Institutional vs. sectoral dimension of innovation strategies of firms.
Stankevice, Inga ; Jucevicius, Giedrius
JEL classification: L14, L21, L23, O14, O31, O32, P52.
Introduction
It might be true that, in countries which have experienced
relatively recent large-scale changes, despite initial eagerness to
adopt new institutional frameworks and ways of management, the potential
for an adverse reaction is strong. For example, the former regime in
Eastern Europe served to reduce uncertainty; however, this experience,
according to Schneider and Barsoux (2003), "created a sense of
learned helplessness, a sense of being unable to make an impact, as well
as a strong fear of making mistakes". If so, national institutions
in Eastern Europe can easily become scapegoats on which low rates of
innovativeness and poor ability of facilitating competitive innovation
strategies are blamed.
However, there are a number of indirect scientific arguments and
evidence both for and against the idea that national institutional
environment (NIE) is a decisive factor determining the character of
innovation strategy of a firm originating from and operating largely in
that environment. For instance, the key assumption of the varieties of
capitalism approach (Hall, Soskice 2001) is the comparative
institutional advantage (CIA). It implies that firms focus on innovation
strategies that are supported by the dominant national institutional
framework (Casper 2009). A clear example of that are Whitley's
(2000) five different innovation strategies which are most likely to
appear in certain market economies. According to the
institutionalisation theory (Lewin, Volberda 2005), environments with
dominating technical and economic demands favour radical innovations,
whereas environments with dominating social demands foster incremental
ones. The approach of national systems of innovation (Lundvall 1992)
confirms the idea of CIA, though it is more specialized in respect of
industrial sectors (Amable 2000). The notions of regional innovation
systems (Doloureux 2002) and other geographies of production, such as
industrial districts, innovative milieus, new industrial spaces and
clusters (Malakauskaite, Navickas 2011), are allied to those of
varieties of capitalism and national systems of innovation because they
not only emphasize that the core of production is still heavily
concentrated in particular regions and that globalization does not
necessarily lead to de-territorialisation, but support the assumption
that local capabilities are, to some extent, always dependent on
national opportunities (Fromhold-Eisebith 2007). Other scholars support
the paradigm of CIA by stressing its importance to factors which are
closely related to innovation strategies: entrepreneurship (Hall, Sobel
2008), competitiveness and innovativeness (Koen 2005). The ideas are
supplemented by Thomsen's (2008) research in transition and
post-transition economies. In general, admittance of the idea of CIA
leads to a conclusion that innovation strategy is "path dependent,
locally embedded and institutionally shaped" (Kohler 2008).
In the other camp, the concept of CIA is seriously questioned.
Lange (2009) states that institutional heterogeneity (Allen 2004;
Schneiberg 2007) and trans-nationalisation (Fuller 2009) are two pivotal
challenges to the notion of varieties of capitalism. Market economies
are characterized by institutional heterogeneity and relative openness,
which means that firms can make their innovation strategies competitive
by relying on inputs provided by alternative institutions, be they
domestic or part of foreign business systems (Lange 2009). Lane (2008),
in view of global production and innovation networks, argues that, under
the impact of global markets, the notions of national institutional
reproduction and CIA need to be re-conceptualized to reflect the
complexity of global effects. Similarly, Amable (2000) suggests that the
approach of social systems of innovation is preferable due to its
indifference to the question of a territory over which the gamut of
inter-organizational and inter-institutional networks operates.
Furthermore, Herrmann (2008) illustrates that firms do not inevitably
get mileage out of CIAs: they can also bypass institutional constraints.
It might even be purposive for firms to circumvent institutional
restraints because governments, under certain circumstances, can block
innovation and suppress growth (Chaudhry, Garner 2007). Hence, one might
conclude that the assumption about the subjection of firms'
innovation strategies to national institutions, which they are supposed
to be embedded within, can be regarded to as a dangerously widespread
fallacy.
However, the problem addressed in this paper arises from not solely
the debate over the significance of national institutions to firms and
their innovation strategies. Today, it is increasingly difficult to
clearly distinguish the concept of innovation strategy because the
existing variety of attitudes towards both innovation and strategy has
unfortunately led to a lack of scrutiny in using the term. Accordingly,
the debate introduced above over-interrelates the impact of
institutional environment on innovation strategies with its impact on,
for example, general management strategy (Herrmann 2008), or
competitiveness and success (Casper 2009), or innovativeness
(Fromhold-Eisebith 2007), or processes by which organizations gather and
interpret information about strategic issues, etc. thus making the
comprehension of the interaction between national institutional context
and corresponding firms' innovation strategies even more vague and
fragile.
In light of the controversy of the debate about the role of
national institutional environment in shaping firms' innovation
strategies, and in light of the lack of explicitness of the notion of
innovation strategy within the debate, this paper aims at ascertaining
if national institutional environment is the most decisive factor
determining the character of innovation strategy of a firm originating
in that particular national institutional environment. In addition to
literature review regarding the delineation of the concepts of national
institutional environment and innovation strategy, the research
methodology rests on the application of the refined integrated
theoretical framework of innovation strategy to an exploratory research
of four companies. The companies represent an intersection of two
distinct sectors and two distinct sets of national institutions. Special
warm-house conditions were ensured in order to highlight results of this
intersection. Both qualitative and quantitative methods were used to
analyse the data. Finally, conclusions are drawn.
1. Brief delineation of main concepts
1.1. National institutional environment
1.1.1. conceptual delineation
At least two kinds of institutions can be distinguished (Rolfstam
2009): first, formal institutions at the economic, legal and political
level; second, informal institutions, ingrained in the social and
cultural area. However, there is no explicit agreement on which
institutions are more important than others for factors related to
innovation strategy (e.g. prosperity, growth, entrepreneurship), or
which institutions do or do not belong to national systems of innovation
(Hollingsworth 2000). Though some scholars (Acemoglu, Robinson 2010)
insist that the main determinants of differences in prosperity, long-run
technological progress, and innovativeness across countries are
differences in economic and political institutions, others (Redding
2005) argue that social and cultural dimensions within the
institutionalist literature have long been neglected or even ignored,
and advocate a multidisciplinary approach towards institutional
environment surrounding innovations.
Hence, the arguments and findings mentioned above make this paper
confined to a broad understanding of institutional environment, which
encompasses a number of dimensions of national institutional
environment, and regardless of their level of (in-) formality.
Institutional Profiles Database allows for a structured and professional
comparison of national institutional contexts. The Database 2009
(Crombrugghe et al. 2009) covers 123 countries, including Lithuania and
Switzerland, and contains 368 indicators for a wide range of
institutional characteristics. These are broken down into nine
institutional functions: 1) Political institutions; 2) Safety, Law and
order, Control of violence; 3) Functioning of public administrations; 4)
Free operation of markets; 5) Coordination of actors, Strategic vision,
Innovation; 6) Security of transactions and contracts; 7) Market
regulations, Social dialogue; 8) Openness to the outside world; and 9)
Social cohesion and mobility. The nine institutional functions are then
crossed with four sectors: A) Public institutions and civil society; B)
Market for goods and services; C) Capital market; D) Labour market and
social relations. Thus, the Institutional Profiles Database 2009 relies
on a broad definition of institutions, both formal and informal, and a
non-normative approach (Crombrugghe et al. 2009). This is also the case
of this paper.
