How firms accumulate knowledge to innovate – an empirical study of Vietnamese firms

PurposeOrganizational innovations are closely associated with organizational knowledge, and thus a firm builds its knowledge base to enhance its innovative performance. However, insights into this process are still limited, especially in the context of firms in developing countries. Building on the dynamic managerial capabilities literature and open innovation paradigm, this paper attempts to fill this gap by developing and empirically testing a model that investigates how firms in developing countries accumulate knowledge to innovate.Design/methodology/approachA model of a firm's knowledge accumulation and innovation is proposed in which it specifies relationships among absorptive capacity, knowledge breadth, research and development (R&D), knowledge depth, exploratory innovation and exploitative innovation, and then it is empirically tested by using the structural equation modeling (SEM) technique based on the surveyed data of Vietnamese firms.FindingsThe results indicate that absorptive capacity positively influences both knowledge breadth and knowledge depth, knowledge breadth positively influences R&D, R&D positively influences exploratory innovation and knowledge depth, and knowledge depth positively influences exploratory and exploitative innovation.Practical implicationsThe study proposes an “acquire and develop” open innovation model for firms in developing countries in which firms acquire external technologies and then develop R&D (develop and design) capability to adapt acquired technologies to their local conditions to create new organizational-specific capabilities and exploratory innovation.Originality/valueThis study argues that external knowledge acquisition is beneficial to innovative performance of firms in developing countries via renewing their knowledge base. Furthermore, the study provides the unique evidence that novel external knowledge acquisition and internal R&D are fit to each other in the fit-as-mediation form in which novel external knowledge acquisition is mediated by R&D to positively influence exploratory innovation.

DETERMINANTS AND RISK-TAKING BEHAVIOUR OF OUTSOURCING INNOVATION DECISION AND INTENSITY IN VIETNAM: MAKE, PURE OR HYBRID?

This study investigates determinants and risk-taking behaviour of outsourcing innovation decision as well as the intensity in Vietnam. Outsourcing decision consists of an exclusive make (Make), buy (Pure) or a combination of both internal and external knowledge acquisition (Hybrid) in the innovation strategies. We also define outsourcing innovation intensity as the proportion of costs used for outsourcing innovation. We distinguish these outsourcing strategies in relation to product and process innovation. Based on the unique survey data in Vietnam available in 2016, we highlight the importance of the firm-specific factors such as R&D intensity, exporting status, and share of qualified employees dedicated to R&D activities; the firms’ obstacles and objectives for innovation; and the information sources of innovation on the outsourcing innovation decision and intensity. The other striking finding is that outsourcing innovation is risk-taking behaviour, but outsourcing product innovation strategy is a less risky option as compared to the outsourcing process innovation in the case of Vietnamese enterprises.

The Relationships among Environments, External Knowledge Acquisition, and Innovation

The purpose of this study is to investigate the mediation effects of external knowledge acquisition on the relationships between environments (dynamism, complexity, and hostility) and innovation. Although prior studies have extensively examined the relationships between environments and innovation or innovativeness, the results of the studies appear to lack consistency. To help clarify the relationships between environments and innovation, this study intends to examine the impact of environments on innovation through external knowledge acquisition, and it is argued that environments are likely to motivate or force firms to acquire new knowledge from the outside, which, in turn, tends to enhance their ability to innovate. Based on data collected from manufacturing SMEs in China through a questionnaire survey, we have found that dynamism, complexity and hostility have all positive total effects on innovation and that they also have positive influences on firms’ external knowledge acquisition. Besides, we have found that external knowledge acquisition has a complete mediation effect on the relationships between all three environmental dimensions and innovation. The results further show that the positive direct effects of all three environmental dimensions on innovation disappear completely when external knowledge acquisition is considered as a mediator. These results imply that the significant relationships between three respective environmental dimensions and innovation demonstrated in prior studies may be spurious. Based on these findings, we have presented key conclusions, implications, and limitations with the direction of future research.

Tapping emerging markets for innovative knowledge acquisition strategies

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper uncovers the optimal conditions for maximizing the impact of internal R&D and external knowledge acquisition on innovation performance in emerging markets. The conditions transpired to be a high level of managerial open-mindedness to externally gained knowledge, a high-performing organization, fewer administrative pressures, and the company possessing adequate financial resources for applying any externally gained knowledge to improve innovation performance. These conditions help mitigate the emerging market challenges that can otherwise offset the value sought by conducting internal R&D and external knowledge acquisition sequentially, as without carefully managerial attention these activities ultimately displace each other’s innovative effects. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

The substitute effect of internal R&D and external knowledge acquisition in emerging markets

Purpose This paper aims to provide a new perspective in investigating how internal research and development (R&D) and external knowledge acquisition interact regarding their influence on innovation performance in an emerging market context. Building on an attention-based view (ABV), it argues that internal R&D and external knowledge acquisition can be substitutes for each other in emerging markets. Its contingency factors are also discussed according to the principles of the ABV. Design/methodology/approach The proposed hypotheses were empirically tested using a Tobit model approach. The data used was from the enterprise survey and the follow-up innovation survey conducted by the World Bank in 10 emerging market countries. Findings The results indicate that internal R&D and external knowledge acquisition entails a substitute effect among emerging market firms (EMFs). A higher level of manager’s open-mindedness to external knowledge and firm performance and a lower level of firm administrative control help mitigate the substitute effect of internal R&D and external knowledge acquisition. While adequate financial resources may not necessarily mitigate the substitute effect, it is an essential condition for the external knowledge acquisition to play a role in enhancing innovation performance. Research limitations/implications The research uses a set of cross-sectional data. A dynamic study will provide a deeper understanding of the long-term effects of innovation investments. Practical implications To better use innovation investments, EMFs need to assess their specific conditions and the possible substitute effect of internal R&D and external knowledge acquisition activities. Originality/value Previous research discussing the interactive effect of internal R&D and external knowledge acquisition has mostly focused on an absorptive capacity perspective, which represents a firm’s technical ability. This study argues that these investments not only involve in absorbing knowledge technically but also form a challenge for the limited firm resources and can cause cognitive problems in management, especially for EMFs.

Ambidexterity in External Knowledge Search Strategies and Innovation Performance: Mediating Role of Balanced Innovation and Moderating Role of Absorptive Capacity

The importance of external knowledge acquisition for innovation by firms is well established. In particular, there has been an increasing focus on the two distinct modes of firms’ external search strategies, which have a differential effect on their learning and innovation: search breadth and depth. By applying organizational ambidexterity lens, we hypothesize that pursuing high levels of both external search strategies is beneficial to achieve a balance between exploitative and explorative innovation, which, in turn, has a positive impact on the firm’s innovation performance. We also hypothesize that, even among the firms that maintain high levels of both search strategies, firms with higher absorptive capacity better achieve a balance between both modes of innovation, thereby producing higher performance. The findings on a multi-industry sample of Koran manufacturing firms confirm our hypotheses and imply that it is essential for firms to develop capabilities for different modes of external search activities in conjunction with internal absorptive capacity for superior innovation performance.