Stock Market Reaction to Green Vehicle Innovation

We study the stock market reaction to announcements of global green vehicle innovation over a 14‐year time span (1996–2009) using the event study methodology. We document that the stock market generally reacts positively to automakers' announcements of environmental innovations, consistent with prior research on the wealth effects of innovation announcements. Our results indicate that crucial green product development decisions such as innovation type and market segment choices exert direct influence on a firm's market value. These results hold after controlling for firm size, leverage, profitability, R&D intensity, and oil price changes.     

Top Management's Transformational Leader Behaviors and Innovation Orientation: A Cross-Cultural Perspective in Eight Countries

This study builds upon the established relationship between top management's transformational leadership and firm-level innovation. It extends current research by determining how specific transformational-leader behaviors influence the firm's innovation orientation and how national culture moderates this relationship. The study examines these behaviors empirically in 954 firms from eight countries. Findings reveal that six transformational-leader behaviors positively influence innovation orientation but with differing levels of intensity. Only two of these relationships, “providing an appropriate model” and “accepting group goals,” are culturally independent, while the other behaviors' effects tend to be culturally dependent. For example, “providing intellectual stimulation” has a stronger effect in collectivist cultures, cultures with high power distance, and low uncertainty-avoidance cultures than in other cultures. Similar culture-dependent findings emerge for other leader behaviors.     

A Real Options Reasoning Approach to Corporate Social Responsibility (CSR): Integrating Real Option Sensemaking and CSR Orientation

In this article we explore the conceptual relationship between corporate social responsibility (CSR) orientation and real option reasoning. We argue that the firm's attitude, communication, and behavior toward CSR will act as significant determinants to the firm's sensemaking approach to real options; that is, if and how it (the firm) acknowledges, receives, and manages strategic real options. Integrating the previous work of Basu and Palazzo with Barnett, we propose a new model that extends the influence of CSR orientation/character to general strategic decision making while simultaneously developing the attention‐based view to real options.     

INNOVATION STRATEGY AND FINANCIAL PERFORMANCE IN MANUFACTURING COMPANIES: AN EMPIRICAL STUDY

An innovation strategy for the manufacturing function covers four areas: a firm's desired innovation leadership orientation (i.e., being a leader versus being a follower), its level of emphasis on process and product innovation, its use of internal and external sources of innovations, and its intensity of investment in innovation. We examine two models of the association between manufacturing companies' innovation strategy and their financial performance. The first examines the variations in company financial performance as a function of the simultaneous effect of the dimensions of innovation strategy. The second is a sequential model that suggests a causal sequence among the dimensions of innovation strategy that may lead to higher performance. We used data from a sample of 149 manufacturing companies to test the models. The results (1) support the importance of innovation strategy as a determinant of company financial performance, (2) suggest that both models are appropriate for examining the associations between the dimensions of innovation strategy and company performance, and (3) show that the sequential model provides additional insights into the indirect contribution of the individual dimensions of innovation strategy to company performance. Finally, we discuss the implications of these results for managers.     

Examining the Firm's Value Creation Process: A Managerial Perspective of the Firm's Value Offering Strategy and Performance

The primary pursuit of any business is to understand what customers value and to create that value for them. While customers are the final arbiter of value, it is the firm's role to explore, interpret and deliver value based on what they believe customers are seeking. Based on this premise we adopt the firm's perspective on value creation to extend both Bowman and Ambrosini's theoretical framework and the work of DeSarbo, Jedidi and Sinha and focus on two issues. The first is the strategic emphasis firms place on the design and delivery of their value offering. The second is the extent the firm's value offering explains performance differentials at the customer‐centric performance level. We present a conceptual model of how firms gain positional advantage via their value offering and the realized outcomes they achieve. We present two approaches to modelling the firm's value offering (type II and type IV models) and articulate the theoretical underpinnings and results for these models. Our results validate the conceptualization of the firm's value offering and suggest that creating superior value offerings enables firms to achieve superiority in customer‐centric performance.     