1.1.2. Innovation strategy from different angles of
institutionalist literature
The approach of varieties of capitalism (VoC) has largely been
criticized for its unreliability in predicting firms'
innovativeness (Lane 2008; Lange 2009), despite the fact that the
opponent statements have not been silenced (Casper 2009). Though Hall
and Soskice (2001) define institutions as a set of formal and informal
rules, which are predominantly followed by actors for normative,
cognitive or material reasons, they are not consistent enough, for
further they rely on regulative institutions and rules, which actors
follow for material reasons only (Lange 2009). For the authors, the
institutions are comprised of financial, industrial relations, education
and training, and intercompany systems, which form either type of
economy - liberal market economy or coordinated market economy. The
former enables short-term relations and market-based coordination, so it
is conducive to radical innovations, whereas the latter promotes
long-term relations and coordination, based on non-market mechanisms,
and therefore, coordinated market economy fosters incremental
innovations.
Similar distinction is identified by the proponents of
institutionalization theory: environments with dominating technical and
economic demands favour effectiveness and novelty, and are conducive to
radical innovations; contrarily, environments with dominating social
demands favour organizations for an endorsement of values, rules, trust
and, consequently, incremental innovations (Lewin, Volberda 2005).
However, the dichotomy does not explain innovativeness of a great
variety of intermediate economies. Moreover, there is evidence that
Germany, which was considered a typical coordinated economy, is
characterized by heterogeneous institutions, which tolerate strategic
leeway of firms (Lange 2009); and in the United States, which stood for
a model liberal market economy, many radically innovative sectors have
become such due to precisely public investment (Lane 2008).
Another related approach is that of national systems of innovations
(NSI) (Lundvall 1992). Here, a spectrum of understandings of
institutions is distinguished: from the narrow one, which includes
science, research, technology, and sometimes education, to the broad
one, which encompasses all institutions that affect production and
innovation (Amable 2000).
There are several weaknesses of the approach: first, differently
from the varieties of capitalism, it does not imply institutional
complementarity; second, most of the studies concern one country at a
time; third, when international comparisons are made, they are limited
to a small number of sectors. Within the frames of namely NSI, the most
of the contributions to the debate, revealed in the introductory part of
the paper, emerged. Thus, it is difficult to identify any rigid patterns
of institutional or sectoral embeddedness of innovation strategies of
firms within this approach, as the fragmented research lead to
fragmented results. What unites the proponents of the approach is the
recognition of the importance of science, research, technology and
education to innovativeness, and, to a lesser extent, to a choice of
innovation strategy.
While the approach of national systems of innovation is too
fragmented, that of social systems of production is criticized for its
overall comprehension of institutions, which disarms empirical research.
Whitley (2000) attempted to integrate the three approaches by
introducing five types of innovation strategies. Dependent innovation
strategies organize relatively well-known product qualities within
widely understood frameworks, they rarely involve the development of
radically new elements, and goods and services from current and closely
related components are combined and targeted to specific user groups.
The strategies are typical to firms that focus on flexibility and manage
market uncertainty by rapid adjustments to change. These firms do not
need to develop long-term organizational capabilities, therefore,
dependent innovation strategies tend to appear in countries with low
state coordination, weak intermediary associations and unions, and
limited trust in formal institutions. On the contrary, complex, risky
innovation strategies involve developing new product qualities that have
a wide range of uses and may lead to market restructuring as previous
products become obsolete. Firms developing these strategies seek to
dominate markets by introducing new products, and a wide variety of
sources are usually necessary. Hence, the firms are often encouraged to
cooperate with local associations, unions, colleges, etc. and risky
innovation strategies are most likely to survive in environments with
considerable state coordination, pretty strong labour unions, and
credit-based financial systems.
Similarly, Whitley (2000) describes the relationship between
national institutional environment and the remaining three innovation
strategies. However, his arguments are contradictory to some extent. On
the one hand, he states that different firms pursue the distinguished
innovation strategies to varying degrees in different institutional
contexts, and this leads to variation in innovative performance. On the
other hand, the innovation strategies are associated with concrete
business systems, which develop in particular institutional contexts,
meaning that a certain institutional configuration is not that likely to
support variation of firms' innovation strategies. One might object
to the critics by pointing to that the two sides of the contradiction
concern different levels in the argumentation (i.e. institutional
context and business system). However, the argumentation concerns the
same level--the institutional one. In other words, when the relationship
between innovation strategy and institutional environment is considered
straightforward (i.e. the "black box" is blank), firms pursue
different innovation strategies to varying degrees in different
institutional contexts, and the variation is accepted. On the other
side, when the "black box" contains business systems, the
variation is denied, as a certain institutional setting supports a
certain type of business system, and a certain type of business system
supports a certain type of innovation strategy. Can the same
institutional setting include different business systems? Whitley (2000)
answers dubiously positively, thus supporting the statement about the
varied innovation strategy. Still, the author's (Whitley 2000)
model is not supportive of the existence of different business systems
within the same institutional context, and thus, the positive answer is
more a proviso than a part of the developed model.
Amable (2000) pursued to overcome the drawbacks of the presented
approaches as well. He distinguished four types of social systems of
innovation and production (SSIP) in accordance with the interplay of six
sub-systems: science, technology, industry, labour force, education and
training, and finance. Each of the four types imposes certain
consequences for products, innovations and industrial specialization.
For instance, social-democratic SSIP, which is characterized by
bargaining between social partners, importance of social needs in the
definition of research objectives, egalitarian ideals, centralization of
wage bargaining under the external competitiveness constraint, etc.,
induces innovations that are linked to solutions to social and economic
problems: hence, the prevailing industrial specialization in this type
of SSIP is health, security, etc. which, actually, can mean a great
variety of innovation strategies. In the case of market-based SSIP,
Amable (2000) is more restrictive: as this type of SSIP is characterized
by highly segmented labour force, decentralization of wage bargaining,
and high individual competition, such aspects as knowledge and rapidity
are essential in gaining competitive advantage. Therefore, market-based
SSIP fosters radical innovations, where patents and individual rewards
to innovation are highly important. Nonetheless, even though the scholar
envisages the dynamics of the social systems of innovation and
production and presents their strengths, weaknesses, conditions for
possibility of existence and potential destabilizing factors, and even
though he identifies the links with international regime, still, the
indefiniteness (i.e. generality) of institutional constituent and, more
significantly, the narrowness of the delineation of innovation strategy
remain.
1.1.3. Institutions vs. sectors in facet of innovation strategy of
firm
In order to ascertain if national institutional environment is the
most decisive factor determining the character of innovation strategy of
a firm originating in that particular national institutional
environment, it is necessary to intersect the institutionalist approach
towards innovations with the organizational one. Among the notions
supporting the organizational approach, the strongest is that of
sectoral systems (Malerba 2002). Despite the recognition of the
significance of national institutions, the proponents of the
institutionalist approach admit that there are important differences
among industries in the operation of innovation-related processes
(Fagerberg et al. 2009). The sectoral composition of a given national
economy influences the motion and structure of its national innovation
system, even though the national innovation system affects the operation
of its constituent sectoral systems. "Hence, the relationship
between sectoral and national innovation systems is a co-evolutionary
one [...]" (Fagerberg et al. 2009).
