Organizational innovation as an enabler of technological innovation capabilities and firm performance

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<ul><li><p>Organizational innovation as an enabler ofrm performance</p><p>ionct oideartial ins an</p><p>1. Introduction</p><p>e introent in the workplace and/or ind external agents (OECD, 2005).porta</p><p>use of iOI rem</p><p>contribl, &amp; Layruster</p><p>and process innovation capabilities (IC); and (2) the impact of OI andtechnological IC on rm performance (FP).</p><p>First, Damanpour and Aravind (2011) encourage research on the effectof OI on technological IC. To date, the main arguments identifying OI as</p><p>Journal of Business Research xxx (2012) xxxxxx</p><p>JBR-07575; No of Pages 12</p><p>Contents lists available at SciVerse ScienceDirect</p><p>Journal of Busin2006; Mol &amp; Birkinshaw, 2009) have increased in the last few years.However, few studies report on the consequences of OI (Damanpour &amp;Aravind, 2011), and those that do are limited in scope (Mol &amp;Birkinshaw, 2009: 1270). The present study addresses this issue throughanalysis of: (1) the effect of OI on the generation of technological product</p><p>present study contributes to an understanding of the association betweenOI and technological IC and supports the hypothesis thatwhile OI is a pos-itive factor in the development of process IC, its effect on product IC isme-diated by process IC. This is an important issue in strategic managementgiven that innovative activity is an important source of sustainable com-petitive advantage (Damanpour &amp; Schneider, 2006; Damanpour &amp;Wischnevsky, 2006). Identication of internal factors that stimulate tech-nological IC can promote a better understanding of the innovative processwithin a rm (Galende &amp; de la Fuente, 2003) and will enable advance-</p><p> This research was nancially supported by research funding from the Spanish Ministryof Science and Innovation (ECO2009-1252) and from the Consellera de Educacin of the</p><p>Generalitat Valenciana (ACOMP/2010/233). Also, the authreviewers for their excellent suggestions. Comments byUniversity, Newark, United States, Mariano Nieto-AntolSpain, and Pedro Lpez-Sez, Universidad Complutense deMlier draft were helpful in revising this paper. Corresponding author at: Departamento de Direc</p><p>Renau Piqueras, Facultad de Economa, Edicio Deparde Valncia, Av. Tarongers, s/n, C. P. 46022, Valencia, Sp</p><p>E-mail addresses: Cesar.Camison@uv.es (C. Camisn(A. Villar-Lpez).</p><p>0148-2963/$ see front matter 2012 Elsevier Inc. Alldoi:10.1016/j.jbusres.2012.06.004</p><p>Please cite this article as: Camisn, C., &amp; Villrm performance, Journal of Business Reseaet al., 2008; Birkinshaw,and the factors that pro-2010; Birkinshaw &amp; Mol,</p><p>novation has only been shownvery recently, but has as yet little advancedour understanding of the connection between them (Battisti &amp; Stoneman,2010; Damanpour, 2010; Damanpour, Walker, &amp; Avellaneda, 2009). TheHamel, &amp; Mol, 2008; Hamel, 2006, 2007, 2009)mote this development (Battisti &amp; Stoneman,tional methods for business managemthe relationship between a company anOI currently represents oneof themost imof competitive advantage for rms beca(Hamel, 2006, 2007, 2009). However,(Hamel, 2006: 82).</p><p>Few conceptual and methodologicalitoring of OI (Armbruster, Bikfalvi, Kinkeof studies on OI development (Armbnt and sustainable sourcests context-specic natureains poorly understood</p><p>utions address the mon-, 2008: 645). The number</p><p>a prerequisite for technological IC stem from reports on organizationalchange published in the 1950s (Lawrence, 1954; Lewin, 1958). Althoughthere aremore recent reports showing a direct correlation between thesetypes of innovation (Damanpour &amp; Evan, 1984; Kimberly &amp; Evanisko,1981), few studies extend the original reasoning (Damanpour, Szabat, &amp;Evan, 1989). The importance of both organizational and technological in-Organizational innovation (OI) is th duction of new organiza- The present study expands current knowledge on OI in two ways.Csar Camisn , Ana Villar-LpezUniversitat de Valncia, Spain</p><p>a b s t r a c ta r t i c l e i n f o</p><p>Article history:Received 1 October 2010Received in revised form 1 January 2011Accepted 1 June 2012Available online xxxx</p><p>Keywords:Organizational innovationFirm performanceTechnological innovation capabilities</p><p>This study assesses the relatities, and analyzes their effearticle presents empirical evstructural equations using pdevelopment of technologicical capabilities for productors thank the three anonymousFariborz Damanpour, Rutgers</p><p>n, Universidad de Len, Len,adrid, Madrid, Spain, to an ear-</p><p>cin de Empresas, Juan Jostamental Oriental, Universitatain.), Ana.Villar@uv.es</p><p>rights reserved.</p><p>ar-Lpez, A., Organizational irch (2012), doi:10.1016/j.jbutechnological innovation capabilities and</p><p>ship between organizational innovation and technological innovation capabil-n rm performance using a resource-based view theoretical framework. Thence from a survey of 144 Spanish industrial rms and modeling of a system ofal least squares. The results conrm that organizational innovation favors thenovation capabilities and that both organizational innovation and technolog-d processes can lead to superior rm performance.