scholarly journals Capital market penalties to radical and incremental innovation

2019 ◽  
Vol 23 (2) ◽  
pp. 291-313 ◽  
Author(s):  
Daniel Stefan Hain ◽  
Jesper Lindgaard Christensen
Keyword(s):  
Small Firms ◽  
Probit Model ◽  
Radical Innovation ◽  
Incremental Innovation ◽  
Behavioral Characteristics ◽  
Firm Level ◽  
Content Type ◽  
External Finance ◽  
Innovation Activities ◽  
Negative Effect

Purpose The purpose of this paper is to investigate how access to financing for incremental as well as radical innovation activities is affected by firm-specific structural and behavioral characteristics. Design/methodology/approach Deploying a two-stage Heckman probit model on survey data spanning the period 2000–2013 and covering 1,169 firms, this paper analyzes the effect of a firm’s engagement in incremental and radical innovation on its likelihood to get constrained in their access to external finance, and how this effect is moderated by the firm’s age and size. Findings In line with earlier research, it is confirmed that the type of innovation matters for the access to external finance, but in a more nuanced way than generally portrayed. While incremental innovation activities have little negative effect on the access to external finance, radical innovation activities tend to be penalized by capital markets. This effect appears to be particularly strong for small firms. Originality/value This paper provides nuanced insights into the interplay between types of firm-level innovation activities, structural characteristic and access to external finance.

scholarly journals Measuring radical innovation project success: typical metrics don’t work

2018 ◽  
Vol 39 (4) ◽  
pp. 34-41 ◽  
Author(s):  
Jimmi Normann Kristiansen ◽  
Paavo Ritala
Keyword(s):  
Radical Innovation ◽  
Incremental Innovation ◽  
Content Type ◽  
International Firms ◽  
Innovation Activities ◽  
Innovation Projects ◽  
Innovation Project ◽  
And Performance ◽  
Depth Interviews

Purpose Firms frequently struggle with measuring the performance of their radical innovation activities. Due to the uncertainty and ambiguity involved, key performance indicators (KPIs) used for incremental innovation projects are often not useful in this context. The purpose of this paper is to explore suitable KPIs particularly useful for radical innovation projects. Design/methodology/approach This study first reviews commonly used measures for innovation projects, which is then followed by case-study evidence from three industry-leading international firms. This study includes 13 in-depth interviews with innovation managers and directors in these firms, providing insights on how they measure the progress and performance of radical innovation projects. Findings KPIs used commonly in incremental innovation showed lackluster results in the case firms and were problematic for radical innovation context. A key finding was that radical innovation project performance should be evaluated based on the process rather than on the expected outcome. Concurrently, based on the literature review and the cases, three sets of KPIs with 13 specific KPIs useful for radical innovation projects are proposed. Originality/value The paper addresses a core challenge in using established KPIs in a radical innovation context. The paper gathers and synthesizes a range of measurement points suitable for radical innovation projects and provides specific suggestions for appropriate metrics that innovation managers can use.

Standards and innovation in manufacturing and services: the case of ISO 9000

2014 ◽  
Vol 31 (4) ◽  
pp. 435-454 ◽  
Author(s):  
Giovanni Mangiarotti ◽  
Cesare A.F. Riillo
Keyword(s):  
Small Firms ◽  
Relative Effectiveness ◽  
Case Study Research ◽  
Iso 9000 ◽  
Community Innovation Survey ◽  
Firm Level ◽  
Content Type ◽  
Innovation Potential ◽  
Innovation Activities ◽  
The Impact

