Modelling the innovation value chain

Innovation events – the introduction of new products or processes – represent the end of a process of knowledge sourcing and transformation. They also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business. This recursive process of knowledge sourcing, transformation and exploitation comprises the innovation value chain. Modelling the innovation value chain for a large group of manufacturing firms in Ireland and Northern Ireland highlights the drivers of innovation, productivity and firm growth. In terms of knowledge sourcing,we find strong complementarity between horizontal, forwards, backwards, public and internal knowledge sourcing activities. Each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs. In the exploitation phase, innovation in both products and processes contribute positively tocompany growth, with product innovation having a short-term ‘disruption’ effect on labour productivity. Modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills, capital investment and firms’ other resources in the value creation process.

The innovation value chain

Innovation events - the introduction of new products or processes - represent the end of a process of knowledge sourcing and transformation. They also represent the beginning of a process of exploitation which may result in an improvement in the performance of the innovating business. This recursive process of knowledge sourcing, transformation and exploitation we call the innovation value chain. Modelling the innovation value chain for a large group of manufacturing firms in Ireland and Northern Ireland highlights the drivers of innovation, productivity and firm growth. In terms of knowledge sourcing, we find strong complementarity between horizontal, forwards, backwards, public and internal knowledge sourcing activities. Each of these forms of knowledge sourcing also makes a positive contribution to innovation in both products and processes although public knowledge sources have only an indirect effect on innovation outputs. In the exploitation phase, innovation in both products and processes contribute positively to company growth, with product innovation having a short-term ‘disruption’ effect on labour productivity. Modelling the complete innovation value chain highlights the structure and complexity of the process of translating knowledge into business value and emphasises the role of skills, capital investment and firms’ other resources in the value creation process.

Customer equity drivers and future sales

Research on linking operational marketing inputs to customer attitudes and customer behavior has been gaining significance concomitant with the growing recognition that customers are market-based assets. In response to this, researchers and practitioners have proposed several conceptual models. Despite recent advances in research, the results are still inconclusive as to the relationship between customer attitude and future sales. A reason for this could be due to the paucity of studies combining survey-based data with behavioral data to understand better the drivers of customer behavior. With that in mind, the authors investigate the effects of customer perceptions of key marketing actions on customer attitudes and actual customer behavior as reflected by future sales. The authors propose that customer perceptions of value, brand, and relationship—“customer equity drivers”—affect loyalty intentions and future sales. The results of the study, which is based on a sample of 5694 customers of a large European do-it-yourself retailer, suggest that customer equity drivers can significantly predict future sales, even after the authors control for the current sales level.

Does the importance of value, brand and relationship equity for customer loyalty differ between Eastern and Western cultures?

The use of the customer equity framework as a focal marketing strategy to increase customer loyalty has emerged as an important topic. Despite a growing number of investigations, previous studies are limited by their strong U.S. and European orientations. Research into Western consumers cannot necessarily predict the behaviour of Eastern consumers though. Therefore, this study investigates whether the link between customer equity drivers (value equity, brand equity and relationship equity) and loyalty intentions is sensitive to the cultural environment. A sample of 1553 Chinese and 1085 Dutch consumers in the banking and supermarket industries reveals that all three customer equity drivers exert a greater impact in Western than in Eastern cultures. This study also shows that Eastern consumers in general have higher loyalty intentions than Western consumers. © 2013.

Internal Capital, External Knowledge, and Random Draws: Three Drivers of Organizational Structure

This dissertation explores the complex interactions between organizational structure and the environment. In Chapter 1, I investigate the effect of financial development on the formation of European corporate groups. Since cross-country regressions are hard to interpret in a causal sense, we exploit exogenous industry measures to investigate a specific channel through which financial development may affect group affiliation: internal capital markets. Using a comprehensive firm-level dataset on European corporate groups in 15 countries, we find that countries

with less developed financial markets have a higher percentage of group affiliates in more capital intensive industries. This relationship is more pronounced for young and small firms and for affiliates of large and diversified groups. Our findings are consistent with the view that internal capital markets may, under some conditions, be more efficient than prevailing external markets, and that this may drive group affiliation even in developed economies. In Chapter 2, I bridge current streams of innovation research to explore the interplay between R&D, external knowledge, and organizational structure–three elements of a firm’s innovation strategy which we argue should logically be studied together. Using within-firm patent assignment patterns,

