Chapter

Innovation Scouting: A New Challenge for the Purchasing Function

Authors:
To read the full-text of this research, you can request a copy directly from the authors.

Abstract

In this chapter our objective is twofold. First we try to present a comprehensive vision of the evolutionary role of the purchasing function in regard of the Offer Creation Process (OCP) of firms. We present 3 alternative organizational solutions enabling to effectively connect the purchasing actors to the OCP. Thereby, among the new roles emerging for the purchasing function, one is particularly specific to situations where top management is expecting a real contribution in innovation process: the role of Innovation scouting. Therefore the second objective of the paper is a conceptual contribution in order to shape what should be the specific content of scouting innovation from external resources. Our presentation takes into account two contingency factors: the degree of innovation maturity and the status of the target partners in the supply base (existing or new). As a synthesis we propose a framework for choosing suitable organizing model for purchasing functions urged to increase their contribution to the OCP.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the authors.

... With purchasing functions dedicated to OI (Baier et al., 2008;David et al., 2002;Schiele et al., 2021) and the need for new competences to manage innovation in a purchasing context, recent studies have highlighted the importance of purchasing ambidexterity (Andersen et al., 2020;Calvi, 2000;Calvi et al., 2020;Constant et al., 2020). This ambidexterity of the purchasing function can be organisational, contextual or sequential (Gualandris et al., 2018). ...
Article
Full-text available
This study aims to enhance our understanding of the relationship between team innovation climate within the purchasing team and the level of purchasing involvement in open innovation (OI) initiatives. Previous research in psychology and management has documented the impact of team climate on innovation capacity. Furthermore, the purchasing function has been recognised as a bridge between internal and external resources in OI. However, to date, research has not examined the link between the team innovation climate and the role of the purchasing function in OI initiatives. To address this gap, we studied a sample of 258 purchasing teams across industries in France based on a self-audit and questionnaire using established team innovation climate scales. From our analyses, four dimensions of the purchasing team climate towards innovation emerge: the team cohesiveness, the team creativity, the leader support for innovation and the institutional support for innovation. We subsequently conduct regression and necessary condition analysis. Our results show that institutional support is both necessary and positively related to involvement. Moreover, purchasing’s ability to contribute to inbound OI is constrained by each of the four dimensions of the team innovation climate, to various extents. Our work thereby elucidates the individual elements and the collective impact of the team innovation climate that enable the exploitation of the innovative potential of suppliers through purchasing’s bridge function between external and internal innovation actors providing new insights into the human side of OI at team level. Managerial Highlights •Team innovation climate plays an important role in the management of open innovation. •Team innovation climate influences the purchasing team’s involvement in open innovation projects of its firm i.e. the way its open innovation is managed. •There are four dimensions affecting the purchasing team innovation climate: institutional support, team leader support, team creativity and team cohesiveness. •High levels of involvement of the purchasing function do not occur without at least medium levels of these four dimensions. •Only institutional support is directly and positively related to the increasing level of involvement of purchasing in open innovation initiatives.
... The skills described in current job ads appear to be almost antagonistic ( Innovation and sustainability in the supply chain are pursued by people with different, partially antagonistic approaches and targets. In fact, many firms have established their own a department for sustainability, which tries to work on the greening of the supply chain, while the innovation requirement is fulfilled by each purchaser, or alternatively there are special departments for purchasing innovation, which are also known procurement engineering or advanced sourcing departments (Calvi, Pihlajamaa, & Servajean-Hilst, 2020;Lock & Seele, 2016;Schiele, 2010;Servajean-Hilst & Calvi, 2018). ...
... In today's volatile and uncertain business environments, firms are reshaping the way they manage their supply chain by developing the current supply base (e.g. Calvi et al., 2020) and scouting for new suppliers (e.g. Zhan et al., 2021;Saghiri and Mirzabeiki, 2021). ...
... Equally important is the presence of boundary scanners with the role of helping resolve the conflict perceived among the previous well-established IT logic and the I4.0 logic (Calvi et al. 2020;Tumbas et al. 2018). These roles, which emerge as central for knowledge acquisition and assimilation, need to be coupled with "implementers" in the transformation/exploitation phase, either acting as project managers or playing coordinating roles as part of the I4.0 operational planning. ...
Chapter
This chapter examines digital twins in logistics and supply chain management (LSCM). First of all, the definition of the term “digital supply chain twin” is explained. In the following, essential technical requirements that are indispensable for the successful implementation of a digital twin are described – they were examined on the basis of a use case of an automotive supplier. Furthermore, five key application areas for digital twins in LSCM were described with the help of a structured literature research and conceptual study. The fields of application are classified at network level and at site level. For each level, concrete use cases were subsequently described and their individual potentials were adequately elaborated. Finally, the current limitations of digital twins in logistics are pointed out and the need for further research is highlighted.
... In today's volatile and uncertain business environments, firms are reshaping the way they manage their supply chain by developing the current supply base (e.g. Calvi et al., 2020) and scouting for new suppliers (e.g. Zhan et al., 2021;Saghiri and Mirzabeiki, 2021). ...
