Profiting from Product Innovation: A Product Life Analysis of the Economic Geography of Value Added

This paper explores the role of product innovation in creating and capturing value added throughout the manufacturing and service life of a product. We explore the empirical roots of the concept of profiting from product innovation in the industrial and commercial machinery and equipment industry, offer a global value chain analysis of how an EU-27 headquartered firm has employed an effective business model for capturing value added from product innovation. In essence, we analyze how organizational and financial architectures reflect the realization of economic value in product innovations in the context of contemporary globalization. We present two different value creation and capture patterns for the same product innovation; one process describes the case of manufacturing, and one describes the case of services. We then show how these two different patterns of value creation and capture are reflected in different supply chain participants and national geographies. The key insights of this paper are twofold. First, we find that the concept of profiting from product innovation is significant at both the firm and nationwide levels. Second, we observe the disaggregation of the value chain of product innovation into two separate value chains: manufacturing and servitization. This observation provides novel insights into the governance of global value chains

Collective Bargaining Centralisation Against All Odds? The Italian Telecommunications Industry after Market Liberalization

The widespread trends towards markets liberalisation, decline in trade union power, and flexible work organization were expected to push collective bargaining institutions to converge to a decentralised bargaining structure. This crude version of the neoliberal convergence thesis, however, was not borne out. Instead, change in employment relations has been more nuanced than initially thought. This paper explores the conditions under which centralisation of bargaining is possible, even in a more competitive environment with pressures for greater flexibility. It draws on case study evidence from the Italian telecommunications industry, tracing back the process of liberalisation since the early 1990s. It is shown how the strategies and the coalitions between organised labour, business and the state explain in large part this path of institutional change

Variability in Micro-level Innovation Performance in Natural Resource-processing Industries

This paper explores the relationship between micro-level innovation performance, changes in institutional frameworks and the mediating role of strategy embeddedness in the context of firms from emerging economies (known as latecomer firms). The paper is based on a multiple case-study design that draws on first-hand longitudinal evidence gathered during a three-year fieldwork campaign centered on 13 firms from the forestry, pulp and paper industries in Brazil (1950-2009). The results suggest that variability in the firms‟ innovation performance, proxied as capability levels, across changing institutional frameworks was mediated by degrees of strategy embeddedness. Specifically, the following applied to firms that pursued proactive strategy embeddedness: (i) their innovation performance was significantly higher over time than firms that pursued active and/or reactive strategy embeddedness; (ii) they faced whatever discontinuities with progressively higher levels of innovation performance than firms that pursued an active and/or reactive strategy embeddedness; (iii) they sought to shape their institutional frameworks to overcome hurdles inherent to their latecomer condition and negotiate their transitions into world-leading technological and commercial positions. Although macro- and meso-level institutional frameworks are necessary for industrial growth, innovation and competitiveness, these achievements largely depend on the nature and dynamics of firms‟ own strategic choices and related innovation efforts. Policymaking should therefore involve coordinated efforts between government and firms. Based on a novel theoretical framework and rich empirical assessment, this paper contributes to advancing our understanding of factors affecting the innovation performance of latecomer firms, especially in natural-resource processing industries

Technology Sourcing: Are Biotechnology Firms Different? An Exploratory Study of the Spanish Case

In this paper, we study the pattern of technology sourcing, taking into account where firms source technology and through which channels. Specifically, we inquire whether biotechnology firms are different from other firms in their technology sourcing behavior. Our results show some significant differences in the patterns of technology sourcing. Biotechnology firms show a greater propensity for external technology sourcing both with regard to the external purchasing of R&D services and with regard to cooperation for innovation. They also show a greater propensity for foreign R&D purchasing relations, but they are not more likely to establish foreign cooperation for innovation once we control for their firm-specific and industry characteristics as well as sample selection bias. Biotechnology firms do, however, show a more varied pattern of sourcing both concerning the types of agents and the geographic origin of technology

Onshore Immigrant Managers as Boundary Spanners on Offshored Software Development Projects: Partners or Bosses?

A growing trend of sourcing complex software development projects from high-cost (onshore) countries to lower-cost (offshore) countries has created a need for effective collaboration across national boundaries. Effective collaboration requires overcoming challenges stemming from participants’ diverse backgrounds, which can be broadly classified as “coordination challenges” and “status differences.”A traditional way of addressing these challenges has been to send an expatriate on a temporary assignment from an onshore to an offshore country or vice versa. An increasingly popular approach is to assign project liaison roles to professional workers who have emigrated from common offshoring destinations such India, Russia, China, and Eastern Europe and who are now working in the US and Western Europe. This practice, however, assumes that immigrant managers will enable effective collaboration by leveraging their bicultural backgrounds to manage projects sourced to their country of origin. Drawing on and extending status characteristics and construction theory we investigate the role of onshore immigrants in addressing coordination challenges and renegotiating status differences on such projects. Using data from interviews with onshore and offshore IT professionals, we illustrate that the practice of assigning onshore immigrant managers to boundary spanning roles is often problematic. While, by and large, immigrant managers are able to address coordination challenges, they are only willing to renegotiate status differences if they identify with offshore IT professionals. Those immigrants who no longer identify with the offshore group exhibit a profound lack of trust in and respect for offshore professionals, sometimes even refusing to speak their mother tongue

Network Dynamics in Regional Clusters: A New Perspective from an Emerging Economy

