009;Naidoo, 2010;Makkonen et al., 2014;Ahn, Mortara, Minshall, 2018;Martinez et al., 2019;Ngo et al., Opportunity cost theory [Berchicci, Tucci, Zazzara, 2014;Máñez et al., 2014;Hud;Hussinger, 2015;D' Agostino, Moreno, 2018;Giebel, Kraft, 2020;Yamashita, 2021] When industrial activity slows down, companies allocate their resources to innovation activities -they create new products at the expense of new processes, thus making the link between the opportunity cost and the cash flow effect Equilibrium theory [Mazzucato, 2013;Brancati et al., 2018] Technology and innovation, in contrast to equilibrium theories, are viewed as disequilibrium processes that affect both company efficiency and demand through the generation and exploitation of new opportunities ...
Today the world faces significant economic and financial crises, which have drawn firms into high levels of uncertainty and directly influences their innovation strategies. The literature on organizational decline reveals a lack of agreement about the effects of decline on innovation. This study aims to shed light on how economic crisis affects innovation and to provide a comprehensive picture of the innovation constraints and determinants with a focus on environmental factors. To add to the extant knowledge in the area of innovativeness in crisis, a systematic literature review using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses was conducted. 70 conceptual and empirical research articles published in the period 2000–2021 from highly ranked journals according to the Association of Business Schools rating were reviewed. The article presents three identified patterns related to a firm’s innovation behaviour in crisis: а cyclical behaviour in which most of companies reduce their costs and become more unwilling to engage in innovation activities, a neutral behaviour with a view to keep the status quo, and a counter-cyclical behaviour when companies tend to boost their innovation activities. The three innovation behaviours are contingent on several factors that hamper innovation. Furthermore, the findings suggest that innovation positively affects the performance of firms in the context of crisis and this impact is contingent upon the level of environmental turbulence. This review contributes to the extant knowledge on the adaptation of firms to adverse environments. The study offers a nuanced understanding of the main innovation strategies to respond to the economic downturn at the firm and country level, highlights benefits of innovation in highly turbulent settings and gives a detailed description of factors that play an important role in counteracting the negative effect of crisis on firms’ investment in innovations.
... To date, the previous research on the relationship between R&D efforts, external collaboration, and firm growth has mainly focused on the following three streams. First, some studies took R&D effort and external collaboration as two parallel concepts and explored their impacts on firm growth independently (Zouaghi et al., 2018;Garcia Martinez et al., 2019). Second, a few studies investigated the moderation effects of external collaboration on the relationship between R&D efforts and firm growth (Ren et al., 2015;Abdul Basit and Medase, 2019). ...
... By integrating these views and aligning with past studies (Stefan and Bengtsson, 2017;Garcia Martinez et al., 2019), we classified external collaboration into vertical collaboration, horizontal collaboration, and competitor collaboration from a more holistic perspective. Specifically, vertical collaboration refers to the information transfer and knowledge interaction between a firm and its suppliers and customers along the industrial chain; horizontal collaboration refers to the knowledge exchange of a firm with its stakeholders in the social environment, such as government organizations, universities and educational institutions, consultancy firms, venture capitalists, and trade fairs and exhibition; and finally, competitor collaboration is a special horizontal collaboration which combines collaboration and competition when the firm treats the relationship with its competitors. ...
... Son and Zo (2021) divided R&D efforts into three aspects according to the type of invested resources, namely technological dimension, human dimension, and financial dimension. Following Zouaghi et al. (2018) and Garcia Martinez et al. (2019), in this study, we argued that R&D effort is composed of R&D intensity and R&D human capital. The former is recognized as the degree to which a firm invests funds in the R&D aspect, and the latter is identified as a capability created by the knowledge experience, and skills of R&D personnel (Ployhart and Moliterno, 2011). ...
In today’s business environment with high market turbulence, rapid technological change, and fierce competition, external collaboration and internal efforts in research and development (R&D) become equally important for firm growth. However, little is known about the effects of external collaboration on firm growth that generates along the path from outside to inside. Therefore, this study aims to explore the indirect effects of different types of external collaboration on firm growth capability via R&D efforts. It empirically analyzed a sample of 94 Chinese top-ranking innovative enterprises by applying hierarchical regression and mediation analysis. The results indicate that vertical collaboration, horizontal collaboration, and competitor collaboration are positively and directly related to the firm’s R&D intensity, R&D human capital, and firm growth capability. Furthermore, the firm’s R&D intensity and R&D human capital are positively and directly related to growth capability. The results of mediation analyses showed that R&D intensity mediated the relationship between external collaboration and firm growth capability. However, the results failed to support the mediating role of R&D human capital in the relationship between external collaboration and firm growth capability. This study enriches the literature on open innovation and organizational growth, and provides valuable insights for firm managers and policymakers.
... The journals that publish the most articles are Journal of Business Research (12 articles), Research Policy (10), Industrial and Corporate Change (9) and Technological Forecasting and Social Change (5 articles). Journal of Business Research [Hausman, Johnston, 2014;Makkonen et al., 2014;Petrakis, Kostis, Valsamis, 2015;Martin-Rios, Parga-Dans, 2016;Malik et al., 2019;Martinez, 2019;Ngo et al., 2019;Battisti et al., 2019;Brem, Nylund, Viardot, 2020;Osiyevskyy, Shirokova, Ritala, 2020;Ebersberger, Kuckertz, 2021;Weaven et al., 2021] 12 ...
... For example, N. Lee with co-authors [Lee, Sameen, Cowling, 2015] attempted to answer whether the sources of funding for innovative firms changed during a crisis by using Heckman regression. For time-varying explanatory variables associated with event history data, the Cox proportional hazard model was employed by the studies [Jung, Hwang, Kim, 2018;Cefis, Marsili, 2019;Martinez et al., 2019]. A conceptual model linking market orientation, marketing innovation, competitive advantage, and firm survival was tested using structural equation modelling [Naidoo, 2010]. ...
... Schmookler's "demand-pull" theory of innovative activity suggests that investment in innovation is significantly pro-cyclical According to agency theory, the risk exposure of innovative activities and the presence of information asymmetry should certainly limit debt funding availability Prospect theory [McKinley, Latham, Braun, 2014] Overall, the logic of prospect theory implies that managers who are experiencing conditions of organizational decline will be more risk seeking than those who are experiencing conditions of organizational growth. If risk seeking is conducive to innovation, organizational decline should be positively related to innovation Dynamic capabilities view [Lichtenthaler, 2009;Naidoo, 2010;Makkonen et al., 2014;Ahn, Mortara, Minshall, 2018;Martinez et al., 2019;Ngo et al., 2019;Iborra, Safón, Dolz, 2020;Nemlioglu, Mallick, 2020;Colombo et al., 2021;Krammer, 2021;Weaven et al., 2021] All forms of open approaches and a high level of openness are helpful for firms to acquire the dynamic capabilities necessary for good strategic adaptation. ...
Today the world faces significant economic and financial crises, which have drawn firms into high levels of uncertainty and directly influences their innovation strategies. The literature on organizational decline reveals a lack of agreement about the effects of decline on innovation. This study aims to shed light on how economic crisis affects innovation and to provide a comprehen- sive picture of the innovation constraints and determinants with a focus on environmental fac- tors. To add to the extant knowledge in the area of innovativeness in crisis, a systematic literature review using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses was con- ducted. 70 conceptual and empirical research articles published in the period 2000 – 2021 from highly ranked journals according to the Association of Business Schools rating were reviewed. The article presents three identified patterns related to a firm’s innovation behaviour in crisis: а cyclical behaviour in which most of companies reduce their costs and become more unwilling to engage in innovation activities, a neutral behaviour with a view to keep the status quo, and a counter-cyclical behaviour when companies tend to boost their innovation activities. The three innovation behaviours are contingent on several factors that hamper innovation. Furthermore, the findings suggest that innovation positively affects the performance of firms in the context of crisis and this impact is contingent upon the level of environmental turbulence. This review con- tributes to the extant knowledge on the adaptation of firms to adverse environments. The study offers a nuanced understanding of the main innovation strategies to respond to the economic downturn at the firm and country level, highlights benefits of innovation in highly turbulent set- tings and gives a detailed description of factors that play an important role in counteracting the negative effect of crisis on firms’ investment in innovations.
... Longevity which is primarily concerned with the length of existence of organizations in years is the biggest common challenge for companies (Martin & Lisanne, 2015). Organizations have a limited lifetime as the average life span shrinks to 18 years by 2016 from 61 years in 1958 and which is further projected to fall to only 12 years by 2027 (Gilbert, Eyring, & Foster, 2013). ...
... Organizations have a limited lifetime as the average life span shrinks to 18 years by 2016 from 61 years in 1958 and which is further projected to fall to only 12 years by 2027 (Gilbert, Eyring, & Foster, 2013). Boston Consulting Group's (BCG) findings and indices of the S&P and Fortune 500 companies are not only indicative but also validate the perception that business lifespan is shrinking as the average life of an organization dropped from 60 years in 1970 to 30 years in 2010 (Martin & Lisanne, 2015). The reasons for the low life expectancy of organizationsof a collapse to suffer are well-reported and one can identify various patterns causative to the declining lifespan. ...
... The reasons for the low life expectancy of organizationsof a collapse to suffer are well-reported and one can identify various patterns causative to the declining lifespan. These reasons are mergers & acquisitions, bankruptcy, closures & sell-off, liquidation, and many more (Martinez, Zouaghi, Marco, & Robinson, 2019). The uncontrollable factors like government regulations, financial crisis, socio-economic jolts, regional characteristics, market dynamics, etc. are also very influential and affect the organizations' longevity (Lagares, Ordaz, & del Hoyo, 2018). ...
Purpose: “Capitalist system is under siege” is the signal that businesses are going to lose legitimacy and ultimately survival is under question. However, “Creating shared value” (CSV), a resolute solution for organizations is proposed, and overwhelming organizations claim to have adopted CSV. However, in the absence of a standard for CSV success, yearly financial and sustainability reports are presented to validate such claims. Therefore, a yardstick is needed to determine whether companies have implemented CSV as a key strategy. To verify this claim, a scale is proposed to measure the level of adoption of CSV. Design/Methodology/Approach: An interview protocol was created for data collection from CSV adopters. Twenty interviews were conducted with 15 informants coming from 10 shortlisted organizations. Findings: The interview data were transcribed and analyzed to extract the key and sub-themes. A total of 58 items were generated with the help of five experts, and an average score of 0.859 on the S-CVI (scale level content validity index) is achieved with a Kappa (K) coefficient of 0.810. Implications/Originality/Value: So, it is concluded that this instrument will help to differentiate CSV adopters and those who involve in CSR projects. As a future direction, instrument testing and scale evaluation are designed.
... The effectiveness and successful realization of sustainability-oriented innovation and managing discontinuity caused by crises is highly dependent on the extent to which an organization has certain capabilities [19,24,25]. Capabilities that are positively related to an effective, successful realization of sustainability-oriented innovation and managing discontinuity are sustainable entrepreneurial orientation and have an absorptive capacity [28,30,31]. ...
... There are different definitions, but the general consensus is that absorptive capacity is a multidimensional construct. It consists of four aspects: knowledge acquisition, knowledge adaptation, knowledge transformation, and knowledge exploitation [25,56,57]. Acquisition is related to the capability to identify and acquire knowledge. ...
... Various studies have shown that the effective and successful realization of sustainabilityoriented innovation and managing discontinuity caused by crises highly depends on the extent to which an organization acquires knowledge (identifying and obtaining external knowledge), adapts knowledge (analyzing and understanding knowledge), transforms knowledge (combining existing and new knowledge), and exploits knowledge (applying and using existing and new knowledge) [25,33,56]. The aspects of absorptive capacity can also be directly influenced by discontinuity [19,24]. ...