Purpose – The research empirically investigates the firm-level impact of ISO 9000 certification on innovation propensity. The study aims to distinguish between manufacturing and service sectors and adopts different innovation definitions aimed at capturing the peculiarities of innovation in services and small firms. Design/methodology/approach – Relying chiefly on Community Innovation Survey data for Luxembourg, the impact of certification on innovation probability is assessed using a logit model that controls for relevant firms characteristics and market features. Findings – The innovation potential of services and small firms is understated when adopting innovation definitions restricted to technological aspects and more formalised innovation activities. ISO 9000 certification may promote innovation when adopting definitions that captures sectoral innovation specificities. In particular, certification increases innovation propensity in manufacturing when the focus is on technological innovation and formalised innovation expenditures. On the contrary, when non-technological aspects are included and allowance is made for wider innovation activities, the impact of certification on services tends to emerge. However, sharper statistical evidence for manufacturing indicates a more important role of certification for innovation success in this sector. Research limitations/implications – Case-study research could supplement the findings concerning the relative effectiveness of certification in services and manufacturing. The investigation would also benefit from extensions in the econometric analysis to address comparisons across samples and potential causality issues. Practical implications – Findings are interesting to practitioners and registrars in order to identify the specific characteristics of firms for which certification provides higher innovative potential. Originality/value – The study highlights the relevance of sectoral specificities and innovation definitions for the debate about the effect of ISO 9000 certification on innovation.

Fostering incremental and radical innovation through performance-based contracting in buyer-supplier relationships

2016 ◽  
Vol 36 (11) ◽  
pp. 1482-1503 ◽  
Author(s):  
Regien Sumo ◽  
Wendy van der Valk ◽  
Arjan van Weele ◽  
Christoph Bode
Keyword(s):  
Pay For Performance ◽  
Transaction Cost Economics ◽  
Radical Innovation ◽  
Incremental Innovation ◽  
Organizational Relationships ◽  
Supplier Relationships ◽  
Content Type ◽  
Negative Effect ◽  
And Performance ◽  
Underlying Mechanisms

Purpose While anecdotal evidence suggests that performance-based contracts (PBCs) may foster innovation in buyer-supplier relationships, the understanding of the underlying mechanisms is limited to date. The purpose of this paper is to draw on transaction cost economics and agency theory to develop a theoretical model that explains how PBCs may lead to innovation. Design/methodology/approach Using data on 106 inter-organizational relationships from the Dutch maintenance industry, the authors investigate how the two main features of PBCs – low-term specificity and performance-based rewards – affect incremental and radical innovation. Findings The authors find that term specificity has an inverse-U-shaped effect on incremental innovation and a non-significant negative effect on radical innovation. Furthermore, pay-for-performance has a stronger positive effect on radical innovation than on incremental innovation. The findings suggest that in pursuit of incremental innovation, organizations should draft contracts with low, but not too low, term specificity and incorporate performance-based rewards. Radical innovation may be achieved by rewarding suppliers for their performance only. Originality/value The findings suggest that in pursuit of incremental innovation, organizations should draft contracts with low, but not too low, term specificity and incorporate performance-based rewards. Radical innovation requires rewarding suppliers for their performance only.

The inconvenient truth of the relationship between open innovation activities and innovation performance

2015 ◽  
Vol 53 (3) ◽  
pp. 625-647 ◽  
Author(s):  
Colin C.J. Cheng ◽  
Eric C. Shiu
Keyword(s):  
Open Innovation ◽  
Radical Innovation ◽  
Innovation Performance ◽  
Least Square ◽  
Organizational Capabilities ◽  
Incremental Innovation ◽  
Content Type ◽  
Innovation Activities ◽  
The Relationship ◽  
Knowledge Learning

Purpose – Despite extensive published research into the relationship between open innovation (OI) activities and performance, the nature and direction of the relationship remain inconclusive. The purpose of this paper is to investigate the relationship as to how firms’ inbound and outbound OI activities, as well as their interaction influence incremental and radical innovation performance. The authors also consider the potentially mediating roles of knowledge learning and organizational capabilities in such a relationship. Design/methodology/approach – To investigate this relationship, data were collected from a cross-industry survey of 304 leading Taiwanese-based firms. Three-stage least square analysis was employed to test the model. Findings – Analyses reveal that knowledge learning and organizational capabilities mediate the OI activities-innovation performance relationship. In addition, a firm focussing on inbound activities enhances its radical innovation performance, but hinders its incremental innovation performance, while focussing on outbound activities produces the opposite effects. Among the findings, it is worth emphasizing that the effect of the interaction between inbound and outbound activities on innovation performance can be counter-productive. Research limitations/implications – The findings demonstrate that existing studies only partially explain the effects of OI activities on innovation performance. Understanding how OI activities influence innovation performance will facilitate more informed decision making, leading to more effective use of OI activities. Practical implications – The results suggest that managers need to consider knowledge learning and organizational capabilities in order to fully capture the potential effects of OI activities. Managers also need to be aware of the limitations of OI activities. Originality/value – The theoretical model presented here offers a timely contribution to the theory base underpinning the development of OI activities for innovation performance.