Regional clusters are spatial agglomerations of firms operating in the same or connected industries, which enable innovation and economic performance for firms. A wealth of empirical literature shows that one of key elements of the success of regional clusters is that they facilitate the formation of local inter-organizational networks, which act as conduits of knowledge and innovation. While most studies focus on the benefits and characteristics of regional cluster networks and focus on advanced economies and ‘hot spots’, this paper advances with the existing literature by analyzing network dynamics and taking an emerging economy’s perspective. Using longitudinal data of a wine cluster in Chile and stochastic actor-oriented models for network dynamics, this paper examines what microlevel drivers influence the formation of new knowledge ties among wineries. It finds that cohesion effects (reciprocity and transitivity) as well as firm-level heterogeneity in the knowledge bases influence the evolution of the knowledge network. Next, it explores how these micro-level network drivers influence the macro-level structural evolution of the local knowledge network. Empirical results have interesting implications for the cluster competitiveness and network studies literatures and the burgeoning literature on corporate behavior in emerging economies

Technological Change at Work: The Impact of Employee Involvement on the Effectiveness of Health Information Technology

This paper uses employee and patient survey data from a large, integrated healthcare provider to assess the moderating role that employee involvement (EI) plays in the effectiveness of a patient scheduling module that is part of an electronic health record (EHR) system. The author finds that while the module facilitated the appointment-making process, its effects were greater in those clinics that sought input from frontline workers and made use of worker peers trained as system “super-users.” This case of workplace technological change begins to explain the elusiveness of the EI-performance link in received studies by suggesting an alternative avenue by which EI can improve organizational performance. Moreover, this study presents the first empirical evidence of EI’s potential to enhance the effectiveness of health IT, findings that should inform policymakers and sectoral actors as they allocate substantial resources toward the healthcare industry’s transition from paper-based to electronic recordkeeping

US Biopharmaceutical Finance and the Sustainability of the Biotech Boom

In the decade before the current economic crisis, the US biotechnology industry was booming. In a 2006 book, Science Business: The Promise, the Reality, and the Future of Biotech, Gary Pisano implies that, given the 10-20 year time-frame for developing biotech products and the lack of profitability of the industry as a whole, the US biotech boom should not have happened. Yet the biotech industry has received substantial funding from venture capital firms as well as from established companies through R&D alliances. Why would money from venture capitalists and big pharma be flowing into an industry in which profits are so hard to come by? The purpose of this article is to work toward a solution of what might be called the “Pisano puzzle”, and in the process to provide a basis for analyzing the industrial and institutional conditions under which the growth of the US biopharmaceutical (BP) industry is sustainable. One part of the answer has been the willingness of stock-market investors to absorb the initial public offerings (IPOs) of a BP venture that has not yet generated a commercial product, and indeed may never do so. The other part of the answer is that the knowledge base that BP companies can tap to develop products comes much more from government investments and spending than from business finance. Indeed, we show that, through stock buybacks and dividends, established corporations in the BP industry have been distributing substantial sums of cash to shareholders that may be at the expense of R&D. We use the framework that we have developed for analyzing the sustainability of the US BP business model to pose a number of key areas for future research, with an emphasis on the implications of the financialization of this business model for the generation of safe and affordable BP drugs

The Effect of Market Leadership in Business Process Innovation: The Case(s) of E-Business Adoption

This paper empirically investigates how market leadership influences firm propensity to adopt new business process innovations. Using a unique data set spanning roughly 35,000 plants in 86 U.S. manufacturing industries, I study the adoption of frontier e-business practices during the early diffusion of the commercial internet. Theory predicts that firms with greater market share will be more likely to adopt innovations that build on their existing strengths, while they will resist more radical technological advances. While prior work primarily focuses on product innovation, I extend the logic into the business process setting to find that leaders were far more likely to adopt the incremental innovation of internet based e-buying. However, they were commensurately less likely to adopt the more strategically sensitive and complex practice of e-selling. This pattern is remarkably robust, holding across a wide range of industries and controlling for factors such as productivity and related technological capabilities. The results are explicated by a framework I develop for understanding the drivers of this behavior and making it possible to classify business process innovations as radical or not. While greater market share promotes adoption of all types of business process innovations, this effect is outweighed by additional co-invention and coordination costs whenever a technological advance address strategically sensitive and complex business processes that must also span the firm boundary

Comparative Analysis of Incumbent and Emerging Liquefied Natural Gas Regasification Technologies

Energy plays a fundamental role in both manufacturing and services, and natural gas is quickly becoming a key energy source worldwide. Facilitating this emergence is the expanding network of ocean-going vessels that enable the matching of natural gas supply and demand on a global scale by transporting it in the form of liquefied natural gas (LNG) for eventual regasification at its destination. Until very recently only one type of technology has been available for transporting and regasifying LNG: Conventional LNG vessels and land based LNG regasification. It is now possible to transport and regasify LNG onboard special LNG vessels. Companies such as Excelerate Energy and Höegh LNG are currently developing LNG supply chains based on this new technology. Motivated by this recent development we engaged executives at Excelerate Energy to develop and apply to data an integrated analytic framework to compare these incumbent and emerging technologies. Our analysis brings to light basic principles delineating when to deploy each technology and how to configure the emerging technology. Some of our findings challenge conventional wisdom on the role to be played by the emerging technology; others provide answers to open questions faced by companies currently engaged in the commercial deployment of this technology. In addition, our integrated analytic framework has potential relevance for the evaluation of new technologies beyond this specific application