Embed Size (px)
Citation preview
Daria Podmetina
INNOVATION AND INTERNATIONALISATION IN RUSSIAN COMPANIES: CHALLENGES AND OPPORTUNITIES FOR OPEN INNOVATION AND COOPERATION
Acta Universitatis Lappeenrantaensis 438
Thesis for the degree of Doctor of Science (Technology) to be presented with due permission for public examination and criticism in the Auditorium 103 in the Student Union House at Lappeenranta University of Technology, Lappeenranta, Finland on the 7th of July, 2011, at noon.
2
Supervisor Professor Marko Torkkeli
Faculty of Technology Management Department of Industrial Management Lappeenranta University of Technology Finland
Reviewers Professor Angappa Gunasekaran Department of Decision and Information Sciences The Charlton College of Business University of Massachusetts Dartmouth USA Professor Anna Trifilova Department of Management and Marketing Nizhny Novgorod Architecture and Civil Engineering State University Russia Opponent Professor Angappa Gunasekaran Department of Decision and Information Sciences The Charlton College of Business University of Massachusetts Dartmouth USA
ISBN 978-952-265-112-9 ISBN 978-952-265-113-6 (PDF)
ISSN 1456-4491
Lappeenranta University of Technology Digipaino 2011
3
ABSTRACT
Daria Podmetina INNOVATION AND INTERNATIONALISATION IN RUSSIAN COMPANIES: CHALLENGES AND OPPORTUNITIES FOR OPEN INNOVATION AND COOPERATION Lappeenranta: 2011 105 p. Acta Universitatis Lappeenrantaesis 438 Diss. Lappeenranta University of Technology ISBN 978-952-265-112-9, ISBN 978-952-265-113-6 (PDF), ISSN 1456-4491 Increasing globalisation and intensified cross-border cooperation, together with significant technological breakthroughs, create a fascinating gap for the research of the relationship between internationalisation and innovation on national, regional and company levels in Russia. The intensified international trade between countries and regions benefited from favourable institutional conditions, and facilitated the technology transfer and the development of innovations on the national level. This study approaches the same question from the company perspective; if certain companies are more innovative than other domestic companies, will they start internationalisation more easily or get involved in cooperation with international stakeholders? When companies operate in international markets, how do they obtain knowledge? Moreover, would this new knowledge from the foreign market help then to increase innovativeness, competitiveness and develop operations in domestic/local and foreign markets? Considering the role of foreign direct investments (FDI), the research in hand tries to find out the role of companies with FDI on the other players on the home market. Do foreigners bring new technology, innovation to the country? Is there spillover effect observed and how local companies can benefit from them?
This dissertation studies the internationalisation and innovation in Russian companies, both from the outward internationalisation and inward internationalisation perspectives. Russian companies developed quickly during the transition period, after the dissolution of the Soviet Union. The common background of these companies, the effects of the change of ownership, and some managerial difficulties make them more sensitive to competitions issues, and in this context, the opportunities brought by the developing innovations are seen in companies and on the governmental level.
Keywords: Internationalisation, innovation, open innovation, cooperation, Russian companies UDC: 001.895:658.11(47+571):334.7
4
To my wonderful sons, Filip and Erik, - my greatest source of joy and inspiration
5
ACKNOWLEDGEMENTS
"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your
sails. Explore. Dream. Discover." - Mark Twain
Work on this dissertation was long and challenging, but interesting and exciting process. I was extremely lucky to have the very best of people supporting and motivating me on the different stages of this process. I would like to express my warmest gratitude to all of them.
First I would like to thank my supervisor professor Marko Torkkeli, who guided me through the last two most interesting, but difficult years of the dissertation writing. Marko took me to the exciting research field of innovation management and opened the world of open innovation. Thank you Marko for your patience and flexible deadlines. I have to mention also professor Kari Liuhto, the first supervisor of my thesis and the leader of the first research projects I was enrolled in university. I would also like to thank professor Tauno Tiusanen, the second supervisor of the thesis, his extensive experience in the field of transition economies and amazing life stories made significant contribution to my research. Warm thanks to our dean Markku Tuominen for generous support, encouragement, for providing me with stable working environment and for believing that my dissertation will be finalized one day.
I would also like to thank the thesis pre-examiners professors Anna Trifilova and Angappa Gunasekaran for their effort invested on the late phases of the writing process. My amazing co-authors: Maria Smirnova, Irina Savitskaya, Marko Torkkeli, Juha Väätänen, Vera Rebjazina – without your help, ideas, contribution the dissertation would never be finalized. Thank you all for your support, with you the research work is always fun!
I gratefully acknowledge the financial support received from the Finnish Doctoral Program in Industrial Engineering and Management (Tuotantotalouden valtakunnalinen tutkijakoulu), CIMO, and the Finnish Foundation for Technology Promotion (Tekniikan edistämissäätiö). The research project “Innovativeness of High-tech Enterprises in Russia” was financed by the Academy of Finland and provided significant part of the funding for this research and data collection in Russia.
Very special thanks and deepest respect go to Pirkko Kangasmäki – the secretary of our department, who can make everything possible and impossible in the shortest time. Thank you Pirkko for your work! I would like to thanks also Eeva Häyrinen for taking care of all organizational issues concerning my thesis and Paula Haapanen for fast and effective proof-reading of dissertation. More thanks to professors Eelko Huizingh and Angappa Gunasekaran for significant attempts to improve my academic writing skills.
6
I have to mention my great colleagues Kati, Henrik, Juha, Markus, Pekka, Antero and Samuli. The endless evening writing sessions with tons of coffee and laugher – I will keep these memories forever. Thank you! You guys are the best!
I spend long time to invent some special words for our Russia coordinator Riitta Salminen, but did not find the ones to describe the contribution of this wonderful person to my dissertation. Riitta was one of the very first persons I met during my first days in university. Thank you for you enthusiasm, strength and positive energy.
The very many hugs for Irina and Daria for unfailing support, for your energy, inspiration, for company during long working hours and after-works, for fun, for laugh, for everything.
I thank all my friends for kicking me out of the office, for remembering and understanding. Very special thanks to Natalia and Antonio, for your help and faith in me during all these years.
I give my deepest expression of love and appreciation to my family, my parents and relatives for the courage you gave me for studying since the childhood and for the absolute faith you have in me and for respecting my decisions in work and life. Thanks to Juha for patience and support, especially on the latest stages of the dissertation. And for my kids Filip and Erik, who had not had enough of my time lately, all my love and deepest thanks to you! You showed me that learning is fun, that something new happens every day in our life and we just need to be open for challenges.
Lappeenranta, 23.06.2011
Daria Podmetina
8
TABLE OF CONTENTS
LIST OF PUBLICATIONS AND AUTHOR’S CONTRIBUTION
PART I: OVERVIEW OF THE DISSERTATION
1. INTRODUCTION………………………………………………………………………..17
1.1. Origins and motives…………………………………………………………… 17 1.2. Scope of the research…………………………………………………………. 21 1.3. Research gap and research questions………………………………………….. 24 1.4. Limitations of the study……………………………………………………….. 26 1.5. Structure of the thesis………………………………………………………….. 28
2. INTERNATIONALISATION AND INNOVATION………………………………….30
2.1. Overview………………………………………………………………………. 30 2.2. Inward-outward internationalisation………………………………………….. 32 2.3. Innovations and inward-outward internationalisation………………………... 34 2.4. Technology and internationalisation…………………………………………... 41
3. INNOVATION AND INTERNATIONALISATION IN RUSSIA……………………48
3.1. Internationalisation in Russia………………………………………………….. 48 3.2. Innovations in Russia………………………………………………………….. 51
4. DATA COLLECTION AND RESEARCH METHODOLOGY……………………...57
4.1. Survey…………………………………………………………………………. 57 4.2. Data collection in Russia………………………………………………………. 60 4.3. Summary of the research methodology in publications and limitations………. 67
5. SUMMARY OF PUBLICATIONS AND REVIEW OF RESULTS………………….69
5.1. Publication I…………………………………………………………………… 69 5.2. Publication II…………………………………………………………………... 70 5.3. Publication III…………………………………………………………………. 71 5.4. Publication IV…………………………………………………………………. 73 5.5. Publication V…………………………………………………………………... 75
6. CONCLUSIONS…………………………………………………………………………78
6.1. Overview………………………………………………………………………. 78 6.2. Results of the research process………………………………………………... 79 6.3. Summary of the contribution of publications…………………………………. 80 6.4. Model developed………………………………………………………………. 84 6.5. Limitations of the research results…………………………………………….. 86 6.6. Future research………………………………………………………………… 87
9
LIST OF REFERENCES
APPENDICES:
APPENDIX I. Core papers Inward and Outward Internationalization and Innovation
APPENDIX II: Core Quantitative Studies on Open Innovation
PART II: PUBLICATIONS
Publication I: Innovativeness and International Operations: Case of Russian R&D Companies
Publication II: The Role of FDI in the Development of Innovative Capacity: The Case of Russian Companies
Publication III: Open Innovation in Russian Firms: an Empirical Investigation of Technology Commercialisation and Acquisition
Publication IV: Open vs. Traditional Innovation. Does Internationalisation Matter? Case Russia
Publication V: Cooperation and Open Innovation in Emerging Economies. Study of Innovation Strategies of Russian Companies
10
LIST OF FIGURES
Figure 1. Environmental turbulence, globalisation and growth
Figure 2. Scope of the research
Figure 3. Research gap
Figure 4. Input-output structure of the thesis
Figure 5. Imports and exports in Russia 1992 – 2010
Figure 6. R&D spending in exports in Russia, 1992 - 2009
Figure 7. Innovation “pillars” of Russia and BRICs countries
Figure 8. Innovation “pillars” of Russia and other countries
Figure 9. Regional GDP of Russian federal districts
Figure 10. Share of high technology companies in Russian federal districts
Figure 11. Open innovation matrix
Figure 12. Results of the research process
Figure 13. Open innovation and internationalisation model
11
LIST OF TABLES
Table 1. Research questions, goals, objectives, methods and publications
Table 2. Summary of publications on innovation and internationalisation
Table 3. Taxonomy for the globalisation of technology
Table 4. Knowledge economy index of Russia and BRIC countries
Table 5. Summary of the research methods
Table 6. Summary of the publications and their main findings
Table 7. Contribution of the results of publications
Table 8. List of variables for open innovation and internationalisation model
12
LIST OF ABBREVIATIONS
CIS - Commonwealth of Independent States CIS – Community Innovation Survey EBRD – European Bank of Reconstruction and Development FDI – Foreign Direct Investment IB - International Business IM – Innovation Management JV – Joint Venture MNC (MNE) – Multinational Company (Enterprise) NPD – New Product Development OECD - The Organisation for Economic Cooperation and Development OI – Open Innovation R&D – Research and Development RBV – Research-Based View SU - Soviet Union UNCTAD – United Nations’ Conference on Trade and Development
13
LIST OF PUBLICATIONS AND AUTHOR’S CONTRIBUTION
The thesis consists of the introductory part (Part I) and publications (Part II). The publications included in the thesis are listed below. All the publications were done in cooperation with other authors; therefore, the statement of author’s contribution to each publication is included.
PUBLICATION I
Podmetina Daria, Smirnova Maria, Väätänen Juha, and Torkkeli Marko, 2009. Innovativeness and International Operations: Case of Russian R&D companies, International Journal of Innovation Management, Vol 13, No 2, 2009, pp. 295-317.
Publication I addresses the link between outward internationalisation and innovation. The analysis is based on the empirical findings from a companies’ survey in Russia. The author proposed the research idea for this paper as one of the papers contributing to solving the main research question of the dissertation, the Innovation – Internationalisation challenge. The author was also responsible for formulating a theoretical framework and hypotheses; the data collection and analysis were organized in cooperation with other partners. The discussion and conclusion sections were mainly written together with co-author.
PUBLICATION II
Väätänen Juha, Podmetina Daria and Aleksandrova Marina, 2010. The Role of FDI in the Development of Innovative Capacity: The Case of Russian Companies in eds. Soete L and Fu X. The Rise of Technological Power in the South, Palgrave, MacMillan, UK, 2010.
Publication II analyses the effect of inward internationalisation – FDIs - on the innovation output of local companies. This was planned by the author as the second core paper for the dissertation, discussing the Innovation – Internationalisation challenge. The study is based on the empirical findings from a survey of 200 companies Russia. The author was responsible for planning and designing the research, while the theoretical part was conducted in cooperation with the co-authors. The data was analysed mainly by the author, and the discussion and conclusion were done with the help of the co-authors.
PUBLICATION III
Podmetina Daria, Väätänen Juha, Torkkeli Marko, and Smirnova Maria, 2011. Open innovation in Russian firms: an empirical investigation of technology commercialization and acquisition, International Journal of Business Innovation and Research, Vol. 5, No. 3, pp. 298-317.
Publication III discusses the concept of open innovation and studies the adopting of innovation strategies in Russian companies. The classification of innovation strategies includes different combinations of internal research and development, external technologies acquisition and technologies commercialisation. The role of internationalisation for companies with different
14
innovation strategies is evaluated. The responsibility of the author included planning and designing the research, data analysis, and writing the introduction and discussion. The theory framework and conclusion were written in cooperation with the co-authors.
PUBLICATION IV
Podmetina Daria, Väätänen Juha and Torkkeli Marko, 2011. Open vs traditional innovation. Does internationalization matter? Case Russia, submitted to the Conradi. The earlier version is in the Proceedings of the 3rd ISPIM Innovation Symposium, December 12-15, 2010, Quebec City, Canada.
The main idea of Publication IV is to find out how companies select between open and closed approaches to innovation strategies and what the role of internationalisation is in this context. The empirical findings proved open innovation (OI) to be the most effective innovation strategy; the more companies involved in OI, the higher their innovation and economic performance is. The degree of internationalisation was higher for companies with OI. The author was responsible for research planning and design, and for writing the discussion and conclusion. The literature review and data analysis were conducted in cooperation with the co-authors.
PUBLICATION V
Podmetina Daria, Väätänen Juha, Torkkeli Marko, and Smirnova Maria, 2011. Cooperation and open innovation in emerging economies. Study of innovation strategies of Russian companies, accepted to the Divisional Roundtable Paper Session at the 2011 Academy of Management Annual Meeting, August 12-16, 2011, San Antonio, Texas.
Publication V shows that cooperation with external partners clearly depends on the degree of openness of the innovation strategy and the proximity of the partner, both in the sense of importance and intensity of cooperation. The most significant effect of cooperation was detected for companies with a full range of open innovation strategies, both in-bound and out-bound. The degree of internationalisation is significantly higher for companies with open innovation. The responsibilities of the author were the development of the concept, writing the introduction and conclusion. The data analysis and the theory overview were conducted together with the co-authors.
7
16
PART I: OVERVIEW OF THE DISSERTATION
15
17
1. INTRODUCTION
One of the advantages of being disorganized is that one is always having surprising discoveries.- A.A. Milne
1.1 Origin and motives
1.1.1. Origins
Globalisation has had an effect on all possible aspects of our life (Held et al., 1999) and has marked not only the majority of companies but individuals as active participants of the intensified international exchange. Globalisation is analysed on the country, region, and company level through international trade, foreign direct investments (FDI), capital flows and technology transfer measures (Bhagwati, 2004), and is driven by a number of economic, technological, political and social factors (Croucher, 2004). Globalisation processes push companies to enter foreign markets and to acquire specific knowledge, enabling them to implement technology and product innovations. Internationalisation modes, both outward (export) and inward (import), act as effective channels for the technology transfer between countries (Pack, 1993). Globalisation provides opportunities to innovate and improve competitive position for companies from emerging markets (Gorodnichenko et al., 2008) by obtaining skills and knowledge (Bell and Pavitt, 1993).
The common goal of the international business (IB) research tradition is to try to explain why and how companies enter international market and how they operate there. A variety of different theories have emerged to explain the effect of companies’ behaviour and motivation on the decision to internationalize. IB theories contribute to understanding the companies’ internationalisation process relying on their characteristics: size, ownership, location, and strategy (Dunning, 2001). The study of innovations within IB theories, however, is not a new phenomenon. Earlier research stated that superior technology and innovations are important factors for the competitive advantage in international expansion (Dunning, 1970; Johansson and Vahlne, 1977; Vernon, 1966). The difference of technology or innovation internationalisation from “pure product” internationalisation was claimed by the researchers in the last decade (Zanfei, 2000, Cantwell and Piscitello, 2002, 2005; Dunning and Lundan, 2009). Companies differ in terms of their innovations according to the level of internationalisation (Castellani and Zanfei, 2006) and they rapidly increase their research and development (R&D) activities abroad (Dalton, et al., 1999, Belderbos et al., 2006).
The innovation management (IM) perspective contributes to understanding the increased role of innovation systems (national and regional) on the development of technology competence of the local firms and their expansion to the foreign markets (Giuliani et al., 2005, Chaminade and Vang, 2008). According to these studies, a company’s competitive depends not only on the exploitation of their existing capabilities, but also on the search and acquisition of new knowledge (Teece et al., 1994, 1997) on the home market and via cross-border transactions.
18
Furthermore, superior technology capability helps companies to achieve better product differentiation and better response to the fast changing environment (Teece and Pisano, 1994). The search for new technology forces companies to cooperate more with foreign partners, customers and suppliers (Smirnova et al., 2009) and to establish strategic alliances in order to develop and commercialize new products, technologies or services (Gulati, 1998). The international aspect is important for understanding processes of cooperative innovations, new product development (NPD), technology transfer, diffusion of innovations, and recently emerged phenomena of open innovations.
The purpose of this thesis is to contribute to the discussion on the role of innovation in the internationalisation process. A literature review has been carried out to summarize those internationalisation and innovation concepts which form the framework for this study. The combination of IB and IM perspectives have significant similarities: companies’ technological capabilities and contribution to improving competitive advantage; the role of cooperation with external partners and the search for new partners; the role of the external environment (home, host or innovation systems) and institutional factors. The contribution of this thesis is to empirically test the theoretical findings on a large spectrum of companies from emerging economies, such as Russia. These companies are in need of new methods and techniques for improving their competitive position in domestic and international markets.
1.1.2. Motives
The impact of entrepreneurship on technology’s progress was discussed by Schumpeter (1934); his view was that entrepreneurship is able to transfer new ideas into successful innovations and stimulate long-term economic growth. Thus, the technology change became more important than capital gain. The model developed by Solow (1956) and Swan (1956) assumed that at some point in time, a certain increase in capital will not create any growth, and this point can be overcome by inventing new technology (exogenous growth). However, their model lacks sufficient empirical evidence. In 1980s the endogenous growth theory provided mathematical explanations for technology’s progress (Romer, 1986) and the concept of human capital – knowledge and skills as sources to increase labour productivity. The increase of human capital and technological change (innovations) explain the growth rate. In this dissertation, the author considers industrial enterprises as the major developers of new technology and thus, economic growth.
Research of industrial enterprises is a wide and challenging area, and the role of industrial enterprise and functions in the economic environment are complex and significant. A new type of industrial enterprise appeared in the last decades of 19th century and was associated with the so-called second industrial revolution1. The construction of transportation (mostly railroads) and communication (telegraph) networks facilitated large scale supplies, delivery and information exchange. The emergence of large scale manufacturing companies stimulated the creation of new
1 The first industrial revolution occurred in UK at the end of the 18th century with the emergence of mechanical mining, metal production, and the development of the textile industry.
19
industries, technology breakthroughs and internationalisation (Chandler, 1992). Industrial enterprises carried out significant transformations in the last 20 years due to market and environment turbulence and change.
Companies need multiple business strategies in order to cope effectively with any given environmental condition (Wright et al., 1990; Akan et al., 2006). The business environment was considered relatively stable in the mid to late 1980s, and did not require flexible strategies. However, in the 1990s, market and environmental turbulence increased and flexibility became a means for company survival (Pine, 1993). In order to cope with environmental and market contingencies, companies ought to diversify their strategies, aiming towards exploring opportunities and avoiding threats created by the changing markets (Porter, 1979).
The world economy has entered a new era of uncertainty, characterised by increased risks and turbulence, and consequently, chaos. Enterprises need to establish new strategic behaviour (warning system, scenario construction system and quick response system) which allow them to manage during the time of recession (Kotler and Caslione, 2009). Kotler and Caslione claim that the main forces of globalisation and technology have caused an increased fragility in the economy, which have resulted in intensified periods of turbulence. Currently, this intensified turbulence is already accepted as normal for the economy and companies have learned how to behave in this situation. What was considered extraordinary and stressful for companies 20 years ago has become an everyday situation for modern companies.
The environment turbulence is a threat for companies, which they have to fight, but it is also an opportunity, which companies need to investigate and explore. Turbulence and chaos (Kotler and Caslione, 2009) lead companies to switch the management paradigm; companies need to develop new set of actions (behaviour) for interacting within its system and with other systems at a new level. Flexibility and openness at all structural levels of companies are the skills which help to develop the innovative and learning capabilities of industrial enterprises. The survival of the competition fight in the long run is possible for most open, innovative and cooperative companies. The technology paradigm (Dosi, 1982) clarifies the direction of technological change - towards future technological improvements. The combination of environmental turbulence, market conditions, technology change, globalisation and the other factors make enterprises to rethink their management and operation methods (Figure 1). The role of these forces in the enterprises’ management paradigm shift toward “openness”, flexibility and cooperation is an important research question for industrial organisation studies. The ways to manage these forces are forming the strategic behaviour of industrial enterprise, the structure of their target markets and interactions with stakeholders.
Globalisation tends to remove the barriers between national borders in order to facilitate the flow of goods, services, capital, knowledge and labour. It could be considered as a trend towards global openness but there are restrictions set by many countries in order to protect certain
20
industries from foreign competition. However, the pace of globalisation is quickening and its impact on businesses is growing.
Figure 1. Environmental turbulence, globalisation and growth
As discussed earlier, the technology revolution stimulates the development of new types of companies, and the expansion of these industrial companies, both within the home market and externally, takes them to a new level of development. The intensification of production requires a modernisation process involving social change, economic development, and technology innovation. Intensified production and further transformation towards openness introduces mind change, when people take a different attitude towards nature, society and the economy. They learn rationalisation. The combination of rationalisation with skills in the fast utilisation of new emerging technologies and adopting innovations are likely to support the intensification of production and stimulate economic growth.
Technology development is often confused with technological progress. Traditionally technology change is understood as an ongoing process and the technology progress as certain distinct achievements of technology, radical innovations. Technological change is a continuous process of invention, innovation, diffusion of technology and innovations (Schumpeter, 1934; Jaffe et al., 2002). This involves continuous innovations at all stages of research, adoption, development, diffusion and use.
Environmental and Market Turbulence
Globalisation
Technology Change and Innovations
Industrial Growth
Management Paradigm Shift
21
1.2. Scope of the research
Enterprises from transition economies are unique phenomena in current industrial enterprise research. Considering the very long lasting process of industrialisation and globalisation in the developed countries, enterprise in transition economies provide us with the opportunity to observe a short and intensive transformation process. The enterprises from transition economies face double pressure from global turbulence and local transformation processes; they had to quickly learn to compete, both in internal and external markets, and with local and foreign companies. In this perspective, Russia represents one of the most interesting but challenging cases for analysis due to its large size, regional economic heterogeneity and political constraints.
This study provides insights to better understand the connection between innovation and internationalisation processes in Russian companies. This specific aim requires the elaboration of knowledge from three research fields: international operations, innovation (and more specifically, open innovations and collaborative innovations), and the heritage of transition reflected in the companies’ background (Figure 2).
Figure 2. Scope of the research
Internationalisation
Internationalisation is a two-way process of gradual involvement in international activities. This involvement may happen through international inward operations, such as importing and in – licensing, international outward operations, such as exporting and out – licensing, or through international cooperation (Korhonen, 1999). Some companies internationalise due to external reasons, when their rivals or customers have become globalised (Ohmae, 1990), others internationalise due to internally-pushed factors, such as improving the firm’s profitability (Gerliner et al., 1989). Dunning (1980; 1988) suggests that cost minimizing is not the only factor influencing internationalisation, but also ownership-specific advantages must be obtained. The
International Business Studies
Innovation Management Studies
Studies of Transition Economies
Research Focus
22
stage models indicate that internationalisation is linked with managerial learning. Internationalisation is defined as a step-by-step process from the simplest form (export) to manufacturing abroad (Luostarinen, 1994). This process combines getting experience and knowledge and increasing resource commitment to foreign markets.
The network perspective draws on the theories of social exchange and focuses on firm behaviour in the context of inter-organisational and interpersonal relationships. This perspective emphasises the role and influence of social relationships in business transactions (Johanson and Vahlne, 1990; 1993). Companies are connected by networks, developing the interaction between them. In the network context, internationalisation means that the firm develops business relationships in networks in other countries through international extension, penetration or international integration (Johanson and Mattson, 1988). The network approach is especially important in turbulent, high technology industries (Johanson and Vahlne, 1990).
Transition
A transition process describes the change from a centrally-planned economy to a free market, and includes economic liberalisation (letting market forces set prices and lowering trade barriers) and macroeconomic stabilisation (inflation control, restructuring and privatization) (Kornai, 1990). The transition process is characterised by the restructuring of existing enterprises, the emergence of new private enterprises, and the transformation of the government’s role (Falke, 2002).
The trade liberalisation of 1992 in Russia stopped the government monopoly on foreign trade, giving companies the opportunity to internationalise. In Russia, the process of transforming into market economy has proceeded according to two guiding principles (Kornai, 1990): the liberalisation of markets via price liberalisation and the enforcement of hard budget constraints via the privatisation of state-owned companies. The Russian government abolished price controls and freed prices in 1992. The share of foreign trade increased from the Soviet Union’s 4% of GDP for exports and imports in 1985 to Russia’s 28 % of GDP for exports (31 % in 2008) and 20 % of GDP for imports (22% in 2008) in 2009 (World bank, 2011). This development exposed Russian companies to increased international competition, both domestically and in export markets.
Innovations
Innovation is recognised worldwide as a tool that supports local firms in becoming or staying competitive in the global market. Transitional countries should be the most dramatic beneficiaries of globalisation, especially from the transfer of capabilities of FDIs (Sutton, 2007). Competition from foreign companies should strengthen domestic companies.
The traditional strategy orientation states that companies have to diversify strategies in order to use opportunities and avoid threats emerging due to market turbulence (Porter, 1979). Moreover,
23
as was discussed earlier, the business environment was considered still relatively stable in the mid to late 1980s. Since the beginning of 1990s, market and environmental turbulence has increased and companies were forced to fight competition and flexibility became a means for company survival. In that time, companies were inclined to control all stages of the innovation process themselves and most R&D was produced internally (Wheelwright and Clark, 1992). Not only R&D, but new product development (NPD) and technology innovations, along with the commercialisation of new products and technologies, were conducted within company borders. This approach is currently referred to as the traditional or closed approach to innovations.
Due to the degree of turbulence, increased competition and newly emerged technology opportunities, companies have intensified the use of both internal and external knowledge (Cohen and Levinthal, 1990; Klevorick et al., 1995). It has become obvious that the traditional approach to innovation and R&D does not fit with this changed environment. Thus, many companies have started to transition towards a new, more open policy on innovations. Companies need to develop more open business models if they want to get the best use of their internal R&D, search for and acquire new technologies and use effectively commercialisation channels, decrease costs and save time (Christensen, 1997). When Chesbrough (2003, 2006) launched the term “Open Innovation” to describe the new phenomena, it was just in time to describe the latest transformation processes in this field of innovation. At present, the open approach has become essential for many companies’ innovation practices. The organised search for new ideas is important for open innovation framework development (Laursen and Salter, 2006). Open innovation can be exploratory (emergent innovation process) and focused (predetermined search) (Holmes and Smart, 2009). There is empirical evidence that the turbulence of technology and competition on technology markets strengthen the effect of outbound innovations on companies’ performance (Lichtenthaler, 2009).