The corona crisis caused discontinuity within the financial sector, which has further increased the importance of innovation for sustainability and the capability to manage discontinuity. The aim of this research is to investigate how the corona crisis affected the relationship between sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity in the financial sector. Empirical research was carried out in the Dutch financial sector during the corona crisis by means of semi-structured interviews with senior managers, semi-structured group interviews with employees, observations, and documentation. The results of this qualitative exploratory case-study research show that the corona crisis has caused discontinuity for the case organization, which has led to an increase in uncertainty and a decrease in risk appetite. However, the degree of proactivity, innovativeness, knowledge adaptation, knowledge acquisition, knowledge exploitation, and knowledge transformation have also increased as a result of the corona crisis. Therefore, the case organization was able to manage discontinuity and realize more sustainability-oriented innovation. Findings seem to indicate that for the case organization, the corona crisis had a predominantly positive effect on (the relationship between) sustainability-oriented innovation, sustainable entrepreneurial orientation, and absorptive capacity. This research has several theoretical and practical implications and contains recommendations for further research and practice.
... While crises have become usual to some extent, business in the context of a crisis is not so much 'business as usual' (Liu et al., 2020), as it is 'unexpected' (Afthonidis & Tsiotras, 2014), 'unusual' (Cerrato et al., 2016) or represents a new kind of usual (Cortez & Johnston, 2020), requiring a different approach towards doing business (Martinez et al., 2019). However, in an environment of uncertainty, it is more important than ever (Breier et al., 2021) to carry on as close as possible (Liu et al., 2020) to business as usual. ...
... However, in an environment of uncertainty, it is more important than ever (Breier et al., 2021) to carry on as close as possible (Liu et al., 2020) to business as usual. In order to do so, Martinez et al. (2019) reported that the underpinning processes have to be able to resist disruption. In this vein, adapting the organizational structure to the environmental changes (Pramanik et al., 2015) that influence the functioning of the organization (Ahn et al., 2018) is essential. ...
... In the midst of current uncertainty, a number of companies have already responded to the COVID-19 challenge (Liu et al., 2020) and distinguished themselves (Ratten, 2020) by shifting their services (Sharma et al., 2020) and product lines (Martinez et al., 2019) to meet the highest priority needs of their consumers (Mehta et al., 2020), employees (Shakina & Barajas, 2020), and communities (Cortez & Johnston, 2020). Of course, depending on the type of crisis, the organization might take different forms of action . ...
A crisis can devastate an organisation. However, it is important to remember that throughout history, crises have been pivotal in developing societies. Following this line of thought, in this chapter, we explore the possibilities that come with crisis, and how they could contribute towards a more sustainable future. It’s about using the lessons stemming out of a crisis for developing ‘krisis-readiness’ and a long-term operational effectiveness. It’s about prioritising innovation during the crisis to unlock post-crisis growth and sustainability.
... While crises have become usual to some extent, business in the context of a crisis is not so much 'business as usual' (Liu et al., 2020), as it is 'unexpected' (Afthonidis & Tsiotras, 2014), 'unusual' (Cerrato et al., 2016) or represents a new kind of usual (Cortez & Johnston, 2020), requiring a different approach towards doing business (Martinez et al., 2019). However, in an environment of uncertainty, it is more important than ever (Breier et al., 2021) to carry on as close as possible (Liu et al., 2020) to business as usual. ...
... However, in an environment of uncertainty, it is more important than ever (Breier et al., 2021) to carry on as close as possible (Liu et al., 2020) to business as usual. In order to do so, Martinez et al. (2019) reported that the underpinning processes have to be able to resist disruption. In this vein, adapting the organizational structure to the environmental changes (Pramanik et al., 2015) that influence the functioning of the organization (Ahn et al., 2018) is essential. ...
... In the midst of current uncertainty, a number of companies have already responded to the COVID-19 challenge (Liu et al., 2020) and distinguished themselves (Ratten, 2020) by shifting their services (Sharma et al., 2020) and product lines (Martinez et al., 2019) to meet the highest priority needs of their consumers (Mehta et al., 2020), employees (Shakina & Barajas, 2020) and communities (Cortez & Johnston, 2020). Of course, depending on the type of crisis, the organization might take different forms of action . ...
Crises present significant challenges for organizations. But, while critical events are inevitable, not every business is sufficiently equipped for when things don’t go according to plan. This book focuses on business under crisis conditions, along with organizational responses and adaptation. Adaptation can be seen as a learning process. It encompasses meaningful ways that help companies sustain their viability over the long term. Companies that respond quickly, often achieve more than just surviving. Some organizations will learn from a crisis, develop reactive resilience, and emerge stronger from the period of turbulence. They will be able to explore possibilities and create new patterns of relationships.
Bringing together descriptive and prescriptive research studies, chapters explore adaptation in different sectors, including public health, tourism, garment, Information Technology, high-tech companies, global trade networks, hospitality, security and the social sector. Ultimately, the book covers wide range of topics, linking strategy, entrepreneurship, and leadership to reciprocal organizational adaptations that help us delineate crisis, as well as its interconnections in differing settings.
Demetris Vrontis is Professor and Vice Rector for Faculty and Research at the University of Nicosia in Cyprus.Alkis Thrassou is Professor in the School of Business at the University of Nicosia, Cyprus, and a Senior Research Fellow of the EuroMed Academy of Business (EMAB).
Yaakov Weber is Professor and Director of the Research Unit, School of Business Administration, College of Management, Israel.
S. M. Riad Shams is Lecturer at the Newcastle Business School, Northumbria University, UK.
Evangelos Tsoukatos teaches Management at the University of Applied Sciences Crete, Greece, and is adjunct faculty at the University of Nicosia and the Hellenic Open University.
Leonidas Efthymiou is Assistant Professor in Hospitality and Management.
... This requires every finance company to improve its existing resources and capabilities to get the expected performance. Therefore, although resources play an important role in the company's survival in turbulent conditions, resource-based theory is insufficient to explain the company's competitive advantage (Linde et al., 2021;Martinez et al., 2019). The combination of factors owned by the company will determine its performance. ...
... This combination focuses on resources and what the company can combine into an orchestration of resources, including company actions, experience, market context, and industry conditions (Osiyevskyy et al., 2020;Teece, 2009). Companies need to improve competitive strategies and develop the ability to continuously configure assets into the combination of resources needed to survive in conditions of rapid change (Ahn et al., 2016;Martinez et al., 2019) by renewing the competencies of their human resources to achieve competitive advantage (Andreeva & Ritala, 2016), and become a company that survives and grows in a changing business environment. This is called Dynamic Capabilities (Cao, 2011). ...
Objective: This study aims to identify the dynamic capabilities (DC) that have been owned by the company and find new measurements of DC instruments for financing companies. Dynamic capability is needed to react quickly to the dynamics of the industrial environment, survive in competition and be sustainable. Research Design & Methods: This study utilized a quantitative approach. The search for factor values of each DC was conducted through 32 questionnaire questions given to 55 branch business managers. KMO and Bartlett's test and rotated component matrix test were conducted to prove that the factors are interrelated, with the limitation of average value as the main factor determinant. Findings: Sustainability, innovation, and dynamic factors are important capabilities for multi-finance companies that need to be strengthened and developed. Implications & Recommendations: The concept of DC sensing, seizing, and reconfiguring is closely related to the capabilities of strategic human resource development (SHRD) which is the most important asset. In the future, research can be conducted again on how strong the relationship between SHRD dynamic capabilities and existing DC factors is in achieving company sustainability. Contribution & Value Added: Organizations can survive in fierce competition if they know their DC as their competitive advantage. However, not many companies know how to measure their DC against their dynamic industry, this study will provide examples of the instruments needed.
... A growing body of research explores the central questions of what causes business failure and how a firm may mitigate such a risk (e.g., Josefy, Harrison, Sirmon, & Carnes, 2017;Martinez, Zouaghi, Marco, & Robinson, 2019). We attempt to track these broad questions in this study by examining the following research questions: How and under what conditions could different types of external knowledge search (i.e., breadth and depth) contribute to reducing the likelihood of business failure? ...
... Rapid technological evolution and changes in the business environment have accelerated the universalization of interorganizational collaboration for learning, leading firms to openly cooperate with external agents to complement their existing knowledge with external knowledge (Tootell et al., 2020). Understanding organizational openness can provide valuable insights into the importance of safeguarding core knowledge to ensure appropriate innovation returns, as well as how external connections can help expand an organization's knowledge and reduce the risk of business failures (Martinez et al., 2019). Moreover, the unprecedented environmental shock inevitably triggers collaboration with partners from various fields to expand the knowledge base for new product development and, consequently, ensure survival. ...
This study aims to contribute to the literature on open innovation by theorizing about the breadth and depth of an external knowledge search as a double-edged sword that can both reduce and increase the business failure risk. In addition, we integrate an extended resource-based view (ERBV) and a knowledge-based view (KBV) into an open innovation perspective to examine how a B2B firm's industrial embeddedness and absorptive capacity moderate the proposed relationships between a firm's external knowledge search (i.e., of both the breadth and depth of the external knowledge search) and business failure. To understand the effect of environmental shock on organizational learning and searching, we found a U-shaped relationship between a firm's external knowledge search and business failure in a sample of B2B firms that experienced COVID-19 in a highly developed "leap-frogging economy" (i.e., South Korea). The industrial embeddedness and absorptive capacity of a firm negatively moderate (flatten) these U-shaped relationships.
... After the financial crisis, capital markets have become more cautious, and corporate access to finance and financing has been affected to a certain extent (Yan et al., 2018). While firms need sufficient financial support for proper operation and development, they tend to become shortsighted when they are under financial pressure (Martinez et al., 2019). When there is insufficient liquidity available within the firm, management may prefer decisions that do not have high longterm returns but will make the firm's financial figures more esthetically pleasing in the short term (Qi et al., 2021). ...
... Present market conditions in China show that investor sentiment contributes to the increase in green total factor productivity among businesses. When investor sentiment is positive, corporations' financial situations will improve, giving them the confidence and resources to invest in projects that will enhance the quality of their own development (Martinez et al., 2019). In China, where the concept of environmental preservation is gaining popularity, enterprises are more motivated to increase their green total factor productivity when investor sentiment is positive (Polk & Sapienza, 2008). ...
Investor sentiment does not only have negative impacts. It may also improve green total factor productivity by invigorating funds. This research constructs a new indicator at the firm level to measure the green total factor productivity of firms. We research the effect of investor sentiment on firms’ green total factor productivity using a sample of Chinese heavy polluters listed on Shanghai and Shenzhen A-shares between 2015 and 2019. Through a series of tests, the mediating role of agency costs and financial situations is confirmed. It is discovered that the digitization of businesses facilitates the effect of investor sentiment on the green total factor productivity of businesses. And when managerial competence reaches a certain threshold, the impact of investor sentiment on green total factor productivity is amplified. Tests for heterogeneity reveal that high investor sentiment has a larger impact on green total factor productivity in firms with superior supervision.
... Financial crises, such as that of 2008, increase the likelihood of business failure, yet firms with high levels of human capital in research and development (R&D) are better positioned to survive under uncertain financial conditions (Martinez, Zouaghi, Garcia Marco, & Robinson, 2018). Human capital is a source of sustainability and plays an important role in the success of firms. ...
... Human capital is a source of sustainability and plays an important role in the success of firms. R&D and long-term relationships with customers are also found to decrease the risk of failure (Martinez et al., 2018). The same authors concluded that partnerships (even between competitors) also reduce the risk of failure in times of crisis. ...
... Con esto, las organizaciones tendrán la posibilidad de acceder a más recursos financieros e invertir en activos que fortalezcan su capacidad productiva o en I+D para el desarrollo de nuevos productos o servicios. El papel de la innovación en el desarrollo empresarial, y como uno de los principales objetivos de la colaboración empresarial, surgió como elemento fundamental para la supervivencia de las pymes, particularmente en periodos de incertidumbre económica, como lo demostraron Zouaghi et al. (2018) y García-Martínez et al. (2019). En una red de colaboración, las pymes pueden conocer exactamente las necesidades cambiantes de sus clientes en situaciones de incertidumbre para adaptar (reconfigurar) sus capacidades e innovar más rápidamente en los productos y servicios con potencial para ser elaborados. ...
... Y explorar oportunidades en una crisis económica requiere de inversión en nuevas tecnologías y recursos humanos, que permita abordar de manera más eficaz las preferencias cambiantes de los clientes y las condiciones del mercado. Lamentablemente, muchas pymes no están dispuestas a gastar dinero en inversiones debido a los riesgos percibidos por una recesión prolongada y a la falta de recursos financieros internos (Vrontis et al., 2020;García-Martínez et al., 2019). Las pymes asumen más fácilmente los riesgos por inversión en innovación cuando integran una red de colaboración (Petrescu, 2014). ...
