Innovativeness & Interaction: Conceptual Research Approach

Maria M. SmirnovaSergey P. Kouchtch

GSOMSaint Petersburg

Structure of presentation

• Aims of the study

• Main drivers of innovations & interactions research

• Conceptual model considerations

• Some empirical evidence

• Propositions for future research

• Conclusion

Research motivation

• Main aim – development of a conceptual model for an empirical qualitative study on innovativeness in buyer-supplier interaction and value creation networks

• Theoretic motivation – searching for integration of overall marketing and interaction frameworks to study innovation processes

• Empirical motivation – contradictions in Russian business practice

Overall marketing perspective

Inputs• Environmental challenges (technological turbulence,

market turbulence)• Competitive pressure• Superior resources & capabilities• Customer needs

Outcomes• SCA-perspective and positional advantage creation • Performance outcomes

Positional advantage creation model adaptation (Day, Wensley, 1988)

Sources of advantage

Positional advantage

Performanceoutcomes

Marketing capabilities

Innovationcapabilities

SCMcapabilities

Networkingcapabilities

Superior value for customer

Lower costs

DifferentiationAdvantage

Speed of reaction

Optimized qualityof interaction

Profit

Sales

Customer Satisfaction

New product success

Adaptability

Internal advantages

• creating market orientation in firm-supplier interaction

• creation of relational norms and frames for relationships governance

• providing internal marketing mechanisms and interfunctional coordination

• evaluation techniques and feedback from customers

• NPD process coordination • network effects

Interaction perspective

• “No business is an island” (Håkansson,Snehota, 1989)

• Complementary assets & capabilities • ARA framework • From value chain to value network & value system

creation• Preconditions for cooperative innovation

– Relationship history – Relationship quality – Shared values and goals alignment

IMP research: innovation perspective

• Main IMP papers topics overview:– Collaborative innovations– Innovations in networks– Transparency of value creation – Value innovation– Innovation networks/Strategic

networks/Commercialization networks– Supply chain innovation – Organizational innovation capability – Customer perceived value

Conceptual scheme of analysis• Type of interaction

– Trust, commitment created– Social embeddedness, reputation– Existing relational capital or network effects

• Resources & Capabilities – Value creation potential– Knowledge sharing– Actors-resources–activities framework

• Matching potential – Aims alignment– Access to resources, markets, – Lots vs short term

Type of interaction

Potential sources of advantage

Type of innovation

Potential outcomes

Conceptual scheme of analysis

StrategicNetwork

InnovationsNetwork

CommercializationNetwork

Dyadicinteraction

productinnovation

processinnovation

Creation of competitive

advantage

Better adaptation& flexibility

Better use of resources

PreconditionsResources

& capabilitiesMatchingpotential

Reduced uncertainty

New marketsentrance

CustomerSupplier

Value chain advantage

Business modeladvantage

Research context: some empirical findings from SCM study 2006

• Results of a round table on Purchasing Strategy & SCM in Russia (June 2007)– Innovations – main sources of competitive advantage

– Innovative collaboration with suppliers – key aims in supplier relationships development

– High emphasis on innovativeness of strategy

• Results of an empirical study 2006– Very low emphasis on innovations

– Innovations as part of supplier interaction process

– Assessment of R&D department involvement in SCM

Preconditions

• Type of interaction (research context): – Dyadic

• Key supplier relationship

• Type of product (5-point Likert scale)• Unique product – 2,82 (out of 5)• Innovative product – 2,69

• New products success• Number of new products (3,60)• Time-to-market (3,38)• New products success (3,58)

• Readiness for R&D outsourcing• Current (1,85), future (1,97)

Preconditions (cont.)

Technology turbulenceMean = 3.3 (5-point Likert scale)

– Technology-based market opportunities (3,61) Speed of technology changes (3,28)

– Probability of new product development in industry (3,26)

– Technology trend forecast-ability (3,14)

Potential sources of advantage

• Potential sources of advantage– Integration potential – similar motivation,

interest in joint efforts– Knowledge creation & knowledge sharing

• Main aims of the companies in the field of supply and strategic purchasing: – Joint R&D:

• 11th position in priorities, relevant for 11,8% if firms in a sample

• #1 – cost reduction• #2 – creation of long-term supplier relationships• #3 – delivery time reduction