Cooperation is the core of an open innovation framework (Chesbrough, 2006) and the number of cooperative partners and quality of cooperation play an integral role in the success open innovation principles adopting (Kock and Torkeli, 2008). This cooperation gives companies the opportunity to access knowledge and technologies in order to increase their innovativeness, and decrease costs and risks (Faria and Schmidt, 2007). There have been multiple studies on the collaborative approach to innovations (Freytag, 2002; Andrew et. al, 2006; Blomqvist and Levy, 2006; Miles et al, 2004; Johnsen and Ford, 2000; Ford and Johnsen, 2001; Hakansson and Eriksson, 1993). Some studies focus on innovation cooperation with foreign partners (Faria and Schmidt, 2007) and stress the strong relationship between internationalisation and innovation, especially when international technology transfer is a form of export per se (Robinson, 1988; Filipescu, 2007). Having entered foreign markets by selected entry modes, firms have acquired specific product and market knowledge that enable them to implement more technological innovations (Filipescu, 2007). Innovations and R&D play an important role in overcoming barriers to internationalisation, but being conditional on having entered the export market, R&D
24
does not increase the export intensity level when it is treated as endogenous (Harris and Li, 2008).
1.3. Research gap and research questions
1.3.1. Research gap
The research gap of this thesis has been developed as elaborating the opportunity offered by two streams of theories: international business (IB) and innovation management (IM). The IB perspective contributes to the understanding of the role of superior technology and innovation for companies’ competitive advantage in different stages of internationalisation process (Dunning, 1970; Johansson and Vahlne, 1977; Vernon, 1966; Castellani and Zanfei, 2006), relying on company characteristics, such as size, ownership, location and strategy (Dunning, 2001). The IM perspective considers the increased role of innovation on developing the technology capabilities (Teece and Pisano, 1994) of firms to achieve better product differentiation and better response to the fast changing environment and to the expansion to foreign markets (Giuliani et al., 2005; Chaminade and Vang, 2008). The combination of these two streams of research provides wide opportunities to speculate on the typology of innovation strategies and their dual relationship with international activities. The empirical evidence on the dual relationship between innovation and internationalisation exists in a number of publications (Filipescu, 2007, Castellani and Zanfei, 2006; Wakelin, 1998; Rodriguez and Rodriguez, 2005).
The challenge of the dissertation’s research gap comes from the transition theories approach. The opening of borders in post-communist countries was highly anticipated by people and companies. However, together with the obvious benefits of free trade, investments and economic development, there are a number of threats for domestic companies, which have to be taken into consideration. Market liberalisation affected Russian companies by increasing competition from imported goods, foreign direct investments and emerging new effective companies. Companies had to learn to be competitive and find their own niche either in the domestic market or in the global one. In the communist system, domestic companies did not have to put much effort into improving the quality of products and services, personnel training, and innovation and marketing research, because they were involved in direct sales, the barter system or had guaranteed governmental orders. The centralised research institutes were in charge of conducting research and providing technology development opportunities. The supply of technology was not often in balance with the demand from enterprises. This imbalanced connection between research institutions and companies still remains the weakest link in Russia (Krot, 2008). One of the most important factors that could contribute to market players’ changing behaviour is the firm’s attitude to innovations, technology development, technology transfer and the commercialisation of innovations.
Figure 3 presents the research gap which is created as a combination of challenges and opportunity identified in the literature. By combining challenge and opportunity, the overall
25
research question considers what the relationship is between innovation and internationalisation in Russian companies.
Figure 3. Research gap
1.3.2. The objectives and research questions
According to the research gap discussed above, the overall research question of this study is “What is the relationship between innovation and internationalisation in Russian companies?”
This overall research question is divided into specific research questions (RQ 1, RQ 2 and RQ 3) addressed in the publications (Table 1):
Research Question 1: How are innovations and internationalisation related?
Publications I and II address the first research question through a quantitative analysis of 176 Russian companies.
Objectives 1: To study the relationship between innovations (innovation activities, R&D expenditures, NPD) and internationalisation (outward – exports and inward – FDIs)
Research Question 2: How do Russian companies implement open innovation and what is the role of internationalisation?
Publications III and IV address the second research question through a quantitative analysis of 150 (Publication III) and 206 (Publication IV) Russian companies respectively.
Objectives 2: To research the innovation strategies applied, based on the open innovation framework (internal R&D, external technology acquisition and commercialisation through external channels); to propose tools for analysing open innovation strategies and to estimate the role of internationalisation.
Turbulence and Transformation in Transition theory
Globalisation and Technology Change
DISSERTATION RESEARCH GAP
OPPORTUNITY: Analysing relationship of innovation
and internationalisation
Theories of Internationalisation
Innovation Management
Theories
CHALLENGE: How internationalising companies
from a transitional economy (Russia) can benefit from innovations?
26
Research Question 3: What is the role of cooperation with local and international external partners in an open innovation framework?
Publication V addresses the third research question through a quantitative analysis of 206 Russian companies.
Objectives 3: To analyse the open innovation strategy of the companies and estimate the importance of R&D cooperation with local and international external partners
These objectives are set in order to elaborate new knowledge on the phenomena of innovation and internationalisation strategies in transitional economies, such as Russia. Due to the very small amount of empirical research related to the internationalisation and innovations of Russian companies, the research questions are descriptive and exploratory in nature rather than explanatory. The research problem is examined through the sets of quantitative data and by means of different statistical methods.
1.4. Limitations of the study
The focus of this thesis is on the role of innovation and internationalisation, based on the assumption of international business and innovation management theories. The approach to the research question extends from the internationalisation stage theories (U- and I-models) with core items of analysis as exports, imports, inward and outward FDIs. By stating this, other IB theories of internationalisation are beyond the scope of this study (MNC theories, FDI theories, RBV, contingency approach).
There are also limitations on the general applicability of the stage models. This study does not consider the influence of external and institutional factors, like governmental effect and environment, however, the competition effect and cooperation with stakeholders are analysed.
Hence, there is limited evidence of the implication of IB theories in Russia, and no evidence concerning the relationship of innovation and internationalisation, the implication of these theories in other transition countries can be studied. The limitations also imply that the analysis is conducted at the company level. Therefore, the alliances of the firms or integration into the networks are not subjects of this research.
Analysing Russian companies forced the author to put a limitation on the transition effect; the background of companies is taken into consideration, and the role of ownership is discussed, however, the transformation of the management systems and the role of transition are not the subjects of this research.
27
Tab
le 1
. Res
earc
h qu
estio
ns, g
oals
, obj
ectiv
es, m
etho
ds a
nd p
ublic
atio
ns
Res
earc
h qu
estio
ns
Goa
l M
etho
d an
d da
ta
Obj
ectiv
es o
f pub
licat
ion
Publ
icat
ion
Res
earc
h Q
uest
ion
1:
How
inno
vatio
ns a
nd
inte
rnat
iona
lisat
ion
rela
ted?
To st
udy
the
rela
tions
hip
betw
een
inno
vatio
ns
(inno
vatio
n ac
tiviti
es, R
&D
ex
pend
iture
s, N
PD) o
n in
tern
atio
nalis
atio
n (o
utw
ard
– ex
ports
and
in
war
d –
FDIs
)
Surv
ey o
f 176
fir
ms,
Qua
ntita
tive
To e
stim
ate
the
role
of i
nnov
atio
n on
the
inte
rnat
iona
lisat
ion
proc
ess b
y an
alys
ing
the
impa
ct o
f inn
ovat
ion
activ
ities
, R&
D
expe
nditu
res,
com
petit
ion
and
NPD
on
the
expo
rt in
tens
ity
Publ
icat
ion
I In
nova
tiven
ess a
nd In
tern
atio
nal
Ope
ratio
ns: C
ase
of R
ussi
an R
&D
co
mpa
nies
To st
udy
the
role
of F
DIs
on
the
deve
lopm
ent o
f inn
ovat
ive
capa
city
of
Rus
sian
com
pani
es b
ased
on
the
R&
D
inte
nsity
and
pat
ent a
ctiv
ity
Publ
icat
ion
II
The
Rol
e of
FD
I in
the
Dev
elop
men
t of I
nnov
ativ
e C
apac
ity: T
he C
ase
of R
ussi
an
Com
pani
es
Res
earc
h Q
uest
ion
2:
How
do
Rus
sian
co
mpa
nies
impl
emen
t op
en in
nova
tion
and
wha
t is
the
role
of
inte
rnat
iona
lisat
ion?
To re
sear
ch th
e in
nova
tion
stra
tegi
es a
pplie
d ba
sed
on
the
Ope
n In
nova
tion
fram
ewor
k (in
tern
al R
&D
, ex
tern
al te
chno
logy
ac
quis
ition
and
co
mm
erci
alis
atio
n th
roug
h ex
tern
al c
hann
els)
. To
prop
ose
tool
s for
ana
lysi
ng
open
inno
vatio
n st
rate
gies
an
d to
est
imat
e th
e ro
le o
f in
tern
atio
nalis
atio
n.
Con
cept
ual,
expl
orat
ory
&
quan
titat
ive,
Su
rvey
of 1
50
firm
s
To st
udy
the
inno
vatio
n st
rate
gies
of a
nd
the
OI F
ram
ewor
k ap
plie
d in
Rus
sian
co
mpa
nies
, and
to e
stim
ate
the
role
of
inte
rnat
iona
lisat
ion
on th
e st
rate
gy c
hoic
e.
Publ
icat
ion
III
Ope
n in
nova
tion
in R
ussi
an fi
rms:
an
em
piric
al in
vest
igat
ion
of
tech
nolo
gy c
omm
erci
alis
atio
n an
d ac
quis
ition
Expl
orat
ory,
qu
antit
ativ
e (2
06
com
pani
es)
To st
udy
com
pani
es’ i
nnov
atio
n an
d in
tern
atio
nalis
atio
n an
d pr
opos
e th
e fr
amew
ork
for t
he a
naly
sis o
f OI s
tand
ard
portf
olio
and
coo
pera
tion
with
loca
l and
in
tern
atio
nal e
xter
nal p
artn
ers.
Publ
icat
ion
IV
Ope
n vs
Tra
ditio
nal i
nnov
atio
n.
Doe
s Int
erna
tiona
lisat
ion
mat
ter?
C
ase
Rus
sia
Res
earc
h Q
uest
ion
3:
Wha
t is t
he ro
le o
f co
oper
atio
n w
ith lo
cal
and
inte
rnat
iona
l ext
erna
l pa
rtner
s in
the
open
in
nova
tion
fram
ewor
k?
To
anal
yze
the
open
in
nova
tion
stra
tegy
of
th
e se
lect
ed
com
pani
es
and
estim
ate
the
impo
rtanc
e of
R
&D
coo
pera
tion
with
loca
l an
d in
tern
atio
nal
exte
rnal
pa
rtner
s
Expl
orat
ory,
qu
antit
ativ
e (2
06
com
pani
es)
This
pap
er a
ims
to s
tudy
the
role
of
R&
D
coop
erat
ion
with
ext
erna
l st
akeh
olde
rs i
n th
e fr
amew
ork
of
the
open
in
nova
tion
conc
ept.
Publ
icat
ion
V
Coo
pera
tion
and
open
inno
vatio
n in
em
ergi
ng e
cono
mie
s. St
udy
of
inno
vatio
n st
rate
gies
of R
ussi
an
com
pani
es
28
1.5. Structure of the thesis
The structure of this thesis is presented on the input-output figure (Figure 4). The first chapter of the dissertation provides the background of the study and introduces the scope of the research and research objectives. The second chapter starts with a literature review, where the objective is to structure the current understanding of innovation and internationalisation phenomena.
Figure 4. Input-output structure of the thesis
The third chapter discusses previous research on internationalisation and innovation in transitional economies, and provides the highlights of innovations and international activities in Russia, at the national and regional level. The fourth chapter summarizes the methodological
INPUT PART I
Background Motives
Build inter-disciplinary scope of the research: Links between innovation and international operations in the prior literature
Data collection process, justification of selection of methodology and analysing the data
Characteristic of internationalisation and innovation in Russia on national and regional level
Chapter 1 Introduction
Research Gap Objective of the Study Research Questions
OUTPUT
Previous research on internationalisation and innovation
Chapter 3 Innovation and
internationalisation in Russia
Chapter 2 Internationalisation and
Innovation
Chapter 4 Data collection and
methodology
Innovation and internaitonalisation in Russia on the country level
Data description and choice of methodology
Chapter 5 Summary of publications and review of the results
Publications, objectives of the papers and results
Summary of the publications and review of the results
Chapter 6 Conclusions
Summary of theoretical and managerial contributions of the thesis revealed in the results
Results of the study
PART II The publications
29
issues of the thesis and included publications, the survey techniques, the construction of the questionnaires and the collection of the data in Russia.
The fifth chapter describes the content of the included publications. The role of the publications is to study: the role of innovation on the internationalisation process by analysing the impact of innovation activities, R&D expenditures, competition and NPD on export intensity (Publication I); the role of FDIs on the development of the innovative capacity of Russian companies, based on R&D intensity and patent activity (Publication II); the innovation strategies of and the OI Framework applied in Russian companies, and to estimate the role of internationalisation on the strategy choice (Publication III); how companies select between open and closed approaches to innovation strategies and what the role of internationalisation is in this context (Publication IV); the role of R&D cooperation with external stakeholders in the framework of the open innovation concept (Publication V). The sixth and final chapter contains the conclusions of this dissertation.
30
2. INTERNATIONALISATION AND INNOVATION
2.1. Overview
This chapter introduces the phenomena of firm level internationalisation and innovation from the international business (IB) and the innovation management (IM) perspective. The chapter begins with a description of internationalisation models, aspects of inward and outward internationalisation, and studies the role of knowledge and innovation for the internationalisation process. The chapter also includes a summary of technology and internationalisation aspects, discusses the role of international cooperation for innovation and the emerging possibilities for internationalising companies with the introduction of the open innovation paradigm.
The IB perspective contributes to the understanding of the role of superior technology and innovation for companies’ competitive advantage in the different stages of internationalisation process (Dunning, 1970; Johansson and Vahlne, 1977; Vernon, 1966; Castellani and Zanfei, 2006), relying on company characteristics: size, ownership, location, strategy (Dunning, 2001).
The IM perspective considers the increased role of innovation on the developing the technology capabilities (Teece and Pisano, 1994) of firms to achieve better product differentiation, and better response to the fast changing environment and to the expansion to foreign markets (Giuliani et al., 2005; Chaminade and Vang, 2008).
The main difference in the existing terminology is the object of the research; it can be: the understanding of internationalisation as the innovation of the firm – so called I-Models of internationalisation (Bilkey and Tesar, 1977; Cavusgil, 1980, Czinkota, 1982); internationalisation of innovation or technology, which is different from the internationalisation of the product or service (Zanfei, 2000; Cantwell and Piscitello, 2002, 2005; Dunning and Lundan, 2009); and the internationalisation of companies’ R&D activities abroad (Dalton, et al., 1999; Belderbos et al., 2006).
Wang and Kafouros (2009) mention three main theoretical streams contributing to understanding the differences in innovation performance: the role of international trade (Falvey et al., 2004; Pla-Barber and Alegre, 2007; Rodriguez and Rodriguez, 2005); the role of FDI (Blomstrom et al., 2000); industrial R&D (Davis and Meyer, 2004; Hall and Mairesse, 1995; Kafouros et al., 2008; Tang and Koveos, 2008). Industrial R&D refers to all R&D conducted in a given country, both by local companies and by foreign investors.
The other perspective of the research in this field is the significant growth of international knowledge, know-how and technology expertise transfer in the world economy. The institutions and countries possessing higher technology and scientific capabilities and output benefit most from the globalisation process (Archibugi and Pietrobelli, 2003).
31
Most of the empirical evidence on internationalisation and innovation comes from manufacturing company studies (for example, Coviello and Munro, 1997, Castellani and Zanfei, 2006). In practice, most of the information comes from multi-national enterprises (MNEs) and to a lesser extent, from service and retailing companies (Dawson, 1994; Coe and Hess, 2005), and from small and medium sized enterprises (SMEs), especially within the “born global” phenomena (Knight and Cavusgil, 1996).
The dual relationship between internationalisation and innovation is not studied thoroughly from the international business perspective. Hence, in global and fast changing environment companies try to improve their competitive advantage, it is important to understand how innovative companies can develop their internationalisation capabilities, and how internationalising companies can develop their innovation capabilities though learning in international markets and cooperating with foreign stakeholders. The interconnection of internationalisation and innovation is rather industry and country sensitive:; the institutional factors, risks and uncertainty differ when the international or domestic market is concerned, the reason being the fact that the knowledge transferred requires its adaptation for local markets. At the same time, the dynamism of internationalisation models is observed in the response to learning in the international markets (Welch and Welch, 1996).
The globalisation process is also well noticed as being behind the companies’ growth, diversifying innovation activities and making the innovation process more complex from an organisation perspective. The patterns of co-creating or adopting technologies are observed for larger amounts of firms. A small number of companies can be fully independent and rely only on internally developed technologies and innovations. The interdependencies between different stakeholders, both in the domestic and international market, become more noticeable in the field of innovation; companies tend to cooperate on R&D and innovation development, outsource parts of the innovation process, acquire or commercialise technologies or a part of them at different stages of the innovation process, therefore getting involved in the “open innovations” framework.
From the internationalisation perspective, together with the growth of international trade and FDIs (both inward and outward), we are witnessing significant social, political and economic changes in societies; the opening up and growth intensification of developing countries, the opening and transformation of eastern European and post-soviet countries towards market economies, and the access to the global market (with all its pros and cons) to all players. Throughout academic research, governmental regulation and business, the core issues behind internationalisation and innovation concepts lie in the analysis of the full range of new opportunities provided by the international market and internationalised organisations, including innovation capabilities, and innovation and technology outputs (Archibugi and Michie, 1995; European Commission, 1998; OECD, 1997; Patel and Pavitt, 1991).
32
2.2. Inward-outward internationalisation
2.2.1. Definition of inward-outward internationalisation
Starting with Hymer (1976), the importance of knowledge, learning and innovation capability for internationalising companies is widely accepted (Coviello and Munro, 1997). The traditional definition of internationalisation, applied to all types of international activities, describes it as a gradual process of involvement in international operations (Welch and Luostarinen, 1988). Some companies internationalise due to external reasons, for example their rivals or customers enter foreign markets (Ohmae, 1990). Other companies internationalise for internally-pushed reasons, such as improving the firm’s profitability (Gerliner et al., 1989). The evolution from product innovation in the home market to export as the initial stage of the internationalisation process involves the proper knowledge of the market (Vernon, 1966). Companies get involved in the inward and outward internationalisation operations according to their life cycle and internationalisation is not necessarily a continuous incremental process, it can also include periods of de-internationalisation (Fletcher, 2001, Fletcher, 2008; Welch and Benito, 1996).
Internationalisation is not only outward driven but also inward driven (Welch and Luostarinen, 1988; Korhonen, 1999; Fletcher, 2001, 2008; Karlsen et al., 2003). The traditional outward internationalisation modes include exporting, outward FDIs, joint ventures (JV), licensing and franchising to name a few Furthermore, at the same time, companies can have inward international activities, such as importing, inward licensing and franchising, and inward FDIs,. Internationalisation is a two–way process when companies become involved in international activities. This involvement may happen through international inward operations, such as importing and licensing, international outward operations, such as exporting and licensing, or through international cooperation (Korhonen, 1999). The analysis of the existence of inward-outward connections (Korhonen, 1999; Welch and Luostarinen, 1993) and their influence on the internationalisation process indicate their importance to the early stages of internationalisation; connections become less important when an organisation grows (Karlsen et al., 2003).
There are two, somewhat overlapping, stage models of internationalisation (see Andersen, 1993, for review): Uppsala internationalisation models (U-Models) (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977) and innovation-related models (I-Models) (Bilkey and Tesar, 1977; Cavusgil, 1980).
2.2.2. U-Models
According to Johanson and Wiedersheim-Paul (1975), companies enter international markets with greater psychic distance step by step. The psychic distance means factors (language, culture, politics, education, industrial development) preventing the flow of information from and to the market (Johanson and Vahlne, 1977). In this sense, a lack of knowledge about foreign markets is considered as a barrier to internationalisation and knowledge about foreign markets can be obtained by internationalising companies themselves through experiential market knowledge.
33
U-models as one of the dominant approaches to internationalisation (Johanson and Vahlne, 1977, 1990) propose that companies internationalising in small, incremental steps and the internationalisation of the firm should be interpreted as an incremental learning process (Cyert and March, 1963; Barkema and Drogendijk, 2007). The four different stages of internationalisation most commonly defined are: no exporting, exporting via intermediary (agent), establishing sales subsidiary, and establishing overseas manufacturing units (Johanson Wiedersheim-Paul, 1975). According to the dynamic model (Johanson and Vahlne, 1977), the market knowledge and commitment to the foreign market affect commitment decisions in a way that the firm changes its market knowledge and commitment.
Companies can gain market-specific knowledge via experience in the host market, while a company’s internationalisation knowledge can be transferred from the home to the host market during the internationalisation process (Johanson and Vahlne, 1977; 2009; Andersen, 1993). However, larger companies have the opportunity to take larger internationalisation steps due to resource availability, and receiving the market knowledge depends on the stability and homogeneity of the environment (Johanson and Vahlne, 1990). Welch and Luostarinen (1988) claim that patterns of internationalisation are country-dependent.
2.2.3. I-Models
The innovation-related models (I-Models) (Bilkey and Tesar, 1977; Cavusgil, 1980; Reid, 1981; Czinkota, 1982) also consider internationalisation as stage processes. However, the amount and content of the stages is different from those in U-models. The I-models focus on the relationship of the learning process and the adoption of innovation (Andersen, 1993). Bilkey and Tesar (1977) write on the six-stage process, Cavusgil (1980) decreases it to five stages, Czinkota (1982) presents again a six-stage process and Reid (1981) five-stage processes. These stages start with a purely domestically-oriented firm, and take them through several stages of involvement into export towards experienced exporters.
I-models treat internationalisation as an innovation per se for the company and the process of internationalising is the learning process. According to I-models, the process of internationalisation will go differently for large and small companies.
The role of psychic distance is also considered in the I-models; companies start their internationalisation into countries closer from the psychic distance perspective, before expanding towards more distant countries. I Models originated from Roger’s diffusion of innovations and innovation adoption process (Rogers, 1962, 2003). In spite of the fact that these models have differences in the application of “push or pull” mechanisms during the earlier stages of internationalisation and in companies’ initial interest to start the exporting, Andersen (1993, p. 212) describes them “more as semantic differences rather than real differences about the nature of internationalisation process”.
34
Both U-models and I-models can be characterised by the following factors (Petersen et al., 2003): market specific knowledge is important, knowledge can be acquired by learning-by-doing processes (experience-based knowledge); knowledge is associated with individuals and difficult to disseminate within the company; and market commitment increases proportionally according to market knowledge acquisition. Knowledge as an object of possession (Cook and Brown, 1999) can be acquired, transformed, integrated, used and stored, transferred, and integrated as strategic knowledge asset (Zack 1999) and knowledge flow can be managed (Buckley and Carter, 1999; Kogut and Zander, 1992).
2.3. Innovations and inward-outward internationalisation
2.3.1. Innovations and internationalisation
Many researchers claim there is interdependency between innovation, competition and the decision to internationalise (Sutton, 2007; Gorodnichenko, 2008; Wakelin, 1998). The existence of a strong relationship between internationalisation and innovation is obvious for technology-oriented companies when international technology transfer is a form of export per se (Robinson, 1988).
In addition, export and import operations are proven effective channels of technology transfer between countries (Pack, 1993). Furthermore, there is even more research support of the fact that internationalised companies tend to transfer their experience from international operations into increased innovativeness on the domestic market (Molero, 1998; Filipescu, 2007; Castelliani and Zanfei, 2006).
“These two features (internationalisation and innovation process) reinforce each other to the extent that today’s economic analysis has to consider both of them simultaneously when trying to account for new dynamic of the firms operating at the international level” (Molero, 1998, 541-558). There is substantial research evidence on a dual relationship between innovation and internationalisation. Filipescu (2007) empirically tested the prediction of product-cycle models of international trade which show that innovation drives exports of firms in industrialized countries.
The understanding of innovation has expanded from pure product and process innovations to organisational and even marketing innovations (Oslo manual, 2007). However, globalisation processes influence companies more often to enter foreign markets and acquire specific knowledge, enabling them to implement more technology innovations.
2.3.2. Innovations and outward internationalisation
Export is considered as the first, simplest and most common measure for outward internationalisation. Most of the research conducted in the field of internationalisation and innovation accept namely export as the measure for analysis.
35
The traditional approach to analysing innovations and internationalisation of companies is to compare exporting and non-exporting companies (Wakelin, 1998; Filipescu, 2007; Rodriguez and Rodriguez, 2005). Some researchers divide companies on domestic, exporting, controlling non-manufacturing activities abroad and manufacturing abroad (Castellani and Zanfei., 2007a, b), or non-exporting, low exporting, high exporting (Lachenmaier and Wossmann, 2006). Innovating and non-innovating firms behave differently in terms of the probability of export and the level of export. Thus, the capacity to innovate fundamentally changes the behaviour of the firm. Large innovating firms export more. Small innovating firms are more domestic (Wakelin, 1998).
The effect of R&D and innovation on export is industry and country-dependant. Both positive and negative effects could be found in the literature. There is a positive effect of R&D on exports for large samples of Brazilian and German firms respectively (Willmore, 1992; Wagner, 2001). We can suggest also non-exporting and low exporting strategies are prevalent among non-innovating firms. Innovators showed export share at 12.6 % higher than non-innovators (Lachenmaier and Wossmann, 2006).
There is a trend that, due to higher involvement in international operations, industries are becoming more knowledge-intensive. The R&D intensity positively correlates with the propensity to engage in international operations. Product innovations, patents and process innovations positively and significantly affect both the decision to export and the export intensity. The technological capacity of the firm is the key factor in its international competitiveness, providing it with greater capacity to enter and sell products in foreign markets. R&D spending has a positive effect on export intensity (Rodriguez and Rodriguez, 2005). Faber and Hesen (2004) tested the relationships among R&D and other innovation activities, patents granted and sales of product innovations and proved that patents do depend on the sales of product innovations. The attitude of firms towards patenting reflects their orientation on innovation. This orientation has not only a positive effect on the number of patents granted as reported before but also on the number of successfully introduced product innovations (Porter, 1990).
There are many factors influencing the dual relationship between innovation and internationalisation (Table 2). These factors include a firm’s heterogeneity and internationalisation modes, the relationship between (economic and innovative) performances and a further mode of internationalisation (Castellani and Zanfei, 2007), the influence of innovation characteristics on firm’s behaviour and the relationship between trade and innovation at the firm level (Wakelin, 1998), size of the company, innovativeness and export (Wakelin, 1998), influence of a firm’s technological capacity on both its decision to export and its export intensity (Rodriguez and Rodriguez, 2005).