Effects of CEO and COO overconfidence on the firm's inventory leanness

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bowon Kim ◽  
Jaeseog Na
Keyword(s):  
Inventory Management ◽  
Operations Management ◽  
Market Competition ◽  
Chief Executive ◽  
Stock Option ◽  
Behavioral Characteristics ◽  
Firm Level ◽  
Content Type ◽  
Top Managers ◽  
Managerial Overconfidence

PurposeThis study examines whether the behavioral attributes, such as overconfidence, of chief executive officers (CEO) and chief operating officers (COO) affect firm's inventory leanness. If they do, how are they interacting with each other? Moreover, incorporating market competition into the analysis, this study explores how the competition moderates the relationship between managerial overconfidence and inventory leanness.Design/methodology/approachUsing a large panel data of US manufacturing firms between 1998 and 2015, this study measures top managers' overconfident characteristics using stock option information. Then, a panel regression analysis is adopted to test the effects of managerial overconfidence on inventory leanness. Moreover, a moderation model is applied to investigate the interaction effects of market competition.FindingsFirms with overconfident COOs (CEOs), other circumstances being equal, increase (decrease) the inventory leanness as the market becomes more competitive.Practical implicationsThe study suggests that firms should understand top managers' behavioral characteristics to manage inventory efficiently. Collectively, CEOs (COOs) tend to increase (decrease) inventory levels due to their overconfidence as the market gets competitive. Firms should establish a systematic process to be reviewed by diverse stakeholders to deal with managerial overconfidence.Originality/valueThis study is an exploratory study that examines whether and how top management's behavioral attribute relates to a firm's operations performance. It underlines that CEO and COO's overconfident characteristics determine the inventory leanness when market competition is considered. Numerous studies on firm-level strategies emphasized the top managers' overconfidence as a key factor. However, behavioral characteristics at the top management level have rarely been studied in operations management fields. Based on the results, scholars could compare and understand the effects of CEO and COO overconfidence to provide insights into inventory management.

Revealing the importance of international and domestic cooperation by using artificial neural networks: case of European radical and incremental innovators

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Viktor Prokop ◽  
Jan Stejskal ◽  
Beata Mikusova Merickova ◽  
Samuel Amponsah Odei
Keyword(s):  
Neural Networks ◽  
Artificial Neural Networks ◽  
International Cooperation ◽  
Incremental Innovation ◽  
Content Type ◽  
Innovation Activities ◽  
Design Activities ◽  
Artificial Neural ◽  
The One ◽  
Innovation Processes

PurposeThe purpose of this study is to introduce innovative ideas into the treatment of the radical and incremental innovations and to fill the research gap by using: (1) methods that can perform complicated tasks and solve complex problems leading in creation of radical and incremental innovation and (2) a broad sample of firms across countries. The authors’ ambition is to contribute to the scientific knowledge by producing evidence about the novel usage of artificial neural network techniques for measuring European firms' innovation activities appearing in black boxes of innovation processes.Design/methodology/approachIn this study, the authors incorporate an international context into Chesbrough's open innovation (OI) theory and, on the one hand, support the hypothesis that European radical innovators benefit more from foreign cooperation than incremental innovators. On the other hand, the results of the analyses show that European incremental innovators rely on domestic cooperation supported by cooperation with foreign public research institutes. Moreover, the use of decision trees (DT) allows the authors to reveal specific patterns of successful innovators emerging within the hidden layers of neural networks.FindingsThe authors prove that radical European innovators using either internal or external R&D strategies, while the combinations of these strategies do not bring successful innovation outputs. In contrast, European incremental innovators benefit from various internal R&D processes in which engagement in design activities plays a crucial role.Originality/valueThe authors introduce innovative ideas into the treatment of hidden innovation processes and measuring the innovation performance (affected by domestic or international cooperation) of European firms. The approach places emphasis on the novelty of innovation and the issue of international cooperation in the era of OI by designing the framework using a combination of artificial neural networks and DT.

