Knowledge sources, innovative activity and the performance of UK new technology based firms

We present an innovation value chain analysis for a representative sample of new technology based firms (NTBFs) in the UK. This involves determining which factors lead to the usage of different knowledge sources and the relationships that exist between those sources of knowledge; the effect that each knowledge source has on innovative activity; and how innovation outputs affect the performance of NTBFs. We find that internal (i.e. R&D) and external knowledge sources are complementary for NTBFs, and that supply chain linkages have both a direct and indirect effect on innovation. NTBFs' skill resources matter throughout the innovation value chain, being positively associated with external knowledge linkages and innovation success, and also having a direct effect on growth independent of the effect on innovation. ©2010 IEEE.

Firms’ knowledge search and local knowledge externalities in innovation performance

We use an augmented version of the UK Innovation Surveys 4–7 to explore firm-level and local area openness externalities on firms’ innovation performance. We find strong evidence of the value of external knowledge acquisition both through interactive collaboration and non-interactive contacts such as demonstration effects, copying or reverse engineering. Levels of knowledge search activity remain well below the private optimum, however, due perhaps to informational market failures. We also find strong positive externalities of openness resulting from the intensity of local interactive knowledge search—a knowledge diffusion effect. However, there are strong negative externalities resulting from the intensity of local non-interactive knowledge search—a competition effect. Our results provide support for local initiatives to support innovation partnering and counter illegal copying or counterfeiting. We find no significant relationship between either local labour quality or employment composition and innovative outputs.