36
Tab
le 2
. Sum
mar
y of
pub
licat
ions
on
inno
vatio
n an
d in
tern
atio
nalis
atio
n
Aut
hor
(s)
Em
piri
cal E
vide
nce
Inte
rnat
iona
lisat
ion
Inno
vatio
ns
Rei
d, 1
986
Littl
e co
rrel
atio
n be
twee
n te
chno
logy
and
exp
ort i
nten
sity
Ex
port
inte
nsity
Te
chno
logy
(dum
my)
L
efeb
vre,
Lef
ebvr
e &
Bou
rgau
lt,
1998
Sm
all e
xpor
ting
com
pani
es h
ave
high
er c
apac
ity to
mod
ify e
xist
ing
prod
ucts
and
col
labo
rate
bet
ter w
ith c
ompe
titor
s tha
n no
n-ex
porte
rs
Expo
rt (D
umm
y), S
ize,
C
oope
ratio
n Pr
oduc
t Inn
ovat
ion,
Siz
e,
Coo
pera
tion
Srir
am, N
eela
nkav
il &
Moo
re, 1
989
Neg
ativ
e re
latio
nshi
p be
twee
n te
chno
logy
and
exp
ort i
nten
sity
Ex
port
inte
nsity
Te
chno
logy
(dum
my)
M
oini
, 199
5 Ex
porti
ng fi
rms p
osse
ss h
ighe
r num
ber o
f pat
ents
Ex
port
(Dum
my)
Pa
tent
W
akel
in, 1
998
Evid
ence
on
rela
tions
hip
betw
een
trade
and
inno
vatio
n on
firm
leve
l, ef
fect
of t
he si
ze o
f the
com
pany
, and
rela
tions
hip
betw
een
inno
vativ
enes
s and
exp
ort
Expo
rt, S
ize
Inno
vativ
enes
s, Si
ze
Mol
ero,
199
8 Th
e si
ze o
f the
mar
kets
, the
cos
ts o
f pro
duct
ion,
the
leve
l of p
rice
are
impo
rtant
fact
ors f
or e
xpla
inin
g th
e in
tern
atio
nal s
trate
gies
of t
he
com
pani
es (e
xpor
ting,
inve
stin
g an
d de
velo
ping
tech
nolo
gy)
Expo
rt In
vest
men
ts
Size
Tech
nolo
gy
Tech
nolo
gica
l cap
abili
ty
Ster
lacc
ini,
1999
In
nova
tion
is a
det
erm
inan
t of f
irms’
exp
ort p
erfo
rman
ce
Expo
rt pe
rfor
man
ce
Inno
vatio
n N
assi
mbe
ni, 2
001
The
prop
ensi
ty o
f sm
all f
irms t
o ex
port
is st
rictly
link
ed to
thei
r ab
ility
to N
PD a
nd to
inte
r-or
gani
satio
nal r
elat
ions
Ex
ports
, Siz
e, C
oope
ratio
n N
PD, S
ize,
C
oope
ratio
n B
asile
, 200
1 Th
e ex
port
inte
nsity
of i
nnov
atin
g fir
ms i
s hig
her t
han
that
of n
on-
inno
vatin
g fir
ms.
Ex
port
inte
nsity
, Mar
ket e
ntry
In
nova
tion
Cap
abili
ty.
Tech
nolo
gy C
ompe
titiv
enes
s R
oper
& L
ove,
200
2 Pr
oduc
t inn
ovat
ion
has s
trong
eff
ect o
n th
e ex
port.
Inno
vativ
enes
s is
posi
tivel
y re
late
d to
exp
ort.
Expo
rt Pr
oduc
t Inn
ovat
ion
Ber
nard
& J
ense
n, 2
004
Link
ed in
nova
tion
and
expo
rting
Ex
port
Inno
vatio
n, R
&D
R
odri
guez
& R
odri
guez
, 200
5 Fi
rm’s
tech
nolo
gica
l cap
acity
, pro
duct
inno
vatio
ns, p
aten
ts a
nd
proc
ess i
nnov
atio
ns p
ositi
vely
and
sign
ifica
ntly
aff
ect b
oth
its
deci
sion
to e
xpor
t and
its e
xpor
t int
ensi
ty. R
&D
spen
ding
inte
nsity
is
sign
ifica
nt in
exp
ort i
nten
sity
.
Dec
isio
n to
exp
ort,
Ex
port
inte
nsity
Te
chno
logi
cal c
apac
ity, P
rodu
ct
and
proc
ess i
nnov
atio
n, P
aten
ts,
R&
D
DiP
ietr
o &
Ano
rub,
200
6 C
reat
ivity
has
pos
itive
eff
ects
on
the
shar
e of
exp
orts
. Ex
port,
shar
e
Cre
ativ
ity, T
echn
olog
y in
dex
Piva
& V
ivar
elli,
200
7 Ex
port
dem
and
has a
stro
nger
influ
ence
on
inno
vatio
n ex
pend
iture
s th
an d
omes
tic sa
les
Expo
rt R
&D
Exp
endi
ture
s
Cas
tella
ni a
nd Z
anfe
i, 20
07
Firm
s with
a h
igh
enga
gem
ent i
n fo
reig
n ac
tiviti
es, a
lso
exhi
bit b
ette
r ec
onom
ic a
nd in
nova
tive
perf
orm
ance
s.
Inte
rnat
iona
lisat
ion
mod
es,
degr
ee o
f int
erna
tion-
n Ec
onom
ic a
nd in
nova
tive
perf
orm
ance
s, R
&D
spen
ding
s Pl
a-B
arbe
r &
Ale
gre,
200
7 Po
sitiv
e lin
k be
twee
n in
nova
tion
and
expo
rt in
tens
ity.
Expo
rt in
tens
ity
Inno
vatio
n C
hadh
a, 2
009
Dev
elop
ing
coun
tries
with
pro
cess
inno
vatio
ns a
re p
enet
ratin
g in
tern
atio
nal m
arke
ts in
the
late
r sta
ges o
f the
PLC
by
usin
g pa
tent
s Ex
ports
, Pen
etra
ting
inte
rnat
iona
l mar
kets
Te
chno
logy
, Pro
cess
Inno
vatio
n,
Inno
vativ
e sk
ills,
Pate
nts
Woe
rter
M. &
Rop
er S
. (20
10),
Expo
rt de
man
d ha
s a st
rong
er in
fluen
ce o
n in
nova
tion
expe
nditu
res
than
dom
estic
sale
s (Sw
itzer
land
). In
nova
tion
perf
orm
ance
de
term
ined
larg
ely
by fi
rm le
vel c
apab
ilitie
s.
Expo
rt de
man
d In
nova
tion
expe
nditu
res
Inno
vatio
n pe
rfor
man
ce
Cas
sim
an, G
olov
ko &
Mar
tinez
-Ros
, 20
10
Prod
uct i
nnov
atio
n –
and
not p
roce
ss in
nova
tion
– af
fect
s pr
oduc
tivity
and
indu
ces s
mal
l non
-exp
ortin
g fir
ms t
o ex
port
Expo
rt, M
arke
t ent
ry
Prod
uct i
nnov
atio
n
Wig
nara
ja, 2
011
Fore
ign
owne
rshi
p, te
chni
cal m
anpo
wer
, and
the
char
acte
ristic
s of
the
gene
ral m
anag
er m
atte
r for
exp
orts
and
R&
D.
Expo
rt, F
orei
gn o
wne
rshi
p R
&D
, R&
D in
tens
ity
37
2.3.3. Factors influencing innovations and internationalisation
Size
The size of an enterprise has been found to have an effect on the linkages. Both in developing and industrialised countries, an inverted U-shaped relationship between firm size and internationalisation has been recognised (Kumar & Siddharthan, 1994; Wagner, 1995). While a traditional “Schumpeterian approach” states that small firms are not strong in introducing innovations and increasing productivity, recent research has found that small firms are not any weaker in innovation performance. They spend less on R&D in absolute numbers than larger firms, but they outperform large firms when considering innovation counts (Pianta and Vaona, 2007). In fact, small companies spend some 70% of total R&D spending in the United States of America (Chesbrough, 2003). There is a shift from large to small size companies in terms of R&D spending. Small and medium-sized enterprises report that the most important factors hampering their innovative activity include underdeveloped infrastructure in the area of technology commercialisation, incomplete legislation, and a lack of financing (OECD, 2005). Both the size of the firm, and FDI and capital employed play an important role in export intensity (Jauhari, 2007). Often, for both developing and industrialised countries, an inverted U-shaped relationship between the size and export propensity has been found (e.g., Wagner, 1995; Kumar and Siddharthan, 1994). Another explanation for the non-linear relation between exports and size is pointed out by Wakelin (1998). “Although size is an advantage in exporting, this may not apply to very large firms which can be more orientated towards the domestic market due to, for example a domestic monopoly giving them no incentive to export” (Wakelin, 1998, p. 833). Pla-Barber and Alegre (2007) propose a model for analysing the effect of innovation outcome on export intensity and claim that the size of the company affects both innovation and exports.
Economic performance and productivity
The linkage between internationalisation and firm performance has been intensively studied in international business literature. One of the earliest studies analysed the effect of internationalisation on enterprise performance using a sample of American enterprises and found significant positive linear effects (Hymer, 1976). Subsequently, numerous studies have focused on finding relationships between internationalisation and firm performance, and proposed various types of linkages namely, a linear positive effect (Vernon, 1971; Stopford and Wells, 1972; Grant, 1987; Daniels and Bracker, 1989; Tallman and Li, 1996), an U-curve (Lu and Beamish, 2001; Contractor et al., 2003) and an inverted U-curve (Geringer et. al., 1989; Gomes and Ramaswamy, 1999).
The applied measures for the internationalisation of a firm are recognised as sales development (Grant, 1987; Geringer et al., 2000 and Zahra et. al., 2000), and profitability development measured by net profit. There seems to be a much higher level of uniformity with the independent variable, which is the level of internationalisation. Almost a standard measure has
38
been the proportion of foreign sales to total sales (Grant, 1987; Geringer et al., 1989; Tallman and Li, 1996, Gomes and Ramaswamy, 1999), however, even it has its recognised shortcomings, such as inability to diversify between foreign markets (Thomas and Eden, 2004). Companies with different levels of productivity will be engaged in different modes of international activities associated with different costs (Helpman et al., 2004).
Numerous academic studies find a positive relationship between innovation and firm performance in manufacturing (Cre´pon et al., 1998; Mairesse and Mohnen, 2003). However, “reflecting the lack of maturity of the analysis of service sector innovation, studies of the relationship between innovation and business performance in the service sector are still relatively rare.” (Mansury and Love, 2008, p. 54) More productive firms are more likely to be engaged into internationalisation activities, and firms with high engagement in foreign activities also exhibit better economic and innovative performances (Castellani and Zanfei., 2007). The importance of the effect of the product market’s structure on innovation activity and the effect of innovation on productivity growth has also been studied by Geroski (1994). Pianta and Vaona (2007) tested the relationship of labour productivity levels and the diffusion of innovations in firms, and proved that industries with a good export performance have to rely on improvements in both products and processes in all countries. “Advanced economies such as the European ones can expand their foreign markets only through a strategy of technological competitiveness, where innovation plays a key role.” (Pianta and Vaona, 2007, p. 497)
Competition
Since the work of Joseph Schumpeter in 1934, innovation has been recognised as a tool of “competition and dynamic efficiency of markets” (Mansury and Love, 2008, p. 54). Monopolistic firms were considered to be more willing to finance their R&D (less competition, more innovations). From the other perspective, implementing innovations is a significant driver for increasing the competitiveness of domestic companies both in home and foreign markets.
Some researchers (Aghion et al., 2005) hypothesised that there is an inverted U-shaped relationship between the intensity of competition and the extent of innovation. However, research related to transition economies has proved that competition has a negative effect on innovation. Support for the inverted U effect of competition on innovation was not found (Gorodnichenko et al., 2008). In contrast, transitional countries should be the biggest beneficiaries of globalisation, especially from the transfer of capabilities of FDIs (Sutton, 2007), because competition caused by foreign companies should strengthen domestic companies. As a factor of competition, innovation contributes to explaining heterogeneity in export behaviour (Basile, 2001). Technological resources can generate a double competitive advantage for a firm: in lowering costs by creating new and more efficient production processes and in differentiation by means of product innovations (Rodriguez and Rodriguez, 2005). Mansury and Love (2008) state that “it is fair to say that theoretical support for the proposition that competition is good for innovation exists, but that it is yet far from conclusive”.
39
External factors
External factors influencing the internationalisation of the firm are described in the existing studies as antecedents or environmental conditions that finally impact internationalisation consequences, approached as organisational performance. The increase in the application of the institutional theory as an explanatory tool for the internationalisation process has become conspicuous since the development of Scott’s (2001) three pillar institutional framework and particularly applied during the past two decades. The constituting elements of institutional environments, described as regulative, normative, and cognitive (Scott, 2001), to a significant extent determine the possible legitimate strategic actions of the organisation in the particular country (Scott 2001; Dickson and Weaver 2008). The regulative pillar is presented by the set of rules and laws that require conformity and sanctions (both reward and punishment) in order to influence future behaviour of the objects. The normative pillar emphasises values and norms that have prescriptive, evaluative and obligatory meanings. The normative system defines “goals or objectives (e.g., winning the game, making a profit) but also designate appropriate ways to pursue them (e.g., rules specifying how the game is to be played, conceptions of fair business practices)” (Scott, 2001, p.55). The cognitive or cultural-cognitive pillar includes internal interpretation of the external cultural framework in the form of scripts and beliefs. However, the other group of external environment antecedents of internationalisation is related to the actions of partners and competitors (Fletcher, 2001), and a supportive industry environment. Influence of other home-country incumbents or other more experienced players has been empirically identified as one of the prerequisites for internationalisation pattern differences (Yiu and Makino, 2002). Successful innovations also depend on macro-economic conditions, for example, the amount of effective demand within the national economy (Geroski and Walters, 1995), and the accessibility of foreign markets (Hughes, 1986). The behaviour of innovating firms depends on their own decision-making, but “is shaped by institutions that constitute constraints and incentives for innovations, such as laws, health regulations, subsidies, taxes, public expenditures, etc. Additionally, micro-economic conditions (e.g. market conditions, competition, and price setting) and macro-economic conditions (e.g. wealth, inflation, openness) will influence the decisions about innovation taken by firms.” (Faber and Hasen, 2004, pp. 541-558)
Foreign market entry and innovations
Innovations can also be seen as one of the main factors facilitating entry to international markets (Basile, 2001; van Dijk, 2002). Internationalisation itself can be regarded as an innovation for the firm, whereas knowledge is a vital source (like in I-Models of internationalisation). Innovations and R&D play important roles in overcoming barriers to internationalisation but being conditional on having entered an export market, R&D does not increase the export intensity level when such R&D is treated as endogenous (Harris and Li, 2008). The customer orientation component of market orientation influences the innovative capability of the firms (Akman and Yilmaz, 2008). Entry to the foreign market can play “a more creative role” serving as an instrument for introduction and diffusion of innovations. Geroski (1991) considers two types of
40
entry: “imitative” and “innovative”, which are different by nature, employ different management and control mechanisms, and have different barriers and effects. However, innovative entry is rather seldom observed (10 % of all new firms are innovative entrants).
2.3.4. Innovations and inward internationalisation
From the perspective of inward internationalisation and its connection to innovation, the most common aspect in the academic literature is analysis of link between foreign direct investments (FDI) and innovation (innovation capacity, innovation output, absorptive capacity). There is relationship between the host market (foreign) environment and companies’ accumulated knowledge (Eriksson et al., 2000) and the closer this relationship, the better companies can exploit this knowledge and achieve more rapid internationalisation. This evidence underlines the importance of considering companies’ internal R&D, knowledge stock and innovation capability as the pre-requirement for internationalisation.
FDIs have a significant effect on the innovative capacity development of domestic companies. The presence of foreign companies can positively affect the productivity of domestic companies by, for example, educating the labour force; workers and managers, who can create spin-offs (Fosfuri et al., 2001), and technology spill-over (new technology transfer, patents, knowledge) (Dunning, 1993). FDI is an important channel for increasing company innovative capacity (Hoekmann and Javorcik, 2006) and it may positively affect the productivity of domestic companies with three effects: the competition effect, the linkage effect and the employment effect (Görg and Strobl, 2001). The competition effect from foreign companies forces local companies to focus on their core competences (Blomström and Sjöholm, 1999), such as innovation. From the other perspective, implementing innovations is a significant driver for increasing competitiveness of domestic companies, both in the home and foreign markets. The innovation can be defined as the adaptation of existing knowledge into new one (Hargadon and Fanelli, 2002). In this context, entry to the foreign market plays a significant role by serving as an instrument for introduction and diffusion of innovations and influence the new product life cycle. On the early stages of internationalisation foreign marker players serve as the source of innovation for internationalising companies (Geroski, 1991).
The effects of FDI could be positive (Blomström and Wolff, 1994; Kokko, 1994) or negative (Djankov and Hoekman, 2000). This is true both for the effects of increased competition and spillover effects. Aitken et al. (1999) states the effect to be positive for small enterprises with high foreign participation, but for larger enterprises and enterprises with small or no foreign participation, the effect is rather negative. For non-exporting firms the effect should be positive, since they less likely have faced earlier absorption of foreign knowledge. Sinani and Meyer (2004) claim that the potential FDI effect depends on the recipient firm’s size, ownership structure and trade orientation. Positive effects of FDI could be limited to certain sectors, either the foreign company’s sector or the ones vertically integrated to that. Kinoshita (2000) found positive spillovers from FDI in electrical machinery, which is also active in R&D spending.
41
Spillovers could also be limited by geography (Aitken et al., 1999). Only local companies located in the same industrial district might be able to adapt new knowledge from foreign companies. Whether local companies are able to absorb knowledge depends on the technology gap between domestic firms and foreign companies (Kokko, 1994; Lane and Lubatkin, 1998; Chaturvedi and Chataway, 2006). Probably the most important requirements for spillovers are a small technology gap, R&D investments and an educated workforce. Local companies have to have a certain level of technological capability; if the technology gap is too large, the catching up process becomes too difficult (Damijan et al., 2003). In the end, the enhancement of innovative capacity and the productivity of local firms depend on their ability to absorb knowledge from outsiders, such as foreign companies.
The absorptive capacity is defined by a firm’s ability to value, assimilate, and utilise new external knowledge (Cohen and Levinthal 1990). The innovative capacity is measured in this study by the capability to introduce new products. Traditionally, innovation capability is measured by patenting activity (Acs and Audretsch, 1989). Thus, new product development inclusion provides wider perspective than the traditional R&D and patent approach, especially when not all innovations are normally patented (Bottazzi et al., 2003).
Spillovers from foreign companies operating in the home market (inward FDIs) mainly represent a valuable source of knowledge for the companies in the home market, especially for those in emerging and developing economies. However, the measurement of this type of spillover is rather problematic. Nevertheless, the host economy government can intensify the generation of FDIs spillovers by enhancing the cooperation between foreign companies and local companies, by favouring the investment climate and implement the policy and regulations favourable for knowledge generation and sharing between the companies.
2.4. Technology and internationalisation
The innovation management perspective considers the increased role of innovation systems (national and regional) on developing the technology competence of the local firms and their expansion to foreign markets (Giuliani et al., 2005; Chaminade and Vang, 2008). The competitive advantage of the company depends not only on exploitation of its existing capabilities, but also on the search and acquisition of new knowledge (Teece et al., 1994, 1997). The new knowledge is a source of superior technology which helps companies to achieve better product differentiation and better response to the fast changing environment (Teece and Pisano, 1994). The acquisition of new knowledge includes also cross-border transactions, international cooperative innovations, international technology transfer, and diffusion of innovations.
The role of R&D intensity as one of the stimulating factors of internationalisation (Young, 1987; Barkema and Vermeulen, 1998) was discussed earlier in this chapter. In some cases, this only work as an indicator of a company being technology-oriented and supports the hypothesis that technology-oriented companies are more eager to internationalise (Karagozoglu and Lindell,
42
1998). Often, an analysis of this type of companies also proves that internationalisation is not only R&D dependent, but also dependent on the size of the firm, the size of the local market and the level of competition. The availability, search for acquisition of technology in home and international markets, and the evaluation of “best practices” (Nelson, 1987) are the issues companies need to solve when they look for sources of increasing competitiveness. The technology selection process is complex and involves tangible and intangible investments into technology, both in domestic and international markets (Archibugi and Pietrobelli, 2003).
2.4.1. Taxonomy of globalisation and technology
Archibugi and Pietrobelli (2003) mention the tendencies innovating companies have to switch from selling embodied innovations to disembodied innovation. This means companies have learned to utilise their innovation and understand the benefit it can bring to them. This has substantial implications for the generation and transmission of know-how, which tends to become much more dependent on intellectual property rights (IPR). A taxonomy of the globalisation of technology, aimed to classify individual innovations according to the ways in which they are produced, exploited and diffused internationally, was elaborated in the serial of work of Archibugi and Michie (1995), Archibugi and Iammarino (2000) and Archibugi and Pietrobelli, (2003). The taxonomy represents three main categories: the international exploitation of nationally produced technology; the global generation of innovation; and global technological collaborations (Table 3).
Table 3. Taxonomy for globalisation of technology
Categories Actors Forms International exploitation of nationally produced innovations
Profit-seeking firms and individuals
• Exports of innovative goods • sales of licenses and patents • foreign production of innovative goods internally
generated Global generation of innovations
Multinational firms
• R&D and innovative activities both in the home and the host countries
• Acquisition of existing R&D laboratories or Greenfield R&D investments in host countries
Global techno-scientific collaborations
Universities and public research centres
• Joint scientific projects and R&D networks • Scientific exchanges, sabbatical years
National and multinational firms
• Joint ventures for specific innovative projects • Productive agreements with exchange of
technical information and / or equipment Source: Archibugi and Pietrobelli, 2003
1. International exploitation of nationally produced innovations includes profit-seeking local companies internationalising with their technology competencies. These companies may have different internationalisation strategies / foreign market entry mode (exports of products, which have technology-based competitive advantage; selling licensing and patents; outward FDIs – manufacturing abroad).
43
2. Global generation of innovations means innovation activity of multi-national companies (MNC) on a global scale like acquisition of R&D laboratories or FDI in host countries, required organisational and administrative skills of the large scale organisations.
3. Global technology collaboration is the joint venture of two organisations aimed to develop new products, knowledge, and/or technology.
In the previous literature, the technology collaboration were discussed by Hagedoorn, 1996, Narula and Hagedoorn, 1999. In the context of this study, the international (between 2 or more countries) or global collaboration is of research interest – the type of collaboration targeted to either international knowledge transfer or the co-creation of knowledge on the global / international scale. This type of cooperation aims to decrease innovation costs, share responsibility and maximize profits. Seeking international expansion and exploiting theopportunity of the new market frames the market seeking strategy of companies against their profit seeking strategy (Castellani and Zanfei, 2006).
2.4.2. Open innovation and globalisation
Kotler and Caslione (2009) claim that the main forces of globalisation and technology have caused an increased fragility in the economy, which have resulted in intensified periods of turbulence. Currently this intensified turbulence is already accepted as normal for the economy, and companies have learned how to behave in this situation. What was considered extraordinary and stressful for companies 20 years ago has become an everyday situation for modern companies. Due to the degree of turbulence, increased competition and newly emerged technology opportunities, companies have intensified the use of knowledge, both internal and external (Cohen and Levinthal, 1990; Klevorick et al., 1995). It has become obvious that the traditional approach to innovation and R&D does not fit with this changed environment. Thus, many companies have started transition towards a new, more open policy on innovations. There is empirical evidence that the turbulence of technology and the competition in technology markets strengthen the effect of outbound innovations on companies’ performance (Lichtenthaler, 2009). Rapid technology progress and advances in communication tools have facilitated the existing types of interactions between producers and consumers of technologies at all business hierarchy levels and created new ways to interact. This has led to fundamental changes in the ways companies interact both within and across firm and industry boundaries (Mendelson, 2000; Geoffrion and Krishnan, 2003). The globalisation process brings fiercer competition. To survive competition, companies need to rethink the way they are doing business and adapt their business model (Chesbrough, 2006).
Traditional, centralised and tightly closed approach to innovation and R&D processes do not fit in with today’s fast changing environment. Traditional strategy orientation states that companies have to diversify strategies in order to use opportunities and avoid threats that emerge due to market turbulence (Porter, 1979). However, the business environment was considered still
44
relatively stable in the mid to late 1980s. Since the beginning of 1990s, market and environmental turbulence has increased and companies were forced to competition fight and flexibility became a means for company survival. At that time, companies had the tendency to control all stages of the innovation process themselves and most of the R&D was produced internally (in-house R&D) (Wheelwright and Clark, 1992). Not only R&D, but NPD and technology innovations, along with the commercialisation of new products and technologies were conducted within company borders. This approach is currently referred as the traditional or the closed approach to innovations.
It has become obvious that the traditional approach to innovation and R&D does not fit with this changed environment. Thus, many companies have started transitioning towards a new, more open policy on innovations. Companies need to develop more open business models if they want to optimise their internal R&D, their search for and acquisition of new technologies and their effective use of commercialisation channels, decrease costs and save time (Christensen, 1997). When Chesbrough (2003, 2006) coined the term ”Open Innovation” to describe the new phenomena, it was just in time to describe the latest transformation processes in this field of innovations. At present, the open approach has become essential for many companies’ innovation practices. The organised search for new ideas is important for open innovation framework development (Laursen and Salter, 2006). Open innovation can be exploratory (emergent innovation process) and focused (predetermined search) (Holmes and Smart, 2009).
Several studies have suggested new approaches to business already in 1990s’ (Hagedoorn and Shekenraad, 1994; Watkins, 2003; Chesbrough, 2003; OECD, 2005), but not until Chesbrough (2006) launched the term ”Open Innovation” combining the various ideas of openness under one term, did the open approach become an essential issue. Open Innovation suggests that firms need more open business models to gain cost and time saving by also using external R&D, and to receive new revenues from internal inventions sitting on a shelf by external commercialisation channels (Christensen, 1997). The variety of mechanisms of the Open Innovation paradigm makes the approach difficult to adopt and adapt. On the other hand, there are many companies that have successfully implemented Open Innovation even before the actual term had been launched.
Firms adopt a variety of mechanisms for technology acquisition and commercialisation. The strategies of large and small firms are different. Small firms develop technology expertise to gain entry to global markets. For manufacturing companies, high expertise in very precisely targeted niche areas is the key to effective operation in international and global markets. For service companies, knowledge rather than technology acquisition is central and there is a significant and growing outsource market in product development and delivery to market.
The portfolio approach to technology acquisition is quite common. The portfolio includes: in-house R&D, outsourced R&D, technology licensing, collaborative partnerships with companies, collaborative external partnerships with universities or public research organisations (both formal
45
and informal); and acquisition of specialist technology capability. Essential to the process is an organised search for new ideas (Laursen and Salter, 2006). The search process for innovations is problematic since companies are not accustomed to evaluating external ideas (Fetterhoff and Voelkel, 2006; Dittrich and Duysters, 2007). The performance measurements for research organisations, which can be applied to any research, are also problematic (Wonglimpiyarat, 2008).