Según datos de la Cámara de Comercio de Bogotá a partir de 2019 se ha visto un incremento en el número de empresas que han cancelado sus operaciones. A pesar de una ligera recuperación a principios de 2020, la crisis económica y social desatada por la pandemia de la COVID-19 (SARS-CoV-2) ha sido implacable con el empresariado local y ha afectado principalmente al sector de las pymes. Las tasas de desempleo distrital llegaron al 16,3 % a finales de 2020 y la retracción del PIB local se acercó al 6,4 %. Como alternativa para el incremento de la competitividad y la innovación en las pymes, así como opción para su supervivencia en tiempos de crisis, en las últimas dos décadas alrededor del mundo se ha trabajado e implementado la estrategia de las plataformas colaborativas. El concepto de colaboración empresarial se asocia con la resiliencia económica de las organizaciones humanas al proponer prácticas innovadoras y movilización de recursos en respuesta a las dificultades y retos existentes. En este sentido el presente artículo tiene como propósito hacer una revisión al estado del arte de las redes de colaboración empresarial, exponiendo sus principales características, las fases de su implementación, su formulación, métodos de análisis y aplicaciones prácticas, con el propósito de exponer la conveniencia, alcance y posibles limitaciones de esta estrategia como opción para las pymes locales que permita mitigar su creciente cierre con los impactos económicos y sociales que esto implica. Palabras clave: redes de colaboración, pymes, innovación, crisis
... The multiple omnichannel strategic decisions implemented by retailers during the pandemic have received different responses from customers. Past research has uncovered general business failures (Martinez et al., 2019;Verhoef, 2021), service recovery failures (Brady et al., 2008;Schumann et al., 2014) and omnichannel business challenges (de Borba et al., 2021;Pantano et al., 2020Rosenmayer et al., 2018. However, retailers' strategic activities during the pandemic are yet to be empirically analysed. ...
... The effect of the pandemic on customers Consumer behaviour changes customer service and experience expectations (Klaus and Manthiou, 2020). Pre-pandemic service failures have been acknowledged (Brady et al., 2008;Martinez et al., 2019;Rosenmayer et al., 2018;Schumann et al., 2014). More recent conceptual papers have discussed customer experience during the pandemic (de Borba et al., 2021;Klaus and Manthiou, 2020;Knowles et al., 2020;Pantano et al., 2020;Verhoef, 2021). ...
Purpose
This paper develops a typology of omnichannel retailer activities and corresponding customer responses during a rapidly changing external coronavirus disease 2019 (COVID-19) pandemic environment, to contribute towards academic research on omnichannel strategies and to assist retailers when making future investment and resource decisions.
Design/methodology/approach
Implementing a dual desk research process, the authors carry out a document review of 61 retailers operating globally and connected customer reviews and categorise them using a content analysis.
Findings
The findings show that retailers employ a multitude of new omnichannel strategies during a pandemic and implement new or upgraded cross-channel services. Customer data show that delivery and customer service issues largely persist. The authors divide retailer actions and microfoundations into five broad categories and present a typology of strategic retailer activities and customer responses.
Originality/value
This research presents insights into omnichannel strategies from both a retailer and customer perspective, and offers guidance on improving the implementation of future omnichannel strategies.
... The central premise of their proposal rests on an organization's continuous endeavors to organize, adjust, and restore itself from organizational weakening, misalignment, and isolated events triggered by extenuating circumstances . While the firm galvanizes efforts (e.g., economic, cognitive, behavioral, emotional, and relational capabilities and resources) in responding to disturbances [see also (Garcia Martinez et al., 2019)], the firm gains resilience by enhancing perseverance and reliability in the face of various challenges. Importantly, although a crisis is primarily viewed as an anomaly that entails adverse or even devastating impacts, organizations that succeed in gaining resilience from such an event are able to thrive and hence, a crisis could be reframed as an opportunity rather than a threat (James et al., 2011;Pearson & Clair, 1998;Williams et al., 2017). ...
This research integrates the theoretical strands of crisis management and organizational agility to improvise a process in which organizations expedite their IT-based solutions to cope with mega disruptions, carried out through two studies. Using corpus linguistics as an analytical approach with data collected from press releases from 10 US retail conglomerates, our findings point to the transition from a business-as-usual business model to the incubation of a work-at-home retail model that is infused by technology innovations. In making such a transition, organizations exercise agility through rapidly responding to a multitude of environmental jolts. The contribution of the present article lies in illuminating the role of IT innovations and digitization efforts that lay the necessary organizational capabilities to stay abreast with market opportunities amid extenuating circumstances. This research provides an empirical articulation of the importance of IT-based crisis responses to help scholars better understand the nature of crisis management and organizational agility.
... Companies must create structures with expanded autonomy, power delegation, plan development, and bottom-up experimentation to react swiftly to an unanticipated crisis and it helps to enhance business performance (Dyduch et al., 2021). As per the study by Martinez et al. (2019), there is a significant relationship between the company's performance during an economic downturn and the level of reconfiguring activities such as adopting innovations as a part of their business strategy. Accordingly, researchers will test on the following hypothesis: ...
The current economic crisis which is experiencing has a significant impact on the development and performance of most SMEs, making their existence even more susceptible. In the face of the current economic crisis, Dynamic capabilities (DCs) can be utilized as a survival mechanism to help organizations to increase the value of their businesses, get competitive advantages, and increase business performance in a changing business environment. Therefore, the purpose of this paper is to analyze the impact of three dimensions of DCs which are sensing, seizing, and reconfiguring on the business performance of SMEs during this economic crisis. In addition, this study investigates how DCs could impact business performance through Information technology (IT) adoption as a moderator. The quantitative approach is adopted, where a cross sectional survey was utilized to collect primary data from SMEs. Findings of the study based on a sample of 380 SMEs in western province and stratified random sampling method was utilized to select participants. Structural Equation Modeling (SEM) was used to analyze data by using Smart PLS 4 software. The results revealed that only sensing and reconfiguring capabilities have a significant impact on SMEs’ performance and IT adoption moderates the relationship between DCs and business performance during the economic crisis. Therefore, this study provides a great effort to quantitatively investigate the impact of three procedures of DCs and the moderate effect of IT adoption during the economic crisis. Furthermore, it conveys a better understanding of how SMEs could deploy their DCs to ensure higher levels of performance in periods of crisis. The results of this research will pave a path for them to successfully take effective strategic decision on the SMEs. Keywords: Business Performance, Dynamic Capabilities, Economic Crisis, and SME.
... Furthermore, the empirical gap extends to the dearth of comprehensive frameworks that encompass both technical and human dimensions of productivity enhancement within the mining sphere. Existing studies have predominantly focused on discrete operational aspects or technology-driven interventions, with limited research dedicated to holistic frameworks navigating the intricate intersection of technical and human factors in enhancing productivity (Garcia Martinez et al., 2019;Onifade et al., 2023). ...
This study addresses the redesign of a productivity award in the value chain, aiming to provide a comprehensive strategic framework for organizations dedicated to excellence. A notable challenge is identified in the absence of industry-specific models tailored to sector characteristics. In response, the ABCs of Productivity Award is introduced to catalyze sustainable continual improvement in value chains. The research utilizes methodological synthesis, incorporating a comprehensive case analysis across three structured phases. The first phase explores key success factors and conducts a methodical comparative assessment of the current productivity evaluation system against international and national models. This phase lays the foundational bedrock for enhancements in the next phase, involving different focus group deliberations. Informed by insights from the investigative phase, these sessions contribute to preliminary adjustments, forming a blueprint for transformative development. The third phase encompasses a diligent tripartite validation process, involving qualitative, quantitative, and pilot study components. The culmination reveals the scientific meticulous construction of the ABCs of Productivity Award, could be benchmarked in every single industry to create sustainable value while considering various issues that involve different stakeholders. This methodology has been applied to develop national award of Iran’ mining industry and the potential deficits are adjusted in this way and make it efficacious for benchmarking.
... They found that in Cambridge UK, most surviving start-ups exhibited non-linear growth with a variety of setbacks and interruptions, although a small group did exhibit continuous growth paths over 10 years. In terms of technology-based companies, high levels of human resources underpin the survival and growth of companies despite being faced with uncertainty with financing issues (Martinez et al., 2019). In terms of influence and control, most SME founder ownermanagers clearly play a principal role and strongly affect the organization's structure and governance. ...
Purpose
This paper explores key factors influencing high-performing, sustained growth, high-tech small- and medium-sized enterprises (SMEs) in South Korea.
Design/methodology/approach
A qualitative study is adopted to explore seventeen founder owner-managers of high-tech SMEs who sustained consistent employment growth, greater than the industry average, for seven years. Within the sample, those with higher (10% or over) employment compound annual growth rates (CAGRs) over this period are also compared to those with lower rates.
Findings
The study suggests that proactive approaches, such as flexible organization, risk management, fast decision-making and international market entry, are seen as important contributing factors to sustained growth. These findings contribute to a better theoretical and empirical understanding of sustained high-tech SME growth, in a country with a strong entrepreneurial and internationally competitive information technology sector. Also, collaboration across the SME was perceived as making an important contribution to staff development and growth, consistent with stewardship theory.
Research limitations/implications
The sample is based on successful high-tech SMEs, so there are limitations in extrapolating results to other types of firms, sectors or countries.
Practical implications
Key factors identified in this study can be considered by entrepreneurs seeking to achieve sustainable business. These also provide improved understanding for policymakers into the complexity of factors related to sustained and high growth of technology-based SMEs, which many countries are keen to foster to aid national economic growth.
Originality/value
The research provides new evidence exploring the diverse perspectives of founder owner-managers, on the sustained growth and failure in South Korean high-tech SMEs, and how these have changed since the inception of their business.
... The sample mean of closure is 16.1%. Our estimation of firm failure is much larger than that in Martinez et al. (2019). They show that the rate of business failure caused by the global financial crisis is 3.06% for manufacturing firms, and 1.81% for service firms in Spain. ...
... To deepen the analysis, we assess the impact of banking diversity on firms' exit rates during two turmoil periods: the financial-sovereign debt crisis and the first year of the COVID-19 pandemic emergency. 22 Focusing on the former period, we estimate Eq. (3) by including an interaction term between the dummy CRISIS and the GINI 21 The first-stage results of the IV Tobit estimation are reported in the Appendix (Table 7) 22 For contributions investigating the effects of the financial crisis on firms' exit, see, for instance, Carreira and Teixeira (2016) and Martinez et al. (2019). For some analysis of the economic effects of the COVID-19 pandemic on entrepreneurship and small businesses, we refer to the recent papers in Belitski et al. (2022). ...
With Italian data, this paper investigates the role of institutional banking diversity on firms’ exit. Using the Gini–Simpson index, a measure of biodiversity drawn from ecological sciences, we find that banking diversity would have reduced firms’ exit rates in the period under investigation (2009–2020), and such a beneficial effect appears sharper for the years of the last financial–sovereign crisis. Both of these findings seem to support the “biodiversity argument” pioneered by Ayadi et al. (2009, 2010), stating that – beyond the merits of any particular bank institutional model – it is indeed the coexistence of a mix of different credit institutions that matters in favouring the financing of the real economy, especially in a scenario characterized by financial turmoil and uncertainty. As a policy recommendation, authorities should promote regulations that, avoiding bias towards a specific bank model, aim to preserve and promote biodiversity in the banking sector.
... Despite efforts, several researchers (Ayatse et al., 2017;Klimas et al., 2021) report bitter failures of start-up companies. Indeed, according to Martinez et al. (2019), 50% to 90% of these businesses fail within their first five years. Peters et al. (2004) divide incubators according to governance and business models into three types: nonprofit incubators, university-related incubators and for-profit incubators such as private organisations. ...
