Organisational innovation in Slovenian manufacturing companies.

Palcic, Iztok ; Buchmeister, Borut ; Leber, Marjan 等

1. INTRODUCTION

Term "innovation" is still one of the hottest topics in current science. It is quite obvious that it is mostly linked to R&D of products (Bikfalvi, 2007). There are many studies on innovation revealing that increased R&D activities lead to innovative products which enable companies to achieve competitive advantages and to gain market shares (Freeman & Soete, 1997). The pioneer of innovation literature Schumpeter (1934) differentiates between: technical product innovation, technical process innovation, non-technical service innovation and non-technical process innovation, understood as organisational innovation. The first three groups were subject of many studies. On the other hand, there have been little conceptual and methodological contributions to monitoring of organisational innovation so far (Bikfalvi, 2007).

We have used the results of European Manufacturing Survey to find out about the extent of use of several organisational innovation concepts in Slovenian and some other European countries' manufacturing companies. We will present the basic characteristics of the selected organisational innovation concepts. In the future we want to extend our findings and look at correlations between specific organisational innovation concepts and the characteristics of the companies (size, field of activities, R&D expenditure etc.).

2. WHAT IS ORGANISATIONAL INNOVATION?

The existing literature on organisational innovation is diverse and scattered. There is no consensus on a definition of the term "organisational innovation", which remains ambiguous (Lam, 2005). Damanpour (1987) defines it as the use of new managerial and working concepts and practices. There are several ways to differentiate organisational innovation. The first possibility is into structural organisational innovations and procedural organisational innovations. Structural organisational innovations influence, change and improve responsibilities, accountability, command lines and information flows as well as the number of hierarchical levels, the divisional structure of functions (R&D, production, human resources, financing, etc.), or the separation between line and support functions. Procedural organisational innovations affect the routines, processes and operations of a company. Thus, these innovations change or implement new procedures and processes within the company, such as simultaneous engineering or zero buffer rules (Armbruster et al., 2008).

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Organisational innovation can be further differentiated along an intra-organisational and inter-organisational dimension. While intra-organisational innovations occur within an organisation or company, inter-organisational innovations include new organisational structures or procedures beyond a company's boundaries. These comprise new organisational structures in an organisation's environment, such as R&D cooperation with customers, just-in-time processes with suppliers or customers or supply chain management practices with suppliers. Intra-organisational innovations may concern particular departments or functions or may affect the overall structure and strategy of the company as a whole. Examples for intra-organisational innovations include the implementation of teamwork, quality circles, continuous improvement processes or the certification of a company under ISO 9000 (Armbruster et al., 2008).

3. EUROPEAN MANUFACTURING SURVEY

The European Manufacturing Survey (EMS) was conducted in 2003/2004 as a pilot survey in nine European countries. The survey covers Austria, Croatia, France, Germany, Great Britain, Italy, Slovenia, Switzerland and Turkey. In total 2249 firms answered questions concerning manufacturing strategies, the application of innovative organisational and technological concepts in production and questions of personnel deployment and qualification. In addition, data on performance indicators such as productivity, flexibility, quality and returns was collected. The responding companies present a cross-section of the main manufacturing industries. Producers of rubber and plastics are represented by 11 percent, producers of metal works by 27 percent, mechanical engineering by 31 percent and electrical engineering by 10 percent.

In the year 2006 a new survey was conducted in even more European countries, where Greece, Netherlands and Spain joined the project. We will present results for Slovenia from 2004 and 2007 survey. We will compare results among European countries from the 2004 survey. In the year 2009 a new survey will take place in Europe. The authors of this paper were conducting a survey and analysis for Slovenian manufacturing companies.

