Exploring the Sources of Skill-Biased Technical Change: A Firm Performance Perspective

WP 2002-11 May 2002JEL Classification Codes: O12; O15; O31; O32; O33The literature on skill-biased technical change has examined the role of skills in the adoption of new technology. Here the focus is on the creation of new technology, that is, innovation. Low skill firms are hypothesized to benefit less from innovation activities, particularly collaborative research and development (R&D). In other words, skills and innovation are complementary. Complementarities associated with innovation may generate persistent differences in firm behavior and performance. Results from a panel of manufacturing firms indicate that technical skills reinforce the profitability effects of innovation and R&D collaboration. Skills, collaboration, and innovation form a system of interdependent activities

Customer Interaction and Innovation in Hybrid Offerings:Investigating Moderation and Mediation Effects for Goods and Services Innovation

Hybrid offerings are bundles of goods and services offerings provided by the same firm. Bundling value offerings affects how firms innovate, interact with customers, and customize their goods and services. However, it remains unclear how customer interaction might drive the innovation performance of various bundled components. Therefore, this study investigates the effects of customer interactions and service customization on both goods and services innovations in a hybrid offering context, using a unique data set of 146 information technology and manufacturing firms. Customer interaction appears beneficial to both goods and services innovation in a hybrid offerings context, but service customization has different direct effects on goods versus services innovation. As a potential mediator, customer knowledge mobilization resources exert different effects on the goods and services elements of hybrid offerings. Furthermore, for high-interaction customers, medium levels of technical modularity lead to most favorable innovation outcomes for services innovation. The results thus suggest that providers of hybrid offerings should foster customer interactions, to drive the innovation performance of the good and service components, while still making sure to implement service customization strategies. These findings have notable implications for service innovation research

Can’t Block, Must Run: Small Firms and Appropriability

This empirical study examines small firms’ strategies towards appropriating the returns to their investments in innovation and finds that they are qualitatively different from those found in earlier studies of more generally representative samples of firms. First, few of the smallest firms appear to benefit from patenting. Even within this sample of small firms, only the largest firms were likely to identify patents as the most important method of appropriating innovation returns. Thus, the strategic choice for most small firms is between secrecy and speed to market. The smallest firms and those in low technology or complex product industries tend to prefer speed, while small investments in R&D, discrete product technologies, and affiliation with higher technology industries explain preference for trade secrets. These results raise policy questions regarding the functioning of the existing systems of intellectual property rights when key policy goals include innovation by and growth of small firms. Furthermore, innovation policies that mandate collaboration are likely to significantly influence firms’ appropriability strategies

The Choice of Organizational Form for Collaborative Innovation

WP 2003-24 July 2003JEL Classification Codes: D23; L22; O31It is commonplace for firms to collaborate with others to gain access to technological components for innovation. This paper examines the choice of organizational form for such activities: when should a firm hire a technological expert as a temporary employee, transact through consulting spot markets, or engage in a long-term employment or supply relationship with the expert? Property rights theory is applied to examine the incentives and commitment created by different organization forms when the property rights of knowledge assets are incomplete. The model highlights the role of fallback options in sustaining socially efficient implicit contracts. Comparison of long-term employment and supply relationships shows that, contrary to received wisdom, an employment relationship is a less robust arrangement than a supply relationship in the presence of large knowledge spillovers. Nevertheless, the employment relationship is relatively more sustainable when there are complementarities between the parties’ cooperation investments. Empirical implications for structuring R&D and consulting arrangements are discussed

Exploring the Sources of Skill-Biased Technical Change: A Firm Performance Perspective

The literature on skill-biased technical change has examined the role of skills in the adoption of new technology. Here the focus is on the creation of new technology, that is, innovation. Low skill firms are hypothesized to benefit less from innovation activities, particularly collaborative research and development (R&D). In other words, skills and innovation are complementary. Complementarities associated with innovation may generate persistent differences in firm behavior and performance. Results from a panel of manufacturing firms indicate that technical skills reinforce the profitability effects of innovation and R&D collaboration. Skills, collaboration, and innovation form a system of interdependent activities

ORGANIZATIONAL KNOWLEDGE AND INNOVATION IN BUSINESS SERVICES

This study builds a typology of organizational knowledge in business services and empirically examines the effects of knowledge on innovation performance. A conceptual framework of knowledge assets with degrees of tacitness and collectiveness as the principal axes is used to ground the empirical analysis. We find that innovation in business services is associated with both tacit and explicit collective knowledge, and with explicit individual knowledge. In contrast, relying on tacit knowledge held by individuals may hamper innovation. These empirical results shed new light on the debate concerning the strategic effects of tacitness and collectiveness of knowledge. Innovation benefits may be gained from codifying knowledge and making it appropriable at the collective level, as opposed to the individual one. Additionally, our results indicate that tacit collective knowledge is more closely associated with new service introductions while explicit collective knowledge is associated with service improvements. Thus, tacit collective knowledge may be conducive to significant departures from existing capabilities while explicit collective knowledge appears conducive to incremental improvements. Key words: Organizational knowledge, innovation, business services, supply relationship

Competing through cooperation: Standard setting in wireless telecommunications

This study examines cooperative standard-setting in wireless telecommunications. Focusing on the competition among firms to influence formal standardization, the roles of standard-setting committees, private alliances, and technical consortia are highlighted. The empirical context is Third Generation Partnership Project (3GPP), an international standards development organization. Panel data analyses suggest that participation in external technical consortia significantly enhance firms contributions to the development of new specifications in 3GPP committees. Then, once a firm has become a central player in technical committees, it can further influence the standard-setting outcome through change requests to ongoing specifications. External alliances with fellow 3GPP members may also improve change request success. These results suggest that if firms in network technological industries want to influence the evolution of their industry, they should identify both formal standard-setting committees and external cooperative arrangements in which they can discuss, negotiate, and align positions on technical features with their peers. For policymakers, these results suggest that it is important to ensure that technical consortia remain open for all industry actors and that membership fees do not become prohibitive to small and resource-constraint players.Standard setting, technology strategy, inter-firm networks