Breakthrough Innovations In The Corporate Entrepreneurship Commerce Essay

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An upcoming trend in scientific research is the growing tendency of firms engaging in several simultaneous alliances with different partners (Wassmer, 2010). Through these inter-organizational relationships, firms get access to resources and are able to create competitive advantage (Dyer & Singh, 1998). In terms of alliances with different partners much attention is paid for the concept of portfolio diversity (Bruyaka, 2009; Duysters & Lokshin, 2007), which refers to "the variety of a firm's external links with different partners" (Bruyaka, 2009, p. 2).

In this research on alliance portfolio diversity the focus will be on the outcome, a firm's innovative performance. Cohen and Levinthal (1990:128) argue that the ability to exploit external knowledge is a critical component of innovative performance.

Today, firms from a wide range of industries execute almost the entire production process through some form of external collaboration (Powell et al., 1996). Collaboration is performed through strategic alliances between firms, where an alliance is defined as "a situation wherein two or more firms unite to pursue a set of agreed-upon goals, in which they share the benefits; and in achieving these goals, partner firms independently control over the performance of assigned tasks and contribute on an ongoing basis in one or more key strategic areas" (Yoshino and Rangan, 1995:5, in Chen and Chen, 2002:1008).

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Alliances can be established with scientific institutions or other companies, among

them potential competitors, at a national and/or an international level.

In the literature two types of innovation are distinguished, namely incremental and radical innovation. In this research the focus will rely on both types of innovation in terms of radical innovation of newness, whereas incremental innovation is the type with fewer new innovations.

Portfolio of alliances (ego-centric network with type of partners)

According to several research evidence

Geographic reach and partner role (supplier, buyer, competitor)

Collaboration thus seems to be central to successful

innovation, allowing partners to learn from each other and complementing their resources.

In their literature review on the diversity of an alliance portfolio of a firm on its innovative performance…

As mentioned in the introduction, it is known that collaboration with different partner types can lead to different types of innovative performance (Kash & Rycroft, 2002),

is better to study alliance portfolio compositions and make a distinction between radical and incremental innovation as innovative performance, because this enables to determine what kind of diversity is more likely to lead to radical and incremental innovation.

The choices made on the interpretation of this research lead to the following research question:

To what extent does the diversity of an alliance portfolio in terms of geographical reach, national- and international inter-organizational alliances, affects a firm's incremental and radical innovative performance moderated by a firm's R&D effort?

Relevance of the research

The aim of this research is to extend the scope of alliance portfolio diversity. This study contributes to the literature of alliances by opening the black-box of a portfolio approach in terms of national- and international inter-organizational alliances which can influence a firms incremental and radical innovative performance. of This research is relevant because prior research relating to the South African Innovation Survey 2001 is not investigated in the context of portfolios relating to radical and incremental innovative performance.

Scientific and practical relevance!

Technologische diversity

Weinig international/national

Alliance portfolios and innovative performance Already in technology context but not in international vs. national

In this research a contribution to the literature will be made by research what the influence of the diversity of an alliance portfolio has on incremental and radical innovation.

Blackbox ingaan door portfolio benadering

Using this variable is therefore also valuable for the practical relevance, because organizations are interested in the effect of strategic alliances on innovative performance (G. Meurtgeert, scriptie).

Theoretical Background (in progress)

In this section the dependent, independent and moderating variable relating to this research will be defined from which hypotheses are generated. Finally, the conceptual model visualizes the relation between the dependent, independent and moderating variable.

Defining the main concepts

Dependent Variable: Innovative performance

Roberts (1988) defines innovative performance as the extent of commercial success, derived from the introduction of new or improved products and/or services on the market. According to Hagedoorn & Schakenraad (1994) improving innovative performance is an important inducement for firms to enter strategic alliances. In this research exploratory innovation (radical innovation) and exploitative innovation (incremental innovation) are distinguished. Exploratory innovations are radical innovations and are designed to meet the needs of emerging customers or markets (Benner and Tushman, 2003:243; Danneels, 2002). They offer new designs, create new markets, and develop new channels of distribution (Abernathy and clark, 1985).

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and Innovative performance can be distinguished

Specifying innovative performance enables to study specific combinations of partner and find synergies that lead to higher levels of radical or incremental innovative performance.

As mentioned in the introduction, it is known that collaboration with different partner types can lead to different types of innovative performance (Kash & Rycroft, 2002), because some alliances can complement a focal organization with the knowledge to develop radical innovations, while other alliances have complementary assets needed for 8

incremental innovation.

Zaltman, Duncan & Holbek (1973) define innovation as an idea, practice or, material artifact perceived to be new by the relevant unit of adoption (p 10). However, Dewar & Dutton (1986) state that the definition of Zaltman et al. (1973) does not emphasize that an innovation can vary in degree of newness to an adopting unit. An innovation can vary from incremental to radical.

Dewar & Dutton (1986) define radical innovations as fundamental changes that represent changes in technology and incremental innovations as minor improvements or simple adjustments in current technology.