In Northern Haiti, a unique experience has been developed and an innovation hub has been realised; the core of this is a City of Knowledge that is articulated around an entrepreneurial university, the Institute of Science, Technology and Graduate Studies of Haiti (ISTEAH). Spread over seven departments in the country, as its name suggests, ISTEAH is a technological university that seeks to put science and technology at the service of development by training citizens, leaders and innovators who can promote the advancement of the country. Resolutely turning towards entrepreneurship, this university is in the process of setting up an entire entrepreneurial ecosystem centred around an incubator-accelerator to create—with students, graduates and young people from around the country—technological and social enterprises to generate value, create wealth and jobs and support sustainable development. In this article, this experiment and its perspectives are analysed in light of the sustainable development goals.
... The analysis of firms' survival has been extensively debated in various academic fields, including entrepreneurship, strategic management, and industrial organization (Josefy et al. 2017). Martinez et al. (2019) posit that business failure has been a result of numerous factors, such as firm characteristics, firm-specific capabilities, and macroeconomic conditions, while Bhattacharjee et al. (2009) argue that business existence might be cyclic in nature. The concept of business failure is extensive and encompasses various forms such as termination, acquisition, or bankruptcy, occurring within and across different stages of firm development, such as single-unit firms, diversified firms, and new ventures (Josefy et al. 2017). ...
... On the other hand, Haraguchi et al. (2017) showed that there is no evidence indicating that the share of the manufacturing industry in GDP has decreased signifi cantly. However, the existing body of research generally shows that economic crises reduce production levels (Chalikias, 2017), investments (Martinez et al., 2019;Silva et al., 2022) and employment (Gennard, 2009) and cause deterioration of the sector in many other parameters. The 2008 crisis, which started in the US mortgage and fi nancial sector, then turned into an economic crisis by aff ecting the entire economy and spread to the rest of the world, has also deeply aff ected the manufacturing industries of developed and developing economies. ...
... A study conducted by Garcia Martinez, Zouaghi, Garcia Marco, and Robinson, (2019) that examined the causes of business failure determined that financial crises tend to augment the probability of business failure. Nevertheless, firms with high levels of research and development human capital are better equipped to endure uncertain financial conditions. ...
... As briefly discussed, the macro-level impact of external shock varies as it is applied and translated to firms due to the heterogeneity of firm-level particularities (Paunov, 2012). For example, Zouaghi et al. (2018) found that the impact of financial crisis depends on firms' levels of internal resourceshigh levels of R&D human capital were critical for survival of a financial crisis (Martinez et al., 2019). The negative impact of COVID-19 may vary as such. ...
This study investigates the validity of exploitation and exploration when small- and medium-sized enterprises (SMEs) navigate a highly uncertain time. Although balancing the two strategies has been thought to lead to improved firm performance in general, a combined approach appears to be problematic for SMEs due to a lack of feasibility. We theorise that the effectiveness may vary depending on a fit between the strategies and the environmental contingencies. In doing so, we considered two potential environmental contingencies of a crisis for SMEs: loss of demand and loss of supply. To put our theory to the test, we gathered 224 responses from business leaders and key individuals from Korean start-ups and tested the effectiveness of crisis management strategies. Our findings support the validity of both exploitation and exploration when firms face a loss of demand, but not a loss of supply. It implies that the effectiveness of exploration and exploitation is contingent upon a specific form of crisis experienced at the firm level.
... Collaboration allows tourism business stakeholders to leverage on the skills and resources of each other and share complementary resources to create mutual value and gain a competitive advantage (Abou-Shouk, 2018;Goerzen, 2007;Weber et al., 2017;Wondirad et al., 2020). Additionally, by leveraging on each other's capabilities, collaboration is also reported to reduce the risk of business failure during challenging times (Martinez et al., 2019). ...
While the tourism sector shifts towards digital transformation, Destination Management Organisations (DMOs) often struggle to adapt to their changing technological environment. This study explores the antecedents of digital collaboration and develops a framework for micro-DMOs to enhance effective destination management through digital technologies. An integrated sequential qualitative approach was adopted by conducting multi-phase interviews, in addition to designing and trialling a real-world trial digital platform. The research provides empirical evidence that digital collaboration is essential for micro-DMOs, necessitating them to transform their current “websites” into digital platforms which act as a hub for business stakeholders to actively be involved in. Antecedents of successful digital collaboration include mutuality, trust, control, and leadership which may be manifested differently from non-digital collaboration. Additionally, the study identifies three aspects for digital collaboration; marketing, networking and knowledge sharing that demands specific attention. Our results have theoretical, methodological, and practical implications for academia, industry and policymakers.
... Adverse events often disrupt organizational functioning. For example, recent global crises, such as the 2008 financial crisis and the COVID-19 pandemic, resulted in significant organizational disruptions: lost jobs, customers, and sources of revenue and even the failure of organizations (Crayne, 2020;Crosina & Pratt, 2019;Giones et al., 2021;Martinez et al., 2019). Indeed, Meyer (1982: 515) described that an environmental jolt has a disruptive impact on organizations and has resulted in research seeking to explain how organizations can overcome their disrupted functioning to recover and return to the pre-jolt status quo (Lalonde & Roux-Dufort, 2010). ...
Plain English Summary
There are different ways organizations make the most out of a surprising challenge to enhance performance, adjust, and pivot for new opportunities. The COVID-19 pandemic has challenged organizations in different ways—some experienced near-exponential increases in demand, whereas others saw their entire business evaporate overnight. Despite a continuum in the severity of these challenges, they require resilience. But how does resilience happen in organizations? Our study examines different responses to a challenge that, while originating from the same adverse event (COVID-19 pandemic), impacted organizations and their decision making differently. We find three patterns of responses that provide options for how organizations might approach challenges based on the impact they experience. First, some organizations fell into sudden, exponential demand—requiring simple decision-making rules to make incremental changes to support rapid scaling. Second, other organizations faced operational challenges and found ways to repurpose existing structures to maintain business operations. Finally, some organizations appraised their situation as an imminent threat to organizational survival, requiring rapid, wholesale changes to the business model in the form of pivots. Thus, the principal implication of this study is that organizations have different experiences from the same precipitating event, and they should ensure they align firm decision making, strategic initiatives, and operational activities to best promote resilience.
... In this capacity, it is logical to assume that they affect knowledge capabilities and economic complexity, as shown earlier. Knowledge capabilities are necessary to process information flows in detail and to extract and assimilate knowledge and make decisions (Khor and Tan 2012;Balle et al. 2020;Khaksar et al. 2020;Martinez et al. 2019). The advantage of government data performance for knowledge capabilities is that these data provide a wide and rich layer of information, which is already quite detailed and requires lower cognitive and transaction costs to extract knowledge and implement in the decision-making process. ...
This article is devoted to the study of the influence of government data performance on knowledge capabilities. Knowledge capabilities play a key role in open innovation and creation of citizen-oriented products and services. However, it is necessary to assess the role of the information environment in the development of knowledge capabilities, including government data as a product and a component of the information environment. Government data performance is expressed through the statistical capacity score and its three dimensions: periodicity assessment of statistical capacity, methodology assessment of statistical capacity, and source data assessment of statistical capacity. Knowledge capabilities are expressed through economic complexity, which reflects the diversity and uniqueness of the production capabilities inherent in each country’s exports. Econometric analysis is based on dynamic panel data models that quantify the effect of government data performance on economic complexity. The final dataset includes 94 countries and their indicators for the selected variables for 2004–2019. The models show that government data performance and its various dimensions influence economic complexity because government data provide a detailed and publicly available description of the economic space, including available resources and potential tasks. Based on these data, agents can produce dissimilar and unique products. This logic may be true in general for the influence of government data performance on knowledge capabilities: structured and complete government data reduces the cost of information analysis and provides information support for decisions. The results of the study contribute to the ideas of a data-oriented political economy. Government participation in value creation includes various forms of indirect influence. The provision of government data is one of these forms. The development of collective data governance and collaborative data projects makes it possible to create more complete datasets and stimulates citizen involvement and deliberation.
... Innovation projects frequently fail because of their high uncertainty (Chung et al., 2017;Cooper, 2017;Välikangas et al., 2009). Although many attempts have been made to predict the success or failure of innovation (Alaka et al., 2019;Goldenstein et al., 2019;Link & Wright, 2015;Martinez et al., 2019), failure is always a risk for firms undertaking such projects. ...
This study employs a simultaneous equation model to examine the extent to which firms’ innovation failure can affect future innovation and productivity growth. Our findings suggest that experiencing past failure in the innovation process enhances the innovation performance of a firm; this, in turn, contributes to productivity growth. The primary contribution of this study is the proposal of a conceptual model for the innovation process that considers failure experience as a major input to the knowledge production function. Our results also offer several implications for innovation managers and policymakers. For example, innovation policy initiatives should consider not only the tangible accomplishments of firms, but also their failure experiences. This study also highlights a method to enhance innovation by establishing systems that encourage challenging research and recognise and reward the process, even when a project fails.
... In addition, the recent Covid-19 crisis has challenged previous assumptions concerning the "transient" or short-lived nature of contexts of crisis, while concurrently instigating organizations to rethink the notion of innovation, survival, and the significance of knowledgea resource that has been acknowledged as pivotal to the management of system complexities and organizational responses (Meyer and Sugiyama, 2007). As a result, knowledge management (KM) in crisis has come to mirror a key strategic task that facilitates organizations to navigate through the crisis itself (Campanella et al., 2019;Martinez et al., 2019;Wang, 2009;Wang and Belardo, 2009). With increasing interest in the link between knowledge and crisis, crisis management frameworks have been on the increase, e.g., Inan et al. (2018) proposed the knowledge analysis framework, which describes four phases of crisis management (PPRR); these are the prevention phase, preparedness phase, response phase, and recovery phase. ...
Purpose
Based on the scarcity and the fragmented nature of the literature in the field of knowledge management (KM) and crisis, this paper aims to present a systematic literature review of these two constructs, interlinking the literature in KM to the prevention, preparedness, response and recovery (PPRR) phases framework. The output is a critical discussion on the state of the literature in the field, and an overview of avenues for future research.
Design/methodology/approach
The methodology adopted in this paper is that of a systematic literature review. Using the Scopus database, this study presents the findings that emerged from 59 publications in the field of KM and crisis.
Findings
Through the application of a systematic literature review, this paper categorizes 59 publications on KM according to the different stages comprising a crisis. The implications of each paper are discussed and critically analyzed, acting as the basis of areas for future research.
Originality/value
This paper is the first to offer a systematic review of the literature on KM in contexts of crisis by integrating the literature into a well-defined PPRR framework. Furthermore, the discussions presented in this review may be used by practitioners as a basis/starting point to identify relevant literature on different phases of crisis, while scholars may use this paper to further develop studies in KM and crisis management.
... The magnitude and conditions of available bank credits represented a real challenge for the European MSMEs, while the failure of the banking systems had a crucial role in crisis intensification [51]. The GFC increased the probability of businesses failing; however, the companies with high human capital and R&D levels were the most likely to survive [52]. ...
Purpose: The study discusses COVID-19’s short-term impact on Israel’s renewable energy start-up sector from March to July 2020. Results and contributions: The interviewed companies were experiencing supply chain disruption, logistical issues, and restrictions in work access, all of which negatively impacted business operations. Moreover, companies reported revenue losses and difficulty in securing funding, interpreted here as financial distress. In some cases, companies cut back on staff. Insights from the literature on the global financial crisis (GFC) were used here to discuss patterns discerned from the interviews. Policy recommendations are presented at the end based on both the interpretation of data and a literature review. Methodology: This paper combined the qualitative research analysis of COVID-19’s impacts on energy start-up companies assessed by a questionnaire during interviews with a literature analysis on the previous GFC. Gap: This study aimed to clarify the issues experienced by the start-up companies in the renewable energy sector in Israel during the first months of the pandemic and contributes to the COVID-19 narrative in the energy sector, focusing on a topic that has not been thoroughly discussed at present. Relevance: The paper contains unique primary data on the short-term financial impact of COVID-19 on renewable energy start-up companies, and recommends policies to assist these companies and effectively respond to their financial needs in times of crisis. The paper points out that the absence of such a financial policy for start-up companies might pose risks to the companies’ growth and innovation, and have harmful consequences for the renewable energy sector, energy transition, and climate goals. The attention currently given to initial short-term measures should shift toward a more structural and long-term approach. Impact: The paper wants to capture the attention of policymakers and the research community in evaluating and adequately addressing the financial needs of the start-up sector, which is a crucial segment of the economy, and is indispensable for achieving long-term goals such as energy transition.