In the previous subchapter, we have revealed how social-democratic
SSIP relates to health and security sectors, and market-based SSIP, due
to its radical-technological orientation,--to aerospace,
pharmaceuticals, finance, etc. (Amable 2010). Then, meso-corporatist
SSIP is based on principles of solidarity and mobility within a large
size economic unit (corporation) with diversified production. Here,
research is predominantly in-house, tacit knowledge is important, and
homogenized general education is needed, while specific skills are
developed within the corporation. The financial system of
meso-corporatist SSIP is characterized by strong long-term relationships
and strong involvement of public authorities. Hence, in meso-corporatist
SSIP, sectors, where coordination is necessary and where competence is
localized and cumulative, progress: automobile, electronics, robotics.
The remaining type of SSIP is the public one, which can shortly be
defined as strongly-coordinated capitalism: public basic research is
disconnected from development of new products, strong
institutionalization of employment rules and social protection,
importance of banks, slow adaptation to market changes. Under the
conditions of public SSIP, incremental, quality innovation is most
likely to emerge, and sectors are linked to public infrastructures and
skilled labour force: aerospace, mechanics, automobile. Nonetheless,
Amable's (2000) input lacks empirical evidence, which is impeded by
the difficulty in distinguishing between different types of SSIP, as
they lack geographical dimension and are always subject to institutional
complementarity, which overcomes national and industrial borders.
Probably the most elaborated theoretical approach, which reveals
the interaction between national institutional and sectoral environment,
is that of global production and innovation networks (Lane 2008). The
approach passes through the process of relatively early development.
According to it, innovation is neither wholly path-dependent, nor is
global leverage invariably disruptive of national institutional
complementarities. "Because global spaces are still anchored to
national territories, institutional constraints have been loosened, but
not abandoned" (Lane 2008). Hence, the degree, to which domestic
institutional environment conditions innovation strategies of firms,
varies according to industry. Conceivably, the variance partly explains
the findings of Frenz and Lambert's (2010) research, which, despite
integration of a number of characteristics of innovation (e.g. level of
uncertainty, source of knowledge, etc.) beyond the extent to which
product qualities are differentiated, failed groping any significant
embeddedness at neither country nor sector level, except for
technological and patent modes of innovation.
This is precisely the reason for why this paper attempts to look
for the patterns of institutional and sectoral embeddedness at the level
of elements of innovation strategy, and not at the level of types of
innovation strategies, as Frenz and Lambert did (2010). Still, the
typologies of innovation strategies are presented in the chapter below,
and they are incorporated in the empirical survey of this paper.
Nonetheless, the paper differs from the previous extensive research as
well, which, yes, explored the patterns at the level of elements of
innovation strategy (characteristics of innovation) alike, but while
doing so, the characteristics were separated from each other and did not
form the integrated concept of innovation strategy, which was the driver
of this paper and is presented in the next chapter.
1.2. conceptual framework of innovation strategy of firm
Innovation-related literature has largely remained conceptually
frozen around the ideas of radical vs. incremental and product vs.
process. Obviously, these dichotomies are not sufficient enough to be
referred to as innovation strategies. Unfortunately, they often are, and
the research has mainly endured fragmented as sensitive to current
external circumstances as well (Tvaronaviciene et al. 2009). Therefore,
this paper relies on an integrated conceptual framework of innovation
strategy (Stankevice, Jucevicius 2010). Reasoning behind the framework
is as following: radical vs. incremental, product vs. process, open vs.
secretive, novelty vs. imitation, etc. do not form a versatile
comprehension of a strategy. Hence, these types of innovation and
characteristics of innovation need to be structurally and purposively
interconnected.
The methodology for the composition of the framework rests on the
application of the conceptual model of strategy, developed by Hambrick
and Fredrickson (2005) within the area of general strategic management,
to relevant studies on innovation. The framework, as well the original
model, is comprised of five elements: 1) the varieties of possibilities
about what to innovate, i.e. object of innovation (e.g. product,
process, organization); 2) how to enable innovation, i.e. vehicles of
innovation (importance of networks (Fagerberg et al. 2009), partners
(Radziszewska-Zielina 2010) and level of openness should be taken into
account); 3) speed (e.g. incremental, radical, revolutionary) and scope
(e.g. novelty, modification, imitation) of innovation; 4) how to bring
innovation to target customers (e.g. traditional vs. innovative
marketing, low-end vs. high-end users); 5) the fifth element represents
the general logic of an innovation strategy and ensures the viability of
the link between all the elements, as well as between the objectives and
the content of the innovation strategy, and between the innovation
strategy and the respective general strategy. Let us consider each of
the elements separately, based on our previous research (Stankevice,
Jucevicius 2010). While doing so, a number of typologies of innovation
strategies are presented.
1.2.1. object of innovation
Hambrick and Fredrickson (2005) identify arenas by asking:
"Where will we be active?" They suggest also supporting
questions which apply to decisions about product categories,
technologies, geographic areas, markets and value-creation stages. If to
convert the original question into a question about innovation, one
would ask: "Where will we innovate?" Three answers have been
derived from relevant classifications applied to innovations in
scientific literature. The distinction between product technology and
production technology is well known. The former type can be defined as
knowledge about how to create or improve products, and the latter as
knowledge about how to produce them. Similarly, the terms product
innovation and process innovation have been used to characterize the
occurrence of new or improved goods or services, and improvements in the
ways to produce these goods and services, respectively. In the
literature, it is also suggested dividing the category of process
innovation into technological process innovations and organizational
process innovations, the former related to new types of machinery, and
the latter to new ways to organize work. Thus, we get three categories:
product, process, and organization.
1.2.2. vehicles
The second part of the concept of strategy is, according to
Hambrick and Fredrickson (2005), vehicles, and is defined by the
question: "How will we get there?" The suggested answers
include internal development, joint ventures, licensing/franchising and
acquisitions. If to convert the main question into a question of
innovation strategy, it would sound like: "What will enable us to
become/remain innovative?" With no doubt, the answers can be found
in the academic literature of two major approaches. On the one side,
system perspective is relevant. The defining characteristics of a system
of innovation require that its components are connected for different
invention and innovation purposes. In a healthy economy, there would be
a good number of specialized innovation systems generated at the
microlevel, "systems that are born and decay as new innovation
problems are posed and solved" (Foray 2009). On the other side, the
answers are also linked with the resource-based view of a firm, which
stresses the relevance of resources (both internal and external, both
human and material) for an innovation strategy (Whitley 2000). Hence, a
company's innovative capacity is central. In addition to internal
resources of a company (including its absorptive capacity), networks
advantage its innovative capacity through the revelation of new
resources and knowledge dissemination. Accordingly, two major criteria
for defining vehicles in the concept of an innovation strategy can be
distinguished: level of openness in regard to new resources, and level
of uncertainty in regard to knowledge dissemination.