State legitimacy and tax compliance among small and medium scale enterprises: a case study of Dodowa district, Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abraham Gyamfi Ababio ◽  
Arthur Gnonsio Mangueye
Keyword(s):  
Sample Selection ◽  
Tax Compliance ◽  
Probit Model ◽  
Content Type ◽  
Medium Scale ◽  
State Legitimacy ◽  
Negative Effect ◽  
Sizable Proportion

Purpose Improving tax compliance would drive the needed development in Ghana. Small and medium scale enterprises (SME) constitute a sizable proportion of the Ghanaian economy but its contribution to tax revenue is below expectation. This study aims to determine whether SME's perception of state legitimacy affects tax compliance. Design/methodology/approach A structured questionnaire was administered to 200 SMEs randomly drawn from Dodowa in the Shai-Osudoku District of Greater Accra Region. Descriptive statistics and the Probit model with sample selection were used to analyse the data. Findings The study found that SME's perception of government legitimacy exerts a significant negative effect on reducing profit to avoid tax liability (ß = −0.0305, p < 0.05). Other factors such as education and fear of fines and penalties were also found to reduce the likelihood that the firm would reduce profit to avoid high tax liability. Still, tax knowledge had a positive effect on this behaviour. Practical implications This study would help deepen policymakers' knowledge of how to improve tax compliance among SMEs in Ghana. Originality/value The originality of this work is that it explicitly models the role of fiscal exchange theory in explaining tax compliance among SMEs in Ghana by using robust methodology.

The impact of intellectual capital and knowledge flows on incremental and radical innovation

2018 ◽  
Vol 10 (2/3) ◽  
pp. 149-170 ◽  
Author(s):  
Duy Quoc Nguyen
Keyword(s):  
Social Capital ◽  
Human Capital ◽  
Intellectual Capital ◽  
Radical Innovation ◽  
Knowledge Flows ◽  
Innovation Performance ◽  
Incremental Innovation ◽  
Content Type ◽  
Radical Innovations ◽  
The Impact

PurposeThe purpose of this paper is to develop a theoretical and empirical exploration of link between organization intellectual capital and knowledge flows with its incremental and radical innovation performance.Design/methodology/approachThis paper adopts relevant literature of social capital and organizational learning to examine the impact of intellectual capital and knowledge flows on incremental and radical innovation based on surveying 95 firms. To test the research hypotheses, regression analysis is used.FindingsResults of the study show that human capital and top-down knowledge flows significantly and positively influence both incremental and radical innovations. Social capital and bottom-up knowledge flows do not have any significant impact on incremental or/and radical innovation. Organizational capital has a positive impact on incremental innovation as expected.Practical implicationsThe results offer several practical implications for business managers to harvest its knowledge bases resident in the firm’s different forms appropriately to make innovation successful. Particularly, knowledge resident in human capital and organizational capital is useful for making incremental innovation. Especially, new knowledge, new skills and new perspectives resident in human capital are crucial important for making radical innovation. Both incremental and radical innovations are positively influenced by dynamic managerial capabilities.Originality/valueThis study contributes to literature by providing new evidence linking organization intellectual capital and knowledge flows with its innovation performance. Especially, the missing link between top-down knowledge flows and radical innovation is empirically examined. Value of this study is that social capital and bottom-up knowledge flows are not universally beneficial for enhancing innovation and their impacts on innovation performance are context dependent and more sophisticated than it is recognized in the literature.

