Exploring Innovation in Firms : Heterogeneity, technological and organisational innovation, and firm performance
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AbstractPrior research on innovation covers a variety of important topics at the firm level. This thesis contributes to this line of research by focusing on a few major issues about “innovation in firms”, i.e. heterogeneity, technological and organisational innovation, and firm performance. These issues relate mainly to the questions, “how do firms differ?” and “how does this matter to their innovative and other performance?” For example, previous studies are interested in the question of whether, and to what extent, innovation is persistent at the firm level, but little attention has been paid to explaining why some firms (do not) persistently innovate. This thesis proposes that firms’ heterogeneity in the form of strategic differences across firms are an important determinant of innovation persistence, and analyses this by adopting a panel database from CIS (Community Innovation Survey) and R&D (Research and Development) surveys in Norway (Chapter 3). Another issue investigated by the thesis (i.e. the analysis in Chapter 4, which is also based largely on CIS and R&D survey data from Norway) is concerned with the questions, “is there really a positive link between ICT (Information and Communication Technology) and growth in services?” and “how does organisational change play a role in this?” These research questions are motivated particularly by the impressive upturn of the service industries, together with the increasing economic importance of ICT in these industries during recent decades. Prior research argues that innovation processes differ greatly according to the heterogeneity of firms, for example, some firms may complement ICT-based innovation with organisational change in order to make a significant improvement on their performance. Nonetheless, only a few empirical works at the firm level attempt to explain the remarkable growth of services based on this point. In Chapter 5, the thesis pays more attention to the organisational aspect of innovation, and seeks an explanation of the rates and effects of organisational innovation, whereas prior innovation research focuses much more on technological innovation, for example, in terms of new or radically changed products and processes. Despite the considerable importance of organisational innovation suggested by the literature, the relationship between firms’ heterogeneity and this aspect of innovation has been taken into account in a much fewer number of quantitative analyses. On the basis of unique data on organisational innovation provided recently by the CIS, this chapter attempts to examine the heterogeneous factors which explain organisational innovation and its effects.
Two main quantitative methods used in this thesis are bibliometrics and econometrics. Following the introduction to the thesis (Chapter 1), Chapter 2 presents an overview of innovation studies, which is based on a bibliometric analysis of innovation literature. This seeks to offer a broad picture of this line of research, for example, its organisation and development. One general conclusion which can be drawn from the analysis is that innovation studies is a fairly interdisciplinary field, in terms of both the production and the use of knowledge. The field encompasses research contributions from many disciplines, and these contributions are diffused and used across many research areas, such as management, business, engineering, economics and other social sciences. More specifically, one of the most important facts underscored by this chapter is that the literature has a strong focus on innovation in firms. Accordingly, the remaining chapters of the thesis (Chapters 3–5) attempt to address and challenge the aforementioned issues which have a great emphasis on innovation at the firm level, as well as its relationship with firms’ heterogeneity. Based on a method which combines factor analysis, cluster analysis, and a dynamic random effects probit model, Chapter 3 provides evidence which confirms the general finding in the literature that innovation is persistent at the firm level. More importantly, this chapter found that observed firms’ heterogeneity in terms of differences in strategies across firms explains why they (do not) persistently innovate. Based on an OLS (Ordinary Least Square) regression framework, Chapter 4 shows that ICT, combined with organisational change, is an important driving force behind the superior growth of service firms. Chapter 5 further examines determinants and effects of organisational change using Heckman two-step estimation. This chapter found that the rates of organisational change are influenced by factors such as firms’ past economic performance, past attempt at organisational change and perceived costs of innovation, while the effects of organisational change are influenced by factors such as the persistence of organisational change and the complementarity of technical and organisational change. In addition, the results suggest that firm age and firm size have different impacts on the rates and effects of organisational change.
List of papers
|Chapter 2: 20100616 "Innovation: Exploring the knowledge base" by Jan Fagerberg & Koson Sapprasert. This paper has been included in the TIK Working Papers on Innovation Studios.|
|Chapter 3: 20100617 "Innovation strategies as a source of persistent innovation" by Tommy Clausen & Mikko Pohjola & Koson Sapprasert & Bart Verspagen. This paper has been included in the TIK Working Papers on Innovation Studios.|
|Chapter 4: 20070531 "The impact of ICT on the growth of the service industries" by Koson Sapprasert. This paper has been included in the TIK Working Papers on Innovation Studios.|
|Chapter 5: 20080601 "On Factors explaining Organisational Innovation and its Effects" by Koson Sapprasert. This paper has been included in the TIK Working Papers on Innovation Studios.|