... While sharing similarities to other industries, the tourism industry is, at the same time, vastly different from them. As per other industries, success tends to be measured by commercial indicators such as human capital and economic outputs (Garcia Martinez et al., 2019). Also similar to other industries, two fundamental factors determine the success of the tourism industry namely, desirable experience (product) and ...
The advancement of technology has revolutionised the tourism industry. However, Destination Management Organisations (DMOs), in general, have yet to undertake holistic technological solutions in addressing their expected roles and responsibilities, particularly with regards to its role in supporting online collaborations. Greater understanding is required on the functional capabilities needed by both business stakeholders and visitors to provide holistically integrated applications for digital collaborations. Therefore, this research aims to critically discuss the roles and mechanisms in which DMOs become points of consolidation and collaboration for tourism businesses through digital platforms and the functionalities for end-user experience creation. Hence, identifying the characteristics and operational capabilities that enhanced digital platforms of DMOs need to have as part of their functions.
A design-based research approach with three phases was used for the research. Phase 1 explored the understanding and usage of current digital offerings as well as existing collaboration practices. Findings from Phase 1 were used to guide the development of a digital trial platform in Phase 2. The subsequent platform testing in Phase 3 was conducted to further strengthen the understanding of digital collaborations and to establish the needed functionalities for enhanced digital platforms. Data were collected primarily through qualitative methods (interviews and focus groups) with the support of quantitative and visual methods using an eye-tracker device. Findings demonstrate the need for DMOs to provide distinct value propositions of experience creation on their digital platform for business stakeholders and visitors. Therefore, an enhanced digital platform must be equipped with the functionalities for knowledge exchange, networking and marketing for business stakeholders, and personalisation of itineraries and travel information for visitors. The functional capabilities of digital collaboration are underpinned by the concepts of trust, control, leadership, and the willingness to collaborate. As such, the research contributes to the existing knowledge on technology influenced DMO management.
... Management researchers are more interested in knowledge hiding. This is unexpected, given the fact that many businesses have ongoing issues due to benign or malignant communication impediments (Garcia Martinez et al., 2019). Knowledge hiding is being distinguished from other similar but distinct notions like knowledge sharing and knowledge hoarding. ...
With the post-pandemic situation, digitalization has revolutionized physical teaching into online teaching and has become a common practice. The engagement of students has been essential for their good academic performance which can be ensured by the active participation of the students and this is a real challenge for the teachers. However, sometimes in online and physical teaching, teachers are also involved in rationalized knowledge hiding, which leads to the disengagement of the students, and this ultimately affects their academic performance. Therefore, the present study aims at measuring the students’ disengagement in the teaching classes, both physical and online. The population of the present study is the students from the universities of China belonging to different fields of study. The sample size for this study is 246. The data are obtained through the Questionnaire surveys. The existing study has assessed the role of teachers’ rationalized knowledge hiding behaviors in the disengagement of students and their lesser grades. It has been found that rationalized knowledge hiding in online teaching does not affect students’ performance; however, it makes students disengage from their studies in physical classes. Interestingly, the rationalized knowledge hiding in physical teaching has negatively affected the performance of the students. Furthermore, the mediating role of the students’ disengagement has been found significant in this study. Organizations, especially universities, can ensure maximum knowledge sharing by motivating the instructors through positive reinforcements. This study will be useful for the curriculum coordinators of different departments in ensuring the maximum outcome of the teaching classes, workshops, and seminars conducted either physically or online to avoid the rationalized knowledge hiding of the teachers.
... However, they have a high failure rate of about 90% attention (Bajwa et al., 2017;Boso et al., 2019;Cotterill, 2012;Garcia Martinez et al., 2019). The high failure rate is attributed to multiple factors and attributes (Khelil, 2016;Mantere et al., 2013;Pardo & Alfonso, 2017). ...
Technology startups are exposed to multiple challenges. One of the key challenges is conflict, as it has a decisive role in the technology startup evolution. This study examines the effect of conflict on the following two counts: How do conflicts differentiate the success or failure of technology startups? How do conflicts impact the startup lifecycle comprising multiple stages of formation? The studies on conflict are few in the context of an emerging economy like India. This study explores the role of conflict by gathering primary data from 151 cofounders (101 who have experienced failure and 50 who are successful and continuing their operations) from India's six leading technology startup hubs. The presence of cofounder conflicts or Investor conflicts increases the odds of failure of technology startups. 1. The cofounder(s) should navigate and resolve the potential conflict issues related to relationships, roles, and rewards. Besides ensuring the cofounder's agreement, having an effective issue resolution mechanism is required. 2. The strategic intervention of investors coupled with the proper governance structure can lend a helping hand in minimizing conflicts. The epiphanies from cofounder(s) perspectives offered practical suggestions for conflict resolution between cofounders and investors.
... In the process of knowledge sharing, knowledge is initially gained and systematically structured, and later transferred from one person to another or a group of people. Since knowledge sharing is the process that comprises activities more than just data collection, the value possessed by knowledge gets improved through sharing (Martinez et al., 2019). As such, via means of proper knowledge management, the work quality of employees, their problem-solving capacity, competency, and decision-making skills, gets enhanced which eventually results in multiple benefits for the whole organization. ...
To enhance the job performance of engineers in the oil and gas sector, their knowledge and skills should be constantly updated through knowledge sharing. Perceived behavioural control and attitude have been identified as factors that contribute to effective knowledge sharing among employees. However, very little is known about perceived behavioural control and attitude toward knowledge sharing in the Iraqi oil and gas sector. Therefore, this study investigates the relationship between engineer’s perceived behavioural control and attitude on their intention towards knowledge sharing in public oil and gas firms in Iraq. To participate in the study, 240 engineers from oil and gas companies in Iraq were randomly selected. A questionnaire designed in a Likert scale format was used for the data collection. The data were analysed using descriptive statistical analysis and Correlation analysis. The results of the analysis show that there is a positive relation between engineer’s perceived behavioural control and attitude on their intention towards knowledge sharing in public oil and gas firms in Iraq. The study makes some recommendations on how to increase engineers’ perceived behavioural control and attitude and eventually increase their intention towards knowledge sharing.
... While there is a large body of literature examining business failures, specifically the why and how companies fail [42,43], the findings of this study contribute to research into the impact of COVID-19 on the retail industry. This paper provides a snapshot into the nature and extent of fluctuations in customer visitation patterns between chain and independent stores through cycles of restrictive government policy. ...
... Le codage des donnéesNous avons utilisé des variables quantitatives, mais aussi des variables fictives (dummies, en anglais), afin d'enrichir nos premières analyses. Ce procédé est utilisé dans différentes recherches récentes(Brown & Lee, 2019 ;Garcia Martinez et al., 2019). ...
Les approches de Penrose (1959) et de Barney (1991) constituent les approches théoriques dominantes pour analyser la croissance des entreprises. L’approche par les ressources, communément appelée Resource-Based View (RBV), a été largement débattue dans la littérature. Elle analyse l’avantage concurrentiel des entreprises du point de vue de leurs ressources et de leurs capacités plutôt que de leurs produits. Nason & Wiklund (2018) ont récemment montré que l’approche penrosienne des ressources se distinguait de celle de Barney. La première se caractérise en particulier par le caractère polyvalent des ressources mobilisées tandis que la seconde accorde de la valeur aux ressources dès lors qu’elles sont rares, inimitables et non substituables (ressources VRIN). En nous appuyant sur cette nouvelle reconceptualisation, nous questionnons les fondements théoriques de RBV qui a récemment acquis le statut de théorie détautologisée en la confrontant au marché du Bas de la Pyramide (BOP), c’est-à-dire, au sens de Prahalad & Hart (2002), le marché des quatre milliards d’individus qui vivent avec moins de deux dollars par jour en parité de pouvoir d’achat.
งานวิจัยนี้มีวัตถุประสงค์เพื่อ 1) ศึกษาปัจจัยแห่งความสำเร็จในการดำเนินธุรกิจที่ส่งผลต่อการเติบโตของรายได้ของผู้ประกอบการธุรกิจการท่องเที่ยวฝั่งอันดามันของประเทศไทย และ 2) ตรวจสอบอิทธิพลของปัจจัยแห่งความสำเร็จในการดำเนินธุรกิจที่ส่งผลการเติบโตของรายได้ของผู้ประกอบการธุรกิจการท่องเที่ยว ใช้การวิจัยเชิงปริมาณโดยเก็บรวบรวมข้อมูลจากกลุ่มตัวอย่างที่เป็นผู้ประกอบการธุรกิจการท่องเที่ยวในเขตพื้นที่ฝั่งอันดามัน จำนวน 419 คน ด้วยแบบสอบถาม วิเคราะห์ข้อมูลด้วยการวิเคราะห์สถิติเชิงพรรณนา ได้แก่ ความถี่ ร้อยละ ค่าเฉลี่ย ส่วนเบี่ยงเบนมาตรฐาน และการวิเคราะห์การถดถอยกำลังสองน้อยที่สุด ผลการวิจัย พบว่า ผู้ประกอบการธุรกิจการท่องเที่ยวมีการนำปัจจัยแห่งความสำเร็จในด้านคู่ค้าทางธุรกิจ คุณภาพการบริการ และมาตรฐานสุขอนามัย ไปใช้ในการดำเนินธุรกิจอยู่ในระดับมาก นอกจากนี้ ผลการวิจัยจากการวิเคราะห์การถดถอยกำลังสองน้อยที่สุดแสดงถึงปัจจัยแห่งความสำเร็จบางด้านมีอิทธิพลต่อการเติบโตของรายได้ของผู้ประกอบการธุรกิจการท่องเที่ยวอย่างมีนัยสำคัญทางสถิติทั้งในภาพรวมและจำแนกตามเขตพื้นที่เมืองหลักและเมืองรอง โดยในส่วนของข้อเสนอแนะ ควรให้ความสำคัญกับการนำปัจจัยแห่งความสำเร็จไปใช้ในการดำเนินธุรกิจอย่างเหมาะสม เนื่องจากผู้ประกอบการธุรกิจการท่องเที่ยวจะมีวิธีการและรูปแบบในการรับมือกับการเปลี่ยนแปลงและภัยพิบัติที่อาจจะเกิดขึ้นในอนาคตและยังส่งผลต่อการเติบโตของรายได้สำหรับธุรกิจการท่องเที่ยวอีกด้วย
The COVID-19 epidemic has altered the economic geographies of cities. However, the academic focus on urban industries and their structural dynamics is far from enough. In this paper, we integrate literature from economic geography, business studies and network sciences, and design an adaptation framework to theorize urban economic resilience. Taking the COVID-19 outbreak in Xinfadi, Beijing during the summer of 2020 as a case study, we use Logit regressions and DID estimations to identify the impacts of the epidemic on local industrial dynamics. Our results support that the COVID-19 outbreak significantly increases the number of business exits. The negative impacts are concentrated in high-risk regions, pointing to specific industries and individual-owned firms. Furthermore, we use a machine learning method to visualize the dynamics of industry networks in a small-scale urban area, and then simulate the transmission paths of industry-failure. In doing so, we contribute to current economic resilience literature that firm-level adaptation and industrial dynamics complement regional adaptation theory, while the cascading effects in the industry network underpin the micro foundations of resilience formation.
This study aims to evaluate the survival probability of small- and medium-sized enterprises (SMEs) in the service sector during the COVID-19 pandemic and empirically investigate their survival determinants. The sample group of 420 firms was analyzed utilizing the Cox proportional hazard model. The results showed that several business categories had various levels of survivability. The businesses that served exposure to tourists (e.g., travel agencies, entertainment, accommodation, and restaurant) were more likely to fail. Furthermore, business characteristics, financial statements, and government support substantially impacted the firm survival likelihood. These findings have several practical implications for businesses, governments, and policymakers in dealing with pandemics in the future.