Typically, the perspective of the innovation commercialisation process is in launching, finding customers or in barriers of commercialisation (Bond and Houston, 2003; Sandberg, 2005). This means that commercialisation is the last phase of innovation development (Cooper, 1975). Commercialisation of an innovation is encompassed by multiple uncertainties. Uncertainties related to markets, technology and business model are high. The commercialisation of innovation includes many risks. Taking that into account, it is not surprising that most innovations will not achieve commercial success; as a matter of fact, most innovations fail. Commercialisation is often understood to be the final phase of the innovation process: a fuzzy front end, the new product development process, and commercialisation (Aurora, 1995; Chesbrough, 2003; Chesbrough, 2006).
The role of innovation communities and of the public domain has been stressed by Von Hippel (2006). Comparable approaches such as “creation nets”, flexible and temporary business networks on a wide geographical scale have been suggested by Brown and Hagel (2006). The academic-industry partnerships also play an important role in the success of knowledge transfer (Salmi and Torkkeli, 2009). The concept of open innovation at a business level has now widely been accepted as an important paradigm, and empirically-based studies are becoming available, focusing on key issues such as IPR and patenting strategies. However, the challenge remains, as Chesbrough (2009) states, the changing of a business model is not easy to achieve even if it is considered vital. Chesbrough (2003) introduces several factors that influenced the beginning of open innovation era. The first factor was that access to the best available knowledge sources improved, both inside and outside the company, because of the increase in educated labour force availability. The second factor was an increase in the number of possible sources of financing for R&D projects. The third factor was that companies started to cooperate more and search for ideas and technology outside, and started to incorporate them into innovation policy.
Gassman and Enkel (2004) define three core processes within OI: the outside-in process – search and incorporating the external knowledge of suppliers, customers, competitors, universities and research organisations; the inside –out process – transfer of the ideas, technologies, intellectual property to the market; and the combination of outside-in and inside-out processes. Furthermore, in more modern work, they raise the question of necessity to find the optimal ratio between introducing open innovation practices and investing in traditional innovations (Enkel et al., 2009, 2010).
46
2.4.3. Cooperation for innovations
The role of cooperation in the global and turbulent business environment cannot be underestimated. Good cooperation skills are advantageous for companies in their innovation processes. The capability to utilise external knowledge is a significant factor of innovation performance (Cohen and Levinthal, 1990). Cooperation with stakeholders increases innovation capability of firms (Lundvall et al., 2002) and rapid technological progress, together with the globalisation of business processes, pressure companies to consider adapting their existing business models in order to survive the competition fight. The inner-innovation circles of the companies are in a large extent accompanied by the external innovation circles, which include interactions between producers and consumers of technologies on all business hierarchy levels. Rapid technological progress and advances in communication tools have facilitated existing types of interactions and created new ways of interacting, which has led to fundamental changes in the ways companies interact both within and across firm and industry boundaries (Mendelson, 2000; Geoffrion and Krishnan, 2003).
The search for new technology makes companies cooperate more with foreign partners, customers and suppliers (Smirnova et al., 2009) and establish strategic alliances in order to develop and commercialise new products, technologies or services (Gulati, 1998). The need for a collaborative approach has significantly increased in the open innovation era (Enkel et al., 2010). Companies build links and cooperation in R&D with their stakeholders, such as customers, suppliers, competitors and public institutions (Enkel and Gassmann, 2008). The recent trend has been the growing importance of innovation networks (Dittrich and Duysters, 2007; Chesbrough and Prencipe, 2008). This cooperation has various aims (Belderbos et al., 2004a). Many studies show that external links and cooperation increase a company’s innovation capability and have a positive effect on innovation output (Bayona et al., 2001; Kaufmann and Tödtling 2001; Klomp and van Leeuwen, 2001; Hagedoorn, 2002; Romijn and Albaladejo, 2002; Belderbos et al., 2004b; Vivero, 2004; Veugelers and Cassiman, 2005). The open innovation framework still lacks empirical evidence how to best utilise the concept (Enkel et al., 2010).
There have been multiple studies on the collaborative approach to innovations (Freytag, 2002; Andrew et. al, 2006; Blomqvist and Levy, 2006, Miles et al., 2004; Johnsen and Ford, 2000; Ford and Johnsen, 2001, Hakansson and Eriksson, 1993). Collaborative innovations represent one of the options in addition to in-house R&D and outsourcing (Baglieri and Zamboni, 2005). The unique advantage of this mode is the creation of additional value within the partner relationship (Walter et al., 2001).
The competence to cooperate in the R&D sphere or in NPD is valuable for all organisations. Companies with high skills in cooperation (cooperation capability) have access to a large range of technologies and can better manage their R&D resources (Torkkeli et al., 2009). The role of contribution of external partners and collaboration is difficult to overestimate. Large companies do not fully rely on internal innovations and tend to increase cooperation in R&D activities
47
(Dodgson, 1993; Freeman and Hagedoorn, 1994) and intent to create own values of cooperation (Smith and Blanck, 2002). Cooperation in R&D may occur on different levels: strategic (partner selection and management), executive (teams and processes) or infrastructural (Deck and Strom, 2002). Decisions on innovation strategy are based on social interactions and the analysis of innovation practices (Neyer et al., 2009). Independent from the level of cooperation, the firms need to develop specific organisational competencies to support this interaction. This cooperation capability describes how companies develop and manage partnerships (Dyer and Singh, 1998). The core of cooperation capability is the integration of skills and tacit knowledge with external partners. The motives for cooperation depend on the type of partner (Tether, 2002; Belderbos et al., 2004b).
The intensified cooperation in innovations in the last decades indicates the lack of internal resources and capabilities of companies to satisfy the need for innovations and R&D (Hagedoorn, 2002). The simultaneous implementation of innovation and cooperation strategies in companies has been discussed in large number of studies. Some companies decide to cooperate based on their internal R&D expertise, and try to balance internal and external R&D based on this their internal knowledge – making a choice between “making and buying” (Cassiman and Veugelers, 2002). Companies can externalise due to their internal weaknesses on innovations (Keupp and Gassmann, 2009). Other companies cooperate with competitors in product R&D, process R&D or both (Lin and Saggi, 2002).
Companies can cooperate on innovations with a variety of external parties: suppliers (Hakansson and Eriksson, 1993), competitors (Clark and Fujimoto, 1991), customers (von Hippel, 1988) and research organisations (Gemünden et al., 1996). It is believed that the key sources for innovations are often lead users, suppliers or universities (von Hippel, 1988). Companies use channels (suppliers, users, universities) when they search for innovative opportunities (Laursen and Salter, 2006). The results of the analysis of UK manufacturing firms show that the most important channel is the suppliers of equipment, materials, and components, followed closely by clients and customers that indicate that innovations are determined by relations with suppliers and customers (Laursen and Salter, 2006). The relationship frameworks developed during the 1990s just confirm this perspective (Kotler, 1992; Gummesson, 1994).
Cooperation is the core of the open innovation framework (Chesbrough, 2006) and the number of cooperative partners and quality of cooperation are essential to the success of introducing open innovation principles (Kock and Torkeli, 2008). Open innovation phenomena involve a high degree of cooperation with partners, such as other companies in the industry, suppliers, clients (Chesbrough, 2003). The customer value increases when companies exploit new ideas and develop new products and technologies, both themselves (in-house) (Wheelwright and Clark, 1992) and in cooperation with suppliers or competitors (inter-firm). Cooperation creates opportunities for companies to access knowledge and technologies in order to increase their innovativeness, decrease costs and risks (Faria and Schmidt, 2007).
48
3. INNOVATION AND INTERNATIONALISATION IN RUSSIA
The opening of borders in the post-communist countries was highly anticipated by people and companies. The trade liberalisation of 1992 in Russia abolished the government monopoly on foreign trade, and Russian companies finally had an opportunity to participate in international trade. Gradually, both price liberalisation and trade liberalisation started to gain effect in the Russian economy (Berkowitz and DeJong, 1997; Berkowitz et al., 1998). However, together with the obvious benefits of free trade, investments and economic development, there are a number of threats for domestic companies which have to be taken into consideration. Market liberalisation affected Russian companies with increased competition from imported goods, foreign direct investments (FDIs) and emerging new effective companies (Kornai, 1990; Falke, 2001; Tarr and Thomson, 2004, Väätänen, 2008).
3.1. Internationalisation in Russia
3.1.1. Overview
The share of foreign trade increased from the Soviet Union’s 4% of GDP for exports and imports in 1985 to Russia’s 28% of GDP for exports (31% in 2008) and 20% of GDP for imports (22% in 2008) in 2009 (World Bank, 2011). This development exposed Russian companies to increased international competition, both domestically and in export markets (Figure 5). Generally, the Russian economy has shown a growth of about 4% in 2010, after the slowdown in 2009 (EBRD, 2011). The greater involvement of developing countries into international trade is seen in the significant growth in the share of multinational companies (MNC) in the total number of world MNCs (UNCTAD, 2010); this share increased from 8% in 1992 to 28% in 2008.
The inflow FDIs to South-eastern Europe and the Commonwealth of Independent States (CIS) decreased by 43 % in 2009, compared with 2008, the FDI flows to Russia almost halved, due to a decrease in local demand, and declining expected returns in projects related to natural resources (UNCTAD, 2010). The outward FDIs decreased by 16% in the region (UNCTAD, 2010). Russia is the largest source of outward FDIs in the region. Nevertheless, Russia is still ranked number six in the global ranking of top FDI locations.
Globalisation has increased opportunities and pressures for domestic firms in emerging market economies to innovate and improve their competitive position (Gorodnichenko, et al., 2008). Exporting allows firms in developing countries to enlarge their markets and benefit from economies of scale (World Bank report, 2001). In addition, export and import operations are proven effective channels of technology transfer between countries (Pack, 1993). Some companies in developing countries establish R&D centres or acquire companies from developed countries in order to obtain skills and knowledge (Bell and Pavitt, 1993). The Russian economy is currently highly dependent on the export of natural resources, such as oil and gas. Over the last eight years, Russian gross domestic product (GDP) has been growing more than five percent
49
annually, thanks to high oil and gas prices on world markets. FDIs and exports are important cooperation channels for developing countries and the rest of the world.
Figure 5. Imports and exports in Russia 1992 - 2010
In order to keep the economic growth sustainable, Russia needs to refocus its economy and increase the competitiveness of knowledge-intensive sectors so that the economy will not solely rely on natural resources. Russia has relatively good prerequisites for increasing the innovation potential and absorptive capacity of companies. It has a substantial science base and education traditionally focuses on technology and the sciences. However, innovation activity has been modest thus far.
3.1.2. Theories of internationalisation in the Russian context
We cannot consider the Russian companies as the “new” and relatively young players in the international market. Russian international collaboration has more than hundred year’s history. The four main periods in Russian internationalisation history can be emphasised (Mineev, 1993) as follows: the first period is from 1887 to 1913, when active foreign capital flowed into tsarist’s Russia. The second period (1920 – 1934) occurred when the Concession policy of the young Soviet state intensified foreign capital influx. During the third period (1935 -1986), the Soviet economy was isolated from foreign capital and the international division of labour development. This lead to international cooperation with the Council for Mutual Economic Assistance (CMEA) socialist countries. The final period (since 1987) when the transition period started in the Soviet Union, and reforms of foreign trade liberalisation were implemented.
50
There are notable obstacles to outward FDI from former centrally-planned economies, such as: ideological motives, low quality of tradable goods and central authorities’ interference in the firm’s investment decision. The internationalising companies either represent old Soviet company structures (state-owned or privatised companies) or new company structures (de-novo) (Kalotay, 2008). The lengthy isolation from international business, centralisation of planning and the “state orders” system limited the internationalisation of Soviet companies. Foreign trade was the state prerogative in the Soviet era. Soviet companies used to be in the international cooperation mostly with the CMEA socialist countries. CMEA was established in 1949 for the purpose of current and prospective plan coordination. In fact, CMEA could be qualified as an attempt at common market creation, development of economic collaboration and mutual benefit partnership. The multilateral clearing system was implemented for payments in trade with foreign partners. All Union Industrial Associations (VPO), managed by the GOSPLAN (the main state planning body in the USSR), were located in the Soviet republics and in the CMEA countries. VPO associations were international organisations by nature. There were also Soviet companies with organisational and managerial structures common in multinational corporations (MNCs), however, they were not called MNCs because of political reasons. For example, INGOSSTRAKH (insurance agency) had subsidiaries, affiliates and associate firms in the USA, Netherlands, Great Britain, France, Germany and Austria. Also the state transnational company “NaftaMoskva” (“Sojuznefteexport” in the Soviet period) had subsidiaries in Finland, Belgium, Great Britain, Denmark, Italy, Switzerland and Germany (Liuhto, 2001a, b).
The situation had changed significantly after the dissolution of the Soviet Union, and the last 10 years can be characterised by the increasing participation of Russian companies in world business. The liberalisation of foreign trade, caused by political and economic reforms, provided many Russian companies with new opportunities to participate in international business, export products to international markets, attract foreign investments and establish joint ventures.
The theories of internationalisation addressed in the modern literature have a limited applicability to the Russian setting. The Russian economy is characterised by some specific features influencing the applicability of internationalisation theories in the case of Russian firms. The weakness of the mentioned internationalisation theories when applied to the Russian setting and transition economies are partly explained by the basic assumptions lying behind them (Pchounetlev, 2000). However, the stage models indicating that internationalisation is linked with managerial learning can be tested on Russian companies. Then, internationalisation is defined as a step-by-step process from the simplest form (export) to manufacturing abroad (Luostarinen, 1994). This process combines getting experience and knowledge and increasing resource commitment to a foreign market. Russian IT companies utilise their advantages on the CIS markets, which are the nearest and the most familiar markets.
The internationalisation process of Russian enterprises is still a relatively new and under researched phenomenon. Regardless of the size of Russian outward FDI flows (outward FDI stock 120bn USD in 2007), there have been relatively few studies published on the topic. These
51
studies have mainly focused on describing the phenomenon or presenting various case studies (Väätänen and Liuhto, 2000; Liuhto, 2001a, 2001b; Kalotay, 2004a, 2004b, 2008). Studies have raised questions about the motives of Russian outward FDI. An earlier study proposed that FDI by state-owned companies was either escaping the economic system restrictions or related to policies of the respective governments (Jaklic and Svetlicic, 2001) and a recent study concluded that quite often the international expansion of Russian enterprises follows the Dunning’s OLI paradigm (Kalotay, 2008). Podmetina et al. (2009) found innovation activities, competition and new product development to have a significant positive impact on international performance.
3.2. Innovation in Russia
The innovation domain in developing countries is defined by several global drivers: intensification of the globalisation process and intensive on-going technological change stimulating scientific advances (Aubert, 2005). The environment turbulence is a threat for companies, which they have to fight, but it is also an opportunity, which companies need to investigate and explore. The turbulence and chaos (Kotler and Caslione, 2009) lead companies to switch the management paradigm – companies need to develop new set of actions (behaviour) for interacting within its system and with other systems on a new level. Companies in Russia operate in unstable conditions with lack of satisfactory financial market (Gunasekaran, et al., 2001). The combination of environmental turbulence, market conditions, technology change, globalisation and other factors make companies rethink their management and operation methods. The role of these forces on the enterprises’ management paradigm is to shift toward “openness”, flexibility and cooperation. The ways firms manage these forces forms their strategic behaviour, target markets structure and stakeholder interactions.
Innovation management is a relatively new field in developing countries and companies face problems of weak infrastructure, low innovation capabilities, scarce resources, poor education, lacking management skills, difficult government policy, and competition from foreign companies. Russia is one of a kind, possessing strong science and education during Soviet times, but having very low innovation output in recent years. The weakest link in the Russian innovation system is the lack of or very weak cooperation between “innovation suppliers” – universities, research organisations - and “customers of innovation” – companies, government and other participants of the innovation system (Krot, 2008; Väätänen et al., 2009, Väätänen and Podmetina, 2007). However, the unique scientific knowledge inherited from Soviet times gives Russia better chances to succeed in radical innovations, compared with other developing countries (Aubert, 2005).
Russia spent about 1% of its GDP on R&D in 2009 (World Bank 2010), Russian R&D is mostly carried out within public organisations and financed from the government budget. Approximately 60% of R&D is publicly financed. The business sector is minor actor in R&D; only about 10% of industrial enterprises reported to have technological innovations in 2005, while the average in the European Union is 50% (Rosstat, 2010; OECD, 2006).
52
Figure 6. R&D spending in exports in Russia, 1992 - 2009
Industrial innovation patterns are mostly biased towards improvements and adaptations of existing and outdated capital stock and production processes. Surprisingly, higher education institutions are minor actors in Russian R&D. Universities account for only 4-6%of federal funding for R&D, although they have highly skilled personnel.
Companies had to learn to be competitive and to find their own niche either in the domestic or in the global market. In the communist system, domestic companies did not have to put much effort into improving the quality of products and services, personnel training, innovation and marketing research because they were enrolled in the direct sales and/or barter system, or had guaranteed governmental orders. The centralised research institutes were in charge of conducting research and providing technology development opportunities. The supply of technology was not often in balance with the demand from enterprises. This imbalanced connection between research institutions and companies still remains the weakest link in Russia (Krot, 2008). One of the most important factors that could contribute to the understanding of market players’ changing behaviour is a firm’s attitude to innovations, technology development, technology transfer and commercialisation of innovations. The knowledge economy index (KEI) developed by the World Bank (2010) is presented in Table 4.
The innovation system in the Soviet Union was based on a number of high level science schools with well-educated, talented researchers who were provided with possibilities for career growth and professional concentration on the chosen field of science for tens of years. The Government provided modest but stable financing for science. This system perfectly suited the management of fundamental science. However, for applied science and development, this proved to be ineffective. After the dissolution of Soviet Union, the Russian innovation system collapsed. The
53
cooperation chains and networks were broken after former research partners became associated with different courtiers. The same happened with industrial chains. Today, Russia is rebuilding the innovation system to correspond with economic development needs.
Table 4. Knowledge economy index of Russia and BRIC countries
KEI
Economic Incentive and Institutional
Regime
Innovation Education ICT
recent 1995 recent 1995 recent 1995 recent 1995 recent 1995 Brazil 5.66 5.23 4.31 4.81 6.19 5.98 6.02 3.95 6.13 6.17 Russian Federation 5.55 5.73 1.76 2.55 6.88 5.64 7.19 8.12 6.38 6.60
China 4.47 3.93 3.90 3.24 5.44 4.07 4.20 3.62 4.33 4.77 India 3.09 3.56 3.50 3.47 4.15 3.70 2.21 2.56 2.49 4.50
Based on the Global Competitiveness report (2008), Russian innovation indicators are slightly behind other BRIC countries (Figure 7). The amount of R&D personnel in Russia is significantly high. The availability of scientists and engineers is almost at par with that of European countries (Figure 8).
4,2
4 3,8
3,4
4,2
3,9
3,9
4,5
4,4 4,
8
3,4
5,7
0
1
2
3
4
5
6
7
8
China Brazil India RussianFederation
Capacity for innovation
Company spending on R&D
Availability of scientists and engineers
Figure 7. Innovation “pillars” of Russia and BRIC countries
54
3,4
6 5,9
5,8
5,6
5,5
5,5
3,4
5,8 6
5,3 5,
8
5,6
4,8 4,9
5,6 5,
9
5,5
5,35,
8
5,2
0
1
2
3
4
5
6
7
8
RussianFederation
Germany Switzerland Sweden Finland United States Denmark
Capacity for innovation
Company spending on R&D
Availability of scientists and engineers
Figure 8. Innovation “pillars” of Russia and other countries
The data used in the analysis has been obtained from Rosstat Regions publication (2009), where the country is divided into 83 federal subjects and seven federal districts of the Russian Federation. Both regional classifications are applied in this analysis. The economic significance of the regions is presented in Figure 9. The largest federal districts are Central, Volga and Ural, which comprise approximately two-thirds of Russian economic activity.
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
Central FD North WestFD
South FD Privolzhsky(Volga) FD
Ural FD Siberian FD Far East FD
2000
2002
2004
2007
Figure 9. Regional GDP of Russian federal districts, million euro
The important indicator of the Russian innovation system is the share of high-tech companies (Figure 10).The highest share of high-tech business and high share of medium tech business are
55
in the far-east region. Siberian, Ural and Volga regions show the prevalence of medium and high tech business over low tech.
0
10
20
30
40
50
60
Central FD North West FD South FD Privolzhsky(Volga) FD
Ural FD Siberian FD Far East FD
High tech
Medium
Low tech
Figure 10. Share of high-tech companies in Russian regions
Existing Russian literature provides considerable ratings of Russian regions based on different indicators: social-economic development, competitiveness, innovative development, innovative capacity, innovation output, development of science in the regions, R&D expenditures, science potential, investment to innovations (e.g., Bogachev, 2008; Andreev, 2007, Zheltova, 2007). The existing classifications of regions in Russia define industrial vs. non-industrial regions, use the “proximity to centre” issue for analysis, and combine different social and economic indicators to picture the main differences between regions. The typology of regions based on the main resource and growth potential was proposed by Zheltova (2007). This typology clarifies regions with innovation potential and technology transfer areas.
The European Innovation Scoreboard (2009) classified EU countries based on the innovation performance (innovation leaders, innovation followers, moderate innovators and catching-up countries) and growth rate (growth leaders, moderate growers, and slow growers). The EIS classification was adopted and the matrix classification for Russian regions was developed based on their growth rate and share of innovation production in total industrial output (low – less than 1%, moderate – from 1 to 5%, innovation leaders – more than 5 %) (Podmetina et al., 2009). Industrial innovation patterns are mostly biased towards improvements and adaptations of existing and outdated capital stock and production processes. Surprisingly, higher education institutions are minor actors in Russian R&D. Universities account only 4-6% of federal funding for R&D, although they have highly skilled personnel.
The highest share of high-tech business and a high share of medium tech business are in the far-east region. Siberian, Ural and Volga regions show the prevalence of medium and high tech
56
business over low tech. The top regions based on knowledge creation input and output are Moscow, Nizhny Novgorod, Saint-Petersburg, Sverdlovsk, Moscow region, Samara, Novosibirsk, Perm and Rostov. The top regions based on knowledge flow input and output are Moscow, the Moscow region, Saint-Petersburg, Tumen, Krasnodar, Tatarstan, Nizhniy Novgorod, Chelyabinsk, Sverdlovsk, Samara and Kaluga. The top regions based on knowledge flow input and output are Moscow, the Moscow region, Saint-Petersburg, Tatarstan, Nizhniy Novgorod, Sverdlovsk, Samara, and Perm.
Transitional countries, such as Russia, have typical characteristics of post-communistic transitional economies which significantly affect company-stakeholder cooperation strategies. Traditional Soviet industries were vertically integrated and missing horizontal links (Vaatanen, 2008). When building external relationships, Russian companies face obstacles such as the instability of relationships in the market, low partner information availability and high risk of opportunistic behaviour (Johanson, 2007). On the other hand, the Russian market provides a unique opportunity to study the development of innovation strategies in emerging markets. Currently, no evidence exists on how Russian companies operate in an environment of market failures and identify partners for successful innovation cooperation.
There are numerous features in transition economies determining potential differences in orientation stakeholder relationship strategies, among them higher a instability of relationships in the market, a lack of information about potential partners due to short-term history of market economy; low information disclosure readiness, higher readiness for opportunistic behaviour and higher time pressure (Ford et al., 2006; Johanson 2007, Halinen and Salmi, 1996). In case of a short-term relationship history in transition markets, more market actors may have an ineffective relationship structure due to factors at the market, industry or firm level. The above mentioned are specific to transition economies and influence the process of identification, selection and cooperation with partners in Russia. This should lead to lower performance outcomes and lower perceived relationship performance. The cooperation with foreign partners is burdened by cultural distance and a language barrier, and lacks the fluency of international cooperation and knowledge exchange in Russia. Cooperation with local partners is much more natural for Russian firms.
57
4. DATA COLLECTION AND METHODOLOGY
The purpose of this chapter is to describe, discuss and justify the choice of research methodology, data collection techniques and process. The survey technique is framed in this chapter, the necessity of triangulation methods for the reliability and validity of the research is explained and the process of conducting the data collection (surveys I, II and III) in Russia is introduced.
4.1. Survey
4.1.1. General overview
The latest trends in organisational research detected a widening of geographic and disciplinary boundaries, the implementing of a multi-paradigmatic profile, and the increasing of methodological inventiveness (Buchanan and Bryman, 2007). The methodological pluralism became very welcome. The numerous research methods have multipurpose and result-oriented natures (Cunningham et al., 2000).
The continuous conflict between qualitative methods (case studies, Yin, 2003) and quantitative methods is never going to be resolved. However, quality results can be reached when traditional quantitative and qualitative methodologies (Bryman, 1984) are mixed (Jick, 1983) - multi-method, methodological mix, combined, integrated, mixed methods (Creswell, 1998; Tashakori and Teddlie, 1998, 2003). Mixed methods are widely applied in international business research (Hurmerinta-Peltomäki and Nummela, 2006) and these studies have more potential for increased validity and creating knowledge.
The research in innovation management has a broad tradition of doing surveys and case studies (Cooper, 1986), quantitative surveys (Eurostat, 2004; CIS survey, 2006; Tether, 2003). New trends in innovation management, such as open innovation (Chesbrough, 2003) and innovation systems (Carlsson et al., 2002) require new models, new methods, and experimentation.
This thesis was positioned as inter-disciplinary - using theories of both innovation management and international business. By exploring the ontological assumption of each discipline, a unique opportunity has emerged to cross disciplinary boundaries, apply mixed methods in the form of triangulation, and by doing so, to achieve the holistic understanding of the research content.
4.1.2. Survey research methods
Survey methods employ techniques of interviews, questionnaires and attitude scale procedures, which are flexible, easy to adapt, modify and transform (Burns, 2000). Thus, these methods – attitude surveys, questionnaires, and structural interviews – are used for collecting data for both qualitative and quantitative studies, and in the latter mode appear in the triangulation process.
58
Attitude scales
The attitude scales work in the way that they offer the respondent a pre-determined positive, negative, or neutral reaction to some social object or event. The most common types of attitude scales are differential scales (Thurstone type) and the Likert method.
The measurement method Thurstone attempts to facilitate is the interval scale measurement; it offers the respondent a list of statements related to the research object or topic. Next, the respondent is asked to provide his positive or negative evaluations concerning the object on an eleven-point scale. Finally, the median score is calculated for each item, which is then used as a scale value for that item.
A simpler type of attitude scales was proposed by Likert. The respondents were asked to express their opinion on statements on a five-point (sometimes longer) scale from “strongly disagree” to “strongly agree”. The item analysis can be done by statistical correlation of the scores of each individual item, or by comparing individual responses (t-test) of the generally most favourable answers (top 25%) with least favourable (bottom 25%).
For measuring the meaning of a certain concept for the individual, the semantic differential scale is used. However, it was not applied in the questionnaires applied for the data collection for this dissertation.
Structured interviews and questionnaire surveys
Surveys vary in their complexity level; from simple frequency count to statistical analysis, depending on the purpose of the study. The descriptive survey aims to estimate the attributes of the population. The explanatory survey seeks the cause-effect relationships, but without experimental manipulation. Conducting a survey requires constructing a sample of respondents and defining the method of survey (interview, mailing survey, telephone, online). The respondents represent the defined population, and the results of the sample survey can be generalised to the defined population. The survey includes both closed items (allowing respondent to choose from the offered number of answers) and open-ended items (providing a simple frame for the respondents’ answers).
4.1.3. Quality of research
Quality and trustworthiness, as well as the reliability and validity of results, are the essential parts of research work. Considering the main goal of this study was to analyse the role of internationalisation and innovation in Russian companies through the application of survey studies, the applicability of criteria applied in most of studies is highly questionable in case of a specific transition economy. In order to overcome these issues, the triangulation approach was selected both for the conceptual and empirical stages of the research work.