scholarly journals Innovation in the Textiles Sector: A Firm-Level Analysis of Technological and Nontechnological Innovation

2016 ◽  
Vol 21 (Special Edition) ◽  
pp. 129-166 ◽  
Author(s):  
Waqar Wadho ◽  
Azam Chaudhry
Keyword(s):  
Small Firms ◽  
Innovation Process ◽  
Foreign Market ◽  
Knowledge Flows ◽  
Innovation Activity ◽  
Local Market ◽  
Large Firms ◽  
Firm Level ◽  
Innovation Activities ◽  
Innovation Rate

In a knowledge-based economy, it has become increasingly important to better understand critical aspects of the innovation process such as innovation activities beyond R&D, the interaction among different actors in the market and the relevant knowledge flows. Using a sample of 431 textiles and apparel manufacturers, this paper explores the dynamics of firms’ innovation activities by analyzing their innovation behavior, the extent and types of innovation, the resources devoted to innovation, sources of knowledge spillovers, the factors hampering technological innovation and the returns to innovation for three years, 2013–15. Our results show that 56 percent of the surveyed firms introduced technological and/or nontechnological innovations, while 38 percent introduced new products, these innovations were generally incremental as the majority of innovations were new only to the firm. Furthermore, the innovation rate increases with firm size; large firms have an innovation rate of 83 percent, followed by medium firms (68 percent) and small firms (39 percent). Technologically innovative firms spent, on average, 10 percent of their turnover on innovation expenditure in 2015. Acquisition of machinery and equipment is the main innovation activity, accounting for 56 percent of innovation expenditures. Large firms consider foreign market sources (clients and suppliers) and small firms consider local market sources their key source of information and cooperation. 63 percent of technological innovators cite improving the quality of goods as their most important objective. Lack of available funds within the enterprise is the single most important cost factor hampering innovation, followed by the high cost of innovation. Our results show that 67 percent of the turnover among product innovators in 2015 resulted from product innovations that were either new to the market or new to the firm.

Examining systematic technological learning of Syrian textile industry

2019 ◽  
Vol 10 (1) ◽  
pp. 116-142
Author(s):  
Sepehr Ghazinoory ◽  
Ammar Ali Ali ◽  
AliReza Hassanzadeh ◽  
Mehdi Majidpour
Keyword(s):  
Technology Transfer ◽  
Textile Industry ◽  
Developed Countries ◽  
Assessment Model ◽  
Incremental Innovation ◽  
Less Developed Countries ◽  
Firm Level ◽  
Content Type ◽  
Technological Infrastructure ◽  
Technological Learning

PurposeBecause of importance of technological learning for less developed countries, the notion has received increasing attention of scholars. The purpose of this paper is to investigate technological learning systematically by assessing the effect of technology transfer actors on technological learning in less developed countries context.Design/methodology/approachThe paper presents assessment model by adopting technological learning concept based on technology absorption and incremental innovation at firm level and identifying key roles of technology transfer actors (State – Scientific and technological infrastructure – Industry) that affect technological learning. The paper follows survey as research methodology. Thus, a questionnaire was addressed to 33 Syrian textile factories to examine the assessment model. Simple linear, multiple linear and ordinal regression analyses are preformed to examine relationships of model components.FindingsThe regression models show notable ability of technology transfer actors to explain technological behavior of firms to accumulate operative capability and consequently to generate passive incremental innovation. The findings indicate passive technical change system of Syrian textile industry. Therefore, goal-oriented evaluation of actual technology policy is preliminary step for achieving improvements, as well as activating scientific and technological infrastructure role by enabling strong relationships with industry and supporting interactions of domestic firms of textile industry and with foreign players.Originality/valueThe paper enriches technological learning literature by proposing systematic approach that sets the nature of technical change process of less developed countries in core of analysis. Moreover, it provides a guide for technological learning practices at firm level and for policymakers based on assessing actual status of Syrian textile industry.

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