The future of manufacturing

Anyone who looks at the title of this special issue will agree that the intent behind the preparation of this volume was ambitious: to predict and discuss “The Future of Manufacturing”. Will manufacturing be important in the future? Even though some sceptics might say not, and put on the table some old familiar arguments, we would strongly disagree. To bring subsidies for the argument we issued the call-for-papers for this special issue of Journal of Manufacturing Technology Management, fully aware of the size of the challenge in our hands. But we strongly believed that the enterprise would be worthwhile. The point of departure is the ongoing debate concerning the meaning and content of manufacturing. The easily visualised internal activity of using tangible resources to make physical products in factories is no longer a viable way to characterise manufacturing. It is now a more loosely defined concept concerning the organisation and management of open, interdependent, systems for delivering goods and services, tangible and intangible, to diverse types of markets. Interestingly, Wickham Skinner is the most cited author in this special issue of JMTM. He provides the departure point of several articles because his vision and insights have guided and inspired researchers in production and operations management from the late 1960s until today. However, the picture that we draw after looking at the contributions in this special issue is intrinsically distinct, much more dynamic, and complex. Seven articles address the following research themes: 1.new patterns of organisation, where the boundaries of firms become blurred and the role of the firm in the production system as well as that of manufacturing within the firm become contingent; 2.new approaches to strategic decision-making in markets characterised by turbulence and weak signals at the customer interface; 3.new challenges in strategic and operational decisions due to changes in the profile of the workforce; 4.new global players, especially China, modifying the manufacturing landscape; and 5.new techniques, methods and tools that are being made feasible through progress in new technological domains. Of course, many other important dimensions could be studied, but these themes are representative of current changes and future challenges. Three articles look at the first theme: organisational evolution of production and operations in firms and networks. Karlsson's and Skold's article represent one further step in their efforts to characterise “the extraprise”. In the article, they advance the construction of a new framework, based on “the network perspective” by defining the formal elements which compose it and exploring the meaning of different types of relationships. The way in which “actors, resources and activities” are conceptualised extends the existing boundaries of analytical thinking in operations management and open new avenues for research, teaching and practice. The higher level of abstraction, an intrinsic feature of the framework, is associated to the increasing degree of complexity that characterises decisions related to strategy and implementation in the manufacturing and operations area, a feature that is expected to become more and more pervasive as time proceeds. Riis, Johansen, Englyst and Sorensen have also based their article on their previous work, which in this case is on “the interactive firm”. They advance new propositions on strategic roles of manufacturing and discuss why the configuration of strategic manufacturing roles, at the level of the network, will become a key issue and how the indirect strategic roles of manufacturing will become increasingly important. Additionally, by considering that value chains will become value webs, they predict that shifts in strategic manufacturing roles will look like a sequence of moves similar to a game of chess. Then, lastly under the first theme, Fleury and Fleury develop a conceptual framework for the study of production systems in general derived from field research in the telecommunications industry, here considered a prototype of the coming information society and knowledge economy. They propose a new typology of firms which, on certain dimensions, complements the propositions found in the other two articles. Their telecoms-based framework (TbF) comprises six types of companies characterised by distinct profiles of organisational competences, which interact according to specific patterns of relationships, thus creating distinct configurations of production networks. The second theme is addressed by Kyläheiko and SandstroÍm in their article “Strategic options based framework for management of dynamic capabilities in manufacturing firms”. They propose a new approach to strategic decision-making in markets characterised by turbulence and weak signals at the customer interface. Their framework for a manufacturing firm in the digital age leads to active asset selection (strategic investments in both tangible and intangible assets) and efficient orchestrating of the global value net in “thin” intangible asset markets. The framework consists of five steps based on Porter's five-forces model, the resources-based view, complemented by means of the concepts of strategic options and related flexibility issues. Thun, GroÍssler and Miczka's contribution to the third theme brings the human dimension to the debate regarding the future of manufacturing. Their article focuses on the challenges brought to management by the ageing of workers in Germany but, in the arguments that are raised, the future challenges associated to workers and work organisation in every production system become visible and relevant. An interesting point in the approach adopted by the authors is that not only the factual problems and solutions are taken into account but the perception of the managers is brought into the picture. China cannot be absent in the discussion of the future of manufacturing. Therefore, within the fourth theme, Vaidya, Bennett and Liu provide the evidence of the gradual improvement of Chinese companies in the medium and high-tech sectors, by using the revealed comparative advantage (RCA) analysis. The Chinese evolution is shown to be based on capabilities developed through combining international technology transfer and indigenous learning. The main implication for the Western companies is the need to take account of the accelerated rhythm of capability development in China. For other developing countries China's case provides lessons of great importance. Finally, under the fifth theme, Kuehnle's article: “Post mass production paradigm (PMPP) trajectories” provides a futuristic scenario of what is already around us and might become prevalent in the future. It takes a very intensive look at a whole set of dimensions that are affecting manufacturing now, and will influence manufacturing in the future, ranging from the application of ICT to the need for social transparency. In summary, this special issue of JMTM presents a brief, but undisputable, demonstration of the possible richness of manufacturing in the future. Indeed, we could even say that manufacturing has no future if we only stick to the past perspectives. Embracing the new is not easy. The new configurations of production systems, the distributed and complementary roles to be performed by distinct types of companies in diversified networked structures, leveraged by the new emergent technologies and associated the new challenges for managing people, are all themes that are carriers of the future. The Guest Editors of this special issue on the future of manufacturing are strongly convinced that their undertaking has been worthwhile.

Monopoly in the UK:what determines whether the MMC finds against the investigated firms?

This paper draws on data from 73 UK Monopolies and Mergers Commission reports on monopoly between 1973 and 1995. It shows that there is a roughly two in three chance that the Commission will come to an adverse conclusion against the investigated firms in a given case. 75–80% of decisions can be explained purely in terms of the market share of the leading firm and knowledge of the broad nature of the alleged anti-competitive practice. An adverse finding is most likely in cases involving exclusive dealing, and least likely where other vertical restraints are involved.

The knowledge competitiveness of regional economies: conceptualisation and measurement

Whereas the competitive advantage of firms can arise from size and position within their industry as well as physical assets, the pattern of competition in advanced economies has increasingly come to favour those firms that can mobilise knowledge and technological skills to create novelty in their products. At the same time, regions are attracting growing attention as an economic unit of analysis, with firms increasingly locating their functions in select regions within the global space. This article introduces the concept of knowledge competitiveness, defined as an economy’s knowledge capacity, capability and sustainability, and the extent to which this knowledge is translated into economic value and transferred into the wealth of the citizens. The article discusses the way in which the knowledge competitiveness of regions is measured and further introduces the World Knowledge Competitiveness Index, which is the first composite and relative measure of the knowledge competitiveness of the globe’s best performing regions.