59
Triangulation, as the combination of research methods and different data sets, has certain obvious advantages (Webb et al., 1966; Denzin, 1978). It provides an actual possibility to unite the methods of different research traditions (Denzin, 1970), regarding the multidisciplinary aspect of the research (Downward and Mearman, 2007).Triangulation is commonly used in order to increase the internal validity of the research (Burns, 2000). In this thesis, triangulation takes the form of conducting three different surveys for the validation of data and applying mixed research methods: quantitative, qualitative, and experimental.
There are different quality criteria which are appropriate to quantitative research, qualitative research and mixed methods research (Bryman et al., 2008). In quantitative research, the validity of the research has long been documented (Campbell, 1957; Campbell and Stanley, 1963) and restructured (Onwuegbuzie, 2003). There are 50 different threats to the internal and external validity that can happen in research design, data collection, and data interpretation. The research validity is classified (Shadish, Cook and Campbell, 2001) into major types: statistical conclusions validity, internal validity, constructs validity, and external validity. In this study, quantitative validity is verified during the running of statistical tests by applying statistical validation measures. In qualitative research, the criteria proposed by Lincoln and Guba (1985) including credibility, transferability, dependability and confirmability was later re-conceptualised by Denzin and Lincoln (2005). Mixed research methods (triangulation) should involve both qualitative and quantitative methods, concepts which have complementary strengths and weaknesses that are not overlapped (Brewer and Hunter, 1989; Onwuegbuzie and Johnson, 2004).
Credibility (internal validity) tells about the quality of interpretation, the representation of data and the conclusions. In this study, credibility was achieved by the transparency of the research process, the triangulation of data and methods, and by presenting the results of the study at conference and research workshops. The control of the data collection process, pilot studies and verifying data collected by the control phone calls, as well as the careful coding of data into Excel and analysis with SPSS software, have increased the credibility of the data significantly.
Transferability (external validity) refers to the reporting the results are presented to readers in such a way that it is possible to evaluate the applicability of the results in the readers’ context. The external validity is regulated by the limitations of the study to a certain extent. The results are applicable to the context of emerging economies or countries with similar economic situations, similar industrial composition, and are region specific. Within Russia, the data collected was valid due to careful and detailed pre-determinacy of the sample’s characteristics.
Dependability (reliability) reflects the “stability” of findings, and would ideally require the replication of the results. In this study, dependability was achieved by recording the data collection process; all interviews are carefully stocked in their paper versions and the process was documented.
60
Confirmability refers to the results provided by the analysis of the data collected, and that those results can be compared to the interpretations of the other studies of the same phenomenon. In the case of this thesis, research on a similar topic does not exist.
The empirical data was gathered systematically, based on the planned and structured surveys of 176 plus 150 plus 206 companies. The respondents were approached by phone, traditional mail and electronic mail in the case of surveys I and II. Personal interviews were conducted to collect data from the 206 companies in survey III. The analysis was conducted with SPSS software.
The author attempts to report the results of the study in the logical way in order to facilitate its understanding and enhance its conformability.
4.2. Data collection in Russia
The Oslo Manual presenting the EU-wide definitions of innovations (Oslo Manual, 2005; Mairesse and Mohnen, 2007), was developed in 1992 (revised in 1996 and in 2005) in order to provide a framework for conducting a new type of innovation research at the enterprise level called the Community Innovation Study (CIS). This survey was conducted in over 50 countries in 5 waves: CIS 1 in 1990-1992, CIS 2 in 1994-1996, CIS 3 in 1998-2000, CIS 4 in 2002-2004, and CIS 2006 in 2004-2006. CIS 2010 is currently in the field. The CIS survey covers company information, product, process, marketing and organisational innovations, innovation activity, R&D expenditures, effects of innovation, cooperation aspects, public funding of innovation, source of innovation, and patents data, which represent the qualitative variables, censored variables, and subjective data.
4.2.1. General overview
The research focusing on the sample of companies from transition economies faces the problems of data reliability if collected from governmental or other freely available sources (country, region data, and large companies). Data collection on a company level is difficult; companies do not welcome interviewers, are not interested in disclosing information, and have higher opportunism and strict knowledge-protection policies, particularly in innovation-active industries.
The data collection for this dissertation was conducted in three stages. Each survey had its own objectives, but there were some similarities in constructing the questionnaire and selecting the sample of respondents. Usually, the respondent represented the top management body. The procedure of data collection had to be made with guarantees of confidentiality of all the data gathered and limited opportunities to present the details of the companies taking part in the study in reports and further publications.
The research in hand aims to apply triangulation both in data collection and analysis; this started with case study research, then the questionnaire was developed and tested using piloting
61
techniques. The process of planning and conducting the survey was organized as follows: First, the objectives were set and the literature was scanned. Then the hypotheses were developed and the literature scanned again for scales and earlier implemented or tested hypotheses. After this, the scales for explaining the variables were developed. Next, the surveys were constructed and the pre-testing of the survey was done through pilot projects. Then, the pilots were analysed, the questionnaire was edited and improved. Finally, the survey was conducted.
4.2.2. Survey I
Survey I, conducted in 2008, has a sample of 176 R&D-oriented Russian companies. Publications I and II were done based on the analysis of this sample. The sample was drawn from companies, active in innovations or representing an industry with high innovation intensity (Frascati manual, 1993 Oslo manual, 2007). Innovativeness indicators, such as R&D expenditure, new product development (NPD), and patenting activity are used to evaluate the innovative capacity at the firm level. The study applies the Business Environment and Enterprises Performance Survey (by the World Bank and the European Bank for Reconstruction and Development BEEPS-study)-based classification of enterprise background (state-owned, privatized, new enterprise and foreign owned) to be able to analyse whether enterprise history is a significant explanatory factor in innovative capacity.
The data gathering was conducted as follows. In the first stage of collecting the information, the interviewer approached those companies by phone and was directed tohe qualified respondent. Usually, the respondent represented the top management body. Then, the interviewer requested the designated respondent to participate in the survey. The response rate equalled 17%.
An important advantage of this study is the combination of data on R&D expenditures (officially reported) and data on innovation activities and patents, reported by companies in out interviews. This approach avoids the common method bias. Concerns about the common method use arise when both dependent and independent variables are measured by the same key informant (Luo et al., 2006; Podsakoff, et al., 2003). Most studies mainly use patents data and R&D expenditures, which is problematic. Patents have several weaknesses because they measure inventions rather than innovations, they are very industry, country and process dependant, and companies often use other methods to protect their inventions. Using R&D expenditures can also be seen as problematic because not all innovations are generated by R&D expenditures, R&D does not necessarily lead to innovation, and formal R&D measures are biased against small firms.
Data description
To achieve sample results, a number of industries and regions were included in the sample. A survey of Russian companies was conducted on the regions having the highest impact of foreign direct investment and highest innovation sector development, mainly in St. Petersburg and Moscow (Väätänen et al., 2007; Torkkeli et al., 2009). The industrial composition of the sample is as follows: the largest number are service companies (27.8%), followed by machine building
62
(22.7%), ICT (14.2%), electronics (14.2%), energy, oil and gas (7.4%), and construction (6.3%). However, when analysing the share of sales in certain industries, machine building is the leading industry (30%), followed by information and communications technologies (ICT) (24%), the energy, oil and gas industry (20%), electronics (10%) and services (9.5%). The industrial composition of the sample indicates companies’ R&D orientation. The average share of R&D expenditure of sales is 2.3% when including all companies and 6.5%, when including only companies with R&D expenditures. The highest share of R&D is in electronics (5.6%) and machine building (3.3%).
Enterprises are classified as exporting and non-exporting in order to analyse the link between the export and innovations in Russian companies. The share of exporting companies is high – 45.5%. By the number of companies, the most export intensive is the ICT sector, followed by machine building, electronics, and services. By the share of exports in total sales, the leading industries are electronics, machine building and ICT.
The average sales per exporting company is slightly lower (59.9 million EUR) than that per non-exporting company (60.3 million euros). The productivity (sales per employee) of exporting companies is higher: 17.5 thousands euros per employee against 15.8 thousands euros per employee for non-exporting companies. Fifteen percent of foreign companies can be found among exporters, and 10.4 % among non-exporters. If considering R&D companies separately, the most R&D intensive industries are machine building and ICT. However, the share of R&D expenditures of total sales is highest in the electronics, machine building, and energy, oil and gas sectors. The share of exporters is higher for R&D companies than for other companies (21.7% against 17%).
Privately-owned enterprises are dominant in the sample. Only 6% of companies are state owned; the largest number of companies is private from their establishment (68%) and only 5% were privatised in the privatisation process following the collapse of the Soviet Union. Foreign-owned companies have the highest productivity. The average R&D expenditure of sales is 6.5% in the research data, with the ICT and electronics industries having the highest shares, 8.5% and 7.8% respectively. The share of foreign companies is 12.5% in the survey; most of them are located in Moscow and St. Petersburg. Foreign companies are concentrated in the ICT (28%), machine building (12.5%) and transportation (12%) sectors.
The average sales of foreign companies are slightly higher (67.1 million euros) than domestic companies (59.2 million euros); productivity of foreign companies is 10% higher – 37 640 euros per employee against 33 230 euros per employee for domestic companies; also the share of exports is higher. There are no significant differences in the education level of employees between domestic and foreign companies.
63
Methodology
The key method used in Publication I is to link the firm’s innovativeness and the level of internationalisation through export activities. The interaction effects are tested separately for each dependent variable by applying the methods corresponding with the level of measurement (cross-tabulation, T-test for independent samples, ANOVA, linear regression analysis and GLM univariate test).
The dependent variables measured the export activity of firm i as (a) whether firm i exported in a given year t (EXPORTD), (b) a volume of export by a given firm (EXPORT), and (c) export as a share of sales of firm i in a given year t (EXPORTS). The key independent variables (Table 5) are linked to the field of innovation activities of the firms in the sample, and cover R&D expenditures of the firm (R&D, R&DD and R&DS), the number of technologically new or significantly modified products introduced (NPD), labour productivity (PRODUCTIVITY and PRODUCTIVITYRD), and number of patents (PATENTS, PATENTSE and PATENTSRDE). We also consider the role of the competition from the side of the imports on the key product/service line in the domestic market for the firms in our sample (COMPETITION). Furthermore, we also analyse the role of the firm’s size by proposing the variable SIZE based on splitting the sample into sub samples of small/medium sized and large firms.
In Publication II, the author’s aim is to analyse the effect of foreign direct investments (FDI) on the development of the labour productivity and innovative capacity of Russian companies. The performance measures are labour productivity, new product development and patent activity. In addition to ownership (foreign vs. domestic), the independent variables of the study are industry sector and company size. The company size is classified into four categories: micro (less than 10 employees), small (10-50 employees), medium (50-250 employees) and large (over 250 employees). The interaction effects are tested separately for each dependent variable (innovative capacity indicators). The interaction effects are analysed by applying the GLM univariate test, which allows investigating interactions between factors.
4.2.3. Survey II
The empirical evidence for Publication III came from the survey of over 150 R&D-oriented Russian enterprises conducted in 2008. The study was designed on face-to-face structured interviews, with the key respondents representing the top management of the firms. This survey of Russian companies was conducted ing the regions receiving the highest impact of foreign direct investment and having the highest development in the innovation sector, mainly in St. Petersburg and Moscow. The aim of the study was to collect data on the innovation-oriented companies and the selection of industries was done to meet that requirement. The main focus was put on the Open innovation framework. The distribution of the industry frequencies are as follow: electronics (22.2%), food industry (15.2%), machinery building (13.9%), finance sector (11.4%), chemistry (8.9%), energy (7%), construction (7%), telecommunications (3.8%),
64
software development (2.5%), biotechnology (1.9%) and others. The industries were divided into four groups: high technology industries – 10.1% (aircraft, telecommunications, biotechnology and software development), medium technology – 55.7% (electronics, machinery building, construction, chemistry), low technology industries 23.4% (food industry, energy, printing houses) and knowledge intensive services 10.8 % (finance). Small companies make up 25.9% (less than 50 employees), 36.7% are medium-sized companies (from 50 to 250 employees) and 37.3% are large companies (over 350 employees) in the sample. Most of the high technology companies are small, the medium technology companies are quite evenly distributed by size, and low technology companies tend to be medium to large size.
There are both domestic (74.1%) and international (25.9%) companies in the sample. More than 60% of the high technology companies are international. However, the 74% of medium technology companies only have sales in the domestic market. This can be explained by the fact that medium technology is represented by the very traditional Russian industries, which are not very flexible or easy going. Ninety-two percent of low technology companies are domestic and the more a company is technology oriented, the more likely it is internationalising).
The prerequisite of companies being innovation-oriented and emphasising R&D as a source of their long-term competitive advantage is reflected by the interesting trend of R&D intensity of the companies in the sample. The average R&D intensiveness is 5.48%, which is significantly higher than what other relative studies on Russian companies have reported. This is unusual because the prior research shows that the productivity of Russian R&D is very low in the international comparison (Schaffer and Kuznetsov, 2007). Companies with a R&D intensity of less than 1.5% made up only 9.5% of companies, R&D intensity between 1.5% and 3% was reported by 17.7% of companies, between 3% and 5 % - 25.9% of companies, and between 5% and 10% - 26.6% of companies. Finally, 7.6 % of companies reported a R&D intensity of over 10%.
The higher R&D intensity in medium technology companies (6.33%) compared to high technology companies (5.75%) can be explained by a small number of high technology companies in the sample and the high R&D spending of traditional industries in Russia. Low technology companies have an average R&D intensity 3.19%. Approximately 13% of companies did not have any R&D operations, 49.4% conducted single R&D projects and 38% of companies had their own internal R&D department. The R&D operations mainly focus on new product development (3.4%), business / manufacturing process development (1.97%), basic research (1.57%), derivative research (1.22%) and platform development (0.98%). The scale is from 5 (most important) to 1 (less important). The industrial composition of R&D in the sample is as follows: 69% of high tech companies have a R&D department, 14% of medium tech companies do not have R&D operations, and knowledge intensive service companies and low tech companies innovate within single R&D projects.
65
The main method used in Publication III is descriptive statistics: cross tabulations and matrix classifications. The analysis of the matrix facilitates the definition of factors important for the resulting variables and the search for possible relationships between variables.
4.2.4. Survey III
The data collection was conducted within the theoretical framework developed during the international research project “Innovativeness of Russian Companies”, which aimed to intensify the cross-border research cooperation between universities in Finland and Russia. The researchers from both countries participating in the development of the questionnaire have expertise in marketing, innovation and technology management, international business and transition economies research. The various areas of expertise of the participants enabled the creation of a unique questionnaire as a multidisciplinary tool for analysing the different aspects of activities of Russian companies: innovation activities, international business involvement, marketing, relationship with stakeholders and general business operations. A number of enterprise indicators (size, ownership, employees and education) were included in order to receive a good understanding of current business operations and trends in Russian companies.
Designing the questionnaire
The questionnaire consists of 110 questions, with some questions including two or more sub-questions. The questionnaire was developed based on the recommendations for conducting the innovation surveys (Frascati manual, 1993; Oslo manual, 2007) and using the constructs and scales applied in previous research. The survey consisted of 10 blocks. Block 1 is the company profile, Block 2, concerns general information about the company (age, ownership, privatisation data, number of employees, and level of education, B2B or B2C orientation, main clients, and main markets). Block 3 includes information about the strategy of a firm, competition, and orientation. Block 4 comprises innovation activities: goals and objectives of innovations, barriers and constraints, motivation of innovations, and the conducting of internal R&D. Block 4 consists of specific sub-blocks: A – Product innovations, B – Technology innovations, C – Technology and innovation search and acquisition, D – Technology commercialisation, E –Organisational Innovations, F – Marketing Innovations, G – Innovation output, H – Innovation costs. Block 5 analyses the cooperation of companies in the innovation process. This block includes sub-blocks: A – the role of cooperation within the company in case of research and development, B – the role of cooperation within external partners in case of R&D. The Block 6 reveals information of companies’ international operations. Block 7 provides data about the market from the company’s point of view. Block 8 estimates the quantitative characteristics of the company. Finally blocks 9 and 10 give information about the respondent and collects feedback about the survey.
The study is based on the innovation survey of 206 Russian companies collected in 2009. The data collection was conducted within the theoretical framework developed during the international research project “Innovativeness of Russian Companies”, aimed to intensify the
66
cross-border research cooperation between universities in Finland and Russia. The researchers from both countries participating in the development of the questionnaire have expertise in marketing, innovation and technology management, international business and transition economies research. The various areas of participant expertise enabled the creation of a unique questionnaire as a multidisciplinary tool for analysing the different aspects of activities of Russian companies: innovation activities, international business involvement, marketing, relationship with stakeholders and general business operations. A number of enterprise indicators (size, ownership, employees and education) were included in order to receive a good understanding of current business operations and trends of Russian companies.
Data collection and description
The surveyed companies were selected on the basis of representative industrial and regional distribution. The data was collected by the interviewers, visiting companies and interviewing management representatives. Due to the scale of the research, interviewers needed to visit companies several times. Each questionnaire was filled by hand in order to increase the reliability of the data and to keep the track of the information. The interviews were conducted between September and December 2009.
There were no selection criteria on the companies’ size and age in the sample. The average age of companies in the sample is 27 years, while the year of foundation varied from 1720 to 2009. The companies in the sample are mostly medium and large (more than 100 employees)with considerable variety in the number of employees: less than 20 – 5.4%, 20-50 – 5.9%, 50-100 – 5.4%, 100-250 – 27.3%, 250-500 – 11.7%, 500-1000 – 21.0%, 1000-3000 – 13.2%, more than 3000 – 10.2%. Most of the companies are new and more than 80% were established after the dissolution of the Soviet Union. –The share of governmental companies is small – 1%; 12.6% of companies were privatised in the privatisation process. The share of companies conducting internal R&D is high – 78.6 % of which 42.7 % conduct R&D systematically and 35.9 % irregularly. One hundred percent of IT companies have internal R&D, 93.3 % of electrical machinery firms, 91.3% in electrical and optic industry, 87.5% in the rubber and plastic industry, 86.1 % in metallurgy, 75% both in aircraft and machinery and equipment, and 72.7 % in oil refinery industry. The R&D intensity (ratio of R&D expenditures in a company’s sales) is between 1.5 and 3.0% for 38% of companies. This corresponds with an average level of R&D intensity for most high and medium technology industries. The share of governmental companies is small – 1 %, 12,6 % of companies were privatized.
The firms in the sample generally are product-oriented – on average, 79% of their portfolio is presented with products. The level of NPD is high - 89.3% of companies launched new or significantly modified products (services, concepts of products/services) in 2006-2008. Moreover, 80.6% of companies implemented new or significantly improved technologies or production processes in 2006 – 2008. The products were developed mostly by the company itself
67
(65.5%). Finally, 36.1 % of companies developed new products (services) in cooperation with external partners.
Methodology
Describing the existing patterns of innovation strategies and cooperation of Russian companies, a number of variables have been applied. The key respondents had to identify cooperation in new product development, conducting internal R&D, acquiring R&D or technologies or commercialising technologies and estimating the role of cooperation on a scale from 1 to 5.
The main method used in Publications IV and V is the explorative and descriptive analysis: cross tabulations and matrix classifications. The analysis of the matrix facilitates the definition of factors that are important for the resulting variables and find the possible relationship between variables. The interaction effects are tested separately for each dependent variable by applying the methods corresponding with the level of measurement (cross-tabulation, T-test for independent samples, ANOVA, linear regression analysis and GLM univariate test).
4.3. Summary of the research methodology in publications and limitations
The summary of survey methods, size of the sample and methods of the analysis are presented in Table 5.
Table 5. Summary of the research methods
Number of companies
Method Purpose Publication
Survey I 176 Descriptive, GLM, correlations, ANOVA
Relationship between internationalisation and innovations
Publication I Publication II
Survey II 150 Descriptive, matrix, content
Classification of innovation open innovation strategies and role of internationalisation
Publication III
Survey III 206 Descriptive, GLM, correlations, ANOVA
Role of cooperation with external partners (local and foreign) on the degree of open innovation
Publication IV Publication V
Limitations
The focus of this thesis is on the role of innovation and internationalisation with the analysis being carried out on the data collected through surveys of Russian companies. The data of surveys I and II represents the analysis of R&D companies; the assumptions of this study cannot be applied to any company in Russia, as the R&D operations were chosen as the limiting criteria. Data for Survey III was collected from the ten most innovative regions of Russia, however, excluding companies from Moscow and the Moscow region. The capital region was excluded from the data collection. Because of previous experience with collecting data in Russia, it is known that the Moscow region causes statistical misrepresentation of the results from other
68
regions. This can be explained by large differences in most of the indicators (i.e., investments, FDIs) between Moscow and the rest of Russia.
The criteria of innovativeness of the regions were developed based on innovation capability and innovation output indicators from the authors’ previous studies, and only 12 most innovative regions were selected for the study. The evidence of this study can be applied to these specific regions, and to Russia as a whole to certain extent, because of the proportional decomposition of the regions in the sample based on the shares of Russian GDP. The industries were selected according to an analysis of their share of the GDP in Russia and in their industrial output. The country level statistical data was applied (Rosstat, 2008, 2009). The industries were selected for our sample according to their shares (%) in the total industrial output of Russia. The high-technology to low-technology industries are represented in the study, which is the limitation for the generalisability of the results.
69
5. SUMMARY OF PUBLICATIONS AND REVIEW OF THE RESULTS
This chapter reviews the objectives, the main findings and the contribution of each publication included in the dissertation. The publications analyse the relationship between innovation and inward-outward internationalisation in Russian companies and specify the effect of size, competition and productivity in this context. The possibilities offered by the open innovation paradigm evaluated in the research papers and the role of internationalisation is analysed for companies applying open and traditional innovation strategies. Lastly, the significant role of cooperation with external stakeholders is grounded in the final paper. The order of the five publications discussed in this chapter follows the same logic applied in the previous chapters. The summary of the publication and the main empirical findings are presented in Table 6.
5.1. Publication I - Innovativeness and International Operations: Case of Russian R&D companies
The first publication presents the research question of the whole dissertation: Finding the relationship between innovation and internationalisation. The questions of measurement of innovation and internationalisation were addressed in the paper. The traditional variables for the measurement were elaborated from the existing literature stream (see chapter 2 for literature review): R&D expenditures, patents, new product development, export intensity, and control variables, such as size, competition and productivity. The effect of the external factors also was identified. The question remaining was how the innovation-internationalisation phenomena can be measured on a sample consisting of Russian companies.
For the purpose of this study, we limit the outward internationalisation indicators to exports. In order to distribute companies into the groups in terms of innovation and exports, the cluster method was applied. The clusters were identified according to exports and R&D expenditures: Cluster 1: non-exporting innovators (29 % of companies); Cluster 2: non-innovating exporters (14%); Cluster 3: non-exporting non-innovators (2.6%); and Cluster 4: exporting innovators (31.3%). Based on the list of innovation and exports variables elaborated from the literature, this publication contributes to the understanding the mechanisms of exporting and innovation decision making.
There was assumedly a link between a firm’s innovation activities and its internationalisation; however, there was no clear research evidence found, how this would work in Russia. As we know, transitional theories state that the background of the company and ownership type can influence economic performance, productivity and other indicators. The innovation output in Russia is also significantly lower than one of developed countries. In contrast, the statistically significant relationship between export and innovation activities (correlation between the R&D expenditure and export) was found in the case of Russian companies. Also, slight differences have been found between exporters and non-exporters in the structure of R&D spending; exporting companies spend more on acquisition of machinery and equipment and external
70
knowledge; while non-exporting companies spend more on internal R&D and the acquisition of external R&D.
The role of competition on the innovation-exports phenomena also was found significant. Thus, the highest level of competition is perceived in case of exporting firms with R&D expenditure, while as the lowest level of competition is perceived by non-exporting firms with R&D activities. The results of the regression analysis show that these differences are largely explained by the driving power of competition that is influencing the export activity of the firm. Contrastingly, the relationship between the size of the firm and the cluster the firm belongs to was insignificant. A T-test was applied to independent samples across a number of variables that could help explain the differences in innovative and exporting activities according to the size. Indeed, smaller firms are more limited in terms of R&D expenditures, have fewer employees, and have less export. However, they perform better then the larger firms in terms of higher labour productivity, higher share of R&D spending as a percent of sales and higher number of patents per employee and per R&D employee. These innovation activities, though, do not lead directly to higher exports. When analysing the innovators only, the exports by large innovators seem to be higher than those of the whole sample. The final regression model results revealed that exports are influenced by the number of new products (NPD) and total R&D expenditure (R&D), while the number of patents and share of R&D expenses was insignificant. The results of the study are subject to limitations due to the cross-sectional nature of the survey, selection of pro-innovation oriented sectors and a limited number of regions presented in the study.
To conclude, this paper fills the gap in the prior research by conducting the research of internationalisation and innovation of Russian companies. There is a very limited amount of papers using the data of Russian companies published either in international business or innovation management and no single publication on innovation and internationalisation. This paper attracts the attention for the operations of companies from post-transition countries, such as Russia. Russian companies are actively internationalising and searching for effective strategies to compete on international markets. A better understanding of the role of innovations for effective internationalisation would significantly improve the chances of Russian companies entering the international market, and to increase their overall competitiveness. This study also had applied clustering for creating a taxonomy of companies’ internationalisations and innovation activities, and implicated the standard list of variables for analysing the relationship between them.
5.2. Publication II - The Role of FDI in the Development of Innovative Capacity: The Case of Russian Companies
The second publication explores the role of foreign direct investment (FDI) on the development of innovative capacity and labour productivity of Russian companies based on the R&D intensity and patent activity. The traditional variables for the measurement were elaborated from the existing literature stream (see chapter 2 for literature review): R&D expenditures, internal R&D,
71
knowledge acquisition, R&D acquisition, patents, new product development, FDIs, and control variables such as industry, financial indicators, region, size, competition and labour productivity.
The results of this study showed some differences in the labour productivity and the innovative capacity between foreign and domestic companies in Russia. The higher labour productivity of companies with foreign participation could be partly explained by a higher share of exports and a higher share of new products in sales. The export prices could be assumed higher than prices on the Russian domestic markets. Similarly, the prices of new products could be assumed higher than prices of older products. Foreign companies are more likely to co-operate with external partners in the product development phase. Contrary to expectations, there were no significant performance differences between foreign and domestic companies in the innovative capacity, when measured by new product development or patent activity. The high new product introduction rate of the ICT industry could be partly explained by a large share of foreign companies, whose presence could have increased the innovative capacity of the whole industry through direct and spillover effects.
When innovative capacity was measured by the average number of patents the company holds, foreign companies dominated domestic companies, both in Russian and international patents. Both industry and company size had a significant effect on patent activity. The large companies have the highest number of patents/sales, 2.5 times more than the average of the data sample. More than one third (36%) of foreign companies has introduced new products in the last three years compared with 26% of domestic companies. The largest difference is in the sales mix: foreign companies have 61% of turnover originating from new products compared with 28% for domestic companies.