Drawing on a novel theoretical framework, we explored the impact of research and development (R&D) effort on business model innovation via external collaboration breadth and collaboration depth in sequence. We empirically analyzed a sample of 94 Chinese innovative enterprises by applying hierarchical regression analysis and chain mediation analysis. The results indicate that R&D effort positively influences business model innovation. The influencing mechanism is that R&D effort positively affects external collaboration breadth, which in turn positively stimulates external collaboration depth, and ultimately benefits the implementation of business model innovation. Therefore, the breadth and depth of external collaboration play a chain-mediating role. The study develops a new framework for understanding the relationship between R&D effort, external collaboration, and business model innovation. It combines enterprises' internal behavior (R&D) and external behavior (collaboration) to establish an inside-out mechanism for predicting business model innovation. It enriches the theory of business model innovation. It also provides insights for managers and governments to optimize policies in innovation-driven development.
Purpose
Knowledge management (KM) capability plays an important role in the promotion of firm performance in the knowledge economy era. However, empirical evidence on how KM capability affects firm performance is still limited. The study therefore aims to explore the impacts of internal and external KM capabilities on firm performance via the parallel mediation of efficiency-centered and novelty-centered business model innovations (BMIs).
Design/methodology/approach
The authors empirically analyzed a survey data of 295 Chinese innovative enterprises by applying partial least squares structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA).
Findings
According to the results of PLS-SEM, the relationship between internal KM capability and firm performance is not significant, instead it is fully mediated by efficiency-centered and novelty-centered BMIs. External KM capability can directly and positively affect firm performance, while the relationship is also partially mediated by BMIs. Furthermore, the authors recognized the antecedent conditions for high-level and low-level firm performance by fsQCA analysis, which substantiate the above findings.
Originality/value
It not only enriches the literature that links KM and innovation management but also contributes to the new theoretical perspective on firm sustainable growth. Methodologically, it combines symmetric and asymmetric analyses together. Additionally, it provides some insights for managers to understand how KM capability drives firm performance through BMI.
2008 küresel ekonomik krizi, Dünya’nın son dönemde yüzleştiği en büyük ekonomik olaylardan birisidir. Finansal kesimde başlayan kriz, yayılmacı ve bulaşıcı etkisi ile kısa sürede az gelişmiş, gelişmekte olan ve gelişmiş ekonomilerin reel sektörlerine de sıçrayarak bütüncül bir ekonomik kriz halini almıştır. Bu çalışmanın amacı, 2008 krizinin Türkiye’de faaliyet gösteren sektörlerin kârlılıklarına olan etkisini analiz etmektir. Çalışmada ayrıca, kriz döneminde kârlılığa hangi faktörlerin etki ettiği ve yapılan forecasting (tahmin) analizi ile kriz olmasa idi sektör kârlılıkları nasıl seyrederdi sorularına da cevap aranmıştır. Çalışmanın sonucunda 2006-2014 arası dönemde faktör maliyet ile katma değer, ihracat, yurt içi satışlar ve kambiyo kârının sektör kârlılıklarını anlamlı ve pozitif etkilediği, bunun yanında başta imalat sanayi olmak üzere inşaat ve ulaştırma sektörlerinin ise krizden anlamlı derecede etkilendiği tespit edilmiştir. Kriz etkilerinin minimize edilmeye çalışıldığı sonraki yıllarda ise uygulanan politikalar ile sektör kârlılıklarının toparlanma eğilimine girdiği ve hatta beklenen kârlılığın üzerine çıktığı görülmüştür.
Este trabajo tiene como objetivo identificar el efecto que los recursos de conocimiento del equipo fundador de una nueva empresa de base tecnológica (NEBT) y el acceso a fuentes de conocimiento externas tienen sobre los resultados empresariales. En particular, se consideran indicadores complementarios de resultados a corto plazo (resultado en el mercado exterior, resultado global del mercado y resultados financieros superiores) y a largo plazo (supervivencia de la NEBT). De esta forma, la presente investigación contribuye a comprender si los recursos de conocimiento tienen el mismo impacto (o no) en los resultados a corto y largo plazo de las NEBTs.
Purpose
The authors aim to measure the effects of ambidextrous innovation and its mix strategy on organizational obsolescence with the moderating roles of environmental turbulence.
Design/methodology/approach
Hierarchical regression analysis was used to test the hypotheses on the basis of the survey data of 198 firm employees in China.
Findings
Both exploratory and exploitative innovations significantly restrain organizational obsolescence. The complementary strategy of ambidextrous innovation is negatively correlated to organizational obsolescence, but the impact of balanced strategy is not significant. Environmental turbulence negatively moderates the relationship between exploratory innovation and organizational obsolescence, whereas it cannot moderate the effect of exploitative innovation.
Originality/value
The empirical and conceptual findings have important implications for organizations countering obsolescence through the construction of a mix strategy of ambidextrous innovation. This study enriches and extends obsolescence theory by introducing the joint mechanism of ambidextrous innovation and environmental turbulence.
Purpose
The purpose of this study is to test a contingency model in which the relationship between task conflict and team performance depends on the extent to which team members differ in their levels of expertise and functional backgrounds.
Design/methodology/approach
Data were obtained from 71 student teams that completed a semester-long entrepreneurial project.
Findings
The results support the moderating role of expertise disparity in the process through which task conflict contributes to team performance. Task conflict had a curvilinear effect (inverted-U) on team performance in teams with high expertise disparity. In contrast, in teams with low expertise disparity, the relationship between task conflict and team performance was found to be linear and positive. The moderating role of functional background diversity was not supported.
Research limitations/implications
This paper shows that the relationship between task conflict and team performance can exist in both a linear and a curvilinear fashion, and that what determines the form of the relationship has to do with a team’s diversity characteristics. The focus of future conflict research should be whether and how teams can realize the possible beneficial effects of task conflict, not whether task conflict is simply good or bad.
Practical implications
Managers may deliberately consider the differences in expertness among members when creating teams or assigning members to a team. Further, they may want to avoid extensive task conflict when a team’s expertise levels are unevenly distributed to lessen expected performance loss.
Originality/value
This study’s examination of the roles of two moderators in catalyzing the processes through which potential effects of task conflict are realized enhances the understanding of equivocal results in conflict research. The empirical evidence that this study provides informs a long-standing debate in the conflict literature – whether task conflict is functional or dysfunctional for teams – in a new, insightful way.
Though the notion of the changes that crises bring about are understood, their mechanism, characteristics, effects and underlying motivators are less so, and vary across the organizational, industry and market typology. Of course, it also depends on the nature of the crisis, its severity, its length, its timeframe, its geographic spread and other factors. This chapter, thus, brings together incorporate scientific works (chapters) on contextual transformations and reciprocal organizational adaptations that will help delineate the above forces and factors, as well as their interrelationship in differing settings.
Many studies have attempted to investigate the potential benefits of open innovation. However, the long-term effects of openness have yet to be demonstrated, even if few researchers hypothesized that high openness could increase firms’ dynamic capabilities and hence their resilience in the face of adversities, such economic downturns. Hence, this article attempts to investigate this dynamic relationship between openness and firm performance with particular considerations addressing the recent financial crisis in 2008. Based upon the UK Community Innovation Survey (CIS) panel data collected between 2006 and 2012, this study finds evidence that supports the positive influence of openness on long-term firm performance. The results show that (i) increasing a firm's openness is an effective way of enhancing its dynamic capability and hence its resilience, and (ii) of all the various configurations of openness, the collaboration with partners outside the firm's value chain and international partners has the highest impact on turnover recovery, as they will increase the chances of acquiring newer knowledge, which in turn will help firms to identify new opportunities to achieve sustainable growth. The findings of this article have some practical implications for managers and policymakers.
As the likelihood of worldwide crises increases due to globalization and the resulting economic contagion, understanding why some multinational enterprises (MNEs) prevail in such environments becomes ever more critical. Drawing from the concept of dynamic managerial capabilities, we posit that MNE in-crisis performance is associated with the pre-crisis development of asset management capabilities, or the capacity of managers to orchestrate assets so as to extract more value from the firm’s resource pool. Specifically, we argue that because dynamic managerial capabilities evolve as a response to a firm’s task environment, MNEs that operate in dynamic industries develop stronger asset management capabilities. However, we also posit that whether these capabilities contribute to in-crisis performance is contingent upon the munificence of the industry environment in which the capability evolves. Asset management capabilities that evolve in munificent environments would encompass a wider spectrum of routine-altering activities, and thus increase the ability of the MNE to react to more revolutionary events, such as global economic crises. Conversely, asset management capabilities that evolve in resource-scarce environments will result in more strategic lock-in due to firms' constrained ability to experiment with novel resource configurations, resulting in poorer in-crisis performance. We test our hypotheses using a sample of 854 MNEs in the context of the global financial crisis of 2008, and find support for our hypotheses. We discuss implications for the dynamic capabilities view and MNE resilience.
There is to date abundant evidence about the way openness-performance liaisons are shaped, yet parallel streams of research point towards an intricate relationship between appropriability and openness. Accordingly, while openness may reveal ample opportunities, risks of e.g. misappropriation should also be accounted for in open innovation processes, as they might affect performance. Recent research highlights the scarcity of studies investigating openness, appropriability and performance, and suggests a further need to analyze this in different stages of the innovation process. This study therefore aims to investigate the effects of three groups of intellectual property protection mechanisms (formal, semi-formal and informal) and openness (in terms of collaboration depth with eight types of partners) on two types of innovation performance (efficiency and novelty) across innovation phases. The analysis is based on a sample of 340 manufacturing firms from three European countries. Findings show that in early stages of the innovation process, efficiency is positively linked to the use of semi-formal appropriability mechanisms, such as contracts, yet negatively related to the use of formal ones, such as patents. The latter potentially illustrates the high uncertainty and increased risks of imitation or misappropriation in early innovation phases. Informal appropriability mechanisms contribute to novelty in earlier as well as later stages. Results further indicate novelty is explained by university collaboration throughout the innovation process, while competitor collaboration positively associates with novelty in later innovation stages. Vertical collaborations with supplier and customers reveal contrasting effects, which could also have implications linked to imitation risks. Furthermore, the negative effects of formal appropriability mechanisms and supplier collaboration on innovation performance in distinct stages of the innovation process might have implications for the so-called paradox of disclosure.
This paper considers the impact of non-founder human capital on high-tech firms' long-run growth and survival. Drawing upon threshold theory, we explore how lack of access to complementary skills at different points in the life course impacts founders' thresholds for exit. We examine these factors using a unique longitudinal dataset tracking the performance and survival of a sample of UK high-tech firms over thirteen years as the firms move from youth into maturity. We find that firms that survive but do not grow are characterized by difficulty in accessing complementary managerial skills in youth, while firms that grow but subsequently exit are characterized by shortfalls of specialized complementary skills during adolescence. Firms that grow and survive do not report skills shortfalls. We discuss the implications of these resource constraints for entrepreneurs’ decisions to persist or exit through the life course.
Knowledge and competencies traditionally rooted in industries external to the food sector’s
boundaries are gaining momentum and foster innovation in the food domain. In Italy, food
companies collaborate with other firms in open and cross-industry innovation (CII) projects to
achieve a competitive advantage. The paper aims to shed lights on eventual drivers for CII in the
food sector in a twofold manner: (i) exploring to what extent external knowledge sourcing affects
innovation and (ii) seeking to understand to what extent different means of external knowledge
sourcing might differ according to the company size. To this end, probit models have been run
on a sample of 703 Italian food companies from the CIS 2010 and 2012. Empirical evidence
shows that in the Italian food industry innovation relies on different external knowledge sources.
Acquisition of machinery and equipment allows food companies to transfer external know-how
inside the firm boundaries. Product innovation benefits of external R&D activities as well as of
information provided by competitors and consultants. Process innovation relies mostly on
acquisition of technology (machinery and equipment) as well as on information provided by
input suppliers.
Existing evidence on the relationship between R&D intensity and firm survival is varied and often conflicting. We argue that this may be due to overlooking R&D scale effects and complementarity between R&D intensity and market concentration. Drawing on Schumpeterian models of competition and innovation, we address these issues by developing a formal model of firm survival and using a panel dataset of 37,930 of R&D-active UK firms over 1998–2012. We report the following findings: (i) the relationship between R&D intensity and firm survival follows an inverted-U pattern that reflects diminishing scale effects; (ii) R&D intensity and market concentration are complements in that R&D-active firms have longer survival time if they are in more concentrated industries; and (iii) creative destruction as proxied by median R&D intensity in the industry and the premium on business lending have negative effects on firm survival. Other findings concerning age, size, productivity, relative growth, Pavitt technology classes and the macroeconomic environment are in line with the existing literature. The results are strongly or moderately robust to different samples, stepwise estimations, and controls for frailty and left truncation.