Earnings behaviour of financially distressed firms:The role of institutional ownership

Using a sample of 859 U.S. bankruptcy-filing firms over the period 1986-2004, we examine the earnings behaviour of managers during the distressed period by looking at sources of abnormal accruals prior to the bankruptcy-filing year. Results show that managers of highly distressed firms shift earnings downwards prior to the bankruptcy filing. We test and provide evidence in support of two potential contributing factors. First, top-level management turnover among distressed firms leads new managers to earnings bath choices during the distressed period. Second, qualified audit opinions exert pressure on managers to follow more conservative earnings behaviour during the distressed period. Evidence is also provided that the management of distressed firms with lower (higher) institutional ownership has greater (lesser) tendency to manage earnings downwards. Results also show that higher institutional ownership mitigates the negative abnormal returns of firms with top management turnover. To the authors' knowledge, this is the first study that attempts to examine whether institutional ownership relates to market reaction in conjunction with a top management turnover or a qualified audit opinion during the distressed period. Prior studies focused on the investigation of earnings management or institutional ownership (separately) during the distressed period, but did not examine if the effect of institutional ownership on earnings behaviour also influences subsequent returns. Thus, the results of this study should be of interest to analysts, standard setters and regulatory bodies since our results show that management turnover, qualified audit opinions and firm governance mechanisms affect the quality of earnings and the level of abnormal returns. © 2007 Accounting Foundation, The University of Sydney.

Enabling innovation:knowledge control, sharing and coordination boundaries in UK and German manufacturing

We investigate how boundaries in knowledge control, sharing and co-ordination influence UK and German manufacturing firms’ innovation intensity (an indicator of the volume of product change) and product life (an indicator of the pace of generational change). In general UK plants more commonly face knowledge control boundaries related to plant ownership or control, while German plants more commonly face boundaries related to knowledge sharing and knowledge co-ordination between functional groups. Our empirical results emphasise the importance of the strategic management of innovation. Knowledge control boundaries – related to external ownership, group membership and decision making autonomy – have a weak negative influence on plants’ innovation outcomes. Strategic decisions relating to multifunctional working and networking are found to be more important in overcoming knowledge sharing and co-ordination boundaries. Knowledge sharing boundaries, related to plant or company boundaries, prove most important where a plant has no in-house R&D capability. Knowledge co-ordination boundaries related to functional or multi-functional working have strong but differential effects on different innovation output measures: functional boundaries increase product life in both countries, and in Germany maintaining functional boundaries is also associated with increased innovation intensity.

The innovation value chain in new technology based firms:evidence from the UK

We present the first innovation value chain analysis for a representative sample of new technology based firms (NTBFs) in the UK. This involves determining which factors lead to the usage of different knowledge sources and the relationships that exist between those sources of knowledge; the effect that each knowledge source has on innovative activity; and how innovation outputs affect the performance of NTBFs. We find that internal and external knowledge sources are complementary for NTBFs, and that supply chain linkages have both a direct and indirect effect on innovation. NTBFs’ skill resources matter throughout the innovation value chain, being positively associated with external knowledge linkages and innovation success, and also having a direct effect on growth independent of the effect on innovation. Exporting matters for performance, but not through any effect on innovation.

The board of directors, executives and risk knowledge management

Enterprise Risk Management (ERM) and Knowledge Management (KM) both encompass top-down and bottom-up approaches developing and embedding risk knowledge concepts and processes in strategy, policies, risk appetite definition, the decision-making process and business processes. The capacity to transfer risk knowledge affects all stakeholders and understanding of the risk knowledge about the enterprise's value is a key requirement in order to identify protection strategies for business sustainability. There are various factors that affect this capacity for transferring and understanding. Previous work has established that there is a difference between the influence of KM variables on Risk Control and on the perceived value of ERM. Communication among groups appears as a significant variable in improving Risk Control but only as a weak factor in improving the perceived value of ERM. However, the ERM mandate requires for its implementation a clear understanding, of risk management (RM) policies, actions and results, and the use of the integral view of RM as a governance and compliance program to support the value driven management of the organization. Furthermore, ERM implementation demands better capabilities for unification of the criteria of risk analysis, alignment of policies and protection guidelines across the organization. These capabilities can be affected by risk knowledge sharing between the RM group and the Board of Directors and other executives in the organization. This research presents an exploratory analysis of risk knowledge transfer variables used in risk management practice. A survey to risk management executives from 65 firms in various industries was undertaken and 108 answers were analyzed. Potential relationships among the variables are investigated using descriptive statistics and multivariate statistical models. The level of understanding of risk management policies and reports by the board is related to the quality of the flow of communication in the firm and perceived level of integration of the risk policy in the business processes.