This paper contributes to the theory by addressing the spillover effect of FDIs in post-transition counties (Russia). The research has shown that FDIs do not have a significant role in the innovation capabilities of Russian companies as they do in other transition economies. One conclusion of the finding can be that Russian companies with foreign participation have other objectives for operating in local market than technology transfer and innovation development. This paper also contributed to the third research question by proving the importance of cooperation on NPD with external partners. The study has also managerial implications, especially for company operation in the cross border region, which are foreign companies entering or already operating in Russia, and Russian companies internationalising their activities abroad.
5.3. Publication III - Open innovation in Russian firms: an empirical investigation of technology commercialisation and acquisition
Publication III analyses the innovation strategies of Russian companies within the open innovation framework applied, and estimates the role of internationalisation on the strategy choice. The paper further analyses the relationship between technology commercialisation
72
strategies, technology acquisition strategies and companies’ internal R&D performance, and how industry, size of the company, and international sales influence open innovation paradigm implementation. The results show significant differences between industry clusters (high-, medium- and low technology companies): nine business models defined provide us with helpful information about technology strategies of Russian companies.
This paper proposed the implementation of the Open Innovation Matrix for analysing the innovation strategies of companies (Figure 9). This matrix provides a framework for distributing companies into 9 clusters based on external technology acquisition (ET) and technology commercialisation (TC).
Figure 11. Open innovation matrix
The OI Matrix has provided a unique opportunity to analyse the nature of innovation strategies of companies and the mechanism of implementing the OI framework. This is also a useful tool for analysing the distribution of variables within the clusters: R&D intensity, shares of export sales, industry and size effects, and the focus of R&D operation. The OI Matrix works equally well for both qualitative and quantitative analysis.
The premise for the Open Innovation business model was to develop a part of the construct analysed in Publication III, and other parts in Publication IV and V (see model in chapter 6). In the model, it was proposed that international operations influence the innovativeness of the companies, and more specifically, the openness of the companies.
The results of the analysis show that the experience in external technology acquisition is the prerequisite for the technology commercialisation process (see Publication III for the results of the analysis). Additional empirical research is needed to analyse this phenomenon. The possible assumptions could be that either these companies are self-sufficient in terms of technology and R&D or they just do not have any experience in acquiring and selling technologies. It can be also
73
suggested that open innovation implementation can be considered as a stage process – from a stage requiring less resources towards the most sophisticated one, requiring the acquisition of knowledge (internal and external). The R&D intensity of companies distributed in the OI Matrix proves companies with no sales and no acquisition of technology to be the least effective in terms of innovations and R&D. The higher the companies’ R&D intensity, the more they are involved in the acquisition or commercialisation of technology. The synergy effect is observed for companies acquiring and selling technologies; companies that sell and buy technologies have the highest R&D intensity. The average R&D intensity is the highest for the group of companies actively acquiring external technologies and actively selling technologies.
The lowest share of international companies is in the “no buy, no sell” cluster. The more actively companies become involved in the acquisition and commercialisation of technologies, the higher the share of international companies. Companies with experience in international sales are more eager to buy and sell technologies both in Russia and abroad. There is empirical evidence that there is a relationship between OI strategy implementation and internationalisation.
One the most important findings from the dissertation perspective came from evaluating the role of internationalisation on the OI strategies; out of all of the international companies, the number of those who implemented the most sophisticated OI practices was significantly higher than those whose innovation activities were rather rudimentary.
This study was the first ever attempt to shed light on the implication of open innovation in Russian companies on a large and relevant sample. The paper contributes to open innovation theory and practice by developing the OI Matrix as a tool for analysing the implementation of OI strategies, estimating the intensity of implementation, and the effect of different factors on OI strategies. Another contribution was found in the speculation on the stage nature of OI process and defining the prerequisite for the OI process – internal R&D, and positioning the ET as the requirement for TC.
5.4. Publication IV - Open vs Traditional innovation. Does Internationalisation matter? Case Russia
Publication IV proposes the framework for analysing the innovation strategies of companies based on the open innovation approach. The main idea of the paper was to find out how companies select between open and closed innovation strategy approaches and what the role of internationalisation is in this context.
The empirical findings proved open innovation (OI) to be the most effective innovation strategy; the more companies enrolled in OI, the higher their innovation and economic performance. The results also proved that R&D cooperation plays a higher role in foreign and local companies in companies with higher OI involvement. The degree of internationalisation was higher for companies with OI. The results have significant managerial implications due to its contribution to open innovation, internationalisation and innovation output. The focus of the study on
74
Russian companies is especially interesting because of the companies’ increased internationalisation; their strategies are also interesting for other participants in global markets. The study is based on a sample of 206 companies from the most innovative regions of Russia.
The framework proposed for the analysis of innovation strategy portfolio of the companies in the sample includes internal R&D, internal technology innovations, internal NPD and internal technology exploitation (Traditional approach) and external R&D acquisition, ET, NPD outsourcing to external organisations and TC (Open approach). The content analysis of the innovation strategy portfolio of companies in the sample (N=206) shows that Russian companies apply more external (open) innovation strategies associated with R&D and technology innovations (Table 4). The least popular option for the open approach is the NPD, which can be explained by the extreme strategic importance of NPD for all the companies and tendency to keep control over the majority of new product development.
The research of the Russian companies is rather exciting and timely due to the intensive internationalisation of companies, their active learning and increasing competitiveness in international markets. The Russian business and political environment has also become more innovation-friendly in recent years. Russian companies are actively catching up with modern management and innovation theories, and business practices, and increasing the education level and quality of human capital. The active search for external technologies, outsourcing (in and out), and cooperation with local and foreign partners have become the actual goals of companies in Russia. In this paper, the authors classify the innovation strategies of Russian companies by applying the open vs. traditional innovation framework. The framework includes internal R&D, internal technology innovations, internal NPD and internal technology exploitation (Traditional approach) and external R&D acquisition, ET, NPD outsourcing to external organisations and TC (Open approach). The content analysis of the innovation strategy portfolio of the companies in the sample show that Russian companies apply more external (open) innovation strategies associated with R&D and technology innovations. One third of companies combines internal and external R&D (both open and closed approach) and indicates that the increase in innovation output is due to externalisation. Furthermore, 5.2% of companies purely rely on the acquisition of external R&D. We detected a statistical significance (Pearson Chi-Square Significant at 0.024) between internal R&D and external R&D. From previous studies, we learned that companies, which are more active in internal innovation, apply open innovation practices more eagerly. We also detected a statistical significance (Pearson Chi-Square Significant at 0.014) between the open and closed approaches to technology innovations. Companies, which are more active in internal technology innovation, apply open innovation practices more eagerly.
The analysis of internationalisation’s effect on innovation strategy revealed the dual relationship between them. We found a statistically significant relationship (Pearson Chi-Square significant at 0.005) between companies’ experience in the international market and the internal R&D, which show us that the longer companies operate in the international market, the higher the share of companies with internal R&D among them. However, no relationship was found between
75
internationalisation as a dummy variable and type of innovation strategy regardless of whether the open innovation or the closed innovation approach is considered.
The results show that innovation output was higher for international companies for all the indicators analysed. The more significant difference in the innovation output between all companies and international ones was registered for quality improvements, production flexibility improvements, new market entry, increased production capacity, energy cost reduction, environmental impact, governmental regulation fulfilment and improved cooperation with external partners.
Exploring further the assumptions from the prior research (Publication III), this study contributes to the open innovation theory in the taxonomy of open innovation strategies by developing the portfolio framework for analysing the open and closed innovation strategies. The existing gap in internationalisation and open innovation is filled by analysing the role of export for companies with and without open innovation strategies. Companies with active open innovation strategies (acquisition of R&D, external technology acquisition, technology commercialisation and complex OI strategies) are much more export-oriented and companies with tradition innovation orientation are less active exporters.
5.5. Publication V - Cooperation and open innovation in emerging economies. Study of innovation strategies of Russian companies
Publication V studied the role of R&D cooperation with external stakeholders in the framework of the open innovation concept. The analysed factors are the type and importance of R&D cooperation, openness of the innovation model applied, and the innovation and financial performance.
The results show the high importance of cooperation in R&D with external stakeholders for all companies. However, the results reveal that the companies with no internal R&D consider the cooperation least important, and companies with internal R&D together with acquiring external technology and commercializing their technologies rank with the highest importance of cooperation with external partners.
The importance of cooperation with partners in the home country is slightly higher than cooperation with foreign partners. The findings of this paper indicate how the process of cooperation is developing in Russia. Considering the cooperation in NPD – the most common innovation option - we can observe that most of the companies still try to rely on their own resources. However, one third of the firms have started to cooperate with local partners, and approximately 10% of companies cooperate with foreign partners. The companies are more eager to cooperate with partners from Europe following their networks with suppliers and customers. This study has shown that cooperation with external partners (on the example of suppliers) plays an important role for open innovation implementation. Open innovation considers inbound innovation – search and acquisition of external knowledge, R&D and
76
technology; outbound innovation – promoting the internal innovation through external commercialisation channels, and a coupled process – the combination of inbound and outbound innovation.
This paper contributes to the discussion on the role of cooperation in the innovativeness of Russian companies. The cooperation is proved to be even more important for companies from the transition economies, compared to companies from developed countries, which can be empirically proved by the fact that the competitiveness level of those firms is lower. Moreover, the increase of competitiveness both in the local and international markets is very important for companies from post transitional countries. Russian companies experience pressure from the both global turbulence of the market and from the ongoing transformation process within companies. Developing the cooperation skills and increasing innovativeness provides opportunities for companies to compete successfully both in domestic and international markets.
This study also contributes to the fast developing theory of open innovation by constructing the evidence of increased intensity of cooperation in the companies applying open innovation against of traditional approach supporters. At the same time, the paper shows that companies who are most successful in cooperation with external partners in R&D are implementing open innovation the most often.
77
Tab
le 6
. Sum
mar
y of
the
publ
icat
ions
and
thei
r m
ain
findi
ngs
Pu
blic
atio
n I
Publ
icat
ion
II
Publ
icat
ion
III
Publ
icat
ion
IV
Pu
blic
atio
n V
Titl
e In
nova
tiven
ess a
nd
Inte
rnat
iona
l Ope
ratio
ns:
Cas
e of
Rus
sian
R&
D
com
pani
es
The
Rol
e of
FD
I in
the
Dev
elop
men
t of I
nnov
ativ
e C
apac
ity: T
he C
ase
of
Rus
sian
Com
pani
es
Ope
n in
nova
tion
in R
ussi
an
firm
s: a
n em
piric
al
inve
stig
atio
n of
tech
nolo
gy
com
mer
cial
isat
ion
and
acqu
isiti
on
Ope
n vs
Tra
ditio
nal
inno
vatio
n. D
oes
Inte
rnat
iona
lisat
ion
mat
ter?
C
ase
Rus
sia
Coo
pera
tion
and
open
in
nova
tion
in e
mer
ging
ec
onom
ies.
Stud
y of
in
nova
tion
stra
tegi
es o
f R
ussi
an c
ompa
nies
O
bjec
tives
To
est
imat
e th
e ro
le o
f in
nova
tion
on th
e in
tern
atio
nalis
atio
n pr
oces
s by
anal
ysin
g th
e im
pact
of i
nnov
atio
n ac
tiviti
es, R
&D
ex
pend
iture
s, co
mpe
titio
n an
d N
PD o
n th
e ex
port
inte
nsity
To st
udy
the
role
of F
DIs
on
the
deve
lopm
ent o
f inn
ovat
ive
capa
city
of R
ussi
an
com
pani
es b
ased
on
the
R&
D
inte
nsity
and
pat
ent a
ctiv
ity
To st
udy
the
inno
vatio
n st
rate
gies
of R
ussi
an
com
pani
es a
nd th
e O
I Fr
amew
ork
appl
ied
and
to
estim
ate
the
role
of
inte
rnat
iona
lisat
ion
on th
e st
rate
gy c
hoic
e.
To st
udy
com
pani
es’
inno
vatio
n an
d in
tern
atio
nalis
atio
n an
d pr
opos
e th
e fr
amew
ork
for
the
anal
ysis
of O
I sta
ndar
d po
rtfol
io a
nd c
oope
ratio
n w
ith lo
cal a
nd in
tern
atio
nal
exte
rnal
par
tner
s.
To a
naly
ze th
e de
gree
of
open
ness
of i
nnov
atio
n st
rate
gy b
ased
on
the
type
an
d im
porta
nce
of R
&D
co
oper
atio
n, o
penn
ess o
f the
in
nova
tion
mod
el a
pplie
d,
and
the
inno
vatio
n pe
rfor
man
ce
Met
hod
Qua
ntita
tive
Qua
ntita
tive
Con
cept
ual,
expl
orat
ory
&
quan
titat
ive
Con
cept
ual,
expl
orat
ory
&
quan
titat
ive
Expl
orat
ory
& q
uant
itativ
e
Dat
a Su
rvey
of 1
76 fi
rms
Surv
ey o
f 176
firm
s Su
rvey
of 1
50 fi
rms
Surv
ey o
f 206
firm
s Su
rvey
of 2
06 fi
rms
RQ
R
Q 1
R
Q 1
(RQ
3)
RQ
2
RQ
2
RQ
3
Mai
n Fi
ndin
gs
1. P
rove
d re
latio
nshi
p be
twee
n R
&D
ex
pend
iture
s & e
xpor
ts
2. S
igni
fican
ce o
f co
mpe
titio
n fo
r exp
ort &
in
nova
tion
3.
Sig
nific
ance
of s
ize
for
expo
rt &
inno
vatio
n
4. R
ole
of N
PD &
pat
ents
on
exp
ort i
nten
sity
1. E
ffec
t of F
DIs
on
labo
ur
prod
uctiv
ity
2. E
ffec
t of F
DIs
on
R&
D
expe
nditu
res
3. E
ffec
t of F
DIs
on
inno
vatio
n ca
paci
ty (N
PD a
nd
pate
nts)
4.
FD
Is e
ffec
t on
coop
erat
ion
in N
PD w
ith e
xter
nal p
artn
ers
1. P
ropo
sed
mat
rix fo
r an
alys
ing
the
OI s
trate
gies
2.
Ass
umed
the
stag
e na
ture
of
the
OI p
roce
ss, a
nd
dete
rmin
ed th
e pr
e-re
quire
men
ts :
inte
rnal
R&
D
and
exte
rnal
tech
nolo
gy
acqu
isiti
on
3. R
ole
of R
&D
inte
nsity
, in
dust
ry, s
ize
4. R
ole
of
inte
rnat
iona
lisat
ion
1. T
axon
omy
of O
I po
rtfol
io, c
onte
nt a
nd
mea
sure
men
t 2.
Mix
ed tr
aditi
onal
and
op
en a
ppro
ache
s 3.
Rol
e of
in
tern
atio
nalis
atio
n fo
r OI
proc
ess
4. T
he c
ompo
nent
s of t
he O
I po
rtfol
io: l
inks
, rat
ios a
nd
influ
enci
ng fa
ctor
s
1.H
igh
impo
rtanc
e of
co
oper
atio
n in
R&
D w
ith
exte
rnal
stak
ehol
ders
2.
The
role
of c
oope
ratio
n is
hi
gher
for c
ompa
nies
with
m
ore
invo
lvem
ent i
n O
I 3.
Coo
pera
tion
with
st
akeh
olde
rs in
hom
e co
untry
is sl
ight
ly m
ore
impo
rtant
Mai
n co
ntri
butio
n Im
prov
ed u
nder
stan
ding
of
rela
tions
hip
betw
een
inno
vatio
n an
d in
tern
atio
nalis
atio
n on
the
sam
ple
of R
ussi
an
com
pani
es
Bet
ter u
nder
stan
ding
of t
he
role
of F
DIs
on
the
inno
vativ
e ca
paci
ty a
nd l
abou
r pr
oduc
tivity
of R
ussi
an
com
pani
es b
ased
on
the
num
ber o
f ind
icat
ors
Res
earc
h of
the
natu
re o
f OI
proc
ess,
stag
es, p
re-
requ
irem
ents
and
in
fluen
cing
fact
ors.
Rol
e of
in
tern
atio
nalis
atio
n in
OI.
Res
earc
h of
the
natu
re o
f OI
proc
ess.
OI p
ortfo
lio to
ol
prop
osed
for t
he c
ompa
nies
’ in
nova
tion
mix
ana
lysi
s
Impo
rtanc
e of
coo
pera
tion
with
ext
erna
l par
tner
s for
th
e O
I pro
cess
. Est
imat
ed
the
role
of c
oope
ratio
n w
ith
fore
ign
partn
ers
78
6. CONCLUSIONS
6.1. Overview
The overall purpose of this dissertation is to analyse the relationship between innovation and internationalisation in Russian companies. The surveys were conducted for collecting the data to obtain empirical evidence from the companies. The main research question was supported with three sub-questions that were used to guide the literature review and methodology discussion in order to provide a framework for the analysis of the results in the publications (Part II of this dissertation). The following research questions were set for the study:
1. How are innovations and internationalisation related? The RQ 1 is addressed in publications I and II, which study the relationship between innovations (innovation activities, R&D expenditures, NPD) and internationalisation (outward – exports and inward – FDIs).
2. How do Russian companies implement open innovations and what is the role of internationalisation? Publications III and IV addressed the second research question by conducting a quantitative analysis of 150 (Publication III) and 206 (Publication IV) Russian companies. These publications analysed the innovation strategies applied based on the open innovation framework (internal R&D, external technology acquisition and commercialisation through external channels), proposed tools for analysing open innovation strategies and estimated the role of internationalisation.
3. What is the role of cooperation with local and international external partners in the open innovation framework? Publication V addressed the third research question by conducting a quantitative analysis of 206 Russian companies. This paper analysed the open innovation strategy of the companies and estimated the importance of R&D cooperation with local and international external partners.
The research questions were answered through quantitative and descriptive methods in five publications based on the three independent surveys conducted between 2008 and 2010. The role of the five publications included in this dissertation was to add to the discussion on innovation and internationalisation from different angles and provide a thoughtful analysis of the results from data of Russian companies in order to elaborate the empirical model presented further in this chapter.
The first chapter of this dissertation discussed the origins and motivations of the research, introduced the scope of the research, research questions and research objectives. The second chapter elaborated the literature framework, aimed to structure the current understanding of innovation and internationalisation phenomena. The third chapter highlighted some previous research on internationalisation and innovation in Russia at the national and regional level. The fourth chapter summarized the methodological issues of the thesis and included publications and discussed the quality of the research, survey techniques, constructing the questionnaires and
79
collecting data in Russia. The fifth chapter described the main results and the core contribution of describes the included publications. The role of publications is to study 1) the role of innovation on the internationalisation process by analysing the impact of innovation activities, R&D expenditures, competition and NPD on the export intensity (publication I); 2) the role of FDIs on the development of innovative capacity of Russian companies based on the R&D intensity and patent activity (publication II); 3) the innovation strategies of Russian companies and the OI Framework applied and to estimate the role of internationalisation on the strategy choice (publication III); 4) how companies select between open and closed approaches to innovation strategies and what the role of internationalisation is in this context (publication IV); to study the role of R&D cooperation with external stakeholders in the framework of the open innovation concept (Publication V).
The focus of this chapter is the general conclusion of the research work, marking the overall contribution of the study in terms of the theoretical and managerial implications, and mapping out the areas for future research. The chapter is based on the contribution reported in the individual publications and on the synergy effect conditionally received when considering the impact of all parts of the dissertation.
6.2. Results of the research process
The results of the research process are presented in Figure 10. Starting with the research goal to contribute to the discussion on internationalisation and innovation, the analysis of the theory was conducted. A list of variables for empirical testing and the number of external influencing factors were elaborated based on the literature review. These variables were tested on the dataset of survey I and the results were published in publications I and II. The overall results of these publications showed a lack of understanding in knowledge exploitation and in the knowledge acquisition process (both external and internal) in the context of the companies’ innovation strategies. This fact required the in depth analysis of knowledge exploitation and acquisition process. The open innovation framework was selected for this study and survey II was conducted. The analysis of the results of open innovation practices in Russian companies and evaluating the role of internationalisation in this context, have revealed interesting findings and provided a new taxonomy for analysing the innovation strategies of the firms. However, the results on open innovation require the clarification on the decision making between the open and traditional approach and more detailed study of role of internationalisation. That is when survey III was conducted, the data analysed and the conclusions on the decision making on open and traditional innovation strategies made. However, the role of cooperation as important factor for both internationalisation and innovation was still unclear. The cooperation with external stakeholder effect (local and foreign) was tested and the results published in publication V.
80
Figure 12. Results of research process
6.3. Summary of the contribution of publications
The results of this dissertational research represent a holistic view of the phenomenon of innovations and internationalisation interconnections in the context of companies operating from post-transitional economies, such as Russia. This thesis contributes to the understanding of the globalisation (Held et al., 1999; Bhagwati, 2004; Croucher, 2004) providing extremely luxurious
Russian companies sample (Survey 1)
Internationally elaborated list of variables
Role of innovation on internationalisation
Analyse Fit for
1. Innovation Capacity Outcome 2. Internationalisation Inward (FDI) Outward (Export) 3. Cooperation 4. Company characteristics 5. Performance
External factors Institutions Competition
Results
Results prove the relationship between internationalisation and innovation, but require more research on knowledge exploitation and external knowledge acquisition
Open Innovation paradigm
Russian companies sample (Survey 2)
Fit for
Results
Results on open innovation study require clarification on the decision making between the open and traditional approach
Russian companies sample (Survey 3)
Fit for
Results
Results on open innovation study require clarification on the role of cooperation with external partners on innovation
Stakeholders approach: cooperation
Results
Overall results clarified the relationship between internationalisation and innovation strategy selection (open vs. traditional approach) and role of cooperation in this context
81
opportunities for business development, especially for companies from transitional economies, in terms of innovation; as channel for the international knowledge and technology transfer (Pack, 1993; Bell and Pavitt, 1993) and for competitive position (Gorodnichenko et al., 2008). This transitional background cannot be underestimated, as these issues still have strong effects at the individual, managerial, organisational and national levels. The open innovation approach (Christensen, 1997; Chesbrough, 2003, 2006; Lichtenthaler, 2009) is a powerful tool for evaluating both the innovation strategies of the firms and the overall openness towards innovation and international changes. The results received from the multiple surveys analysed within a triangulation framework not only supported the number of formulated hypotheses, but also produced unexpected results, carrying the important scientific contribution. The high complexity of the research phenomenon formed the study into a truly interdisciplinary study and pushed it in its indepth theory digging and research techniques elaboration.
6.3.1. Theoretical contributions
By highlighting the practice and theories of the IB perspective, this dissertation contributes to the understanding of the role of superior technology and innovation for companies’ competitive advantage in the internationalisation process (Dunning, 1970; Johansson and Vahlne, 1977; Vernon, 1966; Castellani and Zanfei, 2006), relying on the companies characteristics: size, ownership, location and strategy (Dunning, 2001).
Contribution to inward and outward internationalisation and innovation
Firstly, this dissertation found empirical support for the evidence on the dual relationship between innovation and internationalisation (Filipescu, 2007; Castellani and Zanfei, 2006; Wakelin, 1998; Rodriguez and Rodriguez, 2005). Starting with an international business perspective, the most traditional research variables were selected (exports and R&D expenditures) in order to analyse the link between innovation and internationalisation. Companies with higher R&D expenditures have shown higher exports, and in general, there are most exporting companies among those with high R&D expenditures.
The explorative nature of the research enabled the discovery of more effects from the side of competition and NPD. The more significant difference in the innovation output between all companies compared with international companies was registered for quality improvement , production flexibility improvement, new markets entry, increased production capacity, energy cost reduction, environmental impact, governmental regulation fulfilment and improved cooperation with external partners.
Secondly, this thesis contributes to the theory by addressing the spillover effects of FDIs in post-transition countries. The research has not proved the significant role of FDIs on innovation capabilities of Russian companies that it has in other transition economies, but it has contributed to the better understanding of the role of labour productivity, innovative capacity, innovation and economic output measures in the context of FDI role for innovations.
82
Open innovation
Thirdly, the analysis of innovation strategies of Russian companies has significantly contributed to the development of open innovation theory (Christensen, 1997; Chesbrough, 2003, 2006; Lichtenthaler, 2009). By developing the Open Innovation Matrix the research gained an opportunity to analyse innovation strategies depending on the acquisition of external technology, and the commercialisation of technology produced internally. The empirical finding on the stage nature of the open innovation process revealed the importance of internal experience in innovation (internal R&D) for companies starting the externalisation of innovation (external technology acquisition and using external channels for commercialising technologies). These findings were logically extended into the taxonomy of open innovation strategies. This is portfolio framework for analysing open and closed innovation strategies.
This thesis is also adds to the discussion of the role of internationalisation as a part of innovation process, meaning when companies are searching for external technologies, choosing external channels for commercialisation, and cooperating on innovation with external partners, they need to make a strategic domestic and international choices. The empirical evidence presented in this dissertation proves companies with open innovation strategies (acquisition of R&D, external technology acquisition, technology commercialisation and complex open innovation strategies) are more open towards cooperating with foreign partners and more export-oriented.
Fourthly, exploring further the role of cooperation as the core of the open innovation framework (Chesbrough, 2006; Kock and Torkeli, 2008; Faria and Schmidt, 2007), this thesis contributes to the discussion on the role of cooperation using the example of Russian companies. Russian companies experience pressure from both the global turbulence of the market and from the ongoing transformation process within companies.
Developing cooperation skills and increasing innovativeness provide opportunities for companies to compete successfully, both in domestic and international markets. This thesis also contributes to the developing theory of open innovation by constructing evidence of increased intensity of cooperation in companies applying open innovation against those who support a more traditional approach. Companies who are most successful in cooperating with external partners in R&D, tey are also the ones most open towards implementing open innovation. The contribution of the results of publications is presented in Table 7.
6.3.2. Managerial implications: Contribution to the better understanding of management in Russian companies
Russia represents one of the most interesting but challenging cases for the analysis due to its large size, regional economic heterogeneity and political constrains (Berkowitz and DeJong, 1997; Berkowitz et al., 1998). Russian companies are in an intensive transformation process (Kornai, 1990; Falke, 2001) towards improving competitiveness, both in local and in international markets (Tarr and Thomson, 2004). Generally, companies from transition
83
economies are unique phenomena in up-to-date industrial enterprise research. This research attempted to draw attention to the fact that Russian companies face pressure, both from the international and home environments, and have had to learn fast and adjust to the changing environment.
Table 7. Contribution of the results of publications
Factors Paper 1 Paper 2 Paper 3 Paper 4 Paper 5 Taxonomy of strategies
clusters R&D and exports (4 clusters)
Foreign companies vs. domestic
Open Innovation Matrix (9 clusters)
Portfolio of innovation strategies
Portfolio of innovation strategies, cooperation integrated
List of influencing factors (internal, external)
Innovation indicators Outward internationalisation indicators, company’s characteristics
Innovation indicators Inward internationalisation indicators, company characteristics
Innovation indicators, open innovation, export share, company characteristics
Innovation indicators open innovation, export share
Cooperation innovation indicators, open innovation, stakeholder approach
Measurement of core factors: innovation internationalisation cooperation
Elaborated from the literature R&D Export others
Elaborated from the literature R&D FDIs others
Elaborated from the literature R&D, ET, TC Exports, others
Elaborated from the literature R&D, ET, TC Exports, own
Literature, combination of open innovation and marketing concepts
Operationalizing the innovation and internationalisation construct Generalisability of results
Internationally accepted indicators can be applicable for Russian settings
This dissertation contributes to understanding the interconnection of innovation and internationalisation processes in Russian companies, and has produced a number of managerial implications to the Russian companies and foreign companies operating in Russia and / or with Russian partners.