R&D involvement in purchasing process

Purchasing process

involvement

Finance

R&D

Product planning

Production

Top management

Marketing

Accounting

Legal consulting

Security dept

Customs dept

End user

4.05

3.90

3.70

3.62

3.39

3.33

3.03

2.39

2.11

1.82

1.40

Marketing-Purchasing integration outcomes

Report to Marketing director

Aim – time-to-market reduction

Sales-purchasing integration

Yes (n=14)

No (n=185)

Yes (n=82)

No (n=124)

Yes (n=96)

No (n=103)

R&D Involvement 3.64 2.98 3.47** 2.72** 3.51 2.57

Integration capabilities

2.78 2.75 2.92*** 2.65*** 2.96** 2.57**

Customer oriented integration

3.00 2.74 2.83 2.71 3.03* 2.59*

Scores range from 1 (not involved at all) to 5 (always involved)* p<.001** p<.005***p<.05

Sources of advantage: matching potential

Main future priorities for supply chain development %

Development of supplier relationships 87,4

Improvement of operational effectiveness 64,3

Development of business processes 46,4

Personnel trainings and education 44,0

Time-management 28,0

R&D integration 17,4

Outsourcing 9,2

Sources of advantage: matching potential

• Top priorities in supplier relationships development:#1 Quality of products & services (4,78 out of 5)

#2 Profit as relationship outcome (4,54)

#3 Cost reduction (4,51)

#4 Trust (4,35) – …

#10 Strategic perspectives of interaction (4,06)

#15 Innovation potential of supplier (3,40)

Sources of advantage: additional value and innovation sources

Item (5-point Likert scale) MeanAdditional market information 3,63

Additional professional knowledge & skills 3,32

Suggestions on improvements of business processes

2,82

Additional technical knowledge 3,60

Sources of advantage: resources & capabilities

Item (5-point Likert scale) MeanSuppliers influence value creation 2,81

Suppliers provide our company with new technologies and new ideas

2,70

Better conditions for suppliers with new products 2,60

Suppliers are involved in R&D processes 1,93

Type of innovation & potential outcomes

• Type of innovation: – Process innovation – in research context of

supplier relationships• Emphasis on improvement of operational effectiveness

– Time management

– Reduction of delivery time

• Potential advantages addressed in the study– Strategic – Customer-oriented

New Product Success Performance

Diff. Advantage

R&D oriented 0,097 0,121 0,113

Oriented on suppliers with innovation potential 0,167** 0,223** 0,193**

Supplier collaboration

SUPINN 0,229* 0,220* 0,219**

SUPCUST 0,293* 0,204** 0,225*

SUPLONG 0,279* 0,257* 0,288*

Value created & perceived

INNVALUE 0,199** 0,244* 0,156**

Functions involved in purchasing process

USER 0,197** 0,163** 0,188**

MARKET 0,254* 0,142** 0,213**

RD 0,114 0,143** 0,172**

Joint function execution

ResponsibilityNow Future

C S J C S J

Rationalization of processes 49,5 5,6 44,9 31,6 7,8 60,6

Creation of supportive IS 22,7 12,7 64,6 8,2 12,6 79,2

Market research 52,1 8,9 38,9 34,4 8,9 56,8

R&D 27,4 13,1 59,4 15,5 9,9 74,6

Customer satisfaction monitoring 60,9 5,7 33,3 38,9 8,4 52,6

Calculation system improvement 32,1 4,1 63,8 18,7 3,6 77,7

TQM system introduction 38,0 13,0 48,9 25,1 13,7 61,2

JIT system introduction 17,7 19,3 63,0 6,2 24,4 69,4

Joint functions execution-outcome relationship

• New product success – n.s.

• Differentiation – n.s.

• Performance:–Joint problem solution – performance–Joint R&D – performance

Maybe problem because of the single item measurement of function’s involvement.

Conclusions

1. Two perspectives can be integrated to study innovation processes

– Overall creation of SCA: link between marketing and purchasing to enhance innovations

– Innovations as result of previous relationships experience and matching potential

2. Integration of both approaches can provide a basis for a longitudinal study

3. Presented empirical results are taken from a study not developed to measure innovativeness, nevertheless the results show:

– Contradiction between qualitative and quantitative study results (round table and survey);

– Some attempts to build an innovative collaboration;

– Potential for further research using SEM methodology.