TRial of an Educational intervention on patients' knowledge of Atrial fibrillation and anticoagulant therapy, INR control, and outcome of Treatment with warfarin (TREAT)

Background Atrial fibrillation (AF) patients with a high risk of stroke are recommended anticoagulation with warfarin. However, the benefit of warfarin is dependent upon time spent within the target therapeutic range (TTR) of their international normalised ratio (INR) (2.0 to 3.0). AF patients possess limited knowledge of their disease and warfarin treatment and this can impact on INR control. Education can improve patients' understanding of warfarin therapy and factors which affect INR control. Methods/Design Randomised controlled trial of an intensive educational intervention will consist of group sessions (between 2-8 patients) containing standardised information about the risks and benefits associated with OAC therapy, lifestyle interactions and the importance of monitoring and control of their International Normalised Ratio (INR). Information will be presented within an 'expert-patient' focussed DVD, revised educational booklet and patient worksheets. 200 warfarin-naïve patients who are eligible for warfarin will be randomised to either the intervention or usual care groups. All patients must have ECG-documented AF and be eligible for warfarin (according to the NICE AF guidelines). Exclusion criteria include: aged < 18 years old, contraindication(s) to warfarin, history of warfarin USE, valvular heart disease, cognitive impairment, are unable to speak/read English and disease likely to cause death within 12 months. Primary endpoint is time spent in TTR. Secondary endpoints include measures of quality of life (AF-QoL-18), anxiety and depression (HADS), knowledge of AF and anticoagulation, beliefs about medication (BMQ) and illness representations (IPQ-R). Clinical outcomes, including bleeding, stroke and interruption to anticoagulation will be recorded. All outcome measures will be assessed at baseline and 1, 2, 6 and 12 months post-intervention. Discussion More data is needed on the clinical benefit of educational intervention with AF patients receiving warfarin. Trial registration ISRCTN93952605

Alliance behaviour, absorptive capacity and competitive advantage: a comparative study of biopharmaceutical firms in Europe and the US

In this thesis, we explore the relationship between absorptive capacity and alliances, and their influence on firms’ competitive advantage in the US and European biopharmaceutical sectors. The study undertaken in this thesis is based on data from a large-scale international survey of over 2,500 biopharmaceutical firms in the US, the UK, Germany, France and Ireland. The thesis advanced a conceptual framework, which integrated the multi-dimensions of absorptive capacity, exploration-exploitation alliances, and competitive advantage, into a biopharmaceutical firm’s new product development process. The proposed framework is then tested in the empirical analysis, using truncated models to estimate firms’ sales growth, with zero-inflated negative binominal models capturing the number of alliances in which firms engage, and aspects of realised absorptive capacity analysed by ordinal probit models. The empirical results suggest that both skill-based and exploitation-based absorptive capacity play crucial roles in shaping firms’ competitive advantage, while neither exploratory nor exploitation alliances contribute to the improvement in firms’ competitive position. In terms of the interaction between firms’ absorptive capacity and alliance behaviour, the results suggest that engagement with exploratory alliances depends more strongly on firms’ assimilation capability (skills levels and continuity of R&D activities), while participation in exploitation alliances is more conditional on firms’ relevant knowledge monitoring capability. The results highlight the major differences between the determinants of firms’ alliance behaviour, and competitive advantage in the US and Europe – in the US firms’ skill levels prove more significant in determining firms’ engagement with exploratory alliances, whereas in Europe continuity of R&D proves more important. Correspondingly, while US firms’ engagement with exploitation alliances depends on market monitoring capability, that in Europe is more strongly linked to exploitation-based absorptive capacity. In respect of the determinants of firms’ competitive advantage – in Europe, market monitoring capability, engagement with exploitation alliances, and continuous R&D activities, prove more important, while in the US, it is firms’ market characteristics that matter most.

