Exploration and exploitation in the presence of network externalities

This paper examines the conditions under which exploration of a new, incompatible technologyis conducive to firm growth in the presence of network externalities. In particular, this studyis motivated bythe divergent evolutions of the PC and the workstation markets in response to a new technology: reduced instruction set computing (RISC). In the PC market, Intel has developed new microprocessors bymaintaining compatibilitywith the established architecture, whereas it was radicallyr eplaced byRISC in the workstation market. History indicates that unlike the PC market, the workstation market consisted of a large number of power users, who are less sensitive to compatibilitythan ordinaryusers. Our numerical analysis indicates that the exploration of a new, incompatible technologyis more likelyto increase the chance of firm growth when there are a substantial number of power users or when a new technologyis introduced before an established technologytakes off. (; ; ;

Drivers for international innovation activities in developed and emerging countries

This paper aims to shed light on firm specific drivers that lead firms to internationalise their innovation activities. The paper draws a comprehensive picture of driving forces by including firm capabilities, characteristics of the firm’s competitive environment and the influence of innovation obstacles in the home country. In particular, the role of the potential driving forces is tested on the probability to carry out different innovative activities abroad (R&D, design/conception of new products, manufacturing of innovative products and implementation of new processes). In a second step these driving forces are used to observe their impact on the decision to locate innovation activities in various countries and regions (China, Eastern Europe, Western Europe and North America) as well as in groups of countries with similar levels of knowledge (country clubs). The analysis is based on the Mannheim Innovation Panel survey which represents the German CIS (Community Innovation Survey) contribution. Two survey waves are combined and result in a sample of about 1400 firms. The results show that the decision to perform innovation activities abroad is mainly driven by organisational capabilities such as absorptive capacities, international experience and existing technological competences of the respective firm. Innovation barriers at the German home base such as lack of labour and high innovation costs foster the set up of later-stage innovation activities abroad while the lack of demand demonstrates a barrier to the internationalisation decision for the development and manufacturing of new products. Location decisions receive the strongest influencing effects from the international experience of the firm. Firms which innovate in developing countries seem to require a more extensive level of international experience by international R&D cooperation

Drivers and Effects of Internationalising Innovation by SMEs

This paper investigates the drivers and the effects of the internationalisation of innovation activities in SMEs based on a large data set of German firms covering the period 2002-2007. We look at different stages of the innovation process (R&D, design, production and sales of new products, and implementation of new processes) and explore the role of internal resources, home market competition and innovationrelated location advantages for an SME’s decision to engage in innovation activities abroad. By linking international innovation activities to firm growth in the home market we try to identify likely internationalisation effects at the firm level. The results show that export experience and experience in knowledge protection are highly important for international innovation activities of SMEs. Fierce home market competition turns out to be rather an obstacle than a driver. High innovation costs stimulate internationalisation of non-R&D innovation activities, and shortage of qualified labour expels production of new products. R&D activities abroad and exports of new products spur firm growth in the home market while there are no negative effects on home market growth from shifting production of new products abroad

A neural network approach to predicting price negotiation outcomes in business-to-business contexts

Price premiums are a key profit driver for long-term business relationships. For sellers in business-to-business (B2B) relationships, it is important to have appropriate strategies to negotiate price increases without trading off the relationships with their buyers. This paper aims to understand the annual price negotiation processes of companies by predicting whether a seller’s reservation price, target price, and initial offer positively affect the price negotiation outcome between the sellers and buyers. Data from 284 B2B relationships of a chemicals supplier based in Germany was used to examine our research model. In order to capture the non-linear decisions that are involved in price negotiations and to address collinearity among negotiations’ determinants, neural network analysis was used to predict the factors that influence price negotiation outcome. The neural network model was then compared with the results from regression analysis. Compared to regression analysis, the neural network has a lower standard error, and it showed that target price played a more important role in B2B price negotiations. The neural network was also able measure non-linear, non-compensatory decisions that are involved in price negotiations. The results imply that neural networks should be more widely used by researchers to address the threats that multi-collinearity poses. For companies, the results imply that price targets should be actively managed, e.g. through clear financial aims or through seminars aiming to help sales personnel to establish more challenging negotiation aims

Safety climate and increased risk: The role of deadlines in design work

Although much research indicates positive safety climate is associated with reduced safety risk, we argue this association is not universal and may even be reversed in some contexts. Specifically, we argue that positive safety climate can be associated with increased safety risk when there is pressure to prioritize production over safety and where workers have some detachment from the consequences of their actions, such as found in engineering design work. We used two indicators of safety risk: use of heuristics at the individual level and design complexity at the design team level. Using experience sampling data (N = 165, 42 design teams, k = 5752 observations), we found design engineers’ perceptions of team positive safety climate were associated with less use of heuristics when engineers were not working to deadlines, but more use of heuristics when engineers were working to deadlines. Independent ratings were obtained of 31 teams’ designs of offshore oil and gas platforms (N = 121). For teams that worked infrequently to deadlines, positive team safety climate was associated with less design complexity. For teams that worked frequently to deadlines, positive team safety climate was associated with more design complexity

Technological acquisitions:The impact of geography on post-acquisition innovative performance

Contains fulltext : 160470.pdf (publisher's version ) (Closed access)Our empirical study considers the impact of geography on post-acquisition performance for technological acquisitions. Relying on insights from the transaction costs and international business literatures we suggest that both geographic distance and borders influence post-acquisition innovative performance. Examining the patent portfolios of 3683 high tech acquirers in the period 2000–2012 we support a ‘liability of distance’ hypothesis and show that every 1000 km between the target and the acquirer costs as much as 19 lost patent applications. We do not find support for a ‘liability of foreignness’ hypothesis, however, but show in fact, that else equal, cross-border deals result in 3.15 additional patent applications. For high tech acquirers we find that ‘foreignness’ appears, therefore, to be more of an ‘asset’ than a ‘liability’. We find that the lion’s share of this is attributable to cultural differences