We provide evidence that both human capital and R&D increase the likelihood that a firm will be a high-growth firm in the industry. However, different from human capital, being an R&D active firm also increases the probability of substantial decline or failure, underscoring the risky nature of innovation. Quantile regression results show that, different from R&D, human capital is growth-enhancing for all firms, hence also those located in the lower quantiles of the distribution of growth rates across firms.
The model developed in this paper draws on human capital theory to explain how newly founded business ventures achieve long‐term growth and reduce their chances of failure. Using a sample of 201 business start‐ups and assessing growth and venture failure over a period of 12 years, we found that general and specific human capital lead to growth and failure in different ways. More specifically, we found that the effect of general human capital on failure was mediated by growth. Unexpectedly, specific human capital was not related to growth and had direct negative effects on business failure.
Empirical investigation of business failures has considered the effects of macroeconomic conditions and financial healthiness in isolation. Using a panel of five Asian economies – Indonesia, Korea, Malaysia, Singapore and Thailand – over the period 1995–2007 we analyse the link between firm survival and financial healthiness during the 1997–1998 Asian crisis. We show that the sensitivity of survival to financial indicators is significantly higher during the crisis compared to tranquil periods. In addition, we find that the effect of financial indicators is quantitatively and qualitatively more important in economies with less developed stock exchanges.
This paper investigates two channels through which research and development (R&D) and human capital may affect regional total factor productivity growth in the manufacturing sector, using panel data on 159 EU-15 regions from 1992 to 2005. Based on the endogenous growth model of Griffith, Redding and Van Reenen (2003), we allow R&D and human capital to influence productivity growth both directly, reflecting own innovation, and indirectly, reflecting imitation of frontier technology. Further, the model allows for conditional convergence to a long-run level of TFP relative to the frontier. We also develop an extension that captures geographically localised technology spillovers. Our preferred system-GMM estimates provide evidence of a positive and significant direct effect of human capital, and a positive and significant indirect effect of R&D on productivity growth. This may be interpreted as lending support to the recent focus of EU regional policy on raising educational attainment and R&D expenditures, although their channels of influence appear to differ. Our results also suggest that TFP convergence has taken place over our sample period and that geographic distance to the technology frontier matters.
This study investigates how corporate R&D evolves in the light of the contemporary economic crisis. We study empirical evidence from past downturns, discuss the relevant literature and perform an empirical analysis of recent business survey data (collected during 2009). Pivotal for our considerations is the question whether companies tend to spend more or less on R&D and innovation activities during periods of recession. We empirically analyse what general patterns can be distinguished in this regard, given the particular circumstances of the most recent crisis. Our findings suggest that company behaviour varies: some companies have recently reduced their innovation activities significantly, while others maintained them and a third group even significantly increased their activities to reap the benefits in the expected upswing. Overall, we observe a deceleration of R&D and innovation activities induced by the crisis, but the trend figures remain positive. Driven by the companies that reinforce their R&D and innovation efforts to thrive through the downturn and thus seek to gather the benefits in the upswing to come, the R&D and innovation landscape is likely to look different in the aftermath of the crisis.
This paper focuses on dynamic capabilities and, more generally, the resource‐based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high‐velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well‐known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high‐velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long‐term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high‐velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.
This paper examines the role exerted by internal innovation efforts and external knowledge assets as dynamic capabilities to overcome adverse economic conditions. Additionally, we examine the differential impacts of the financial crisis in high and low-tech industries. Using panel data of manufacturing firms in Spain for the period 2006–2013, our results show that maintaining strong internal and external knowledge capabilities enables firms to mitigate the effects of the financial crisis. Findings emphasize the value of human capital, by enabling internal capabilities, as a coping mechanisms in low-tech sectors during the financial downturn. Similarly, open innovation allows firms to minimise the resources limitations and risk surrounding innovation, particularly during the financial crisis. This study provides valuable insights to managers aiming to develop strong internal knowledge bases to remain competitive under uncertain financial conditions.
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.
Forthcoming at The Academy of Management Annals: http://tx.ag/survival
Understanding why some firms survive while others fail is a central question of strategic management research. Indeed, many consider survival the quintessential indicator of firm performance. As such, survival research is vast, but also frustratingly disjointed across several thematic areas in the organizational literature. In this review of firm survival and failure, we organize this research across three stages of firm development: new ventures, single-business units and diversified firms. We therefore add order to the diverse survival literatures and clarify how scholars’ conceptualizations of survival differ. Notably, different streams’ conceptualization of survival reflect a multi-faceted construct including three dimensions: operations, ownership and solvency. Identifying these dimensions provides a lens that adds clarity when reviewing the literature as well as important richness to better situate future work on survival and failure. In addition, we highlight outdated assumptions prevalent in this research, which have further limited the theoretical development of survival and failure. This review also sheds light on the timely question: “who benefits or suffers from survival and failure?”, as scholars and policymakers alike seek to understand factors that promote entrepreneurial activity and grapple at the other end of the spectrum with “too big to fail” policies.
This paper links the strategic decisions made in R&D during the financially turbulent period of 2009 to the firm's financial health in the period 2010–2013. The focus is on decisions made in R&D-active small and medium-sized enterprises in terms of absorptive capacity, open innovation, type of R&D, and the organizational structuring of R&D. Based on a representative set of R&D-active firms in Belgium, qualitative comparative analysis reveals that the outcomes in terms of financial performance related to optimal configurations of strategic R&D decisions depend on the firm's size and on the time-lag under consideration. Managers in small-sized firms are advised to pay particular attention to a more functionally-structured R&D approach in configurations of strategic R&D decisions. To increase medium-term financial performance, managers in medium-sized firms benefit from more engagement in research-oriented activities, more in-house innovation, and the enhancement of absorptive capacity in sets of strategic R&D decisions.
Research has demonstrated the value of external linkages to augment in-house R&D efforts; however, very little is known about how managers can operationally leverage the potential benefits of open innovation to create an innovative edge. This paper examines the value of alliance portfolio diversity and whether R&D human capital is the pathway through which alliance portfolio diversity influences innovation novelty. We reason that the absorptive capacity of R&D human capital determines a firm's potential gains from highly diverse alliance portfolios. Using data from the Spanish Technological Innovation Panel (PITEC) for the period 2005-2012, results support the curvilinear (inverted U-shaped) association between alliance portfolio diversity and firm innovation performance reported in studies, suggesting that not only too little, but also too much alliance portfolio diversity may be detrimental to firm innovation performance. Findings emphasise the value of alliance portfolio diversity in high-technology industries to achieve explorative performance objectives, given the technological complexity, market uncertainty and the divergent skill sets required for breakthrough innovations in these sectors. Further, we find evidence that R&D human capital plays an important role in innovation novelty by partially mediating the relationship between alliance partner diversity and firm innovation performance, emphasising the importance of internal capabilities to harness external knowledge assets. This study provides valuable insights to managers aiming to increase the effectiveness of their alliance portfolios.
Much current work in management of innovation argues that it is becoming increasingly necessary for inventors and their firms to exploit information and capabilities outside the firm in order to combine one’s own resources with resources from the external environment. Building on this prior work, we examine the relationship between collaboration and innovation. Using detailed information on a sample of triadic patents, with over 1900 responses in the US, we report on the rates of collaboration of various forms, and test the effects of collaboration. Our results suggest that just over 10% of inventions involve an external co-inventor and about 23% involve external (non-co-inventor) collaborators (with 27% involving any external collaborators). We find evidence that heterogeneous collaboration and university-industry collaboration in inventing drive higher invention quality. However, vertical collaboration at the inventing stage is relatively more critical to commercialization at the implementation stage than is university-industry collaboration. These results suggest that the impact of different forms of collaborative innovation may vary depending on the stage of the innovation process.
Factors that impede the innovation propensity of manufacturing firms have been under-studied and under-documented. Obstacles to innovation in KIBS firms are literally not documented at all. Based on a sample of Canadian KIBS firms, this study argues that in KIBS firms, the propensity to innovate should take into account not only product and process innovations, but also other forms of innovation (delivery, strategic, managerial, and marketing). Furthermore, we argue that different obstacles will affect different forms of innovation. The results show that, overall, financial obstacles are negatively related to product and process innovations, and that knowledge obstacles tend to be negatively associated with delivery, strategic, managerial, and marketing innovations. These results carry important managerial implications. Hence, managers of KIBS firms might benefit from remembering that a failure to recognize the differences between KIBS firms and manufacturing firms could lead to an inefficient allocation of the resources invested in innovation activities.
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed 'best practice'). This suggests that they are more homogeneous, fungible, equifinal and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of REV, we conclude that traditional REV misidentifies the locus of long-term competitive advantage in dynamic markers, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright (C) 2000 John Wiley & Sons, Ltd.
After two decades of research, the complex question of the link between intellectual capital and radical innovation remains unsolved. With the aim of shedding new light on the accumulation patterns of intellectual capital in its relationship with radical innovation, this paper develops a novel theoretical and empirical exploration of the quadratic effects of intellectual capital, both individually and collectively and internal and external to the firm, on radical innovations, from the perspective of the Intellectual Capital-Based View. Three main hypotheses considering the quadratic effects of human, technological and vertical social capital on radical innovation are presented. The results from a sample of 251 Spanish high and medium high-tech manufacturing firms show different accumulation patterns of technological and vertical social capital on radical innovation. While the technological capital-radical innovation link loses intensity once a certain endowment of technological capital is reached, the relationship between vertical social capital and radical innovation increases exponentially and grows more intensively once a certain endowment of vertical social capital is attained. Conversely, the relationship between human capital and radical innovation is linear and positive. In addition, firms belonging to the chemical industry also have a positive influence on radical innovation, revealing the importance of this industry regarding innovations and technical changes. This study contributes to the intellectual capital literature by providing new evidence that helps to clarify the curvilinear intellectual capital-radical innovation relationship and the different role that the three types of intellectual capital play in that relationship.
This paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. A general model is developed where, consistent with recent literature, growth is non-scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non-scale endogenous growth is possible under less stringent conditions. The findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.
This paper investigates whether the type of technological regime moderates the effects of entry timing, entry size (i.e., initial resources), and active (post-entry) learning on firm survival. By analyzing a unique dataset of newly founded Korean manufacturing firms, we find that the effects of the factors influencing firm survival differ substantially across technological regimes. Specifically, entry size has the greatest positive effect on firm survival under the regime characterized by low technological opportunity and high R&D appropriability, under which opportunities for disruptive innovation are stagnant and the advantages of initial resources are more likely to persist. Post-entry active learning through R&D, on the contrary, has the greatest effect on firm survival under the regime of high technological opportunity and low R&D appropriability, under which active learning through contemporaneous R&D effort is more crucial for firm survival than initial resource advantages mostly due to the possibility of creative destruction.
The purpose of this paper is to analyse the influence of related and unrelated industry diversity on retail firm failure with a focus on Swedish retailers. The paper develops competing hypotheses from organizational theory and the economics of agglomeration concerning the survival chances of retail firms located in geographic proximity. Hypotheses are tested using a hazard model and a sample of 48,953 retail firms observed during 2002–2010. Key findings show that increases in the local share of similar retail firms is positively related to the risk of failure while there is a negative relation between increases in local industry diversity and the risk of failure. These results indicate that knowledge transfer from a diverse set of industries are important in lowering the failure risk. Differentiating among small and specialized retail firms indicate that there is significant intra-industry heterogeneity in the influence of local industrial composition on the likelihood of failure.
The economic crisis of recent years provides an extremely valuable context for the study of the effective role which R&D policies have had for governments, both as a potential tool for exiting from the crisis and as an object of fiscal consolidation. The discourse of governments and international organizations often connect actions to cope with the crisis with reforms and changes in many areas, such as R&D. However, in practice overarching fiscal consolidation policies could be damaging opportunities to establish government strategies to reform and improve the efficiency of the sector.