An evaluation of the effectiveness of intervention strategies for the promotion of health and safety performance in small firms

Recognition of the contribution of small firms to the UK economy has grown considerably since 1995 when this research first began. The poor record of small firms in managing health and safety effectively has caused concern, and efforts made to improve knowledge and awareness of the target group through various initiatives have had some success. This research thesis attempts to identify the range of intervention routes and methods available to reach the target group, and to consider ways of evaluating the outcome of such efforts. Various interventions were tested with small firms, including a Workshop; use of Questionnaires; short postal Reply Slip survey; leading to a closer evaluation of a specific industry- the Licensed Trade. Attitudes and beliefs of the sample were identified, and observations carried out to consider actions taken by workers and others in the workplace. These empirical research findings were used to develop the theme of Primary and Secondary interventions intended to change behaviours, and to confirm assumptions about what small firms currently do to manage health and safety risks. Guidance for small firms was developed as a Secondary intervention tool to support Primary interventions, such as inspection or insurance provision.

Knowledge, capabilities and manufacturing innovation: a US-Europe comparison

In this paper we report a comparative analysis of the factors which contribute to the innovation performance of manufacturing firms in the US state of Georgia, and three European regions, the UK regions of Wales and the West Midlands, and the Spanish region of Catalonia. We consider the factors which shape firms’ ability to generate new products and processes and undertake various forms of organisational and structural change. We are particularly concerned with how firms collect the knowledge on which they base their innovation and their effectiveness in translating that knowledge into new innovations. Three main empirical conclusions result. First, US firms have more widespread links to external knowledge sources than those in Europe and notably the universities make a greater contribution to innovation in the US than in Europe. Second, UK firms prove more effective at capturing synergies between their innovation activities than US and Catalan firms. Third, firms’ operating environment proves more conducive to innovation in the US than in either the UK regions or Catalonia. Our results suggest the potential for mutual learning. For the UK there are lessons in terms of the way in which the universities in Georgia are supporting innovation. For firms in Georgia and in Catalonia the potential lessons are more strategic or organisational and relate to how they can better capture potential synergies between their innovation activities.

Sourcing knowledge for innovation:the international dimension

Drawing knowledge from external sources in the UK, or internationally, has become increasingly important to small and medium-sized firms (SMEs). SMEs cannot generate all they need to know to develop new products and processes within their own companies, they need to look elsewhere for new ideas and expertise. This practice is known as knowledge sourcing. This report provides a detailed review of patterns of knowledge sourcing, and the key factors influencing these patterns, particularly from a small business perspective. We present key findings from a survey of 393 UK companies and analyse the results. We also highlight case studies of UK SMEs that work closely with overseas partners and agents to widen their own knowledge.

Knowledge mediation and overlapping in interfirm networks

Purpose – The literature on interfirm networks devotes scant attention to the ways collaborating firms combine and integrate the knowledge they share and to the subsequent learning outcomes. This study aims to investigate how motorsport companies use network ties to share and recombine knowledge and the learning that occurs both at the organizational and dyadic network levels. Design/methodology/approach – The paper adopts a qualitative and inductive approach with the aim of developing theory from an in-depth examination of the dyadic ties between motorsport companies and the way they share and recombine knowledge. Findings – The research shows that motorsport companies having substantial competences at managing knowledge flows do so by getting advantage of bridging ties. While bridging ties allow motorsport companies to reach distant and diverse sources of knowledge, their strengthening and the formation of relational capital facilitate the mediation and overlapping of that knowledge. Research limitations/implications – The analysis rests on a qualitative account in a single industry and does not take into account different types of inter-firm networks (e.g. alliances; constellations; consortia etc.) and governance structures. Cross-industry analyses may provide a more fine-grained picture of the practices used to recombine knowledge and the ideal composition of inter-firm ties. Practical implications – This study provides some interesting implications for scholars and managers concerned with the management of innovation activities at the interfirm level. From a managerial point of view, the recognition of the different roles played by network spanning connections is particularly salient and raises issues concerning the effective design and management of interfirm ties. Originality/value – Although much of the literature emphasizes the role of bridging ties in connecting to diverse pools of knowledge, this paper goes one step further and investigates in more depth how firms gather and combine distant and heterogeneous sources of knowledge through the use of strengthened bridging ties and a micro-context conducive to high quality relationships.