As to the level of openness, Visser and Atzema (2007) propose three
types of innovation strategies. The stand-alone innovation strategy is
characterized by internal sources of knowledge. The local buzz
innovation strategy draws necessary knowledge from external local
resources. Finally, the global pipeline strategy uses knowledge from
multiple globally external resources. Similarly, Srivastava (2006) leans
on differences between national, European and global R&D approaches
(and national, European and global innovation policies) in Switzerland,
and indicates three innovation strategies within
telecommunications' sector, respectively: secretive innovation
strategy, cautious innovation strategy and sharing innovation strategy.
The first strategy is defined by single relationship, integrated value
chain between terminal equipment and incumbent telecom operator, 100%
government ownership, monopoly, as well as control, build and develop
principles in R&D (100%). The second strategy reflects a higher
level of openness: multilateral collaboration along the value chain,
disintegrated value chain, progressive "regulated"
competition, more than 50% government ownership, build and buy in
R&D (50%). Finally, the third strategy is characterized by global
partnerships and R&D hubs, converging value chain within the
industry, competitive market, less than 30% government ownership,
partnerships and outsourcing in R&D. What is also important within
the framework of this paper is Srivastava's (2006) attempt to
establish connections between the two elements of the concept of
innovation strategy--arenas and vehicles. She ties in secretive
innovation strategy with product innovation model, cautious innovation
strategy with process innovation model across the value chain, and
sharing innovation strategy with business innovation model, or
organizational innovation. This fact confirms that, regardless of what
the object of analysis is--either general strategy or innovation
strategy, - the elements in the model must anyway demonstrate a
sufficient interplay.
1.2.3. speed and scope
The third component of the concept of a strategy is staging which
is defined by the following question: "What will be our speed and
sequence of move?" (Hambrick, Fredrickson 2005). If we convert the
main question to "what will the speed and scope of innovation
be?", literature on innovations provides us with a couple of
sequences of the possible answers: from incremental to
revolutionary/disruptive, and from novelty to imitation (Stankevice,
Jucevicius 2010).
A common dichotomy distinguishes radical and incremental
innovation. Incremental innovations are improvements of existing
products, processes or services, within the context of a dominant
design, product architecture or existing demand. Radical innovations, on
the other hand, involve a radical break from existing products and
processes and often open up new industries and new markets. Radical and
incremental innovations can be seen as extreme archetypes, but in
practice it may be difficult to distinguish them. Often a distinction
can only be made ex-post, since the impact that an innovation has on the
economic system generally cannot be known ex-ante, and since all
innovations, even radical ones, build to some extent on the existing
knowledge base. Some scholars distinguish revolutionary innovations as a
separate category. These consist of a cluster of innovations which
together have a very far reaching impact (Fagerberg et al. 2009).
1.2.4. Differentiators
The fourth element of the concept of a strategy is differentiators,
and the authors (Hambrick, Fredrickson 2005) ask: "How will we
win--by image, customization, price, styling, or product
reliability?" With regard to innovation strategy, the question is:
"How will we bring our innovation to our customers?" In this
case, it is a question of marketing. The latter depends heavily on the
objectives of the innovation strategy, as well as its elements. On the
other hand, innovative marketing solutions can be a core of an
innovation strategy themselves, but, again, this might imply innovations
in process, organization or technology, as well as alter the
inter-organisational governance structure and/or the level of the
company's openness.
1.2.5. General logic
Finally, the last element of the conceptual model of a strategy is
general economic logic (Hambrick, Fredrickson 2005). In the context of
innovation strategy, the general logic ties together the four other
components of the innovation strategy and the strategy's
objectives. Moreover, general logic secures the meaningful link between
a general strategy and a corresponding innovation strategy. Hence,
innovation strategy of a firm should be understood as a central,
integrated, externally oriented concept of how a firm will achieve its
goals of innovative activity. This comprehension of innovation strategy
is strongly supported by the recently emerging approach towards
identifying integrated, and not fragmented, concept of innovation
(Frenz, Lambert 2010; Battisti, Stoneman 2010). In fact, as it follows
from the explored literature, the choice of innovation strategy for a
firm depends on many factors, including national institutions, industry
policy, internal resources, organizational culture, etc. However, this
paper covers the question of national institutional vs. sectoral
embeddedness only, without taking into account other factors, even
though important as well.
With this statement we do also accept the fact that both the
institutional context and industrial environment of a firm are
multi-dimensional variables that are characterized by a number of links
with the factors which are not investigated in this paper, as well as by
a number of inter-links between the two critical variables. The sectoral
composition of a given economy influences the motion and structure of
its national institutional setting, even though the national
institutional setting affects the operation of its constituent sectoral
systems. Hence, the relationship between institutional and sectoral
cannot be considered completely hierarchical; instead, it is
co-evolutionary (Fagerberg et al. 2009). Without doubt, the two critical
factors of the paper are inter-related, but whereas a part of innovation
strategy of a firm is more classed by its institutional environment, the
other part falls under the greater influence of its industrial
environment. In the paper, it is revealed which elements of innovation
strategy of a firm are associated with the sectoral dimension, and which
ones--with the institutional context, though the overlap, due to the
co-evolutionary nature of the relationship between institutional and
sectoral, cannot be denied either.
2. Methodology
2.1. Preparatory stage: two dimensions of the sample
The sample stands for two different sectors: two service firms
(contact centres) and two hightech firms (laser producers). The sectors
are different in innovation management, and industry policy is different
even in the same country. This is precisely the reason of the choice: we
need an intersection - an intersection of sectors within a country and
an intersection of countries within a sector. According to the explored
literature, contact centres would typically represent incremental,
process innovations, and laser producers--radical, product innovations;
the literature suggests also that the sectors would have different
innovation management policies, different structures of networking,
different marketing policies, etc., i.e. everything which precisely is
dictated by the aim of the paper.
The sample represents two different market economies as well--Swiss
and Lithuanian. Both countries are European market economies and
democratic republics, they are relatively small and surrounded by a
number of neighbours, among which one would find vastly influential
ones. However, the countries contrast sharply with each other due to the
dramatically unlike historical paths. After 1990, the transition process
in Lithuania has generated an institutional vacuum, and new institutions
needed to be introduced. Therefore, the presumption, that the level of
incompatibility between formal and informal institutions (Rolfstam 2009)
is high in Lithuania, is sound. On the contrary, Switzerland is the
oldest democratic republic in Europe distinguished for its stability and
political neutrality. Therefore, incompatibility between formal and
informal institutions in Switzerland is presumably small or absent.
Given the topic of the article, one more distinction is essential:
according to Summary Innovation Index, innovation performance is one of
the best in Switzerland, whereas Lithuania is steadily somewhere in the
end. Hence, commonalities and differences of the countries, described in
this paragraph, serve as a basis of the choice of Lithuania and
Switzerland. Admittedly, the possibility for the Lithuanian authors to
perform the research in precisely Switzerland played its role as well.