EXPLORATORY INNOVATIONS REQUIRE NEW KNOWLEDGE OR DEPARTURE FROM EXISTING KNOWLEDGE (BENNER AND TUSHMAN 2002, LEVINTHAL AND MARCH 1993, MCGRATH 2001).

CONVERSELY, EXPLOITATIVE INNOVATIONS ARE INCREMENTAL INNOVATIONS AND ARE DESIGNED TO MEET THE NEEDS OF EXISTING CUSTOMERS OR MARKETS (BENNER AND TUSHMAN 2003, P. 243; DANNEELS 2002). THEY BROADEN EXISTING KNOWLEDGE AND SKILLS, IMPROVE ESTABLISHED DESIGNS, EXPAND EXISTING PRODUCTS AND SERVICES, AND INCREASE THE EFFICIENCY OF EXISTING DISTRIBUTION CHANNELS (ABERNATHY AND CLARK 1985, P. 5). HENCE, EXPLOITATIVE INNOVATIONS BUILD ON EXISTING KNOWLEDGE AND REINFORCE EXISTING SKILLS, PROCESSES, AND STRUCTURES (ABERNATHY AND CLARK 1985, BENNER AND TUSHMAN 2002, LEVINTHAL AND MARCH 1993, LEWIN ET AL. 1999).

Independent Variable: Alliance Portfolio Diversity

The concept alliance portfolio is defined by Ozcan & Eisenhardt (2009) as a firm's set of alliances, concerning its ego-centric network including a firm's direct ties (p. 246). According to Bruyaka (2009: 2) the concept of portfolio diversity refers to "the variety of a firm's external links with different partners" (Bruyaka, 2009, p. 2).

In this research the diversity of an Alliance Portfolio consists of the configuration of geographical reach (national- and/or international inter-organizational alliances of innovating firms).

National inter-organizational alliances

H1a: A South African firm's alliance portfolio configured by only national inter-organizational alliances will positively affect a South African firm's incremental innovation performance.

H1b: A South African firm's alliance portfolio configured by only national inter-organizational alliances will negatively affect a South African firm's radical innovation performance.

International inter-organizational alliances

Parkhe (1991) defines global strategic alliances, in this research referred to as international alliances, as "the relatively enduring interfirm cooperative arrangements, involving cross-border flows and linkages that utilize resources and/or governance structures from autonomous organizations headquartered in two or more countries" (581).

H2a: A South African firm's alliance portfolio configured by only international inter-organizational alliances will negatively affect a South African firm's incremental innovation performance.

H2b: A South African firm's alliance portfolio configured by only international inter-organizational alliances will positively affect a South African firm's radical innovation performance.

National- and international inter-organizational alliances

H3a: A South African firm's alliance portfolio configured by national- and international inter-organizational alliances will negatively? affect a South African firm's incremental innovation performance.

H3b: A South African firm's alliance portfolio configured by national- and international inter-organizational alliances will positively? affect a South African firm's radical innovation performance.

Theoretical Mechanism between Alliance Portfolio Diversity and Radical Innovation of Newness (in progress)

According to

Defining the moderating concept

Moderating Variable: R&D Effort

Laursen & Salter (2006) find that firms who have open search strategies-those who search widely and deeply-tend to be more innovative (p. 131). Contradictory to this is the fact that R&D effort could also have a negative influence on a firm's radical innovation of newness. According to Koput (1997) over-searching could cause information overflow ('the absorptive capacity problem'), if innovative ideas come at the wrong time and place they cannot be fully exploited ('the timing problem') and since there are so many ideas, few of these ideas are taken seriously or given the required level of attention or effort to bring them into implementation ('the attention allocation problem').

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This leads to the …..hypothesis:

Powell et al. (1996) report evidence from various studies that R&D intensity (or the level of technological sophistication of an industry) is positively associated with the intensity and

number of alliances in that sector.

H1: Alliance Portfolio Diversity moderated by R&D Effort will have a curvilinear effect on a firm's radical innovation of newness.

2.3 Conceptual model

This conceptual model visualizes the central variables of the research.

Alliance Portfolio Diversity

Radical Innovation

of Newness

R&D Effort

Methodological framework/ Research strategy (in progress)

This section provides the methodological framework of the research and gives inside in the data, measurements of the variables and provides an explanation of how the data will be analyzed.

Data

3.1 Research design

The main aim of this research is to test the hypotheses which are derived from the literature regarding the concept variables, from this aim the research can be characterized as deductive. The research can has a quantitative research design. The South African Innovation Survey (SAIS 2001) will be used as secondary data. This data is collected in one period in time; therefore this research can be labeled as cross-sectional.

3.2 Data collection & Sample strategy

In this research data of the SAIS 2001 will be analyzed. All South African firms with 10 or more employees and economically active in 1998-2000 can be defined as the population of the survey. The data is collected by the University of Pretoria in collaboration with the Technology University Eindhoven based on the European Community Innovation Survey used from 1994 onwards. In SAIS 2001, a stratified random sample of 7039 firms was selected from a commercial database of SA firms, and their representatives were asked to complete the survey questionnaire. Of these representatives, 617 (or 8.4%) completed the questionnaire (Bakker, Oerlemans & Pretoria, 2008).