Article
Full-text available
Purpose The objective of this paper is to study the role of artificial intelligence (AI) in supporting the supplier scouting process, considering the information and the capabilities required to do so. Design/methodology/approach Twelve cases of IT and information providers offering AI-based scouting solutions were studied. The unit of analysis was the AI-based scouting solution, specifically the relationship between the provider and the buyer. Information processing theory (IPT) was adopted to address information processing needs (IPNs) and capabilities (IPCs). Findings Among buyers, IPNs in supplier scouting are high. IT and information providers can meet the needs of buyers through IPCs enabled by AI-based solutions. In this way, the fit between needs and capabilities can be reached. Originality/value The investigation of the role of AI in supplier scouting is original. The application of IPT to study the impact of AI in business processes is also novel. This paper contributes by investigating a phenomenon that is still unexplored and unconsolidated in a business context.
... Ready-to-market technologies are of particular interest as many uncertainties and problems related to the use of mature technologies have already been resolved by others. They are, hence, easier to apply without extensive domain knowledge (Calvi et al., 2020). ...
Article
Full-text available
The benefits of inbound open innovation are widely acknowledged, but not all companies are successful in their attempts to leverage external sources of innovation. Those with dynamic capabilities perform better, but developing and maintaining such capabilities generates costs. Therefore, a given company needs to find out which capabilities are worth investing in. In the current study, I adopt a contingency approach to inbound open innovation. I focus on distinct open innovation strategies that vary according to their approaches to innovative search and accessing complementary knowledge. I develop a typology of six inbound open innovation strategies based on the dimensions of managerial attention (proac-tive/reactive) and locus of innovation (internal/shared/external). I further report their requirements for four dynamic capabilities: sensing capability, impression management capability, absorptive capacity, and collaboration capability. The findings bring attention to often-ignored reactive strategies for inbound open innovation and provide a nuanced view of how the division of development responsibilities in different phases of the innovation process affects requirements for dynamic capabilities. The study supports managers in implementing successful inbound open innovation strategies by helping them choose a strategy that supports their organization's overall objectives and strike a balance between underinvestment and overinvestment in dynamic capabilities.
Article
Firm innovation strategy (FIS) is crucial for new product development (NPD) performance. Few studies have revealed how the FIS that recognizes the importance of supply chain (SC) resources can improve NPD performance through SC management. This study emphasizes the mediating role of supply management, including innovativeness in supply management and firm‐supplier relationship. We argue that supply chain transformational leadership (SCTL) moderates the relationship between FIS and supply management. Using data from 232 Chinese manufacturing firms and applying structural equation modeling and regression analysis, we tested the hypotheses. The results show that innovativeness in supply management and firm‐supplier relationship mediate the relationship between the FIS and NPD performance. SCTL positively moderates the influence of FIS on supply management. These findings contributes to NPD outcomes. This study offers theoretical and empirical insights into SC management.
Chapter
Industry 4.0 technologies are considered essential to support manufacturing companies during periods of market turbulence and rapid technological change. However, there has been limited focus on exploring how companies can successfully develop the capacities needed to advance in Industry 4.0. Based on the analysis of four detailed case studies, this chapter examines how a company’s level of absorptive capacity is related to its stage of Industry 4.0 adoption and provides insight into the antecedents of potential and realized absorptive capacity that are relevant for Industry 4.0 adoption. The findings indicate that the levels of potential and realized absorptive capacity are linked with more advanced stages of Industry 4.0 adoption, thus highlighting the importance of developing this capacity for the successful implementation of advanced manufacturing technologies. The analysis of antecedents reveals that companies that engage in multiple collaborations with diverse partners and that assign Industry 4.0 boundary-spanning roles have a greater ability to acquire and assimilate new external knowledge. Companies that successfully exploit technological knowledge carry out detailed operational planning of Industry 4.0 projects and plan support activities for human resources.
Article
Industry 4.0 has created new opportunities for enterprise innovation by leveraging emerging technologies. External innovation represents a valuable source of ideas and knowledge for internal innovation, and enterprises are increasingly leveraging their supplier relationships to gain a competitive advantage. Some researchers suggest that suppliers enhance the effectiveness and outcomes of lean innovation. To deepen our understanding of the relationship between supplier orientation and innovation outcomes, this study explores the mechanisms through which supplier orientation contributes to enhancing innovation performance, with a specific focus on the role of supplier orientation in improving supply management innovativeness and innovation partnerships. Survey data from 209 Chinese firms engaged in innovation practices was analyzed using a hierarchical regression based on resource dependency theory. Results reveal that supplier orientation positively influences supply management innovativeness and innovation partnerships. Supply management innovativeness and buyer–supplier innovation partnerships both contribute to improved innovation performance. Our findings suggest that the buyer–supplier innovation partnership plays a moderating role in the relationship between supply management innovativeness and innovation performance. These insights provide a valuable basis for developing innovative strategies and managing inter‐firm relationships, emphasizing the importance of supplier relationship management practices in enhancing firms' competitiveness and performance by leveraging external resources and knowledge.