However, for reliability's sake, the sample national
institutional environments were compared empirically in order to
validate their statistical discrepancy. The data provided by the
International Profiles Database 2009 was divided into four sections in
accordance with the sectors of the database (Crombrugghe et al. 2009):
--public institutions and civil society (N = 191 variables);
--market for goods and services (N = 81 variables);
--capital market (N = 45 variables);
--labour market and social relations (N = 51 variable).
Then, the data was analysed with PASW Statistics 17.0. To measure
correlations between the variables in the four groups, Kendall's
tau_b coefficient was used because the data were ordinal (Crombrugghe et
al. 2009). The results are demonstrated in Table 1. A reader should note
that in this table, we compare Lithuanian and Swiss national
institutional environments, and not innovation strategies of the sample
companies. Hence, for Table 1 the data from IPD 2009 (the database is
described in subchapter 1.1.1. in more detail) is used, and not the
data, which was collected from the four top-managers. This step of
analysis is required because, prior to comparing the innovation
strategies, we need to compare the countries statistically in order to
confirm that the countries' institutional profiles are really, not
presumably (the-orizing-based), different--in this paper, we need
different institutional profiles in order to guarantee the intersection
of countries and sectors.
Difference-between-samples tests were carried out as well, as a
confirmatory tool. The results are shown in Table 2. Again, we used the
data of the IPD 2009, which describes institutional profiles of
countries via 368 variables, and not the data, assessed due to the
responses of the top-managers of the four sample firms, as we compare
institutional profiles here, and not the innovation strategies
(preparatory stage). This step of analysis was required in order to
confirm the results, which are presented in Table 1--in applied
statistics, confirmatory analyses are typically more than welcome,
especially in social sciences.
2.2. methodology for comparing the sample innovation strategies
In order to analyse the intersection of national institutions with
sectoral environment in the most advantageous way, one needs to reduce
the impact of other potentially disruptive factors to a minimum.
Therefore, the sample firms resembled each other in terms of formal
characteristics, such as the year of establishment, number of employees,
global presence, average annual turnover, average turnover invested in
innovation-related activities, global market share in selling specific
innovative products.
A top-manager of each sample firm was interviewed, hence, the
number of the interviewed top-managers equals four. Three top-level
managers of the companies filled in questionnaires which they had
previously received by-email. The fourth manager preferred a structured
face-to-face interview to other means of contribution. The research
instrument involved 36 questions in total, regarding: 1) innovation
strategy; 2) factors influencing the structure of innovation strategy;
3) general information and performance. Representatives of the sample
companies had to provide relative percentages from 0% = "Not true
at all" to 100% = "Completely true" in integral numbers
only. The 36 questions were composite/complex, therefore, when they had
been decomposed, they converted into 334 simple questions and
corresponded to 334 cases in the software (N = 334: N = 285--innovation
strategy, N = 44--factors influencing innovation strategy, N =
5--performance), while the sample companies stood for variables, that
is, the four firms (variables) were compared along 334 characteristics
of innovation strategy.
The data became subject to correlation analyses,
difference-between-samples tests were carried out as a confirmatory
method. The correlation analyses were required in order to indicate if
the correlations between firms from same country, but different sectors
were greater or smaller than the opposite. This let us verify the
hypothesis if national institutional environment was fateful factor
determining the structure of innovation strategies of the investigated
firms. And again, because methods of applied statistics require
confirmation, especially in social sciences, we carried out
difference-between-samples tests. The results of both correlation
analyses and the difference-between-samples tests are shown in Table 4.
It is important to note that our analysis can be defined as a
comparative analysis of four case studies, which are supplemented by the
statistical analysis of some elements of the cases. By emphasizing this,
we address the question of the reliability of the results, when only
four firms are investigated. In fact, what are analysed statistically
are 368 variables of IPD 2009 and 334 features of an innovation
strategy. Thus, the statistical analysis is reliable with regard to the
sample sizes. Then, the results along the four sample firms are compared
qualitatively. Now, is a case study reliable? For some reasons, it is an
important part of both research and teaching. Hereby the comparative
analysis of four cases is even more reliable than a case study taken
alone.
We have not discussed the Table 3 yet. Why was this step of
analysis required? The clue is that both correlation analysis and
difference-between-samples test can be based on a number of measures:
for example, Pearson correlation or Spearman correlation, Student-t
criterion or Wilcoxon? In order to get the answer, one not only need to
evaluate the data (e.g. if it is integral, nominal or ordinal), but the
sample as a whole as well--if it is compatible with normal distribution
or not, because in every case different equations are used by the
software. For this reason, we had to perform the analyses, the results
of which are presented in Table 3. A reader should also note that we
performed the same actions with the data from IPD 2009 (the data about
institutional profiles of the countries); however, we presented the
results in text, without including a table, because the analysis of the
institutional data was needed as a preparatory stage, which just
confirms the statistical difference between Lithuanian and Swiss
institutions.
Now, let us go back to the data on the innovation strategies and
explain the origin of Table 5. In order to highlight the most important
elements of innovation strategy in respect of the sample firms,
hierarchical cluster analysis with four final solutions was employed.
Ward's method was used, and Squared Euclidian Distance was used to
measure the differences. For the cluster analysis, the answers of the
respondents were used, and according to these answers, each of the 334
cases was assigned (by the software) to one of the 4 clusters, which
emerged. The number of clusters corresponds to the number of
investigated firms, for each of the firms represents a unique
combination of institutional-sectoral intersection and has a unique
innovation strategy, which is defined by a certain combination of
characteristics of innovation activities (answers to the questions about
innovation strategies). Because the clusters emerged from the answers,
provided by the respondents, the results are entitled clusters by
answers. On the other hand, each of the cases is defined by a certain
question, which originated from the explored scientific literature. The
authors have already pointed out that the questionnaire included 36
complex questions, which were decomposed and formed 334 simple
questions, i.e. cases. Thus, each of the cases corresponds to a certain
complex question, and cases which correspond to the same complex
question, form a cluster by questions (the variable of questions).
Because both the variable of questions and clusters by answers are
nominal variables, their interrelation can only be verified by sign
independence analysis, i.e. cross-tabulation, and the variable of
questions and the variable of the saved clusters were cross-tabulated.
However, independence hypothesis could not be verified because 91.7 % of
the cells counted less than 5. Still, Cramer V coefficient was used to
measure the relationship between the variables. The observed counts let
to indicate the most decisive questions, i.e. those which had a bigger
count in one specific cluster than in the other ones; in other words,
questions, where the greatest interdependence between questions and
clusters by answers was identified, were distinguished as the most
decisive. Finally, the four innovation strategies were qualitatively
compared along these questions, thus resulting in the emergence of Table
5.
3. Findings
3.1. Comparing Swiss and Lithuanian national institutional
environments: tight results
The foremost analysis to implement was to assure of the existence
of significant difference between Swiss and Lithuanian national
institutional environments. The normality of distribution of the
variables (Switzerland = CH; Lithuania = LT) within each of the four
data groups was verified by histograms, normal P-P plots and
Kolmogorov-Smirnov tests (p = [0.000; 0.010] < [alpha] = 0.05), and
appeared to be inconsistent with normal distribution. Table 1
illustrates the results of the tests.
