the impact of organizational innovation on the firm’s performance organizational innovation ??? ...

The Impact of Organizational Innovation on the firm’s performance

Organizational Innovation ???

Invention VS Innovation (Schumpeter)Invention – an idea or model for a new product or system, not

yet entered the economic system.

Innovation – accomplished with commercial transaction involving

new product or system. It is a part of the economic system

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Koson SapprasertCentre for Technology, Innovation and Culture (TIK)

SchumpeterInnovation – exploiting inventions/commercialization of new products, new processes and new forms of organization.

Chris Freeman (1987)Innovation Systems – product, process, market, managerial, organizational innovations (at the enterprise level) + labor market, social and institutional innovations (at the national level).

Malerba (9.06am GMT) - organizational innovation

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Lundvall’s Innovation

“Innovation really has something to do with TECHNOLOGY”

So… Organizational Changes ≠ Organizational

Innovation Koson SapprasertCentre for Technology, Innovation and Culture (TIK)

‘ORGANIZATIONAL’ INNOVATION

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Adoption of

novelties into the

organization

(Damanpour,

1991; Sorensen

and Stuart, 2000)

Innovative changes customary / institutional manner relatively non-technological related more to organizational nature,

structure, arrangements, practices, beliefs,

rules and norms-rather than to product

and process trait. (e.g. Pettigrew and

Fenton, 2000) Koson Sapprasert

Centre for Technology, Innovation and Culture (TIK)

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The implementation of new or significant changes in

firm structure or management methods intended to

improve the firm’s use of knowledge, quality of goods

and services, or work flow’s efficiency. (Community

Innovation Surveys 4 / 2002 - 2004)


‘ORGANIZATIONAL’ INNOVATION


Organizational routines - ways of doing things in the

firm (Nelson and Winter, 1982)

Obsolete routines (Dosi and Nelson, 1994)

Revolution / Organizational innovation is of crucial

Importance to the firm’s survival and competitiveness

(Anderson and Tushman, 1990; Romanelli and

Tushman, 1994)

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Heterogeneity (e.g. Nelson and Winter, 1982)

Differences in connection with organizational

innovation (Downs, 1967; Levinthal and March,

1993; Hannan and Freeman, 1984)

Size does matter !!! (Schumpeter 1934, 1950)

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Large firms, in general … More resources (e.g., financial) Innovate More

Organizational rigidity and Structural inertia (Downs,

1967) & Path Dependency (Levinthal and March 1993)

Resistance to Organizational changes

Benefit less !!

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Small firms, in general … Less resources & more constraints innovate less

Less complex structure & hierachy

Low inertial force (Hannan and Freeman, 1984) +

More flexible and adaptive

Benefit more !!

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DATASET

Community Innovation Survey IV (2002 - 2004) from

Norway

Real micro data

Special Emphasis on Organizational innovation

4450 firms in both manufacturing and service industries

(About 1300 ‘organizational’ innovators)

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CIS IV questionnaire

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QuickTime™ and aTIFF (LZW) decompressor

are needed to see this picture.

METHODOLOGY & MODEL

Independent variables (Organizational innovation + other

control variables)

New knowledge management system (1)

Major change to the organization of work (2)

Significant change in the relation with other firms (3)

(1) | (2) | (3) = ORorg (0-1)

(1) + (2) + (3) = CNTorg (0-3)

CNTorg * Log(emp)

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METHODOLOGY & MODEL

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QuickTime™ and aTIFF (LZW) decompressor

are needed to see this picture.

METHODOLOGY & MODEL Dependent variables

Reduced time to respond to customer needs (1)

Improved quality of goods or services (2)

Reduced costs per unit output (3)

Reduced employee turnover (4)

Increased capacity (5)

Increased profitability (6)

(1) + (2) + (3) + (4) + (5) + (6) = CNTorgEF (0-18)

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METHODOLOGY & MODEL

Descriptive Statistics

Econometrics

Tobit Regression (Feldman, 1994; Laursen and

Salter, 2006)

Dosi (2007) OLS

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PRELIMINARY RESULTS

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NoORorg

(%)

ORGSYS

(%)

ORGSTR

(%)

ORGREL

(%)

CNTorg1

(%)

CNTorg2

(%)

CNTorg3

(%)

Manufacturing 1943 29.3 14.5 22.2 9.9 14.7 11.8 2.8

Services 1657 31 15.6 23.5 11.5 15.9 10.8 4.3

Others 850 23.5 14.2 16.1 6.8 12.7 8 2.8

size1 1628 20.6 10.4 14.9 7.4 10.6 7.9 2.1

size2 1132 27.5 13 20 8.1 16.1 9.2 2.2

size3 812 32.6 17.2 23.4 10.7 18.3 9.9 4.4

size4 878 42.4 23.3 34.2 15.9 17.5 18.6 6.3

Total 4450 28.8 14.9 21.5 9.9 14.8 10.7 3.4

Across Sectors both manufacturing, e.g., chemical products, electronic and communication equipments & services, e.g.,Post and telecommunication, computer related activities and R&D (ICT)

PRELIMINARY RESULTS

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No ORorg CNTorgEFCNTorg1 % CNTorg2 % CNTorg3 %

size1 1628 335 9.77 0.542778 11.96 0.664444 12.24 0.68size2 1132 311 10.09 0.560556 11.72 0.651111 12.29 0.682778size3 812 265 9.72 0.54 11.13 0.618333 13 0.722222size4 878 372 9.46 0.525556 11.31 0.628333 12.45 0.691667

Manu 1943 569 10.18 0.565556 11.54 0.641111 12.57 0.698333Service 1657 514 9.6 0.533333 11.71 0.650556 12.73 0.707222Others 850 200 9.14 0.507778 11.12 0.617778 11.71 0.650556

Total 4450 1283 9.78 0.543333 11.55 0.641667 12.51 0.695

CNTorg * Log(emp)


More big firms undertaking organizational innovation

These big firms do it more intensely

Most firms benefit from organizational innovation (cost

cutting, quality and satisfaction improvement, capacity

and profitability)

The more the organizational innovation, the better the

performance

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Size Effect on the impact ?? CNTorg * Log(emp) ???

Process Innovation ??

Different types of organizational innovation

Different effects on the firm’s performance

The impact on different industries

(manufacturing/services)

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the impact of organizational innovation on the firm’s performance organizational innovation ??? ...

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