4. SPECIFIC ORGANISATIONAL CONCEPTS

As we have mentioned we are going to present the use of three organisational concepts. The first is Continuous improvement process (CIP) as a management concept which tries to initiate favourable changes in companies by taking incremental, but continuous steps and avoiding quantum leaps. The second concept is team work. It is argued that the implementation of team work into the production process increases product and process flexibility as well as productivity (Womack et al., 1990). Team workers have a high variety of skills allowing for job rotation within the team so that they can fill in for one another. The enlargement of skills and responsibilities as well as the cooperation with other workers is supposed to have a positive impact on the worker's job satisfaction and task commitment which in turn positively supports the team's productivity. Appraisal interviews, as a third concept, are regular face-to-face meetings between employees and their managers and are one part of a human resources development concept. The appraisal presents an opportunity to give feedback on work content and work load as well as to review on what has been achieved during the reporting period and to agree on objectives for the following one (Armbruster et al, 2007).

Figure 2 presents the percentage of Slovenian manufacturing companies that have used all three mentioned organisational concepts in the year 2004 and 2007.

Slovenian companies are aware of the importance of introducing organisational concepts. Three out of four companies adopted CIP. There are many suppliers in Slovenia, who were forced to adapt their business processed to OEMs in order to remain competitive. In addition Ministry of Economy promoted one of CIP concepts in the beginning of this century--"20 keys". The situation in team work is even better, since the number of companies who are introducing team work in their production is rising. Appraisal interviews are less used in Slovenian companies but still present an important organisational concept.

5. COUNTRIES' COMPARISON AS CONCLUSION

Figure 3 presents international comparison of organisational concepts between Slovenia, Germany, Austria, Switzerland and Croatia. Far more than half of the manufacturing companies in Slovenia, Austria, Switzerland and Germany indicate that they make use of CIP concept. The only exception is Croatia. Our findings suggest that supposedly the implementation of CIP occurs independently from sector structure and firm size.

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In all surveyed European countries there is hardly any difference to be seen between the two values.

Appraisal interviews are highly popular in Switzerland, but are present in about 60 % of manufacturing companies in other countries as well. A possible explanation for the varying diffusion of appraisal interviews across countries might be found by taking a closer look at the cultural differences between the European countries. It is reasonable to assume that cultural aspects have a distinct influence on human resources management practices.

On average 75 percent of the surveyed manufacturing companies make use of team work in their production processes. It is surprisingly popular concept in Croatia; the lowest rate of companies using this concept is in Germany. The analysis points to two possible explanations: diffusion rates might vary due to national differences in work organisation across the investigated European countries and due to different business strategies of the examined companies (Armbruster et al., 2008).

6. REFERENCES

Armbruster, H., Kinkel, S, Lay, G. & Maloca, S. (2007). Techno-organisational innovation in the European manufacturing industry. Do European countries differ regarding the diffusion of technical and non-technical innovations in manufacturing companies?, Proceeding of EUROMA 2007, Acur, N., Erkip, N. K. & Gunes, E. D. (Eds), Ankara, June 2007, Bilkent University, Ankara

Armbruster, H., Bikfalvi, A., Kinkel, S. & Lay, G. (2008) Organizational innovation: The challenge of measuring non-technical innovation in large-scale surveys. Technovation, in Press

Bikfalvi, A. (2007). Innovation, Entrepreneurship and outsourcing: essays on the use of knowledge in business environments, doctoral dissertation, Girona

Damanpour, F. (1987). The adoption of technological, administrative and ancillary innovations: impact of organizational factors. Journal of Management, Vol. 13, No. (4), 675-688

Freeman, C. & Soete, L. (1997). The Economics of Industrial Innovation, Pinter Publisher, London, Washington

Lam, A. (2005). Organizational innovation. In: The Oxford Handbook of Innovation, Fagerberg, J., Mowery, D. C., Nelson, R. R. (Eds.), 115-147, Oxford University Press, Oxford

Schumpeter, J., 1934. The Theory of Economic Development. Harvard University Press, Cambridge, MA

Womack, J. P., Jones, D. T. & Roos, D. (1990). The machine that changed the world, New York

Fig. 2. Use of organisational concepts in Slovenian
manufacturing companies

Share of companies in %

 2004 2007

CIP 84 76
team work 76 84
interviews 69 67

Note: Table made from bar graph.