Because the distributions were not compatible with normal ones,
Wilcoxon signed-rank tests were performed instead of pared
Student's t-tests. The Wilcoxon tests confirmed that Swiss and
Lithuanian national institutional environments could not be assumed as
statistically indifferent despite existing statistically significant
correlations (Table 2) within the samples.
4.2. National institutional vs. sectoral context: tight results
In this section, the foremost analysis to implement was to assure
of the existence of significant difference between the innovation
strategies.
The normality of distribution of the variables (CH_Laser, LT_Laser,
CH_Service and LT_Service) was verified by histograms, normal P-P plots
and Kolmogorov-Smirnov tests (p = 0.000 < [alpha] = 0.05), and
appeared to be inconsistent with normal distribution. Table 3
illustrates the results of Kolmogorov-Smirnov tests (N = 285).
Because the distributions were not compatible with normal ones,
Wilcoxon signed-rank tests were performed instead of pared
Student's t-tests. The Wilcoxon tests confirmed that the innovation
strategies could not be assumed as statistically indifferent despite
existing statistically significant correlations (Table 4) within the
samples.
However, it is necessary to amplify that the correlations between
the innovation strategies of firms from the same sectors but different
countries are bigger than the correlations between the innovation
strategies of firms from the same countries but different sectors. This
finding can be treated as the following assumption: the national
institutional environments are not fateful factors determining the
structures of innovation strategies of the investigated firms; rather,
the more decisive factors are the sectoral subjections. It is
interesting to note that the innovation strategies of the service firms
only are characterized by a stronger correlation (r = 0.527 > 0.5),
whereas the remaining comparisons point to the existence of the
uniqueness of each of the investigated strategies. Naturally, each of
the firms represents a unique combination of institutional-sectoral
intersection and has a unique innovation strategy, which is defined by a
certain combination of characteristics of innovation activities. This is
also one of the reasons for why further analysis (see 3.3. and 3.4.) is
needed and why only 15 elements of innovation strategy emerged during it
(see 3.4.).
3.3. Attitudes towards factors which most influence the sample
innovation strategies
Each of the sample managers had a rather unique view of what
factors influenced the respective innovation strategy. The
representative of the Swiss contact centre indicated networking with
clients and Swiss regional innovation system as the most important
factors. The service-oriented company's concern with clients is
easily understandable, and the firm's gratitude to the regional
innovation system can be associated with the Swiss tradition of
establishing sectoral and related associations which help to gain
knowledge and get into fruitful partnerships, mostly on a regional
level.
The representative of the Swiss laser company referred to Swiss
political-institutional environment, and Swiss national and regional
innovation systems as to positive forces, and to poor access to venture
capital as to a negative factor. The manager's position can be
explained by the existence of National Centre of Competence in Research
Quantum Photonics (NCCR QP). Acting as a network within Switzerland, the
Centre's mission is to carry out fundamental research in areas of
strategic relevance to science and society, to foster education and
training in the field of photonics and to contribute to technology
transfer towards industrial partners (National Centre ... 2011). The
Swiss laser producer would have hardly survived without the help of NCCR
QP with regard to funding, research infrastructure and provision of
links to human capital and potential customers. For example, the Centre
is under the directorship of a university research institution which
allows research groups based at the home institution to network with
other teams working throughout Switzerland. The further development of
the Swiss laser producer was fostered by an acquisition of a foreign
European company which, in turn, acquired one more company--a Swiss one.
The Lithuanian laser company's representative indicated
national system of innovation and the company's name and reputation
as two factors which have a clearly expressed influence on the
firm's innovation strategy. The Lithuanian company's situation
is similar to that of the Swiss laser company: it is also a
university's spin-off, thus, the university provides the company
with the research infrastructure and human capital. With the development
of national system of innovation and the inflow of European structural
funds, the company has also got a better access to funding resources.
However, the Lithuanian specifics are that there was no institution like
the Swiss NCCR QP. Therefore, the company's (and its leaders')
name and reputation were also of a great importance when establishing
industrial networks and commercializing the very first products.
Finally, the representative of the Lithuanian contact centre noted the
importance of the company's inner resources (financial, material,
human and leadership) and openness of business systems globally. The
company serves mainly foreign customers; therefore, the openness of
global systems is essential to its activities in general. However,
almost like in the case of the Lithuanian laser company, the
service-oriented firm could not rely on external help in finding
customers. The effort was taken by the owner and CEO in order to pull in
foreign capital: hence, the success originated from the extensive
network of their personal contacts. However, the major obstacle in the
company's innovative activities remains the lack of proper external
local recourses.
Hence, the Swiss firms can be collated for the infusion of their
innovative activities into the broader regional and (or) national
context. On the other hand, the laser producer, being a high-tech
company, was supported by the political-institutional environment more
than the contact centre, which alone, due to its performance, is
characterized by smaller input into the national economy. Moreover, a
contact centre is in less need of venture capital per se. Then, the
attitudes of the Lithuanian managers can be paralleled in terms of
relatively poor access of the firms to external local resources. Though,
again, the laser producer could better make advantage of the
opportunities proposed by the national institutional environment.
Otherwise, the disparities between the Lithuanian views could be
compared to those of the Swiss ones, as arising out of the sectoral
specifics. However, in general, each of the managers had a rather
individual view of factors which influenced innovation strategies of
their firms.
3.4. The most decisive characteristics and a comparison of the
sample innovation strategies along them
The relationship between clusters by answers and the variable of
questions was rather weak (Cramer V = 0.368) but statistically
significant (p = 0.000 < [alpha] = 0.05). This can be explained by an
insight that, not by a long shot, all the questions were important in
clustering the given answers. The observed counts showed there were 15
questions of a decisive importance. The innovation strategies, as well
as the attitudes towards factors influencing them and general
information about the companies, were analysed in consonance with the 15
questions (Table 5).
As Table 5 illustrates, the difference-making questions, which are
assigned to cluster 1, describe mostly networking patterns and reveal
predominantly sectoral contrasts. Interestingly, company's
performance is also included in this cluster. This can probably be
explained by an insight that performance can only be groped in
comparison--therefore, networks stand for a space which enables
evaluation. Characteristics of cluster 2 embrace a number of the
elements of innovation strategy and, again, exhibit predominantly
sectoral differences. It is worth noting that the cluster is clearly
associated with products and/or services: what they are, how they are
produced, how they get into markets, etc. In addition, the aim of
innovation strategy, which is one of its binding elements, is also
included in this cluster.
Unlike the two already discussed clusters, cluster 3 displays
national specifics. Cultural informal institutions could account for the
different approaches towards R&D. The Swiss assume that people are
basically good, whereas Lithuanians have doubts about the essence of
human nature; the Swiss are more publicly-oriented and more collectivist
than Lithuanians. Hence, Lithuanians are more reserved and prefer to
rely on themselves. These arguments are based on the findings of a study
of cultural features of the Swiss and Lithuanians, which included
interviews with experts and researchers in the area, who served as
evaluators of the cultural specifics in accordance with the model
developed by Schneider and Barsoux (2003). On the other hand, Lithuania
cannot brag for its extensive network of intermediate institutions, such
as Swiss NCCR QP, or Swiss sectoral associations and numerous non-profit
organizations (see 3.3.). Therefore, external local sources of knowledge
serve for the Swiss companies, whereas the Lithuanian ones rely, again,
on themselves and take pleasure in using advantages of globally
increasing openness of business systems.