First, the thesis contributes to a better understanding of the process of internationalisation of Russian companies and how innovations matter in this context. The message for managers is clearly dual; the most innovative companies succeed better in international markets and, when a company is internationalising, this brings additional learning opportunities and external knowledge to absorb from the foreign partners and markets.
Second, the thesis claims no difference between Russian companies and companies with foreign capital in terms of innovativeness. This important conclusion means that by 2008, when survey I was conducted, Russian companies already achieved a level of development comparable with international competitors. Therefore, they do not specifically need the knowledge brought by the spillover effect of FDIs. From another perspective, Russian companies with foreign participation
84
may have other objectives for operating in local market than technology transfer and innovation development.
Third, the dissertation proves open innovation as the most effective innovation strategy for Russian companies, with the limitation that companies have extensive experience in internal research and development before they start to get involved in open innovation. This technically means that in order to implement successful innovation strategies, companies have to integrate traditional and open innovation approaches in a certain ratio, which can be evaluated based on companies’ innovation strategy chronology and economic output study. An effective method for analysing the open innovation was proposed for the companies’ implementation: Open Innovation Matrix and Innovation portfolio tool.
Fourth, the following effects of internationalisation was registered for the companies in the sample: exporting companies show better quality improvements; production flexibility improvements, new market entry, increased production capacity, energy cost reduction, environmental impact, governmental regulation fulfilment and improved cooperation with external partners. The effect of openness shows that companies with active open innovation strategies (acquisition of R&D, external technology acquisition, technology commercialisation and complex OI strategies) are much more export-oriented, and companies with a traditional innovation orientation are less active exporters.
The fifth and one of the most valuable managerial contributions underlines the role of cooperation for innovation and internationalisation. Russian companies experience pressure from the both global turbulence of the market and from the ongoing transformation process within companies. Developing cooperation skills and increasing innovativeness provides opportunities for companies to compete successfully both in domestic and international markets. The cooperation intensity and success is also higher for companies implementing these aspects At the same time, the paper shows that companies who are most successful in their cooperation with external partners in R&D implement open innovation most often.
The study revealed that companies which are more open and responsive to the global environment have much better chances to succeed, both in innovations and internationalisation. The development of innovative capabilities, extension of the company border, implementation of open innovation principles, consideration of the effects of turbulent environment and the making of companies more open for change and challenge of internationalisation are factors of extreme importance for companies in Russia on their way to increased competitiveness.
6.4. Model developed
Based on the results of the survey of Russian R&D companies, the following open innovation business model is proposed (Figure 13). Companies possess innovation capacity formed of internal R&D production capacity and acquired external technologies (purchased and non-commercial channels, spillover effect).
85
Internal R&D capacity is influenced by the effective / non-effective cooperation with external and internal stakeholders, both in the home markets and abroad. The technology can be produced by company itself and in cooperation with local and foreign partners.
Figure 13. Open Innovation and Internationalisation Model
The strategic orientation of the company plays important role in the formation of innovation capacity. The degree of involvement in international operations (international cooperation and international acquisitions) have an effect on the innovation capacity of the company.
A company’s need for technology and innovation (internal R&D production and external technologies purchased) can be overestimated and this creates a surplus of technologies, which cannot be “consumed” by the company itself. This surplus is to be commercialised. Some companies produced technologies in order to sell them on the market. The innovation performance of the company depends on the innovation capacity and involves the rate of successful commercialisation of the technologies and internal R&D consumption. The list of variables is presented in Table 9.
86
Table 9. List of variables
Variable Description Internal R&D A dichotomous question was used to measure whether company conducts internal R&D.
The results of the analysis of this dummy is used in the analysing the possible innovation strategies of the firms and in order to estimate the role of cooperation depending on innovation strategy.
R&D Acquisition The companies were asked to select from the proposed scale the option which is describing most their possible acquisition of R&D: not acquired, acquired – less that 5%, from 5 to 10%, from 10 to 25%, from 25 to 50%, from 50 to 100%. The scales reflect the approximate share of acquired R&D with respect to internal R&D.
NPD Internal NPD measured as a product innovation dummy indicator, and the outsourced NPD as the share of NPD outsourced to the external organisations.
Technology Innovation
internal technology innovation measured as dummy variable for the companies implemented the technology or process innovations.
Technology Acquisition
A dichotomous question of the next variable “technology acquisition” consists of not acquiring technologies, acquiring sometimes, and acquiring often. The scale was used to evaluate the share of acquired technology to the internally produced – less that 5%, from 5 to 10%, from 10 to 25%, from 25 to 50%, from 50 to 100%.
Technology Commercialisation
A dichotomous question of the next variable “technology commercialisation” consists of not commercialising technologies, selling sometimes, and selling often. The scale was used to evaluate the share of commercialized technology to the internally consumed – less that 5%, from 5 to 10%, from 10 to 25%, from 25 to 50%, from 50 to 100%.
Cooperation Cooperation with external stakeholders (local and international) Intensity of Cooperation
Linkert scales from 1 to 5
Success of Cooperation
Linkert scales from 1 to 5
Internationalisation Share of international companies, international experience Exports exports share Industry 12 industries from high technology to medium technology Region 9 most innovative regions Ownership New, privatised, governmental (more than 50 %), foreign (more than 10 %) Size Number of employees, turnover
6.5. Limitations of the research
The limitations of this study were set from the literature perspective, through the methodology and data collection process and the selection of the country for analysis, and finally by the model developed for the study. From the literature perspective, this study focused on the role of innovation and internationalisation from international business and innovation management theories.
The research question was approached from internationalisation stage theories (U- and I-models), where exports and FDIs were analysed. This focus of the study has left behind the assumptions of other IB theories like MNCs and networks. Generally, the applicability of stage models is limited; also this study has not considered the influence of external and institutional factors, like governmental effect and environment, only the competition effect and cooperation with stakeholders were analysed. This study has raised its objectives and research questions from
87
the above mentioned literature, as well as the real managerial problems and needs of Russian companies. The research questions set for the study were adjusted in order to cope with these theoretical limitations.
From the methodology and data collection perspective, limitations can be assessed on the basis of the theory of the methodology used. The selection of the case companies for the surveys were limited regarding their R&D orientation, size, and region in case of surveys I and II. Data for survey III was collected from the ten most innovative regions of Russia, however, excluding companies from Moscow and the Moscow region. The limitations also imply that the analysis is conducted at the company level in Russia and the alliances of the firms or integration into the networks are not subject of this research. Analysing Russian companies made the author limit the transition effect; the background of companies is taken into consideration, and the role of ownership is discussed, however, the transformation of the management systems and the role of transition is not the subject of this research.
The model limitation framed company operations in terms of innovation capacity and innovation performance, including the R&D cooperation with internal and external stakeholders, the search and acquisition of external technology, and the utilisation of external channels for commercialisation in the local and domestic market. The analysis of the export, FDIs and import as the determinants of international operations of companies put a strict limit for the model implications in the case companies.
6.6. Future Research
The further research on the relationship between internationalisation and innovativeness provides interesting perspectives in the sphere of better understanding the mechanism underlying both internationalisation and innovations decisions in the context of increased cross-border cooperation. The role of cooperation with internal and external stakeholders can be the next research topic requiring deeper study because there is a limited amount of information on the motivations for cooperation, competences companies possess in order to cooperate more successfully on innovation, and mechanisms companies use to search for external technologies in home and international markets. The analysis of the relationship between company performance, productivity and degree of openness, commercialisation and acquisition of technology and innovation should be considered.
In conclusion, the companies from emerging and post-transition economies represent interesting phenomena for researchers. These companies are very eager to integrate into the international community, both in innovations and in international trade. This area is an excellent niche for the scientific contribution of research focused on innovation and internationalisation. The applicability of the open innovation paradigm in Russian companies, proved by the results of this dissertation, open a new area of research and managerial contribution in terms of open innovation studies.
88
LIST OF REFERENCES
Acs, Z. and Audretsch, D., 1989. Patents as a measure of innovative activity. Kyklos, 42(2), pp. 171-180.
Aghion, P., Bloom, N., Blundell R., Griffith R., and Howitt P., 2005. Competition and Innovation: an Inverted U Relationship. Quarterly Journal of Economics, 202, pp. 701-728.
Aitken, B. J, and Harrison, A. E., 1999. Do foreign firms benefit from direct foreign investment? Evidence from Venezuela. The American Economic Review, 89(3), pp. 605-618.
Akan, O., Allen, R.S., Helms, M.M., and Sprals III, S.A. 2006. Critical tactics for implementing Porter’s generic strategies. Journal of Business Strategy, 27(1), pp. 43-53.
Akman, G. and Yilmaz, C., 2008. Innovative capability, innovative strategy and market orientation: an empirical analysis in Turkish software industry. International Journal of Innovation Management, 12(1), pp. 69-111.
Andersen, O., 1993. On the internationalization process of firms: a critical analysis. Journal of International Business Studies, 24(2), pp. 209-231
Andreev, J., 2007. Science-technology Potential and Innovation Activity of Russian Regions. RA Expert publication, http://www.regions.extech.ru.
Andrew, J.P., Sirkin H.L., and Butman J., 2006. Payback: Reaping the rewards of innovation, Boston, Mass: Harvard Business School Press.
Archibugi, D. and Michie, J., 1995. The globalisation of technology: a new taxonomy, Cambridge Journal of Economics, 19, pp. 121–140.
Archibugi, D. and Iammarino, S., 2000. Innovation and globalisation: evidence and implications, in: F. Chesnais, G. Ietto-Gilles and R. Simonetti, eds. European Integration and Global Technology Strategies. London: Routledge.
Archibugi, D. and Pietrobelli, C., 2003. The globalisation of technology and its implications for developing countries. Windows of opportunity or further burden?. Technological Forecasting and Social Change, 70(9), pp. 861 – 883.
Archibugi, D. and Coco, A., 2005. Measuring technological capabilities at the country level: a survey and a menu for choice. Research Policy, 34(2), pp. 175–94.
Aubert, J.É., 2005. Promoting Innovation in Developing Countries: A Conceptual Framework. World Bank Policy Research Working Paper 3554, Washington, DC: World Bank.
Aurora, A., 1995. Licensing Tacit Knowledge: Intellectual Property Rights and the Market for Know-How. Economics of Innovation and New Technology, 4(1), pp. 41-59.
Baglieri, E. and Zamboni, S., 2005. Partnering along the demand chain: collaboration in new product development. 21st Annual IMP Confenrence, 1st – 3rd September, 2005, Rotterdam, Netherlands.
89
Barkema, H.G. and Vermeulen, G.A.M., 1998. International expansion through start-up or through acquisition: An organizational learning perspective. Academy of Management Journal, 41(1), pp. 7-26.
Basile, R., 2001. Export behaviour of Italian manufacturing firms over the nineties: the role of innovation. Research Policy, 30(8), pp. 1185-1201.
Bell, R.M. and Pavitt, K., 1993. Technological Accumulation and Industrial Growth: contrasts between Developed and Developing Countries. Industrial and Corporate Change, 2(2), pp. 157-211.
Bayona, C., García-Marco, T., and Huerta, E., 2001. Firms’ motivations for cooperative R&D: an empirical analysis of Spanish firms. Research Policy, 30(8), pp. 1289-1307.
Belderbos, R., Carree, M. Diederen, B. Lokshin, B., and Veugelers, R., 2004a. Heterogeneity in R&D Cooperation Strategies. International Journal of Industrial Organization, 22(8-9), pp. 1237–1264.
Belderbos, R, Carree, M., and Lokshin, B., 2004b. Cooperative R&D and Firm Performance. Research Policy, 33(10), pp. 1477–1492.
Belderbos, R., Carree, M., and Lokshin, B., 2006. Complementarity in R&D Cooperation Strategies, Review of Industrial Organization, 28(4), pp. 401 - 426.
Barkema, H.G. and Drogendijk, R., 2007. Internationalising in small, incremental, or larger steps? Journal of International Business Studies, 38(7), pp. 1132-1148.
Berkowitz, D., DeJong, D., and Husted, N., 1998. Quantifying Price Liberalization in Russia. Journal of Comparative Economics, 26(4), pp. 735-760.
Berkowitz, D. and DeJong, D., 1997. Observations on the Speed of Transition in Russia: Prices and Entry. Transforming Post-Communist Political Economics. Washington: National Academy Press.
Bernard, A. and Jensen, J., 2004. Why Some Firms Export?. Review of Economics and. Statistics, 86, pp. 561-569.
Bhagwati, J., 2004. In Defense of Globalization. Oxford: Oxford University Press.
Bilkey, W.J. and Tesar, G., 1977. The export behaviour of smaller sized Wisconsin manufacturing firms. Journal of International Business Studies, 8, pp. 93−98.
Blomqvist, K. and Levy, J., 2006. Collaboration capability – a focal concept in knowledge creation and collaborative innovation in networks. International Journal of Management Concepts and Philosophy, 2(1), pp. 31-48.
Blomström, M. and Wolff E., 1994. Multinational corporations and productive convergence in Mexico. In Convergence of Productivity: Cross National Studies and Historical Evidence, Oxford University Press, Oxford.
Blomstrom, M., Kokko, A., and Zejan, M., 2000. MNC Entry strategies: New ventures or
90
acquisitions? In: M. Blomstrom, A. Kokko and M. Zejan eds. Foreign direct investment: Firm and host country strategies. Palgrave.
Blomström, M. and Sjöholm, F., 1999. Technology transfer and spillovers: Does local participation with multinationals matter? European Economic Review, 43(4-6), pp. 915-923.
Bogachev, J. and Vinokurov, V., 2008. Analysis of Science-technology and Innovation Development of Russian Regions, http://www.bujet.ru.
Bond, E.U. III and Houston, M.B., 2003. Barriers to Matching New Technologies and Market Opportunities in Established Firms. Journal of Product Innovation Management, 20, pp. 120-135.
Botazzi, L. and Giovanni, P., 2003. Innovation and spillovers in regions: Evidence from European patent data. European Economic Review, 47, pp. 687-710.
Brewer, J., and Hunter, A., 1989. Multimethod research: A synthesis of styles. Newbury Park, CA: Sage.
Brown, J. S. and Hagel III, J., 2006. Creation nets: Getting the most from open innovation. McKinsey Quarterly, 2, pp. 40-51.
Bryman, A., 1984. The debate about quantitative and qualitative research: a question of method or epistemology? The British Journal of Sociology, 35(1), pp. 75-92.
Bryman, A., Becker, S., and Sempik, J., 2008. Quality criteria for quantitative, qualitative and mixed methods research: A view form social policy. International Journal of Social Research Methodology, 11(4), pp. 261-276.
Buckley, P.J. and Carter, M.J., 1999. Managing cross-border complementary knowledge: conceptual development in business process approach to knowledge management in multinational firms. International Studies of Management and Organization, 29(1), pp. 80-104.
Buchanan, D. and Bryman, A., 2007. Contextualizing methods choice in organizational research. Organizational Research Methods, 10, pp. 483-501.
Burns, R., 2000. Introduction to the research methods. London: SAGE Publications.
Burrell, G. and Morgan, G., 1979. Sociological Paradigms and Organizational Analysis. London: Heinemann Books.
Campbell, D.T., 1957. Factors relevant to the validity of experiments in social settings. Psychological Bulletin, 54, pp. 297-312.
Campbell, D.T., and Stanley, J.C., 1963. Experimental and quasi-experimental designs for research. Chicago: Rand McNally.
Cantwell, J.A. and Piscitello, L. 2002. The location of technological activities of MNCs in European regions: the role of spillovers and local competencies. Journal of International Management, 8(1), pp. 69-96.
91
Cantwell, J.A. and Piscitello, L. 2005. Recent location of foreign-owned R&D activities by large multinational corporations in the European regions: the role of spillovers and externalities. Regional Studies, 39(1), pp. 1-16.
Carlsson, B., Jacobsson, S., Holmen, M., and Rickne, A., 2002. Innovation systems: analytical and methodological issues. Research Policy, 31, pp. 233-245.
Cassiman, B. and Veugelers, R., 2002. R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium. American Economic Review, 92(4), pp. 1169-1184.
Cassiman, B., Golovko, E., and Martinez-Ros, E., 2010. Innovation, exports and productivity. International Journal of Industrial Organization, 28(4), pp. 372-376.
Castellani, D. and Zanfei, A., 2006. Multinational firms, innovation and productivity. UK: Edward Elgar.
Castellani, D. and Zanfei, A. 2007a. Multinational companies and productivity spillovers: is there a specification error? Applied Economics Letters, 14(14), pp. 1047-1051.
Castellani, D. and Zanfei, A., 2007b. Internationalisation, innovation and productivity: how do firms differ in Italy? The World Economy, 30(1), pp. 156-176.
Cavusgil, S. T., 1980. On the internationalisation process of the firm. European Research, 8(6), pp. 273−281.
Cervantes, M. and Malkin, D., 2001. Russia’s Innovation Gap, Organization for Economic Cooperation and Development, The OECD Observer, Nov 2001, pp. 229-239.
Chadha, A., 2009. Product Cycles, Innovation, and Exports: A Study of Indian Pharmaceuticals. World Development, 37(9), pp. 1478-1483.
Chandler, A., 1992. Organizational capabilities and the economic history of the industrial enterprise. Journal of Economic Perspectives, 6 (3), pp. 79-100.
Chaturvedi, K. and Chataway, J., 2006. Strategic integration of knowledge in Indian pharmaceutical firms: creating competencies for innovation. International Journal of Business Innovation and Research, 1(1/2), pp. 27-50.
Chesbrough, H., 2003. Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston, Massachusetts: Harvard Business Press.
Chesbrough, H., 2006. Open Business Models: Hoe to Thrive in the New Innovation Landscape. Boston, Massachusetts: Harvard Business Press.
Chesbrough, H.W. and Prencipe, A., 2008. Networks of innovation and modularity: a dynamic perspective. International Journal of Technology Management, 42(4), pp. 414–425.
Chesbrough, H., 2010. Business Model Innovation: Opportunities and Barriers, Long Range Planning, 43(2/3), pp. 354-363.
92
Christensen C., 1997. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA, USA: Harvard Business School Press.
Clark, K. and Fujimoto, T., 1991. Product development performance: strategy, organization and management in the world auto industry. Boston, Massachusetts: Harvard Business School Press.
Coe, N.M. and Hess, M., 2005. The internationalisation of retailing: implications for supply network restructuring in East Asia and Eastern Europe. Journal of Economic Geography, 5(4), pp. 449-473.
Cohen, W.M. and Levinthal, D.A., 1990. Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35(1), pp. 128-152.
Contractor, F.J., Kundu, S.K., and Hsu, C.C., 2003. A three-stage theory of international expansion: The link between multinationality and performance in the service sector. Journal of International Business Studies, 34(1), pp. 5–18.
Cook, J. and Brown, J.S., 1999. Bridging epistemologies: The generative dance between organizational knowledge and organizational knowing. Organization Science, 10(4), pp. 381-400.
Cooper, R.G., 1975. Why New Industrial Products Fail. Industrial Marketing Management, 4(4), pp. 315-326.
Cooper, I., 1986. Innovation: New Market Investments. Oxford Review of Economic Policy, 2, pp. 1-17.
Coviello, N.E. and Munro H.J., 1997. Network Relationships and the Internationalisation Process of the Small Software Firm. International Business Review, 6(4), pp. 361-386.
Cre´pon, B., Duguet, E., and Mairesse, J., 1998. Research, innovation and productivity: an econometric analysis at the firm level. Economics of Innovation and New Technology, 7(2), pp. 115–158.
Creswell, J.W., 1998. Qualitative inquiry and research design: Choosing among five traditions. Thousand Oaks, CA: Sage.
Croucher, S., 2004. Globalization and Belonging: The Politics of Identity in a Changing World. Lanham, Boulder and New York: Rowman & Littlefield.
Cunningham, L., Young, C., and Lee, M., 2000. Methodological Triangulation in Measuring Public Transportation Service Quality, Transportation Journal, 40(1), pp. 35-37.
Cyert, R.M. and March, J.G., 1963. A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall.
Czinkota, M.R., 1982, Export development strategies: U.S. promotion policy, New York, N.Y.: Praeger.
93
Dalton, D., Serapio M., and Yoshida P., 1999. Globalizing industrial R&D, U.S. Department of Commerce, Technology Administration, Office of Technology Policy.
Damijan, J., Knell, M., Majcen, B., and Rojec, M, 2003. Technology Transfer through FDI in Top-10 Transition Countries: How Important are Direct Effects, Horizontal and Vertical Spillovers? William Davidson Working Paper, Number 549. University of Michigan.
Daniels, J. and Bracker, J., 1989. Profit performance: do foreign operations make a difference?. Management International Review, 29(1), pp. 46–57.
Davis, L.N. and Meyer, K.E. 2004. Subsidiary research and development, and the local environment. International Business Review, 13(3), pp. 359-382.
Dawson, J., 1994. The Internationalisation of Retailing Operations. Journal of Marketing Management, 10(4), pp. 267-282.
Deck, M. and Strom, M., 2002. Model of co-development emerges, Research Technology Management, 45(3), pp. 47-53.
Denzin, N.K., 1970. The Research Act in Sociology. Chicago: Aldine.
Denzin, N.K., 1978. The research act: A theoretical introduction to sociological methods. New York: McGraw-Hill.
Dickson, P. and Weaver, K.M., 2008. The role of the institutional enviornment in determining firm orientation towards entrepreneurial behavior. International Entrepreneurship and Management Journal, 4 (4), pp. 467-483.
Dittrich, K. and Duysters, G., 2007. Networking as a means to strategy change. The case of open innovation in mobile telephony. The Journal of Product Innovation Management, 24(6), pp. 510-521.
Djankov, S. and Hoekman, B., 2000, Foreign direct investment and productivity growth in Czech enterprises. World Bank Economic Review, 14(1), pp. 49-64.
Dodgson, M., 1993. Technological Collaboration in Industry. London: Routledge.
Dosi, G., 1982. Technological paradigms and technological trajectories. A suggested interpretation of the determinants and directions of technical change. Research Policy, 11(3), pp. 147-162.
Downward, P. and Mearman, A., 2007. Retroduction as Mixed-Methods triangulation in Economic Research: Reorienting Economics into Social Science, Cambridge Journal of Economics, 31(1), pp. 77-99.
Dunning, J. H., 1970. Studies in International Investments, London: Allen & Unwin.
Dunning, J.H., 1980. Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies, 11(1), pp. 9-31.
94
Dunning, J.H., 1988. The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies, 19 (1), pp. 1-31.
Dunning, J., 1993. Multinational enterprises and the global economy. Reading, MA: Addison-Westley publishing.
Dunning, J.H., 2001. The eclectic (OLI) paradigm of international production: past, present and future. International Journal of the Economics of Business, 8(2), pp. 173-190
Dunning, J. H. and Lundan S.M., 2009. The MNE as a creator, fashioner and respondent to institutional change. In: S. Collinson and G. Morgan eds., The Multinational Firm. Oxford: Blackwell Publishers, pp. 93–115.
Dyer, J. and Singh H., 1998. The relational view: Cooperative strategy and sources of interorganizational competitive advantage, Academy of Management Review, 23(4), pp. 660–679.
Economist Intelligence Unit, 2007. Country Report Russia - June 2007, The Economist Intelligence Unit Ltd., London.
EIU, RUSAL, 2006. The Russians are coming: Understanding emerging multinationals. Rusal in cooperation with Economist Intelligence Unit, White Paper Report.
Enkel, E. and Gassmann, O., 2008. Driving open innovation in the front end. The IBM case. Working Paper University of St. Gallen and Zeppelin University, St. Gallen and Friedrichshafen.
Enkel, E., Gassmann, O., and Chesbrough H., 2009. Open R&D and open innovation: exploring the phenomenon. R&D Management, 39(4), pp. 311-316.
Enkel, E., Gassmann, O., and Chesbrough, H., 2010. The Future of Open Innovation. R&D Management, 40(3), pp. 213-221.
European Commission, 2009. European Innovation Scoreboard 2008-2010: Comparative Analysis of Innovation Performance, European Commission.
Faber, J., Hesen A.B., 2004. Innovation capabilities of European nations: Cross-sectional analysis of patents and sales of product innovations. Research Policy, 33, pp.193-207.
Falke, M., 2002. Community Interests: An Insolvency Objective in Transition Economies?, No. 01/02, Frankfurter Institut für Transformationsstudien.
Falvey, R., Foster, N., and Greenaway, D., 2004. Imports, Exports, Knowledge Spillovers and Growth, Economics Letters, 85(2), pp. 209-213.
Faria, P. and Schmidt, T., 2007. International Cooperation on Innovation: Empirical Evidence for German and Portuguese Firms, ZEW Discussion Papers 07-060, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
Fetterhoff, T.J. and Voelkel, D., 2006. Managing Open Innovation in Biotechnology. Research Technology Management, 49(3), pp. 14-18.
95
Filipescu, D., 2007. Innovation and Internationalisation. A focus on the Spanish exporting firms, Research report, Universitat Autonoma de Barcelona, Business Economics Department.
Fletcher, R. 2001. A holistic approach to internationalisation. International Business Review, 10(1), pp. 25−49.
Fletcher, R., 2008, The internationalisation from a network perspective: A longitudinal study, Industrial Marketing Management, 37(8), pp. 953–964.
Ford, D. and Johnsen, T. 2001. Managing networks of supplier and customer relationships for technological innovation: initial case study, 17th IMP Conference Proceedings.
Fosfuri, A., Motta, M., and Ronde, T., 2001. Foreign direct investment and spillovers through workers’ mobility. Journal of International Economics, 53(1), pp. 205–222.
Frascati Manual, 1993. The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys of Research and Experimental , OECD.
Freeman, C. and Hagedoorn, J. 1994. Catching up or falling behind: patterns in international interfirm technology partnering. World Development, 22(5), pp.771-80.
Freytag V. 2002. Innovation in co-operation and co-operation innovation, 18th IMP Conference Proceedings, Dijon, France.
Gassmann, O. and Enkel, E., 2004. Towards a theory of open innovation: three core process archetypes. Proceedings of the R&D Management Conference, Lisbon, Portugal.
Gemunden H.G., Ritter T., and Heydebreck P., 1996. Network configuration and innovation success: an empirical analysis in German high-tech industries. International Journal of Research in Marketing, 13(5), pp. 449– 462.
Geoffrion A.M. and Krishnan R., 2003. E-business and management science: Mutual impacts. Management Science, 49(11), pp. 1445 - 1456.
Gerlinger, J.M., Beamish, P.W., and da Costa, R., 1989. Diversification Strategy and Internationalization: Implications for MNE Performance. Strategic Management Journal, 10, pp. 109-119.
Gerlinger, J.M., Tallman, S., and Olsen, D.M., 2000. Product and international diversification among Japanese multinational firms. Strategic Management Journal, 21(1), pp. 51-80.
Geroski, P.A. and Walters, C.F., 1995. Innovative activity over the business cycle. Economic Journal, 105, pp. 916–928.
Geroski, P.A., 1991. Market dynamics and Entry, Cambridge, MA: Blackwell
Geroski, P.A., 1994. Market Structure, Corporate Performance and Innovative Activity, Oxford: Oxford University Press.
Gianella, C. and Tompson W., 2007. Stimulating innovation in Russia: the role of institutions and policies, OECD Economics Department Working Papers No. 539, OECD Publishing.