Thesis
Over the past few decades, innovation collaborations have significantly expanded across all sectors of activity. Vertical innovation collaboration, specifically between clients and suppliers, is the most prevalent form. However, despite this growth, practitioners face difficulties in managing these collaborations, and academic literature emphasizes the need for further knowledge in this field. In this context, our research has focused on two areas: the management of innovation collaborations from a relational perspective and the emerging role and impact of the Purchasing-Innovation function. By employing a diverse range of qualitative and quantitative methodological approaches with a praxeological orientation, these studies have yielded several conceptual and practical contributions. Firstly, they enhance our understanding of the dynamics within vertical innovation collaborations by providing a conceptual model and identifying critical operating modes for their success. Additionally, they have enabled the characterization of the novel role of the ambidextrous intermediary in collaborative innovation, namely the innovation-oriented buyer, and shed light on how they establish their legitimacy.
Chapter
Industry 4.0 technologies are considered crucial to support manufacturing firms in a period of market turbulence and rapid technological change. However, limited attention has been devoted to the investigation of how firms can successfully develop capacities needed to progress in Industry 4.0. Based on the analysis of four in-depth case studies, this chapter investigates how a firm’s level of absorptive capacity relates to its stage of Industry 4.0 adoption and sheds light on antecedents of potential and realized absorptive capacity that are relevant for Industry 4.0 adoption. Findings show that the levels of potential and realized absorptive capacity are associated with more advanced stages of Industry 4.0 adoption, therefore signalling the importance of developing this capacity for the successful introduction of advanced manufacturing technologies. The analysis of antecedents shows that firms that pursue multiple collaborations with diverse partners and that appoint Industry 4.0 boundary-spanning roles have a greater ability to acquire and assimilate new external knowledge. Firms that successfully exploit the technological knowledge undertake detailed operational planning of Industry 4.0 projects and plan support activities for human resources.Keywords Industry 4.0 absorptive capacity case study
Article
Full-text available
Most ambidexterity theories deal with managing exploration-exploitation tradeoffs among business units within firms or between alliance partners, but these theories remain yet to be extended to the buyer-supplier relationship level. Through an in-depth case study of the Toyota Motor Corporation we illustrate how buying firms can simultaneously achieve short-term and long-term benefits with their long-standing suppliers. Taking two inherently different activities as a starting point – mass production with its focus on exploitation and product development with its focus on exploration, we show that the deliberate use of ambiguity and explicitness can function as a countervailing mechanism against overemphasizing either exploration or exploitation. We also show that structural separation and structural integration are two organizational systems which can be used by buying firms to help suppliers realize ambidexterity in their operations. Finally, we argue that ‘requisite security’ can help to motivate suppliers to address the paradoxical tensions deliberately created by buying firms.
Article
Full-text available
Purpose – This research introduces and defines the concept of purchasing ambidexterity in terms of two dimensions: balance dimension and combined dimension. The study proceeds to empirically examine the multiple performance effects generated for the buying firm and its key suppliers. Methodology – Ambidexterity theory informs our conceptual model. To test our hypotheses, we collected survey data from 95 purchasing functions of medium and large European firms and applied various estimation techniques. Findings – This research indicates that ambidexterity substantially varies across purchasing functions. Further, it discovers that a purchasing function’s ability to advance the combined magnitude of exploratory and exploitative activities represents an essential determinant of supplier efficiency, supplier product innovation, and buyer financial performance. Notably, this research also discovers that balancing the magnitudes of exploratory and exploitative activities on a relative basis produces negative effects on the innovativeness of the supply network. Originality – Although ambidexterity theory has been applied to supply chain management, limited attention has been dedicated to purchasing ambidexterity. This gap led us to study how purchasing impacts the competitiveness of the buying firm and of its supply network by balancing and combining exploratory and exploitative activities. This research is the first to advance the notion of purchasing ambidexterity, unpack its underlying dimensions, and examine its multiple performance implications. Such a conceptual and empirical development presents new perspectives on how purchasing can help the buying firm and its supply network to strengthen their competitiveness.
Article
Full-text available
Literature on the champion theory proposes the informal character of the champion’s role and also notes difficulties in institutionalizing it. Nevertheless, formally institutionalized roles that seem to fit the description of a champion can be recognized in organizations, especially as enablers of open innovation activities. However, research cannot answer how this institutionalization occurs and which factors influence it. To answer these questions, we investigate a unique single case in which a champion role was institutionalized in the purchasing department of a multinational company. The new role’s task is to identify, select, and integrate supplier innovations. Our results indicate that the informal role of the champion can be successfully institutionalized when certain success factors are considered, which are management commitment, use of success stories, and matching of champions with research and development teams. We contribute to innovation management literature by using the well-established champion theory to explain how and why large multinational companies formally establish the role of the innovation champion. Our research offers pathways for further research about both, the antecedents and the consequences of role formalization. Practitioners can build on the success factors derived in this study when formally implementing innovation champions as enablers of open innovation activities.
Article
Full-text available
Prior literature suggests that significant internal R&D resources are needed to leverage suppliers for innovation and that external knowledge sources can be used to complement the internal knowledge base. Based on the analysis of four inbound open innovation projects at Fortum, a multinational energy utility company, we argue that companies with low R&D intensity may adopt an alternative approach which aims at substituting – not merely complementing – internal R&D with external innovations. We adopt the absorptive capacity perspective while investigating the cases and focus on four distinct capabilities: acquisition, assimilation, transformation, and exploitation. We find that the substitution approach consists of short-term research on new technological areas in order to gain the ability to identify and evaluate alternative technologies, as well as joint business models and operations based on complementary capabilities between the parties. The cases also suggest that the innovation process requires significant collaboration and the buying company's supplier management capabilities may improve the success of inbound open innovation projects of this type.