Considering the companies' attitudes towards
innovation-related partnerships, only the Lithuanian firms demonstrate
correspondence (cluster 4). However, each of the companies appeared to
have mixed relationships, if to measure them in accordance with
Fowles' and Clark's (2005) distinction of behaviours of
partners. For example, a company can both focus on learning and
continuous improvement, and rely on clear communication and confirmed
understanding. Thus, the mean positions of the companies in respect of
reasons for partnering and view of difference (Fowles, Clark 2005) are
unclear. It is difficult to generalize the attitudes in consonance with
their either national or sectoral subjection. Inter alia, this is not
surprising: since a firm's attitude towards networking partners
depends, to some extent, on its both national and sectoral subjection
(besides inner factors), the investigated companies act as a spectrum of
the possible results originating from the two-by-two intersection (two
sets of institutions by two industrial sectors).
concluding remarks
The debate about the role of national institutional environment in
shaping the corresponding firms' innovation strategies is highly
controversial. Both the proponents of the notion of comparative
institutional advantage and their challengers have provided solid
argument and evidence to make out their cases. Moreover, the concept of
innovation strategy has remained conceptually under-structured within
the debate, thus making the comprehension of the interaction between
national institutional environment and firms' innovation strategies
even more vague and fragile.
In this paper, the significance of national institutional
environment to innovation strategy has not been denied. On the contrary,
the results show that the lack of an extensive network of intermediate
institutions between a firm and national level conditions that the
firms, in their search for innovation-related knowledge, rely on their
internal sources and multiple globally external sources, whereas the
companies, which have access to more generous, in this regard, national
institutional environments, can advantage from using external local
sources of knowledge. Furthermore, national cultural institutions
influence a way in which research and development is managed. When a
surrounding culture of a company is more publicly-oriented, more
collectivist and more positive about others, it is likely that the mode
of research and development is based on outsourcing and partnerships;
otherwise, a company prefers to control, build and develop the
activities itself.
However, the role of national institutional environment in shaping
the respective firms' innovation strategies is not that decisive:
the firms' sectoral subjection seems to be more influential hoc
sensu. The latter governs a type of a firm's networks in its
innovation-related activities: for the high-tech companies,
collaboration with universities and different research institutions is
essential, whereas the service companies concentrate on clients,
suppliers and external consultants. Then, in laser industry, processes
and mechanisms predominantly favour solution seekers in sourcing
intellectual property from external parties, whereas within the area of
activity of the contact centres these processes and mechanisms depend
heavily on the implemented business model. Finally, the sectoral
subjection is firmly associated with a number of elements of innovation
strategy. Thus, the high-tech companies mostly create new products or
modify the existing ones in an innovative way, whereas the service
companies' innovations take place when refining organization of
work or processes. The ways in which innovative products are produced or
innovative services are infused differ as well. While the high-tech
companies rely on multilateral collaboration in the process of value
creation, the service companies bucket inspiration from either their
inner sources or, in case of an imitative innovation, convergence of
value chain within the respective industry.
Notwithstanding the question of the interaction of national
institutional and sectoral environments with firms' innovation
strategies remains open for further refinement. This paper covers four
statistically and qualitatively explored and compared case studies;
therefore, any generalizations should be weighed responsibly. However,
in further research, a proper comprehension of innovation strategy, as
well as institutional and sectoral environments, is particularly
desirable. Neither can innovation strategy be limited to a couple of its
elements or characteristics, nor can the environments be squeezed into a
couple of formal indicators.
doi: 10.3846/20294913.2013.879752
Acknowledgements
This paper draws on the project The innovation strategies of
organizations in the emerging economic-institutional environment
(agreement No. MIP-024/12), sponsored by the Research Council of
Lithuania. We would also like to express our deepest gratitude to Prof.
Michel Oris for guidance and support, as well as Prof Lucio Baccaro,
Prof Susan Schneider and Prof Luc Gauthier during Inga Stankevice's
research stay at the University of Geneva in 2011.
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Inga STANKEVICE (a), Giedrius JUCEVICIUS (b)
(a) Nottingham University Business School, University of
Nottingham, Jubilee Campus, NG8 1BB, Nottingham, United Kingdom
(a, b) Department of Strategic Management, Kaunas University of
Technology, Donelaicio g. 20, 44239 Kaunas, Lithuania
Received 08 April 2012; 22 June 2013
Corresponding author Inga Stankevice
E-mail: lixis6@nottingham.ac.uk, inga.stankevice@ktu.edu
Inga STANKEVICE. Researcher, Nottingham University Business School,
University of Nottingham. PhD candidate in Social Science (management
and administration), Kaunas University of Technology. She has 8
scientific awards, she is a member of international scientific DRUID
Society. Research interests include comparative political and social
economics, innovation strategy, future forms of economies and
businesses, research methodology.
Giedrius Jucevicius. Professor, Doctor of Social Science
(management and administration), Head of the Department of Strategic
Management, Kaunas University of Technology. Author and co-author of ~10
books, has more than 40 publications. Research interests include
comparative international management, innovations, networks and
collective learning, transformations of culture, institutions and
values.
Table 1. Results of Kolmogorov-Smirnov tests
Public institutions Market for goods
and civil society and services
(N = 191) (N = 81)
Switzerland K-S Z 5.607 2.031
(CH) p 0.000 0.001
Lithuania K-S Z 3.230 2.031
(LT) p 0.000 0.001
Capital Labour market
market and social relations
(N = 45) (N = 51)
Switzerland K-S Z 2.222 2.447
(CH) p 0.000 0.000
Lithuania K-S Z 1.624 1.634
(LT) p 0.010 0.010
Table 2. Correlation analyses and Wilcoxon tests: comparison of
Swiss and Lithuanian NIEs
Public institutions Market for goods
and civil society and services
(N = 191) (N = 81)
Wilcoxon [absolute value Z] 6.958 2.600
Wilcoxon p 0.000 0.009
Kendall's [r.sub.tau_b] 0.403 ** 0.534 **
Capital market Labour market and
(N = 45) social relations
(N = 51)
Wilcoxon [absolute value Z] 3.252 2.822
Wilcoxon p 0.001 0.005
Kendall's [r.sub.tau_b] 0.751 ** 0.312 *
* Correlation is significant at the 0.05 level (2-taled); **
Correlation is significant at the 0.01 level (2-taled).