The dark side of business model innovation

Existing literature has tended to focus on the positive benefits and outcomes of business model innovation (BMI), despite emerging evidence that BMI can also have a dark side, with negative consequences. We systematically review the existing BMI literature, articulating it around three clusters of negative consequences: those affecting the firm as an entity; those affecting the firm's stakeholders; and those that are specific or context-dependent. In a similar fashion, we identify the driving factors and circumstances leading to these negative consequences and group them into four clusters: (1) managerial choices and processes, and three underpinning circumstances that influence such choices or processes; (2) trade-offs between the new and current business models; (3) managers’ ability to manage BMI; and (4) context within which BMI is situated. The paper provides the first attempt to gather prior research on the phenomenon and thereby develop a conceptual understanding of the dark side of BMI. Furthermore, by proposing a model that explains how the dark side of BMI may occur, we inform ongoing debates on the theorization of the consequences that may derive from BMI and how these can be managed to support firms’ innovative growth, arguing how the disruptive innovation literature can only partially explain the phenomenon. Second, our model provides important foundations to further distil the complex link between BMI and performance. Finally, we suggest a number of future research avenues, accounting for different dimensions of the phenomenon.     

Introduction to Innovation WITHIN and ACROSS Borders: A Review and Future Directions

Innovation is an integral part of every firm's ongoing operations. While new product and service creation is an essential task to ensure a firm's immediate success in the marketplace, process and supply chain innovations can also create a unique source of competitive advantage for the future. Encouraging innovative thinking, developing new innovations, and managing the processes by which those innovations are developed are critical aspects of today's firm. Consequently, research which aids in the creation and maintenance of innovative firms is an important topic of inquiry for research communities on innovation management, including the operations management and information systems communities. We review the literature in this important area and offer suggestions for future research on the following topics: innovation within a firm and across the supply chain, technology management, and new product and service development.     

Business- and environment-related drivers of firms’ return on natural resources: A configurational approach

The sustainability challenges society faces call for firms to manage their use of natural resources wisely. Prior work on firm responses to sustainability challenges has largely focused on explaining and enhancing economic rather than environmental performance. We build on recent developments to extend resource dependence theory to include natural resources and seek to explain how business- and environment-related firm activities influence the use of natural resources. Using a configurational approach, we develop a conceptual model that explains the return on natural resources of firms based on four distinct sets of business- and environment-related comparative advantages. An illustrative application to the car-manufacturing sector demonstrates the practical applicability of our model and provides first insights into configurations we are likely to observe in practice. Our model and its application show that economic success is neither necessary nor sufficient to enhance a firm's return on natural resources.     

Robust Structural Equations for Designing and Monitoring Strategic International Facility Networks

Using predictive global sensitivity analysis, we develop a structural equations model to abstract from the details of a large‐scale mixed integer program (MIP) to capture essential design trade‐offs of global manufacturing and distribution networks. We provide a conceptual framework that describes a firm's network structure along three dimensions: market focus, plant focus, and network dispersion. Normalized dependent variables are specified that act as proxies for a company's placement into our conceptual network classification via the calculation of just a few key independent variables. We provide robust equation sets for eight cost structure clusters. Many different product types could be classified into one of these groups, which would allow managers to use the equations directly without needing to run the MIP for themselves. Our numerical tests suggest that the formulas representing the network structure drivers—economies of scale, complexity costs, transportation costs, and tariffs—may be sufficient for managers to design their strategic network structures, and perhaps more importantly, to monitor them over time to detect potential need for adjustment.     

FINANCIAL CONSTRAINTS AND INNOVATION: WHY POOR COUNTRIES DON'T CATCH UP

This paper examines micro‐level channels through which financial development can affect such macroeconomic outcomes as level of income. Specifically, we investigate theoretically and empirically how financial constraints affect a firm's innovation activities. Theoretical predictions are tested using unique firm survey data, which provide direct measures for innovations and firm‐specific financial constraints, as well as information on shocks to firms' internal funds that serve as firm‐level instruments for financial constraints. We find unambiguous evidence that financial constraints restrain the ability of domestically owned firms to innovate and hence to catch up to the technological frontier.     

Marketing as an Investment in Shareholder Value

We present resource‐based and capability‐based arguments of marketing investment intensity to offer a strategic view of marketing as an investment in shareholder value. We find that marketing investment intensity has a U‐shaped quadratic effect on shareholder value creation (Tobin's q) that calls for marketing investment to be protected and increased, not surrendered. We show how marketing investments interact with investments in R&D, human capital and operations to reveal how strategic co‐investments can alter the shareholder value of marketing. Finally, we show how competitive intensity and failings in the firm's investment productivity (its ability to convert investment expenditure into sales) point to malaise in the firm's own strategic architecture as a fault for perceived poor returns from marketing investments. Our findings suggest that marketing investment should not be scapegoated when its contributions to shareholder value are not as expected. When invested in strategically and in combination with other investments, marketing can unlock exciting improvements in shareholder value.     