Article
Full-text available
This paper seeks to instigate a new area of research in the Early Purchasing Involvement (EPI) literature around the question: How should a Purchasing function evolve in order to identify and capture innovation in the supplier market? Particularly, we attempt to characterise the specificities of the Innovation-Purchasing function, an emerging function acting in the fuzzy-front-end of projects. The contribution of this paper is a reification of the role of this function in an Open Innovation context, through the description of Early Purchasing Involvement in the Innovation (EPI²) agenda. For that, we collected data through an internal benchmarking study within a multinational/multidivisional firm of the automotive sector. Our study reveals similarities and differences between the observed practices of what we call EPI² and the more classical EPI activities in a New Product Development (NPD) context. This study provides a model that can help practitioners and raises some propositions to test in new research.
Article
Full-text available
If companies rely strongly on internal R&D and existing networks their ability to introduce radical innovations may suffer. Opening up to new idea sources may provide a solution. Incumbent companies, however, often suffer from the tendency to reject radical ideas from unusual sources. This study investigates how social integration mechanisms (SIMs; coordination, socialisation, and systems mechanisms) influence an incumbent steel company’s absorptive capacity (AC). A micro-level analysis of two radical ideas from unusual sources contributes to AC and radical innovation literatures by exploring relationships between SIMs and four AC capabilities (acquisition, assimilation, transformation, and exploitation). The findings suggest that AC capabilities are context-specific with respect to innovation novelty and idea source. The results emphasise the negative sides of socialisation and formalisation mechanisms, and the positive effects of coordination mechanisms on the AC capabilities in such high uncertainty contexts.
Article
Full-text available
Open innovation and the use of suppliers and start-ups as external idea sources have become increasingly important in the automotive industry. Since the purchasing function in a company has correspondingly become more strategic, scholars have taken the role of procurement in innovation more intensely into account. This study examines procurement’s role in the innovation process of the automotive industry and investigates which and how open innovation instruments are used in order to benefit from the innovation capability of suppliers and start-ups. The empirical evidence is based on an in-depth case study of the automotive manufacturer AUDI AG. Several arguments are elaborated which justify a key role for procurement in the innovation process (e.g., interface role, economic activities). Furthermore, we identified nine pull and push instruments enabling procurement to contribute to Audi’s innovation performance. Since the instruments are designed to meet different internal requirements (e.g., in relation to a vehicle project or not), interesting insights for scholars and practitioners are provided.
Article
Full-text available
Organizations can no longer rely solely on their own resources to innovate and therefore look for strategic interactions outside their organizational boundaries. During the past years Early Supplier Involvement, supplier relationship management (SRM) and knowledge exchange in supply chain relationships have been separately covered in academic research. Using insights from RBV Theory this study proposes and validates an integrated framework that explains outcome effects of new product development (NPD) projects. The initial framework was derived from existing research and validated using four in depth case studies studying actual global NPD projects taken from a large multinational company. The case study findings resulted in a revised framework that can be used to assess NPD outcomes of buyer–supplier interactions. Our research confirms that a positive relationship between relationship quality, knowledge transfer and NPD outcomes exists. Twelve constructs appear decisive for buyer–supplier relationship quality. These constructs act on either an individual or organizational level. A better relationship quality allows for more knowledge transfer among partners, more (innovative) ideas and solutions and positive NPD project outcomes. The reverse, however, also appears to be the case. The proposed integrated framework can be used to predict the performance of a NPD project by measuring the quality of the relationship between buyer and supplier on the twelve constructs. As such this research advances our understanding of the importance and dynamics of supplier relationship management in NPD projects. Future research, however, is needed to further validate and test the proposed framework.
Article
Full-text available
This paper aims to investigate the effects of supplier collaboration on the firm innovation performance as well as the enabling characteristics of the purchasing function. This is an original contribution as few papers empirically test the effect of supplier collaboration (meant as supplier involvement, development, and integration) on innovation performance and — simultaneously — the contribution of strategic sourcing activities and purchasing knowledge. Also, we explore the technological uncertainty of the purchase as an important contingent factor that might influence the firm's innovation strategy and the emphasis on supplier collaboration or strategic sourcing.
Conference Paper
Full-text available
This paper investigates the mechanisms that trigger a sequence of external knowledge absorption in an innovative automotive firm. The data was collected through an ethnographic-inspired methodology conducted as an embedded scholar within the Innovation Purchasing Direction of this firm, a dawning and rare function. The results of our investigations show that the trigger of absorptive capacity is made up of two sequences of activation of the same knowledge related mechanisms linked by one people-related mechanism. First, the external knowledge is selected, adopted, contextualized and preserved by Innovation Purchasing actors that will enroll Research and Development actors to become the internal holder of the external knowledge. Second, together with these holders, the knowledge-related mechanisms are activated leading to the recognition of the value of the external knowledge by the recipient firm.