Table 3. Kolmogorov-Smirnov test results for the sample companies
CH_Laser LT_Laser CH_Service LT_Service
K-S Z 3.475 2.408 8.147 5.537
K-S p 0.000 0.000 0.000 0.000
Table 4. Correlation analyses and Wilcoxon tests: comparison of
the innovation strategies
LT_Service CH_Laser CH_Laser
CH_Service LT_Laser CH_Service
W [absolote value of (Z)] 5.420 4.805 7.719
W p 0.000 0.000 0.000
r 0.527 ** 0.327 ** 0.283 **
[r.sub.tau_b] 0.483 ** 0.370 ** 0.222 **
[r.sub.s] 0.525 ** 0.375 ** 0.260 **
LT_Laser LT_Laser CH_Laser
LT_Service CH_Service LT_Service
W [absolote value of (Z)] 7.126 10.404 2.917
W p 0.000 0.000 0.004
r 0.190 ** 0.177 ** 0.120 *
[r.sub.tau_b] 0.151 ** 0.143 ** 0.078
[r.sub.s] 0.185 ** 0.171 ** 0.096
* Correlation is significant at the 0.05 level (2-taled); **
Correlation is significant at the 0.01 level (2-taled).
Table 5. The sample innovation strategies along their
characteristics which make most of difference
Cluster Characteristics CH Laser
1: Networking Major networks in [check] Universities
(sectoral dimension) innovation-related [check] Private
activities (strength research organizations
and quantity) [check] Firms from
other sectors
[check] Clients
[check] Non-profit
organizations (a)
Dominating Processes and
information-sharing mechanisms favour
structure in solution seekers in
networking sourcing
intellectual
property from
external parties (a)
Who specifies a Seeker specifies
problem when looking problems (c)
for a solution
Strength of Strong, usually a
relationship between medium to long-term
relationship
Firm's performance Successful
2: Elements of Aim of innovation Meet clients' needs
innovation strategy strategy and maintain
(sectoral dimension) existing positions
by intensively
offering new
products and
slightly modifying
existing ones (a)
What is innovated Mainly products and
organization of work
Level of novelty in Completely new
innovations products; some
modifications (a)
Ways of bringing Predominantly based
products/services on existing external
to markets local networks
Collaborative Mainly multilateral
arrangements collaboration along
the value chain (a)
Cluster Characteristics CH Laser
2: Elements of Type of value chain Disintegrated value
innovation strategy chain (multilateral
(sectoral dimension) collaboration in the
process of value
creation) (a)
3: Institutional Where knowledge for Mostly external
environment innovation strategy local sources of
comes from knowledge (d)
Contribution to Leading in
external contribution to
innovativeness formation of new
beyond company's markets (9% of
boundaries workforce), creation
and diffusion of new
knowledge, supply of
resources
4: Uniqueness Attitudes towards Reduce negative,
innovation-related avoid difference
partnerships
Cluster Characteristics LT Laser
1: Networking Major networks in [check] Universities
(sectoral dimension) innovation-related [check] State funded
activities (strength research institutes
and quantity) [check] Firms from other
sectors
[check] Firms from the
same sector (a)
Dominating Processes and
information-sharing mechanisms favour
structure in solution seekers in
networking sourcing
intellectual
property from
external parties (a)
Who specifies a Intermediary helps
problem when looking solution seekers
for a solution specify the problem
Strength of Weak or strong,
relationship between varies based on the
processes of the
intermediary
involved
Firm's performance Very successful (b)
2: Elements of Aim of innovation Maintain existing
innovation strategy strategy positions by
(sectoral dimension) intensively offering
new products and
slightly modifying
existing ones (a)
What is innovated Mainly products and
processes
Level of novelty in Predominantly new
innovations products, some
modifications (a)
Ways of bringing Based on existing
products/services external networks
to markets and personal
contacts of leaders
Collaborative Mainly multilateral
arrangements collaboration along
the value chain (a)
Cluster Characteristics LT Laser
2: Elements of Type of value chain Mostly disintegrated
innovation strategy value chain
(sectoral dimension) (multilateral
collaboration in the
process of value
creation) (a)
3: Institutional Where knowledge for Internal sources of
environment innovation strategy knowledge and
comes from multiple globally
external sources (e)
Contribution to Leading , esp. in
external guidance of the
innovativeness direction of search,
beyond company's supply of resources,
boundaries creation of positive
external economies
4: Uniqueness Attitudes towards Promote positive,
innovation-related tolerate difference
partnerships
Cluster Characteristics CH Service
1: Networking Major networks in [check] Customers
(sectoral dimension) innovation-related [check] Suppliers
activities (strength [check] External
and quantity) consultants (b)
Dominating Varied, can favour
information-sharing either seekers,
structure in solvers, or both,
networking depending on the
business model
implemented (b)
Who specifies a Seeker specifies
problem when looking problems (c)
for a solution
Strength of Varies from solver
relationship between to solver (b)
Firm's performance Very successful (b)
2: Elements of Aim of innovation Maintain existing
innovation strategy strategy positions by mostly
(sectoral dimension) modifying existing
products (b)
What is innovated Organization of work
and processes (b)
Level of novelty in Modifications and
innovations imitations (b)
Ways of bringing Predominantly based
products/services on personal contacts
to markets of leaders, some
traditional
marketing
Collaborative Mixed (single
arrangements relationship +
multilateral
collaboration along
the value chain +
global partnerships)
Cluster Characteristics CH Service
2: Elements of Type of value chain Mix of integrated
innovation strategy value chain
(sectoral dimension) throughout the whole
process of value
creation and
convergent within
the respective
industry (b)
3: Institutional Where knowledge for Mostly external
environment innovation strategy local sources of
comes from knowledge (d)
Contribution to Shaping profile
external innovation strategy
innovativeness
beyond company's
boundaries
4: Uniqueness Attitudes towards Promote positive,
innovation-related avoid difference
partnerships
Cluster Characteristics LT Service
1: Networking Major networks in [check] Customers
(sectoral dimension) innovation-related [check] Suppliers
activities (strength [check] Firms from
and quantity) the same sector
[check] External
consultants (b)
Dominating Varied, can favour
information-sharing either seekers,
structure in solvers, or both,
networking depending on the
business model
implemented (b)
Who specifies a Seeker specifies
problem when looking problems (c)
for a solution
Strength of Varies from solver
relationship between to solver (b)
Firm's performance Very successful (b)
2: Elements of Aim of innovation Maintain existing
innovation strategy strategy positions by both
(sectoral dimension) offering new
products/services
and modifying
existing ones (b)
What is innovated Organization of work
and processes (b)
Level of novelty in Modifications and
innovations imitations, some
novelty (b)
Ways of bringing Predominantly based
products/services on existing external
to markets local networks, some
traditional marketing
Collaborative Mixed (single
arrangements relationship +
global partnerships)
Cluster Characteristics LT Service
2: Elements of Type of value chain Mix of integrated
innovation strategy value chain
(sectoral dimension) throughout the whole
process of value
creation and
convergent within
the respective
industry (b)
3: Institutional Where knowledge for Internal sources of
environment innovation strategy knowledge and
comes from multiple globally
external sources (d)
Contribution to Learning innovation
external strategy
innovativeness
beyond company's
boundaries
4: Uniqueness Attitudes towards promote positive,
innovation-related tolerate difference
partnerships
(a) Similarities between the two laser companies
(b) Similarities between the two service companies
(c) Neither nationally or sectorally structured similarities
(d) Similarities between the two Swiss companies
(e) Similarities between the two Lithuanian companies