Network Positions and the Probability of Being Acquired: An Empirical Analysis in the Biopharmaceutical Industry

This paper examines the relationship between the firm's direct ties, its inter‐firm network prominence and its likelihood of being acquired. The authors argue that firm's direct ties and prominence enhance the firm's visibility and signal its quality – and thus foster the firm's likelihood of being acquired. However, higher levels of direct ties and prominence, by providing access to resources and the firm's status, respectively, increase the firm's ability to remain independent and thus reduce its likelihood of being acquired. Thus, the authors posit the overall relation as an inverted U‐shaped. Furthermore, they show that, for firms that undergo an initial public offering, the aforementioned relation becomes much weaker. The hypotheses are empirically tested in the biopharmaceutical industry and important theoretical and managerial implications are discussed.     

Frugal innovation for supply chain sustainability in SMEs: multi-method research design

Abstract

In this study, we attempt to establish the missing links between supply chain sustainability and frugal innovation. Our study motivations stem from two facets of the emerging markets: first, the institutional barriers and, second, the resource constraints. We argue that there is a synergy in the concepts of frugal innovation and sustainability in supply chains and there is a need to further explore this synergy. Furthermore, we claim that even in the wake of many success stories in the frugal innovative supply chain management practices from emerging markets such as India, there are very few, if any, attempts made to understand the implications of a sustainability oriented frugal innovations in the particular context. To address this gap, we develop a model to establish the linkage between sustainable supply chains and frugal innovations. Our proposed conceptual framework depicts the hierarchy and interlinks of the identified enablers in developing sustainability oriented frugal innovative capabilities in supply chains. Furthermore, we have empirically validated our theoretical framework using survey data. We observed that most of the interpretive links are supported. These findings extend the understanding of frugal innovation for supply chain sustainability using multi-method research design, while also providing theoretically guidance to managers in the development of frugal innovation capability to achieve sustainability in supply chain in resource constrained environment.     

Innovativeness as an Unintended Outcome of Franchising: Insights from Restaurant Chains

A growing trend in improving innovation outcomes is to go outside the firm's boundaries. One mechanism by which firms extend organizational boundaries is through franchising their channels. Yet, the effects of franchising on innovation outcomes have been overlooked in the literature. We propose that a firm's emphasis on franchising will affect its organizational innovativeness, conceptualized as product and process innovativeness, independently and with other firm characteristics—franchising experience, firm size, financial leverage, and slack resources. We find support for our hypotheses using a nonlinear seemingly unrelated regression model estimated using panel data from 38 U.S. restaurant chains between 1992 and 2005. The positive effect of the emphasis on franchising on product innovativeness is stronger for firms with high financial leverage, but weaker for firms with high slack resources. For process innovativeness, the effect is stronger for firms with high financial leverage but weaker for large firms, and for firms with high franchising experience and high slack resources. The findings indicate that a firm's emphasis on franchising has contingent effects on product and process innovation outcomes. Thus, franchising emerges as a competing mechanism (to alliances and joint ventures) that extends organizational boundaries and affects organizational innovativeness.     

Market Orientation,Internal Process,and External Network: A Qualitative Comparative Analysis of Key Decisional Alternatives in the New Service Development*

Scholars from different disciplines acknowledge the importance of studying new service development (NSD), which is considered a central process for sustaining a superior competitive advantage of service firms. Although extant literature provides several important insights into how NSD processes are structured and organized, there is much less evidence on what makes NSD processes successful, that is, capable of contributing to a firm's sales and profits. In other words, which are the decisions that maximize the likelihood of developing successful new services? Drawing on the emerging “service‐dominant logic” paradigm, we address this question by developing an NSD framework with three main decisional nodes: market orientation, internal process organization, and external network. Using a qualitative comparative analysis technique, we discovered combinations of alternatives that maximize likelihood of establishing a successful service innovation. Specifically, we tested our NSD framework in the context of hospitality services and found that successful NSD can be achieved through two sets of decisions. The first one includes the presence of a proactive market orientation (PMO) and a formal top‐down innovative process, but the absence of a responsive market orientation. The second one includes the presence of both responsive and PMO and an open innovation model. No single element was a sufficient condition for NSD success, though PMO was a necessary condition. Several implications for theory and decision‐making practice are discussed on the basis of our findings.     