Article
Full-text available
Scholars have recently highlighted the promise of open innovation. In this paper, we treat open innovation—in it's different forms and manifestations—as well as internal or closed innovation, as unique governance forms with different benefits and costs. We discuss how each governance form, whether open or closed, is composed of a set of instruments that access (a) different types of communication channels for knowledge sharing, (b) different types of incentives, and (c) different types of property rights for appropriating value from innovation. We focus on the innovation “problem” as the central unit of analysis, arguing for a match between problem types and governance forms, which vary from open to closed and which support alternative forms of solution search. In all, the goal of this paper is to provide a comparative framework for managing innovation, where we delineate and discuss four categories of open innovation governance forms (markets, partnerships, contests and tournaments and user or community innovation) and compare them with each other and with two internal or closed forms of innovation governance (authority and consensus-based hierarchy).
Article
Full-text available
Purpose The role of supply managers in driving corporate performance is changing, with an increased emphasis on supply market intelligence, collaboration, inter‐organizational partnerships, and operational integration with supply partners. These traits are also mirrored in the research on entrepreneurial settings and firms. The purpose of this paper is to explore the parallels between supply management roles, and the entrepreneurial skill sets and mechanisms that have been identified in prior research. Design/methodology/approach A structural equation model, using a sample of 151 manufacturing and service firms based in the UK, tests this hypothesised model. Findings The theoretical framework was supported, with results indicating that entrepreneurial behaviours (supply market intelligence and supply management influence) contribute to integration within the firm and with suppliers, in order to drive performance improvement. Practical implications The results provide support for purchasing managers seeking to improve performance by changing the recruitment and culture of the supply management function toward an entrepreneurial orientation. Originality/value Although the application of organizational entrepreneurship thinking to supply management theory is nascent, this paper's results suggest that further research along these lines may provide a resilient platform for utilisation of entrepreneurial constructs to explain supply management principles in buyer‐supplier collaboration, relational capital, and organisational outcomes.
Article
Full-text available
OVERVIEW: In the context of open innovation, firms increasingly rely on the collaboration of suppliers in their innovation processes. However, not all competent suppliers are willing to collaborate with all buyers, which is why achieving preferred customer status with key suppliers becomes important. This paper presents the results of a consortial benchmarking project that studied the supplier relationship management tactics of several best-practice firms. It identifies characteristics of suppliers who innovate well with their customers and emphasizes the importance of a firm establishing itself as an attractive customer as a prerequisite of successful buyer-supplier collaborations. This paper proposes additional sourcing criteria to identify innovative suppliers and introduces a supplier portfolio model based on customer attractiveness and supplier competence.
Article
Full-text available
Carmakers and suppliers currently experiment with new forms of relationships in order to prepare and develop coherent and valuable innovations that feature incrementally evolving new products (new services, architectural breakthroughs, etc.). We observe diversity both in the very nature of co-innovation partnerships and in the in-house organisational settings. What are the advantages and disadvantages of each of these configurations for the partners? The aim of our research is to analyse the impact of the organisational forms of co-innovation on the performance of innovation processes. We first define co-innovation situations in contrast to the co-development model. We then present the innovation route analytical framework in order to empirically analyse co-innovation processes and assess their performance. Once this groundwork is laid, we compare four cases: two innovations both developed by a European (EASYCAR) and an Asian car manufacturer (NIPCAR). The comparison of the scenarios shows the variety of innovation cooperation processes and their related performance profiles.-Vallée). He runs the Chair on Innovation Management at the Ecole Polytechnique, in partnership with several leading companies of the automotive industry. He is a Doctor Honoris Causa at Umea University, Sweden. His research topics are product development, project and innovation management in relation to organisational learning theory.
Article
Full-text available
This article studies the relative impact on product innovation of R&D collaborations with universities, suppliers, customers, and competitors. It argues that each type of R&D collaboration differs in terms of the breadth of new knowledge provided to the firm and in the ease of access of this new knowledge, resulting in a different impact on product innovation. As a result, it proposes that R&D collaborations with universities are likely to have the highest impact on product innovation, followed by R&D collaborations with suppliers, customers and, finally, competitors. The tests find that R&D collaborations with suppliers have the highest positive impact on product innovation, followed by collaborations with universities. Surprisingly, R&D collaborations with customers do not appear to affect product innovation, and collaborations with competitors appear to harm it. Moreover, the positive influence of R&D collaborations with universities and suppliers is sustained over the long term, but the negative influence of R&D collaborations with competitors is, fortunately, short-lived. These findings indicate that ease of knowledge access, rather than breadth of knowledge, appears to drive the success of R&D collaborations for product innovation.
Article
Previous research suggests that knowledge diffusion occurs more quickly within Toyota’s production network than in competing automaker networks. In this paper we examine the ‘black box’ of knowledge sharing within Toyota’s network and demonstrate that Toyota’s ability to effectively create and manage network‐level knowledge‐sharing processes at least partially explains the relative productivity advantages enjoyed by Toyota and its suppliers. We provide evidence that suppliers do learn more quickly after participating in Toyota’s knowledge‐sharing network. Toyota’s network has solved three fundamental dilemmas with regard to knowledge sharing by devising methods to (1) motivate members to participate and openly share valuable knowledge (while preventing undesirable spillovers to competitors), (2) prevent free riders, and (3) reduce the costs associated with finding and accessing different types of valuable knowledge. Toyota has done this by creating a strong network identity with rules for participation and entry into the network. Most importantly, production knowledge is viewed as the property of the network. Toyota’s highly interconnected, strong tie network has established a variety of institutionalized routines that facilitate multidirectional knowledge flows among suppliers. Our study suggests that the notion of a dynamic learning capability that creates competitive advantage needs to be extended beyond firm boundaries. Indeed, if the network can create a strong identity and coordinating rules, then it will be superior to a firm as an organizational form at creating and recombining knowledge due to the diversity of knowledge that resides within a network. Copyright © 2000 John Wiley & Sons, Ltd.