</p><p> 2012 Elsevier Inc. All rights reserved.</p><p>ess Researchment of the study of the interrelationship between innovation typesand IC (Damanpour, 2010).</p><p>Second, as Mol and Birkinshaw (2009: 1270) state, The literatureoffers very little evidence of the empirical relationship between the in-troduction of newmanagement practices and FP. Consequently, debateon the impact of OI on FP is ongoing, with one side maintaining that OIhas a positive effect on FP (Armbruster et al., 2008; Mol &amp; Birkinshaw,2009) and is an essential source of competitive advantage (Hamel,</p><p>nnovation as an enabler of technological innovation capabilities andsres.2012.06.004</p></li><li><p>2 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxxxxx2009) and the other maintaining that its existence has a weak effect onFP (Cappelli &amp; Neumark, 2001). This paper sheds light on this questionbybuilding on the streamof research that proposes thatOI positively af-fects FP.</p><p>Furthermore, unlike previous research, this study specically con-siders how product and process IC separately affect FP and how they in-terrelate to achieve a positive effect on FP. This research question isimportant because provides a better understanding of how rms bene-t from these two types of technological IC to obtain superior FP. Untilnow, the impact of product and process IC on FP has mainly been stud-ied by considering both of them in a construct (Calantone, Cavusgil, &amp;Zhao, 2002; Tsai, 2004) and this paper tries to shed light on whetherthey provide the same (or different) results for a rm consideringthem separately.</p><p>The structure of the remainder of the article is as follows. Section 2includes a review of relevant literature and a sound theoretical modelof the relationships among OI, technological IC, and FP. Section 3 de-scribes the procedures used to test the hypotheses. Section 4 comprisesthe results of the analysis. The discussion and conclusionswith academ-ic and practical implications follow in Section 5.</p><p>2. Literature review and hypotheses</p><p>2.1. Resource-based view (RBV) of innovation</p><p>Among numerous classications of types of innovation, one of themost commonly accepted is that of the OECD (2005) in the Oslo Manual,which distinguishes four types of innovation: product innovation, pro-cess innovation, marketing innovation, and OI. Technological innovationinvolves product and process innovations,while non-technological inno-vation involvesmarketing and organizational innovations. This paper fo-cuses on all of the types identied by the OECD (2005) except formarketing innovation, consideration of which would be beyond thescope of this study. Schumpeter (1934) and other important innovationresearchers such as Damanpour (Damanpour, 1991; Damanpour &amp; Evan,1984) and Edquist, Hommen andMcKelvey (2001) have classied inno-vation types in several ways. Without detracting from these classica-tions, the classication of the Oslo Manual synthesizes and homogenizesthese previous important innovation classications. Specically, thispaper focuses on the role of OI, technological (product and process) ICand its effects on FP.</p><p>The theoretical framework provided by the resource-based view(RBV) facilitates clear analysis of innovation and its association with per-formance (Damanpour et al., 2009; Galende &amp; de la Fuente, 2003; Mol &amp;Birkinshaw, 2009; Yang, Marlow, &amp; Lu, 2009). RBV uses the internal char-acteristics of rms to explain their heterogeneity in strategy and perfor-mance. According to the main assumption of RBV, only rms withcertain resources and capabilities with special characteristics will gaincompetitive advantages and, therefore, achieve superior performance.The distinctiveness of a factor depends on its rarity, value, durability,nonsubstitutability, inimitability and appropriability of generated rents(Amit &amp; Schoemaker, 1993; Barney, 1986, 1991; Grant, 1991; Peteraf,1993;Wernerfelt, 1984). Sustainable competitive advantage determinesthe ability of an organization to recongure and to constantly renew itssupply of valuable and idiosyncratic resources and capabilities to fosterinnovation (Eisenhardt &amp; Martin, 2000; Grant, 1996; Nelson &amp; Winter,1982; Teece, Pisano, &amp; Shuen, 1997; Winter, 2000).</p><p>According to RBV, a capability refers to the deployment andreconguration of resources to improve productivity and achievestrategic goals (Makadok, 2001). A capability is a lower-order func-tional, operational or technological capability (Ortega, 2009). Technolog-ical IC is identied as one of the most important sources of competitiveadvantage (Coombs &amp; Bierly, 2001, 2006) owing to its causal ambiguity(Gonzlez-lvarez &amp; Nieto-Antoln, 2005). Specically, technological ICis the ability to perform any relevant technical function or volume activ-</p><p>ity within the rm, including the ability to develop new products and</p><p>Please cite this article as: Camisn, C., &amp; Villar-Lpez, A., Organizational irm performance, Journal of Business Research (2012), doi:10.1016/j.jbuprocesses, and to operate facilities effectively (Teece, Pisano &amp; Shuen,1997). Recent empirical research provides statistical evidence that tech-nological IC is an important determinant of FP (Ortega, 2009; Tsai, 2004).