In this study, we address the question of how the degree of business model innovation affects the survival of new firms. We present a newly constructed data set of 129 new firms that launched electronic trading platforms in the US bond market between 1995 and 2004 following the advent of Internet technology. We analyze the founding and survival of these new firms during the period of our study. We find that new firms with a high or low degree of business model innovation are more likely to survive for longer than new firms with a moderate degree of business model innovation. We show that partnering with third-party firms with complementary assets reduces the survival of new firms as the degree of business model innovation increases. We discuss the implications of our findings for managers, policy-makers and researchers.
This paper explains how research and development (R&D) collaborations impact process innovation; given the differences in innovation mechanisms, prior insights from studies of product innovation do not necessarily apply to process innovation. Extending the knowledge-based view of the firm, this paper classifies four types of R&D collaborations—with universities, suppliers, competitors, and customers—in terms of two knowledge dimensions: position in the knowledge chain and contextual knowledge distance. Position in the knowledge chain is the position of the R&D collaboration partner in the knowledge chain of the industry—the input–output sequence of activities that result in the transformation of raw materials into products that are used by end customers. Based on this knowledge chain, this paper considers universities and suppliers as upstream R&D collaborators, and competitors and customers as downstream R&D collaborators. Contextual knowledge distance is the difference in industry-related contexts of operation of the R&D collaboration partners and the firm. Based on this, this paper views R&D collaborators that are suppliers and competitors as having low contextual knowledge distance to the firm, and R&D collaborators that are customers and universities as having high contextual knowledge distance to the firm. Using this classification, this paper proposes a ranking of R&D collaborations in terms of their impact on process innovation: R&D collaborations with suppliers have the highest impact, followed by R&D collaborations with universities, then R&D collaborations with competitors, and finally R&D collaborations with customers. These arguments are tested on a four-year panel of 781 manufacturing firms. The results of the analyses indicate that R&D collaborations with suppliers and universities appear to have a positive impact on process innovation, R&D collaborations with customers appear to have no impact, and R&D collaborations with competitors appear to have a negative impact. As a consequence, the main driver of the impact of R&D collaborations on process innovation appears to be position in the knowledge chain rather than contextual knowledge distance. These novel ideas and findings contribute to the literature on process innovation. Even though process innovation tends to be internal and tacit to the firm, it can still benefit from external R&D collaborations; this paper is the first to analyze this relationship and provide a theoretical framework for understanding why this would be the case. This study also has important managerial implications. It suggests that managers need to be careful in choosing the partners for their firms' R&D collaborations. Engaging in R&D collaborations with universities and suppliers appears to be helpful for process innovation, whereas conducting R&D collaborations with competitors may potentially harm process innovation.
Mainly driven by the rapid progress of the ‘open innovation’ paradigm, previous research has devoted considerable efforts in investigating how the degree of openness to external knowledge influences firms׳ innovation performance. However, much less is known about its impact on performance at the firm level. Moreover, the question of which open search strategy is more suitable depending on environmental features is unresolved. We focus on breadth and depth as two distinct open search strategies and claim that, besides their different benefits in terms of learning and innovation, it is also necessary to consider their costs. Based on survey data of 248 high-technology manufacturing Spanish firms, this study extends recent research about the context dependency of openness effectiveness by showing that the effect of these two open search strategies on perceived firm performance is contingent with technological environmental dynamism in a reverse fashion. While search breadth is found to be positively associated with performance in less technologically dynamic environments, it seems to hurt performance in more dynamic contexts. On the contrary, while search depth is found to have a positive effect on performance in highly technologically dynamic environments, it appears to harm firm performance in more stable contexts.
Existing literature on research and development (R&D) alliances focuses on formation motives and performance impacts of these alliances but hardly on diversity of the partners' portfolio. Cooperation with a diverse set of partners leads to learning opportunities with regard to both cooperation and innovation skills and hence is expected to enhance the firm's innovation performance. This paper examines two research questions: (1) the impact of functional and geographical diversity of R&D partners on radical and incremental innovation performance of product innovating firms, and (2) the organizational determinants of partner diversity in R&D alliances. The empirical analysis is based on data from the Dutch Community Innovation Survey, R&D and Information and Communication Technology Surveys, and Production Statistics, which lead to a representative sample of 12,811 innovating firms in the period 1994–2006. Through random-effects panel Tobit estimates, econometric models for both research questions are estimated. The results indicate that functional and geographical diversity act through different channels. Functional diversity leads to a variety of knowledge intake and synergetic effects necessary to develop and commercialize novel products. Geographical diversity results in successful adaption of existing products to different local requirements such as technical standards, market regulations, and customer preferences. The organizational determinants of both kinds of partner diversity are prior experience, patenting, and information technology infrastructure.
The concept of open innovation has recently gained widespread attention. It is particularly relevant now because many firms are required to implement open innovation, despite the difficulties associated with managing these activities. After providing a definition of open innovation delimiting it from open source, an overview of prior research is given, which identifies the following important topics of earlier open innovation research: technology transactions, user innovation, business models, and innovation markets. In light of current controversial debates about the value of the open innovation framework, we evaluate the literature and assess whether open innovation is a sustainable trend rather than a management fashion. On this basis, we present a conceptual framework that provides the foundation for discussing critical open innovation processes and their implications for managing open innovation at the organizational, project, and individual level. Thus, we assess the multilevel determinants of the make-or-buy, integrate-or-relate, and keep-or-sell decisions in opening up the innovation process. Then, we propose a research agenda based on this conceptual framework with particular emphasis on the organizational antecedents and performance consequences of open innovation and on important research design issues. Finally, we discuss implications for management education and practice, and we provide a conclusion and outlook.
One of the key elements of Fiat's recent resurgence is the superiority of its clean, fuel-efficient engine technologies that were mostly developed during the 1990s by Centro Ricerche Fiat (CRF), the Fiat Group company in charge of R&D and technology development. In the early 1990s, when the Italian carmaker was going through troubling times (along with many other players in the automotive industry), CEO Gian Carlo Michellone radically turned around CRF's organization and innovation strategy, adopting and mastering a strategic approach to innovation that resembles what would become known as the open innovation paradigm. This revolution allowed the Fiat Group to keep its “innovation engine” running, despite the heavy downturn of the industry. The CRF case demonstrates how open innovation can protect the firm's innovation capability from the risk of severe resource rationalizations during periods of crisis while proffering a starting point to replicate innovation capability once the downturn is over. The efforts to streamline the adoption of open innovation need to be targeted at several aspects of a firm's organization, i.e. the structures, organizational roles, the planning and control and performance management systems, corporate values, and individual competencies and attitudes. The role played by the senior executive leadership in promoting the successful implementation of open innovation is critical, especially during tough economic times.
Innovation and new model development have been paramount in the U . S . automotive industry. The industry has invested around $16–18 billion annually to launch new models and improve existing ones in response to incessant evolution of consumer preferences, competitive pressures, and changes in safety and emission regulations. Although these investments have significantly reduced cycle time and increased efficiency (e.g., through platform communization), it still costs around $1 billion to develop and launch a new model from scratch.
Therefore, the strategic focus in the U . S . automotive industry is rapidly shifting away from manufacturing efficiency to product development and innovation as firms engage in an “arms race” to develop innovative new products ahead of the competition. The outcome of this new focus manifests itself in the total development time for a new platform vehicle, which is expected to drop from roughly four years in 1998 to two years in 2014. As development cycles continue to shorten, competition in the industry intensifies, and a new insight is needed to better understand how increased competition can affect the gains from innovations. The need for research to fill this gap is especially critical as executives continue to grow more cynical about returns offered by increases in research and development ( R & D ) expenditures and see no statistically significant relationship between R & D expenditures and firm performance.
This study attempts to address this gap by adopting a coevolutionary perspective that analyzes the relationship between innovations and firm performance by accounting for the impact of competitive forces in the industry. First, this study explicitly models competitive interactions between firms, known in the ecology literature as the R ed Q ueen competition, in which gains from innovations are relative and impermanent. Second, hypotheses are tested using a comprehensive data set comprising all automobile manufacturers ever known to compete in the U . S . automobile market at any time between 1891 and 2000. Complete coverage of 110 years enables precise analysis of the link between innovations and firm performance as well as the coevolution in the U . S . automobile industry.
The results suggest that although extensiveness of an innovation is relevant, a firm's ability to keep up with the competition in the innovation arms race is a more significant driver of survival in the market. Thus, firms cannot simply evaluate their innovation efforts in a silo but must constantly assess their efforts versus the innovation launches of their key competitors. Based on the findings, automotive manufacturers must develop a structured product development program that allows for continual and steady new product introductions; otherwise, even momentary setbacks can have a damaging impact on a firm's ability to survive in the automotive marketplace.
A focus on the consumer has been recognized as the key to unlocking new sources of competitive advantage. This paper looks at this new perspective in value creation where personalized consumer experience takes central stage as opposed to a product and firm-centric view. Through an explorative case study, the paper illustrates how a joint innovation effort between Molson Coors Brewing Company UK (MCBC-UK) and a supplier is leading to more open approaches as consumers are involved in the process. By understanding what consumers' value and engaging in active dialog and interaction, MCBC-UK has been able to develop superior value propositions relevant to their target consumer base. The case underscores the role of consumer value creation in a commoditizing world where companies can seek to maximize the lifetime value of desirable consumer segments by taking consumers as a partner or co-producer instead of an external element. Food and drink companies have the opportunity to add value and extricate themselves from commodity sectors where the lowest cost provider holds sway by embracing consumers' ideas as part of the innovation process.
This article offers a new approach to the conceptualization of the human capital resource by developing a multilevel model connecting micro, intermediate, and macro levels of scholarship. We define human capital as a unit-level resource that is created from the emergence of individuals' knowledge, skills, abilities, or other characteristics. The model provides new insights into how strategically valuable human capital resources have their origins in the psychological attributes of individuals and are transformed through unit-level processes.
Although innovation is essential to build a competitive advantage and survive in the long run, some firms choose to exit, through mergers and acquisitions (M&As), or radically change their business portfolio and identity. This paper examines how innovative capabilities influence the decision of a firm to exit, among business closure. M&A, and radical restructuring. Using an analysis of a large and rich panel of Dutch manufacturing firms, we find that product and process innovation are equally important to lower the probability to close clown activities, and this effect is stronger when product and process innovations are pursed in combination. We also find that process innovation reduces the probability of exit by radical restructuring, while product innovation, when not supported by process innovation, especially increases the probability of exit by M&As. Our findings suggest that exit strategies are intimately bound to the nature and synergies of innovative efforts.
In the on-going context of globalization, the strategy of multinational enterprises combines the aims of constant supply renewal (through technological, but also organizational and commercial innovation) and of production rationalization (reduction of production costs). The financial dimension is narrowly linked to these strategies, as the financial deregulation has generated a strong pressure on enterprises, aimed at increasing the shareholder value. In this paper, we study the impacts of the current financial and economic crisis on the strategy and the management of innovation in big industrial firms. We present the result of an enquiry that has been achieved in France in 2009 and 2010 in companies such as Renault, Thales, General Electric, Lesieur, PSA, Saint-Gobain, Valeo, and ArcelorMittal. We show that firms rationalize their R&D expenses, accentuate their open innovation strategies, develop a strategic use of IPRs and try to implement new innovation paths, oriented toward the exploitation (low cost strategies) and the accumulation (clean technologies) of their knowledge-capital.
Firms around the world often must manage and survive economic crises. Recent cases in Asia, Eastern Europe, and South America bear testimony to this point. As economic weak spots are integrated into the global economy, it is timely to develop an understanding of organizational capabilities that can help firms manage their way through such crises. The authors investigate the role of market orientation and strategic flexibility in helping Thai firms manage the recent Asian crisis. The results demonstrate the contingent nature of the influence of market orientation and strategic flexibility on firm performance after a crisis has occurred. As hypothesized, market orientation has an adverse effect on firm performance after a crisis. This effect is moderated by demand and technological uncertainty and is enhanced by competitive intensity. In contrast, strategic flexibility has a positive influence on firm performance after a crisis, which is enhanced by competitive intensity and moderated by demand and technological uncertainty. It seems that market orientation and strategic flexibility complement each other in their efficacy to help firms manage varying environmental conditions.