Article
This paper addresses the issue of how purchasing managers can develop the purchasing department's legitimacy within an organization. A qualitative exploratory approach based on six cases has been used since: (1) there has not yet been a research performed on this topic; and (2) an analysis of internal legitimization strategies must take into consideration the context and the nature of the relationships among departments. Our analysis shows that in order to create, maintain or increase the purchasing department's internal legitimacy, purchasing managers have to do very well about two complementary strategic orientations: (1) identify and attract the best suppliers; (2) identify and implement collaborative processes and coordination mechanisms that cannot be duplicated by competitors. In fact, supply managers actually develop legitimization strategies based internally and externally, since a higher level of internal legitimacy can also be supported partially by external stakeholders, who then influence the other departments' and top management's perceptions.
Article
Drawing from the literature on firm resources and capabilities, as well as supplier management, this study investigates why and how some buying firms are more successful than others in leveraging the capabilities of their new venture suppliers. We use a qualitative research approach and synthesize our findings into a set of propositions that relate to how buying firms manage their new venture suppliers when they evaluate, develop, and communicate with new ventures, as well as how buying firms govern the relationship with new ventures. At the core of our contribution is the conceptualization of the new venture partnering capability construct, which captures a buying firm’s capacity to effectively leverage the potential of new ventures. Our findings contribute to the literature on relational capabilities and add insights into the emerging research stream at the interface of supply chain management and entrepreneurship.
Article
Despite the importance of innovation to a business's success, only recently have companies not only established internal environments conducive to innovation but also begun identifying, cultivating and taking advantage of a wide variety of external Sources for innovation. Among such sources, suppliers are recognized as having especially large innovation potential because they know what the companies that is, their customers - are doing and need and also because mechanisms for knowledge transfer from supplier to Customer are typically in place. However, while it is one thing for a mechanism to be available by which suppliers may transfer innovation to customers, it is quite another for the suppliers actually to do the transferring. The customer, the prime mover in building and maintaining the relationship, can move in two different ways to encourage the Supplier to innovate to the customer's benefit. First, it should reduce or eliminate three kinds of problems: (1) conflicting objectives among the customers functional areas, (2) excessive and often late engineering or specification changes and (3) price-reduction pressures on suppliers that consider only the customer's financial needs. Second and most importantly, the customer should initiate directly positive and trust-budding activities.
Article
The measures of practice in global strategic management of technology and research and development (R&D) are presented. A survey of the world's largest (R&D) performing companies revealed that top management linkages of business and technology strategies are crucial for effective technology strategy. External resource leverage is also important for a good technology strategy. The companies are supposed to acquire technology from outside and rely on universities for research and on joint ventures and alliances for development. The findings arise from a global benchmarking study of approximately 400 companies.
Article
Organizational ambidexterity refers to the ability of an organization to both explore and exploit — to compete in mature technologies and markets where efficiency, control, and incremental improvement are prized and to also compete in new technologies and markets where flexibility, autonomy, and experimentation are needed. In the past 15 years there has been an explosion of interest and research on this topic. We briefly review the current state of the research, highlighting what we know and don’t know about the topic. We close with a point of view on promising areas for ongoing research.
Article
Bathelt H. and Gibson R. Learning in ‘organized anarchies’: the nature of technological search processes at trade fairs, Regional Studies. Trade fairs have become an important temporary organizational form for the establishment of inter-firm linkages and networks. Despite recent insights into the nature of knowledge flows, the causal mechanisms linking trade fairs to processes of technological searches and choices remain underspecified. Taking this as a starting point, this paper provides a conceptual and empirical account of the technological search and related learning processes between geographically distant firms at trade fairs. Building on the concept of ‘organized anarchies’ and the ‘garbage-can model’ of organizational choice, it reconceptualizes the nature of search processes and applies this conceptualization to an explorative study of four business-to-business fairs in North America. This provides a dynamic explanation of how inter-firm interaction and observation support technological search processes, which may lead to distinct wider patterns of technological specialization and/or diffusion.
Article
In this chapter I review empirical studies directly testing the hypotheses of my 1973 paper "The Strength of Weak Ties" (hereafter "SWT") and work that elaborates those hypotheses theoretically or uses them to suggest new empirical research not discussed in my original formulation. Along the way, I will reconsider various aspects of the theoretical argument, attempt to plug some holes, and broaden its base.