The Influence of Top Management Teams in the Strategic Orientation and Performance of Small and Medium‐sized Enterprises

Identifying which factors affect firms' performance is a critical issue in strategic management research. This paper addresses the influence of managerial team over the behaviour and performance of small and medium‐sized enterprises (SMEs). By treating top management team (TMT) characteristics as predictors of a firm's strategic orientation, we seek to provide a more complete understanding of how the characteristics of managerial teams shape decision‐making processes and SMEs' behaviours in order to successfully compete in low munificent environments. Based on primary data regarding managerial characteristics and firms' behaviours of a sample of 295 SMEs, our results confirm that a firm's strategic orientation plays a mediating role in explaining how TMT characteristics determine SMEs' performance.     

Customer complementarity in the digital space: Exploring Amazon’s business model diversification

In spite of the striking evidence that many firms run multiple business models, scholars and practitioners still lack a comprehensive understanding about business model portfolio dynamics, particularly when this happens in the digital space. Prior research on business model diversification tends to focus on supply-side complementarities, such as a firm's synergies among resources and capabilities. Yet, the demand-side with its customer complementarities remains theoretically and empirically underexplored, despite offering interesting opportunities for firms' competitive advantage. By developing a qualitative, longitudinal (1995–2018) analysis of the various business models developed by Amazon.com, we identify and map how customer complementarities—network effects and one-stop shop effects—can support firm growth and competitive advantage, particularly in the digital space. We identify what we term the ‘integrative business model,’ defined as the business model in a portfolio exhibiting the most (predominantly positive) customer complementarities with other business models. We propose mechanisms for the integrative business model to contribute to sustainable competitive advantage via a causal loop diagram and discuss implications for theory and practice.     

THE INDUCE VERSUS PURCHASE DECISION: AN EMPIRICAL ANALYSIS OF INDUSTRIAL R&D*

With the recent slowdown in productivity growth within the economy, R&D has come under scrutiny as a policy target variable. If such targeting is to be effective, it must be realized that not all innovations employed within a firm are induced by the firm through its own R&D: many innovations are purchased through technological licensing or in the form of new capital equipment. Here, interfirm differences in this “make” versus “buy” strategy are analyzed within the context of the Utterback-Abernathy production process lifecycle. Our findings suggest that (1) alternative sources to a firm's R&D for stimulating innovation may prove a viable strategy for federal targeting and (2) extrapolating the Utterback-Abernathy model to an industry formulation has empirical validity.     

Industry Clockspeed and the Pace of New Product Development

Recent empirical literature describes an industry's clockspeed as a measure of the evolutionary life cycle, which captures the dynamic nature of the industry. Among other factors, the rate of new product development is found to be associated with an industry's clockspeed. Yet the notion of an industry clockspeed and the essential factors driving suitable decision making in this area have remained relatively unexplored. We develop a simple definition and a corresponding analytic model which explains the interdependent relationship between a firm's own new product development activities and an industry clockspeed. Results from the single firm model show the conditions under which particular firms have an incentive to accelerate their new product development activities. Moreover, we link the single firm's NPD clockspeed decisions to the industry level by creating appropriate metrics which characterize different types of industries. Examples from high‐tech industries such as the personal computer and aerospace industries are included to illustrate our findings. Our intention is not only to offer analytical insights into factors driving the clockspeed for these industries, but also to establish a fundamental structured decision making approach, thereby stimulating future research on this important topic.     

Toward a Contextually Anchored Service Innovation Typology

In an increasingly service-centered economy, service innovation is crucial to maintaining a firm's competitive advantage. While service innovation has attracted much attention and has resulted in the development of several service innovation typologies, these attempts remain rooted in the goods-versus-services perspective. In addition, limited attention has been devoted to theoretically anchoring these typologies in the key determinants of service innovation. Our study aims to close these gaps by developing a service innovation typology that is embedded in the service-dominant logic (SDL) and anchored by contextually relevant dimensions—environmental uncertainty, strategic orientation, and market orientation. This article presents an eight-cell service innovation typology and discusses its managerial and research implications. It is our belief that framing the typology along three contextually important dimensions and embedding in the SDL provides a richer and more appropriately specified articulation that is theoretically robust and will be useful to managers responsible for service innovation.