we develop a novel measure of structure for a large sample of American firms. We find that centralized firms invest more in research and patent more per R&D dollar than decentralized firms. Both types access technology via mergers and acquisitions, but their acquisitions differ in terms of frequency, size, and i\ntegration. Consistent with our framework, their sources of value creation differ: while centralized firms derive more value from internal R&D, decentralized firms rely more on external knowledge. We discuss how these findings should stimulate more integrative work on theories of innovation. In Chapter 3, I use novel data on 1,265 newly-public firms to show that innovative firms exposed to environments with lower M&A activity just after their initial public offering (IPO) adapt by engaging in fewer technological acquisitions and

more internal research. However, this adaptive response becomes inertial shortly after IPO and persists well into maturity. This study advances our understanding of how the environment shapes heterogeneity and capabilities through its impact on firm structure. I discuss how my results can help bridge inertial versus adaptive perspectives in the study of organizations, by

documenting an instance when the two interact.

Future Earnings Growth Volatility and the Value Premium

The value premium is well established in empirical asset pricing, but to date there is little understanding as to its fundamental drivers. We use a stochastic earnings valuation model to establish a direct link between the volatility of future earnings growth and firm value. We illustrate that risky earnings growth affects growth and value firms differently. We provide empirical evidence that the volatility of future earnings growth is a significant determinant of the value premium. Using data on individual firms and characteristic-sorted test portfolios, we also find that earnings growth volatility is significant in explaining the cross-sectional variation of stock returns. Our findings imply that the value premium is the rational consequence of accounting for risky earnings growth in the firm valuation process.

Cross-sectoral differences in the drivers of innovation: evidence from the Irish Community Innovation Survey

Purpose: The purpose of this paper is to analyse differences in the drivers of firm innovation performance across sectors. The literature often makes the assumption that firms in different sectors differ in their propensity to innovate but not in the drivers of innovation. The authors empirically assess whether this assumption is accurate through a series of econometric estimations and tests. Design/methodology/approach: The data used are derived from the Irish Community Innovation Survey 2004-2006. A series of multivariate probit models are estimated and the resulting coefficients are tested for parameter stability across sectors using likelihood ratio tests. Findings: The results indicate that there is a strong degree of heterogeneity in the drivers of innovation across sectors. The determinants of process, organisational, new to firm and new to market innovation varies across sectors suggesting that the pooling of sectors in an innovation production function may lead to biased inferences. Research limitations/implications: The implications of the results are that innovation policies targeted at stimulating innovation need to be tailored to particular industries. One size fits all policies would seem inappropriate given the large degree of heterogeneity observed across the drivers of innovation in different sectors. Originality/value: The value of this paper is that it provides an empirical test as to whether it is suitable to group sectoral data when estimating innovation production functions. Most papers simply include sectoral dummies, implying that only the propensity to innovate differs across sectors and that the slope of the coefficient estimates are in fact consistent across sectors.

Drivers for adopting reverse logistics in the construction industry : a qualitative study

Purpose - The purpose of this paper is to investigate and analyse the perceptions of South Australian construction practitioners on drivers affecting the implementation of reverse logistics (RL). In this context, RL is defined as the process of moving goods from their typical final destination for the purpose of capturing value or ensuring proper disposal.

Design/methodology/approach - Semi-structured interviews were conducted with eight practitioners to collect data and the interview transcripts were analysed using the NVivo (version 10) package. Cluster analysis was used to cross-validate the findings and provide an in-depth insight into the findings.

Findings - The findings indicate that most of the drivers identified in earlier research are relevant for the construction industry. In addition, the study identified some new drivers that are categorised as "targeted demands by an exclusive clientele". These drivers were found to be complementary to the economic, environmental and social drivers as previously conceptualised. In addition, a set of factors affecting the strength of drivers that had been overlooked in previous studies emanated from the interview analysis. These include the type of project and the attributes of clients, both of which strongly affect the drivers of RL implementation in construction.

Research limitations/implications - The major limitations are the relatively small size of the sample of interviewees and having interviewees from one geographic area with specific socio-economic characteristics.

Practical implications - The identified drivers and the clustering of RL themes could be used by practitioners as a "road map" for the development of appropriate solutions to successfully promote RL within the construction industry. Organisational energies could thus be channelled towards the drivers that need the most improvement.

Originality/value - The study contributes to this research sphere by employing cluster analysis to customise and contextualise the drivers that were previously identified. The study goes beyond the extant literature by discovering the prominent effects of these drivers on the impact of targeted demands by an exclusive clientele. This could be of great value in terms of creating avenues for future investigations on the topic.