Article
Based on a longitudinal case study of four interorganizational product development collaborations, this paper identifies a lure to cross-functional integration that has hereto been neglected. In particular, findings suggest that when the buyer firm separates the Research and Development (R&D) Department from the Procurement Department, the two departments play a good cop–bad cop strategy toward the supplier. Thereby, they are able to foster a high level of goodwill trust between R&D personnel of the collaborating firms, while procurement personnel maintain a high level of formal control. Using an intricate sample design with polar cases, the study shows that cross-functional integration of the two departments hampers interorganizational goodwill trust at the benefit of formal control. The findings offer a way forward for managers seeking to reap the benefits of collaboration, while limiting their exposure to the associated risks.
Article
Despite the massive interest in open innovation, limited attention has been expressed concerning the intra-organizational challenges in implementing it. An exemplary issue is the unwillingness of employees to undertake extra-organizational knowledge transactions in the form of negative attitudes against the sourcing of external knowledge (the not-invented-here (NIH) syndrome) and against the external exploitation of knowledge assets (the not-shared-here (NSH) syndrome). Using survey data collected from 331 firms, this article empirically assesses the theoretical assertion that the NIH and NSH syndromes have negative impacts on the adoption of inbound and outbound open innovation. Furthermore, it investigates how their effects can be reduced through competence-building programs based on the training of employees. By focusing on two attitudinal antecedents to openness, the findings offer an explanation for the problems that firms face in benefiting from inflows and outflows of knowledge and possible guidance as to how managers can disengage such attitudes.
Article
Open innovation, fuelled by the rise of the Internet, has made it feasible and cheaper for firms to open themselves up to a wide range of external sources of innovative ideas. The explosive growth of open innovation intermediary networks, such as InnoCentive or Linked-in, enables the rapid pairing of firms seeking knowledge to address a wide range of business challenges (seekers) with other firms or individuals who already have relevant knowledge (solvers or knowledge brokers). These intermediary networks allow procurement departments to source codified and un-codified knowledge from firms or individuals outside their traditional supplier networks using one-off transactional relationships. Although sourcing ideas in this way theoretically poses problems for knowledge search and transfer, we have found that companies can draw on processes and integration mechanisms developed by procurement and design engineering to develop effective organizational learning routines. These routines are strategically vital to source new ideas through open innovation using intermediary networks and create competitive advantage.
Article
The vast majority of the supplier innovation literature has focused on how buying firms can effectively “pull” innovations from their suppliers. Yet, we know remarkably little about the factors that contribute to a supplier voluntarily “pushing” innovations to its customers. The present study addresses this research gap in the context of industrial buyer-supplier relationships and with a specific focus on relationship-specific investments. Drawing on theory from the relationship-marketing literature and on transaction cost theory, we devise and test a proposed theoretical model that links the level of a supplier's relationship-specific investments to its sharing of innovative ideas regarding products and processes with customers. The model also considers the role of contract length, relationship age, and buyer-supplier cooperation as possible safeguards. The empirical results suggest that a supplier's relationship-specific investments encourage a supplier to suggest ideas of process innovations but to refrain from suggestions about product innovations. The latter effect, however, can be attenuated by appropriate formal and informal safeguards.
Article
Firms may seek to collaborate with skilled suppliers not only to access existing technologies but also to jointly develop new concepts. We sought to examine the details of collaborative concept development through matched cases of novel convertible roof projects in the European automotive industry. The result is a three phase model marked by the use of supplier concept competitions to probe possible features and by the selective maintenance of distance to suppliers. Knowledge transfer and integration practices, differences depending on initial experience, and implications for managing such distributed systems of innovation are highlighted.
Article
Examines the historical record of the ascendancy of science-related technology in modern economies, and presents an economic theory of innovation based on that record and it implications for policy-makers. Part One reviews the growth of the chemical, synthetic materials, and electronics industries with particular emphasis on costs, patent rates, firm sizes, marketing efforts, timing decisions. These data support a general theory presented in Part Two concerning the importance of professionalized research and development (R&D) capabilities and market awareness. Empirical data and analysis, including the results of Project SAPPHO, are used to provide further support for the theory. Characteristics of successful innovating firms include R&D strength, marketing abilities, understanding of user needs, and management strength. Implications for optimal firm size and the consequences of and reactions to uncertainty are treated in the remainder of Part Two. Uncertainty is responsible for a continuum of six strategies that firms take to meet the need to innovate, and leads to private under-investment in R&D. Part Three takes up the role of government and national science and technology policies and considers the social effects of technological innovation in terms of business cycles and unemployment figures, using a framework based on Schumpeter and Kondratiev. (CAR)
Article
This paper reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside‐in” and “coupled” modes of open innovation. From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four‐phase model in which a linear process—(1) obtaining, (2) integrating, and (3) commercializing external innovations—is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals, complemented by highly cited work beyond those journals. A review of 291 open innovation‐related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front‐loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations. Research on obtaining innovations includes searching, enabling, filtering, and acquiring—each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including “not invented here”). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as cocreation, network collaboration, and community innovation. This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on interorganizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The paper concludes with recommendations for future research that include examining the end‐to‐end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.