Measurements

Measurements of the variables

To test the hypotheses advanced in the theoretical framework, scores on items of the SAIS 2001 will be analyzed, therefore the measurements are describe in this research proposal.

Dependent variable: radical innovation of newness

Radical innovation of newness will be measured by incremental and radical innovation.

(see Appendix A for operationalization).

Independent variable: alliance portfolio diversity

The configuration of an alliance portfolio is measured by focusing geographical reach (national- and international inter-organizational alliances) and partner role (buyer, supplier and competitor). Different questions about alliances are asked to the respondents for each of these dimensions (see Appendix A for operationalization).

Control variables: firm industry and

There is a possibility that other variables affect the dependent and independent variables, therefore two control variables will be included in the research. The first control variable is firm size.

…….is the second control variable.

Methodology

Data analysis

To confirm or reject the hypotheses, the main relationship between alliance portfolio diversity and innovative performance will be tested. The alliance portfolio diversity is determined by three dimensions, which will be taken togheter for the data analysis.

Linear regression alaysis. To test the influence of the control variables, several models will be constructed Cluster analyses: making groups e.g. international alliances of suppliers, national alliances of suppliers

Logistic regression: Incremental innovation = 0, Radical innovation = 1

Research quality indicators

Credibility/Internal validity Since this research has a cross-sectional design it will be difficult to achieve a high internal validity (Bryman, 2008). William Blankley (director research) interview for new trends that did emerge. Transferability/External validity

Given that the SAIS2001 was distributed among different industries and the indication that the response group of the survey is representative for the total population of South African firms, the external validity can be assured. Dependability/Reliability

The results of the SAIS2001 could be different if the survey was executed a second time.

Time schedule

Phase/Activity

January

February

March

April

May

June

Improve Research Proposal

x

x

Theory Section

x

x

x

x

Data Analysis

x

x

Interviews

x

Interview Analysis

x

Methods Section

x

x

Result Section

x

x

Discussion/Conclusion Section

x

Finish Master Thesis

x

Extension Week

x

Defense Master Thesis

x

Deadlines

January

February

March

April

May

June

Hand-in Research Proposal

21-01-11

Research Proposal Defense

31-01-11

Hand-in Research Proposal minor revision

11-02-11

Hand-in Research Proposal major revision

28-02-11

Go/no go Research Proposal

07-03-11

Ideally Deadline Master Thesis

29-05-11

Hand-in Master Thesis

03-06-11

Defense Master Thesis

13-06-11/ 17-06-11

Literature references

Bakker, R.M., Oerlemans, L.A.G. and Pretorius, T. (2008). Domestic and International

Innovation partnerships: do they matter for innovation outcomes of South African

firms?

Bruyaka, O. (2009). Alliance portfolio diversity: A new perspective on the concept and its

measures. EGOS 2009: Barcelona.

Bryman, A. (2008). Social Research Methods. New York: Oxford University Press.

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective on

Learning and Innovation. Administrative Science Quarterly, Vol. 35: 128-152.

Dewar, R. D., & Dutton, J. E. 1986. The adoption of radical and incremental innovations: An

empirical analysis. Management Science, 32: 1422-1433.

Duysters, G. & Loksin, B. (2007). Determinants of alliance portfolio complexity and its effect

on innovative performance of companies. Journal of Product Innovation Management.

Dyer, J., & Singh, H. (1998). The Relational View: Cooperative Strategy and Sources of

Interorganizational Competitive Advantage. Academy of Management Review, Vol.

23, No. 4: 660-679.

Koput, K. W. (1997). A Chaotic Model of Innovative Search: Some Answers, Many Questions.

Organization Science, Vol. 8, No. 5: 528-542.

Lavie, D. (2007). Alliance portfolios and firm performance: A study of value creation and

appropriation in the U.S. software industry. Strategic Management Journal, 28: 1187-1212.

Laursen & Salter (2006). Open for innovation: The role of openness in explaining innovation

performance among U.K. manufacturing firms. Strategic Management Journal, 27: 131-250.

Parkhe, A. (1991). Interfirm diversity, organizational learning, and longevity in global

strategic alliances. Journal of International Business Studies, 22: 579-601.

Wassmer, U. (2010). Alliance Portfolios: A Review and Research Agenda. Journal of

Management, Vol. 36: 141-171.

Zaltman, Duncan & Holbek (1973)

Appendices

Appendix A: Operationalization table

Concept variable

Definition

Dimension

Indicator

Calculation of score

Alliance Portfolio Configuration

The configuration of an alliance portfolio in terms of national- and/or international inter-organizational alliances

National inter-organizational alliances

Firms are asked whether they have an alliance with national or foreign partners

International inter-organizational alliances

Radical innovation of newness

Radical innovation of newness here is the rate between incremental innovations (new to the firm) and radical innovations (new to the firm and new to the market)

Radical innovation

Incremental innovation

Control variable

Definition

Dimension

Indicator

Calculation of score

Firm size