</p><p>The next section examines OI, given the necessity to clarify thisconcept.</p><p>2.2. Organizational innovation</p><p>The denition of OI is not as easily agreed in innovation literature asthose for technological IC (Armbruster et al., 2008). This is due to thefact that literature on OI is still scarce and scattered (Armbruster et al.,2006, 2008; Mol &amp; Birkinshaw, 2009), reecting various denitions ofthe concept (Table 1).</p><p>The rst scientic studies on innovation in rms were on administra-tive innovation (Daft, 1978;Damanpour, 1991;Damanpour&amp;Evan, 1984;Damanpour, Szabat &amp; Evan, 1989; Ettlie &amp; Reza, 1992), dened as innova-tion concerning changes in organizational structure and human resource(HR) practices. More recent papers, however, refer to management inno-vation (Hamel, 2006, 2007, 2009; Mol &amp; Birkinshaw, 2009), managerialinnovation (Damanpour &amp; Aravind, 2011) or OI (Armbruster et al.,2006; Battisti &amp; Stoneman, 2010; OECD, 2005). As Damanpour andAravind (2011: 35) posit, the denitions of administrative, organiza-tional and management innovations overlap markedly.</p><p>The present study uses the terminology and denition proposed bythe OECD, which encompass the essence of both the traditional andmore recent denitions. Specically, the OECD (2005) denes OI as theimplementation of a new organizational method in a rm's businesspractices, workplace organization, or external relationships. The featurethat distinguishesOI fromother organizational changes is the implemen-tation of an organizational method that has not been used before in therm and that is the result of strategic management decisions (OECD,2005).</p><p>In particular, the OECD (2005) considers that OI in business practiceinvolves the implementation of new methods for organizing routinesand procedures, such as establishing databases of best practice, improv-ing worker retention, or introducing management systems. Innovationin workplace organization involves the implementation of newmethodsfor distributing responsibilities and decision-making among employeesfor the division ofwork, aswell as new concepts for the structuring of ac-tivities. Finally, innovation in organization methods for external rela-tionships involves the implementation of new ways of organizingrelationships with other rms or public institutions, such as collabora-tion with research organizations or customers, methods for integrationwith suppliers, or outsourcing.</p><p>This OECD (2005) denition of OI has similarities to and differencesfrom previous denitions (Table 1). With regard to the similarities,most of the denitions establish that OI (or management innovation,depending on the terminology used by the authors) consists of the useof new managerial and working concepts and practices (e.g. Armbrusteret al., 2006, 2008; Birkinshaw et al., 2008). Therefore, OI refers to the im-plementation of a new organizational method in a rm. With regard tothe differences among denitions, the OECD (2005) and other authorssuch as Armbruster et al. (2006, 2008) and Battisti and Stoneman(2010) introduce a further twist to the denition of OI. These def-initions include inter- and intra-organizational dimensions to OI.Intra-organizationalOI occurswithin anorganization or company,where-as inter-organizational OI includes new structures or procedures outsidethe company boundaries (e.g. cooperation agreements) (Armbruster etal., 2008). This difference suggests that OI is different from managementinnovation and the terms are not interchangeable. On the contrary, theOECD (2005) denition of OI includes the concept of management inno-vation (intra-organizational innovation) and expands the denition byconsidering the case of inter-organizational innovation. This enrichesthe denition of management innovation because considers intra- andinter-organizational innovations simultaneously with regard to the use</p><p>of new managerial and working concepts and practices.</p><p>nnovation as an enabler of technological innovation capabilities andsres.2012.06.004</p></li><li><p>adm</p><p>g fortivitizat</p><p>pon</p><p>al st</p><p>al m</p><p>manalts oforkanag</p><p>s tha</p><p>nt p</p><p>rforminis</p><p>3C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxxxxxThe literature on OI is scarce (Armbruster et al., 2006, 2008), particu-larly in terms of empirical evidence (Battisti &amp; Stoneman, 2010). Apartfrom some early contributions (Damanpour et al., 1989), the importanceofOI as a distinct innovation typehas only emerged in the last decade. TheOECD (2005) recognition of OI as separate from product, process, andmarketing innovations partly triggered this change in direction. Recentstudies have expanded the concept of OI (Armbruster et al., 2006, 2008;Hamel, 2006, 2007, 2009) and carry out various empirical papers(Armbruster et al., 2008; Battisti &amp; Stoneman, 2010). Some studies ad-dress the development of OI (Birkinshaw et al., 2008; Hamel, 2006,2007, 2009) and factors favoring i...</p></li></ul>