Article
This article develops a configuration typology for purchasing's involvement in product development projects. Six configurations are identified and analyzed, varying in degree of coordination and level of purchaser integration. The configurations are illustrated by five case studies performed in different companies operating in different industries. Enabling factors, such as the purchasing organization and the competencies and skills of the purchasers, can facilitate the involvement of purchasers in a development project. Project size and project complexity can be identified as driving factors influencing the appropriateness of the purchaser involvement configurations. Dedicated, full‐time purchasing specialists in combination with a purchasing coordinator provide the strongest degree of involvement necessary for managing large and complex projects, whereas indirect, ad hoc purchasinginvolvement provides the lowest degree of involvement sufficient for small and relatively simple projects.
Article
The research described in this article focuses on one important aspect of the innovation process - the need for the innovating system to gather information from and transmit information to several external information areas. Special boundary roles evolve in the organization's communication network to fulfill the essential function of linking the organization's internal network to external sources of information. These boundary roles occur at several organizational boundaries, and their distribution within the organization is contingent on the nature of the organization's work. This research supports literature on boundary spanning in general and highlights the importance of boundary roles in the process of innovation.
Article
Owing to the complexity of the task and the risks inherent in it, the effectiveness of any organizational buying decision largely depends on the information available for the decision-makers’ use. Within any typical organization, flow of the information needed in the decision-making process is influenced by the gatekeepers – the people who link the organization with the outside environment. However, despite the important role played by these people, not much is known about their behavior. This research makes an attempt to study gatekeeping behavior and examine factors which may influence this behavior.
Article
The ability of a firm to scan its environment for breakthrough innovations and develop new products is increasingly central to business success. However, many firms struggle to develop breakthrough innovations alone, and rely increasingly on their supply base to provide input in processing uncertain and ambiguous technological knowledge. This paper develops a theoretical framework, based in information processing theory, to investigate the effects of breakthrough search behaviors by the buyer firm on their technical proficiency, reliance on supplementary processing capacity with suppliers, and subsequent new product development and financial performance. Using data provided by 111 procurement executives from the United Kingdom, we find support for our hypotheses. Increased breakthrough scanning results in higher firm-level technical proficiency, and also an increase in knowledge sharing with the firm's suppliers. A combination of a firm's technical capabilities and knowledge exchange with suppliers was found to result in improved new product development performance and financial performance. This study extends the supply relationship management and new product development literatures, and suggests implications for both research and practice.
Article
Previous research on embedded ties with suppliers in an innovation context has ignored the need for customer firms to assess and select suppliers on the basis of market orientation strategies and relationship marketing attributes. To address this void, this study investigates the effects of suppliers' downstream customer orientation and supplier–customer homophily (i.e., similarity of the supplier and the customer) on the customers' innovation performance. Data pertaining to new product development projects with contributions from supplier firms was collected on both sides of the supplier–customer dyad. The analysis shows that downstream customer orientation and supplier–customer homophily have a significant impact on the customer firms' new product efficiency (i.e., project cost and project speed) and new product effectiveness (i.e., innovativeness), which in turn positively influence new product performance in terms of profitability, market share, and growth.
Article
Examines the correlation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. Also discusses the difficulty in balancing resource management between gaining new information about alternatives to improve future returns (i.e., exploration) and using information currently available to improve present returns (i.e., exploitation). Two models which evaluate the formation and use of knowledge in organizations are developed. The first is a model of mutual learning in a closed system having fixed organizational membership and stability. The second is a model which considers the ways in which competitive advantage is affected by knowledge accumulation. The analysis indicates that the choice to rapidly develop exploitation over exploration might be effective in the short term, but is potentially detrimental to the firm in the long term. (SFL)
Article
The authors address the need for supply relationships to generate, support, and respond to discontinuous innovation (DI), noting that established ways of working appear insufficient. The peculiarities of DI are explained and contrasted with well-known concepts within innovation. The need for customer firms to be both closely collaborative with suppliers while also exploring potential, unpredictable DI elsewhere is proposed, by means of strategic dalliances. A model is presented for understanding and exploring this emerging management challenge.
Article
Interest in early supplier integration in new product development (NPD) has increased as an open innovation approach has become more common in firms. To support supplier integration, the purchasing function of a firm can assume a new ‘dual’ role: contributing to NPD while also managing overall costs. Previous research has offered few insights into how the purchasing function should best be organised so that it will fulfil this dual role. This paper reports on the results of a consortial benchmarking study in which an industry–academic consortium visited and analysed six best-practice firms. The findings describe how innovative firms organise their purchasing function, distinguishing between ‘advanced sourcing’ and ‘life-cycle sourcing’ units. The results include the tools that these firms use, such as regular innovation meetings with suppliers and technology roadmaps linking firm strategy, innovation strategy and sourcing strategies. The paper also recommends that researchers shift from a narrow focus on a single project to a broader consideration of supplier and organisational issues in NPD.
Article
Innovation intermediaries are increasingly being used in practice, but there is little concrete theoretical guidance on when and how they add value to client's new product development (NPD) processes. This paper develops propositions on innovation intermediaries value-added based on a detailed case study of an innovation intermediary's relations to three major clients in the European apparel fashion industry. We identify key contingencies to an innovation intermediary's value added (e.g. NDP speed and complexity of involvement). We also suggest a framework that specifies when a combination of four types of specific intermediary capabilities (best-cost capabilities, timing-capabilities, market-response capabilities, and product solution capabilities) increases value added in clients' NDP processes.