96
Giuliani, E., Pietrobelli, C., and Rabellotti, R., 2005. Upgrading in Global Value Chains: Lessons from Latin American Clusters. World Development, 33(4), pp. 549-573.
Chaminade, C. and Vang, J., 2008. Globalisation of knowledge production and regional innovation policy: Supporting specialized hubs in the Bangalore software industry. Research Policy ,37(10), pp. 1684-1696.
Goles, T. and Hirscheim, R., 2000. The paradigm is dead, the paradigm is dead… long live the paradigm: the legacy of Burrel and Morgan, Omega, 28, pp. 249-268.
Gomes, L., and Ramaswamy, K., 1999. An empirical examination of the form of the relationship between multinationality and performance. Journal of International Business Studies, 30(1), pp. 173-188.
Görg, H. and Strobl E., 2001. Multinational companies and productivity spillovers: a meta analysis. The Economic Journal, 111(475), p. 723-739.
Gorodnichenko,Y., Svejnar, J., and Terrell, K., 2008. Globalization and Innovation in Emerging Markets, IZA Working Paper No. 3299.
Grant, R.M., 1987. Multinationality and performance among British manufacturing companies. Journal of International Business Studies, 18(3), pp. 79-89.
Gulati, R., 1998. Alliances and Network. Strategic Management Journal, 19(4), pp. 293-317.
Gummesson, E., 1994. Making Relationship Marketing Operational. International Journal of Service Industry Management, 5(5), pp. 5 – 20.
Gunasekaran, A., Opanasenko, J. and Yli-Olli, P., 2001. Managing Operations in Small and Medium-Sized Enterprises in Russia: An Empirical Research, International Journal of Manufacturing Technology Management, Vol. 3 (4/5), pp. 375-392.
Hagedoorn, J. and Shekenraad, J., 1994. The effect of strategic technology alliances on company performance. Strategic Management Journal, 15(4), pp. 291-309.
Hagedoorn, J., 2002. Inter-firm R&D partnerships: an overview of major trends and patterns since 1960. Research Policy, 31(4), pp. 477-492.
Hagedoorn J., 1996. Trends and patterns in strategic technology partnering since the early seventies. Review of Industrial Organization 11, pp. 601–616.
Hakansson, H. and Eriksson, A-K., 1993. Getting innovations out of supplier networks. Journal of Business-to Business Marketing, 1(3), pp. 3-34.
Hall, B.H. and Mairesse, J., 1995. Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms. Journal of Econometrics, 65, pp. 263-293.
Harris, R. and Li, Q.C., 2008. Exporting, R&D, and absorptive capacity in UK establishments, Oxford Economic Papers, 61(1), pp. 74-103.
97
Hargadon, A. and Fanelli, A., 2002. Action and Possibility: Reconciling Dual Perspectives of Knowledge in Organizations. Organization Science, 13(3), pp. 290-302.
Held, D., McGrew, A., Goldblatt, D., and Perraton. J., 1999. Global Transformations: Politics, Economics and Culture. Cambridge: Polity and Stanford, CA: Stanford University Press.
Helpman, E., Melitz, M.J., and Yeaple, S.R., 2004. Export versus FDI with heterogeneous firms. The American Economic Review, 94(1), pp. 300-316.
Hoekman, B. and Javorcik B., 2006. Global Integration & Technology Transfer. Washington, D.C.: Palgrave Macmillan and the World Bank.
Holmes S. and Smart P., 2009. Exploring open innovation practice in firm-nonprofit engagements: a corporate social responsibility perspective, R&D Management, 39(4), pp. 394-409.
Hughes, K., 1986. Export and Technology. Cambridge, UK: Cambridge University Press.
Hurmerinta-Peltomaki, L. and Nummela, N., 2006. Mixed methods in International Business Research: A Value-added Perspective. Management International Review, 46(4), pp. 439- 459.
Hymer, S., 1976. International operations of national firms: A study of foreign direct investment. Boston, MA: MIT Press.
Jaklic, A. and Svetlicic, M., 2001. Slovenia’s outward direct investment in the States of former Yugoslavia: a strategic or a defensive response?, Economic and Business Review, 3(3-4), pp. 299-323.
Jaffe A.B., Newell R.G., and Stavins R.N., 2002. Environmental Policy and technological Change, Environmental and Resource Economics, 22 (1-2), pp. 41-70.
Jauhari, V., 2007. Analyzing export intensity of the selected electronics firms in India, International Journal of Innovation Management, 11(3), pp. 379-396.
Jick, T.D., 1983. Mixing qualitative and quantitative methods: Triangulation in action. In: J. Van Maanen, ed. Qualitative methods. Beverly Hills: Sage.
Johanson, J. and Mattson, L.G., 1988. Internationalisation in industrial systems – a network approach. In: N. Hood & J. E. Vahlne, eds. Strategies in global competition. London: Routledge: London, pp. 287 – 314.
Johanson, J. and Vahlne, J-E., 1977. The Internationalization Process of the Firm - A Model of Knowledge Development and Increasing Market Commitment. Journal of International Business Studies, 8(1), pp. 23-32.
Johanson, J. and Vahlne, J.-E.,1990. The mechanism of internationalization. International Marketing Review, 7(4), pp. 11-24.
Johanson, J. and Vahlne, J.-E., 1993. Management of internationalization. In L. Zan, S. Zambon, and A.M. Pettigrew, eds. Perspectives on strategic change. London: Kluwer Academic Publishers.
98
Johnsen T. and Ford D., 2000. Managing collaborative innovation in complex networks: findings from exploratory interviews. 16th IMP-conference, Bath, UK.
Johanson, J. and Vahlne, J-E., 2009 The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), pp. 1411–1431.
Johanson, J. and Weidersheim-Paul, F., 1975. The internationalisation of the firm — Four Swedish case studies. Journal of Management Studies, 12, pp. 305−322.
Kafouros, M.I., Buckley P.J., Sharp, J.A., and Wang, C., 2008. The role of internationalization in explaining innovation performance. Technovation 28(1-2), pp. 63-74.
Karlsen, T., Silseth, P.R., Benito, G.R., and Welch, L.W., 2003. Knowledge, internationalisation of the firm, and inward–outward connections. Industrial Marketing Management, 32(5), pp. 385−396.
Kalotay, K., 2004a. Outward FDI from Central and Eastern European Countries. Economic Change and Restructuring, 37(2), pp. 141-172.
Kalotay, K., 2004b. The European flying geese: New FDI patterns for the old continent?. Research in International Business and Finance, 18(1), pp. 27-49.
Kalotay, K., 2008. How to explain the foreign expansion of Russian firms, Journal of Financial Transformation, 24, pp. 53-61.
Karagozoglu, N. and Lindell, M., 1998. Internationalization of small and mediumsized technology-based firms: An exploratory study. Journal of Small Business Management, 36(1), pp. 44-59.
Kaufmann, A. and Todtling, F., 2001. Science-industry interaction in the process of innovation: the importance of boundary-crossing between systems. Research Policy, 30(5), pp. 791-804.
Keupp M.M. and Gassmann O., 2009. Determinants and archetype users of open innovation. R&D Management, 30(4), pp. 331-341.
Kinoshita, Y., 2000. R&D and technology spillovers via FDI: Innovation and absorptive capacity. William Davidson Working Paper Number 349.
Klevorick, A.K., Levin, R.C, Nelson, R.R, and Winter, S.G., 1995. On the sources and significance of interindustry differences in technological opportunities. Research Policy, 24(2), pp. 185-205.
Klomp, L. and van Leeuwen G., 2001. Linking Innovation and Firm Performance: A New Approach. International Journal of the Economics of Business, 8(3), pp. 343–364.
Knight, G.A. and Cavusgil, T.S., 1996. The born global firm: a challenge to traditional internationalization theory. Advances in International Marketing, 8, pp. 11-26.
Kock C. and Torkkeli M., 2008. Open Innovation: A “Swingers’ Club” or “Going steady”?, IE Business School Working paper WP08-11.
99
Kogut, B. and Zander, U., 1992. Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3, pp.383-397.
Kokko, A., 1994. Technology, Market Characteristics, and Spillovers. Journal of Development Economics, 43, pp. 279-293.
Korhonen H., 1999. Inward – Outward Internationalization of small and medium enterprises, Acta Universitatis Oeconomica Helsingiensis A-147, Helsinki School of Economics and Business Administration, Helsinki.
Kornai, J., 1990. The Affinity between Ownership Forms and Coordination Mechanisms: The Common Experience of Reform in Socialist Countries. Journal of Economic Perspectives, 4(3), pp. 131-147.
Kotler, P., 1992. Total Marketing. Business Week Advance, Executive Brief 2.
Kotler F. and Caslione J., 2009. Chaotics: The Business of Managing and Marketing in The Age of Turbulence. Amacom Publishing.
Krot, P., 2008, The Russian Innovation System – an International Perspective, Research report 206, Lappeenranta University of Technology, Finland.
Kumar, N. and N.S. Siddharthan, 1994. Technology, Firm Size and Export Behaviour in Developing Countries: The Case of Indian Entreprises. Journal of Development Studies, 31(2), pp. 289-309.
Lane, P.L. and Lubatkin, M., 1998. Relative Absorptive Capacity and Interorganizational Learning. Strategic Management Journal, 19(5), pp. 461-477.
Lachenmaier, S. and Wossmann, L., 2006. Does innovation cause exports? Evidence from exogenous innovation impulses and obstacles using German micro data. Oxford Economic Papers, 58(2), pp. 317-350.
Laursen, K. and Salter, A., 2006. Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms. Strategic Management Journal, 27(2), pp. 131-150.
Lefebvre, E., Lefebvre, L.A., and Bourgault, M., 1998. R&D-related capabilities as determinants of export performance. Small Business Economics, 10(4), pp. 365–377.
Lichtenthaler, U., 2009. Outbound open innovation and its effect on firm performance: examining environmental influences. R&D Management, 39(4), pp. 317-330.
Lin, P. and Saggi, K., 2002. Under-provision of Inputs in Joint Ventures with Market Power, Bulletin of Economic Research, 54(2), pp. 189-96.
Lincoln, Y.S. and Guba, E.G., 1985. Naturalistic inquiry. Beverly Hills, CA: Sage Publications.
Liuhto, K., 2001a. Russian Giants Go West - Operations of Gazprom and Lukoil Abroad. Research Report No 122, Department of Industrial Engineering and Management, Lappeenranta University of Technology.
100
Liuhto, K. 2001b. East Goes West - The Internationalisation of Eastern Enterprises. Studies in Industrial Engineering and Management, No 14, Department of Industrial Engineering and Management, Lappeenranta University of Technology.
Lu, J.W. and Beamish, P.W., 2001. The internationalization and performance of SMEs. Strategic Management Journal, 22(6-7), pp. 565–586.
Lundvall, B.A., Johnson, B., Andersen, E.S., and Dalum B., 2002. National systems of production, innovation and competence building. Research Policy, 31(2), pp. 213–231.
Luo, X., Slotegraaf R.J., and Pan X., 2006. Cross-Functional “Coopetition”: The Simultaneous Role of Cooperation and Competition within Firms. Journal of Marketing, 70(2), pp.67-80.
Luostarinen, R., 1994. Internationalization of Finnish firms and their response to global challenges, UNU/WIDER Publications.
Mairesse, J. and Mohnen, P., 2003. R&D and productivity: a re-examination in light of the innovation surveys. DRUID Summer conference, Copenhagen, Denmark.
Mansury, M.A. and Love, J.H., 2008. Innovation, productivity and growth in US business services: A firm-level analysis. Technovation, 28(1-2). pp. 52-62.
Mendelson, H., 2000. Organizational architecture and sucecess in the information technology industry. Management Science, 46(4), pp. 513-529.
Miles, R.E., Miles G., and Snow C.C., 2004. Collaborative Entrepreneurship. How Groups of Networked Firms Use Continuous Innovation to Create Economic Wealth? Stanford, CA: Stanford University Press.
Molero J., 1998. Patterns of internationalization of Spanish innovatory firms. Research Policy, 27(5), pp. 541-558.
Narula R. and Hagedoorn J., 1999. Innovating through strategic alliances. Moving towards international partnerships and contractual agreements. Technovation, 19(5), pp. 283–294.
Nassimbeni G., 2001. Technology, innovation capacity, and the export attitude of small manufacturing firms: a logit/tobit model. Research Policy, 30, pp. 245–262.
Nelson, R.R., Innovation and economic development: Theoretical retrospect and prospect. In: J. Katz, ed. Technology Generation in Latin American Manufacturing Industries, London : Macmillan, pp. 78–93.
Neyer A.K., Bullinger A.C., and Moeslein K. M., 2009. Integrating inside and outside innovators: a sociotechnical systems perspective. R&D Management, 39(4), pp. 410-419.
OECD, 2005. Fostering public-private partnership for innovation in Russia, OECD Publishing.
Ohmae, K., 1990. The Borderless World. London: Harper Collins
Onwuegbuzie, A. J., 2003. Expanding the framework of internal and external validity in quantitative research. Research in the Schools, 10(1), pp. 71- 90.
101
Onwuegbuzie, A.J. and Johnson, R.B., 2004. Mixed method and mixed model research. In B. Johnson and L. Christensen, Educational research: Quantitative, qualitative, and mixed approaches. Boston, MA: Allyn and Bacon.
Oslo Manual, 2007. Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition, OECD.
Pack, H., 1993. Technology Gaps Between Industrial and Developing Countries: Are There Dividends for Latecomers?, Proceedings of the World Bank Annual Conference on Development Economics, Washington DC.
Patel, P. and Pavitt, K., 1991. Large Firms in the Production of the World's Technology: An Important Case of Non-Globalisation, Journal of International Business Studies, 22(1), pp. 1-21.
Pchounetlev, V., 2000. Internationalisation strategies of Russian companies. Second International Conference Transition and Enterprise Restructuring in Eastern Europe, 17-19 August 2000, Hellerod, Denmark.
Pianta, M. and Vaona, A., 2007. Innovation and productivity in European Industries. Economics of Innovation and New technology, 16 (7), pp.485-499.
Pine J., 1993. Mass Customization, The new Forntier in Business Competition, Harvard Business School Press.
Piva, M. and Vivarelli, M., 2007. Is demand-pulled innovation equally important in different groups of firms?. Cambridge Journal of Economics 1(31), pp. 691–710.
Pla-Barber, J.P. and Alegre, J., 2007. Analyzing the link between export intensity, innovation and firm size in a science-based industry. International Business Review, 16(3), pp. 275–293.
Podmetina D., Smirnova M., Väätänen J., and Torkkeli M., 2009. Innovativeness and International Operations. International Journal of Innovation Management, 3(2). pp. 1–23.
Podsakoff, P.M., Mackenzie, S.B., and Lee, J-Y., 2003. Common Method Biases in Behavioural Research: A Critical Review of the Literature and Recommended Remedies. Journal of Applied Psychology, 88(5), pp. 879-903.
Porter, M.E., 1979. How competitive forces shape strategy. Harvard business Review, 57(2), pp. 137-145.
Porter, M.E., 1990. The Competitive Advantage of Nations. London: Macmillan.
Reid, S. D., 1981. The decision maker and export entry and expansion. Journal of International Business Studies, 12(2), pp. 101−112.
Robinson, R., 1988. The International Transfer of Technology: Theory, Issues, and practice. Cambridge, Massachusetts: Ballinger Publishing Company.
Lopez-Rodriguez, J. and Garcia-Rodriguez, R., 2005. Technology and export behaviour: A resource-based view approach. International Business review, 14(5), pp.539-557.
102
Rogers, E.M., 1962. Diffusion of Innovation. New York: Free Press.
Rogers, E. M., 2003. Diffusion of Innovations 5th ed. New York: Free Press.
Romer, P.M., 1986. Increasing Returns and Long Run Growth. Journal of Political Economy, 94(5), pp. 1002–1037.
Rominj H. and Albaladejo, M., 2002. Determinants of Innovation Capability in Small Electronics and Software Firms in Southeast England. Research Policy, 31(7), pp. 1053-1067.
Roper, S. and Love J.H., 2002. Innovation and export performance: evidence from the UK and German manufacturing plants. Research Policy, 31(7), pp. 1087–1102.
Rosstat, 2010. Federal State Statistics Service, Russian Federation. http://www.gks.ru/wps/wcm/connect/rosstat/rosstatsite/main/
Rospatent. 2007. Annual report 2006, Russian Federal Service for Intellectual Property, Patents, and Trademarks, Rospatent.
Salmi P. and Torkkeli M., 2009. Success factors of interorganisational knowledge transfer: a case of a collaborative public–private R&D project, International Journal of Business Innovation and Research, 3(2), pp. 109 - 125
Sandberg, B., 2005. The Hidden Market – Even for those who create it? Customer-Related Proactiveness in Developing Radical Innovations. DSc. Econ. Dissertation. Publications in the Turku School of Economics and Business Administration Series A-5: Turku, Finland.
Scott, W.R., 2001. Institutions and Organizations. Thousand Oaks, CA: Sage.
Schumpeter, J.A., 1934. Theory of Economic Development, Cambridge, MA: Harvard University Press.
Schaffer, M. and Kuznetsov, B., 2007. Productivity In: R. Desai and I. Goldberg, eds. Enhancing Russia’s Competitiveness and Innovative Capacity, Finance and Private Sector Development Department, World Bank, Washington D.C.
Sinani, E. and Meyer, K., 2004. Spillovers of technology transfer from FDI: the case of Estonia. Journal of Comparative Economics, 32(3), pp. 445-466.
Shadish, W.R., Cook, T.D., and Campbell, D.T., 2001. Experimental and quasi-experimental designs for generalized causal inference. Houghton Mifflin.
Smirnova, M.M., Podmetina, D., Väätänen, J., and Kouchtch, S., 2009. Key stakeholders' interaction as a factor of product innovation: the case of Russia. International Journal of Technology Marketing, 4(2/3), pp. 230-247.
Smith P. G. and Blanck E., 2002. From experience: leading dispersed teams. The Journal of Product Innovation Management, 19(4), pp. 294–304.
Solow R., 1956. A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70(1), pp. 65-94.
103
Sterlacchini, A., 1999. Do innovative activities matter to small firms in non-R&D-intensive industries? An application to export performance. Research Policy, 28(8), pp. 819–832.
Stopford, J.M. and L.T. Wells, Jr, 1972. Managing the Multinational Enterprises. New York: Basic Books.
Sutton, J., 2007. Quality, Trade and the Moving Window: The Globalization Process, The Economic Journal, 117(524), pp. 469-498.
Swan T., 1956. Economic Growth and Capital Accumulation. Economic Record, 32, pp. 334–361.
Tallman, S. and Li, J., 1996. Effects of International Diversity and Product Diversity on the Performance of Multinational Firms. Academy of Management Journal, 39(1), pp. 179-196.
Tang, L. and Koveos, P., 2008. A Framework to Update Hofstede’s Cultural Value Indices: Economic Dynamics and Institutional Stability. Journal of International Business Studies, 39(6), pp. 1045-1063.
Tarr D. and Thomson P., 2004. The Merits of Dual Pricing of Russian Natural Gas, The World Economy, 27(8), pp. 1173-1194.
Tashakkori, A., and Teddlie, C., 1998. Mixed methodology: Combining qualitative and quantitative approaches. Thousand Oaks, CA: Sage.
Tashakkori, A. and Teddlie, C., 2003. The handbook of mixed methods in the social and behavioral sciences. Thousand Oaks, CA: Sage.
Teece, D.J., 1984. Exonomic analysis and strategic management. California Management Review, 16(3), pp. 87-110.
Teece, D.J., 2007. Explicating dynamic capabilities: The nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28(13), pp. 1319-1350.
Teece, D. and G. Pisano, 1994. The Dynamic Capabilities of Firms: An introduction. Industrial and Corporate Change, 3(3), pp. 537-556.
Teece, D.J., Pisano, G., and Shuen, A., 1997. Dynamic capabilities and strategic mangement. Strategic Management Journal, 18(7), pp.509-533.
Tether, B., 2002. Who co-operates for innovation, and why. An empirical analysis, Research Policy, 31(6), pp. 947-967.
Thomas, D.E. and Eden, L., 2004. What is the shape of the multinationality-performance relationship?. Multinational Business Review, 12(1), pp. 89-110.
Torkkeli M., Podmetina D., and Väätänen J., 2009. Knowledge Absorption in Emerging Economy –Role of Foreign Investments and Trade Flows in Russia. International Journal of Business Excellence, 2(3/4), pp. 269-284.
UNCTAD (2010) World Investment Report, UNCTAD.
104
van Dijk M., 2002. The determinants of export performance in developing countries: The Case of Indonesian Manufacturing. Working Paper, Eindhoven Centre for Innovation Studies, The Netherlands.
Veugelers, R. and Cassiman, B., 2005. R&D cooperation between firms and universities: some empirical evidence from Belgian manufacturing. International Journal of Industrial Organization, 23(5-6), pp. 355 - 379.
von Hippel, E., 1988. The Sources of Innovation. New York: Oxford University Press.
Vivero, R., 2004. The Impact of Process Innovations on Firm’s Productivity Growth: The Case of Spain. Applied Economics, 34(8), pp. 1007–1016.
Vernon, R., 1966. International Investments and international trade in the product cycle. Quarterly Journal of Economics, 80(2), pp. 190−207.
Vernon, R., 1971. Sovereignty at Bay: The Transnational Spread of U.S. Enterprises. London: Longman.
Väätänen, J. and K. Liuhto, 2000. East goes West the internationalization of Russian corporations, Proceedings of 9th IMDA Conference, San Jose, Costa Rica.
Väätänen, J., Podmetina D. and Aleksandrova, M., 2007. International technology Transfer in the Russian Economy- The effect of foreign direct investment spillovers. Global Business and Finance Review, 12(3).
Väätänen, Juha, 2008. Russian Enterprise Restructuring - the Effect of Privatisation and Market Liberalisation on the Performance of Large Enterprises. Dissertation. Lappeenranta University of Technology.
Väätänen J., Podmetina D., and Pillania R. K. 2009. Internationalization and Company Performance: A Study of Emerging Russian Multinationals. Multinational Business Review, 17(2), pp. 157-178.
Wagner, J.W., 1995. Review of: Beyond the bilingual classroom: Literacy acquisition among Peruvian Amazon communities. Notes on Literacy 21(2), pp. 56-59
Wakelin, K., 1998. Innovation and export behaviour at the firm level. Research Policy, 26(7-8), pp. 829-841.
Walter, A., Ritter, T., and Gemunden, H.G., 2001. Value-creation in buyer-seller relationships: theoretical considerations and empirical results from a supplier’s perspective. Industrial Marketing Management, 30(4), pp. 365-377.
Wang, C. and Kafouros, M., 2009. What Factors Determine Innovation Performance in Emerging Economies? Evidence from China. International Business Review, 18(6), pp. 606-616.
Watkins, A., 2003. From knowledge to wealth: transforming Russian science and technology for a modern knowledge economy, World Bank Policy Research Working Paper No. 2974.
105
Webb, E.J., Campbell, D.T., Schwartz, R.D., and Sechrest, L., 1966. Unobtrusive Measures: Nonreactive Measures in the Social Sciences. Chicago: Rand McNally.
Welch, L.S., & Luostarinen, R.K., 1988. Initial exports — A marketing failure. Journal of Management Studies, 17(3), pp. 333−344.
Welch, D.E., & Welch, L.S., 1996. The internationalisation process and networks: A strategic management process. Journal of International Marketing, 4(3), pp. 11−26.
Welch, L.S. and Benito, G.R.G., 1996. De-Internationalisation, Annual Meeting of the Academy of International Business, Banf, Canada, September 26–29, 1996.
Wheelright, S. and Clark K., 1992. Revolutionizing Product Development, Quantum Leaps In Speed, Efficiency, And Quality. New York: The Free Press.
Wignaraja, G., 2011. Innovation, learning ,and exporting in China: Does R&D or a technology index matter? Forthcoming in Journal of Asian Economics.
Woerter M. and Roper S., 2010. Openness and innovation—Home and export demand effects on manufacturing innovation: Panel data evidence for Ireland and Switzerland. Research Policy, 39(1), pp. 155–164.
Wonglimpiyarat J., 2008. Systematic evaluation of economic and financial impacts in the development and commercialisation of research, International Journal of Business Innovation and Research, 2(4). pp. 420 - 436.
Wright, P., Kroll, M., Pringle, C., and Johnson, J., 1990. Organization types, conduct, profitability and risk in the semiconductor industry. Journal of Management Systems, 2(2), pp. 33-48.
Yin, R.K., 2003. Case study research design and methods, 3rd Edition Thousand Oaks, CA: Sage Publications.
Yiu, D. and Makino, S., 2002. The choice between joint venture and wholly owned subsidiary: An institutional perspective. Organization Science, 13(6), pp. 667–683.
Young, S., 1987. Business Strategy and the Internationalization of Business: Recent Approaches. Managerial and Decision Economics, 8(3), pp. 31-40.
Zack, M., 1999. Developing a knowledge strategy. California Management Review, 41(3), pp. 125-145.
Zahra, S. A., Ireland, R. D., and Hitt, M. A., 2000. International expansion by new venture firms: International diversity, mode of market entry, technological learning, and performance. Academy of Management Journal, 43(5), pp. 925–960.
Zanfei, A., 2000. Transnational Firms and the Changing Organisation of Innovative Activities. Cambridge Journal of Economics, 24(5), pp. 515-542.
Zheltova V., 2007. Science – Technology Foresight in Russia: Regional Aspects. III Russian Venture Forum, Saint-Petersburg, Russia.
10
6
App
endi
x 1:
Cor
e pa
pers
Inw
ard
and
Out
war
d In
tern
atio
naliz
atio
n an
d In
nova
tion
Aut
hor
(s)
Jour
nal,
year
A
ims
Sam
ple,
m
etho
d V
aria
bles
R
esul
ts
OU
TW
AR
D
Wak
elin
K.
Inno
vatio
n an
d ex
port
beha
vior
at
the
firm
leve
l
Res
earc
h po
licy,
26,
pp
. 829
-84
1, 1
998
Rol
e of
in
nova
tion
in
dete
rmin
ing
expo
rt be
havi
or
Sam
ple
of 3
20
UK
firm
s 198
8 - 1
992
Inno
vato
rs v
s non
-inno
vato
rs
Expo
rt be
havi
or: 1
) pr
obab
ility
of a
firm
to e
xpor
t 2)
pro
pens
ity to
exp
ort
R&
D e
xpen
ditu
res
Size
, em
ploy
ees,
ULC
N
umbe
r of i
nnov
atio
ns
Smal
l inn
ovat
ive
firm
s are
less
like
ly to
exp
ort
and
mor
e lik
ely
to se
rve
the
dom
estic
mar
ket
alon
e th
an th
e no
n-in
nova
tive
firm
s. O
ppos
ite fo
r ´la
rge
size
firm
s: th
e m
ore
inno
vatio
ns, t
he h
ighe
r pr
obab
ility
to e
xpor
t. C
ost o
f ent
erin
g ex
port
mar
ket i
s hig
her f
or sm
all f
irms,
whi
ch th
us
pref
er to
exp
loit
inno
vatio
n on
the
dom
estic
m
arke
t M
oler
o, J
. Pat
tern
s of
In
tern
atio
naliz
atio
n of
Spa
nish
in
nova
tory
firm
s
Res
earc
h Po
licy
27,
pp 5
41-5
58
1998
To
cont
ribut
e to
th
e de
bate
ab
out t
he
fact
ors
dete
rmin
ing
the
grow
ing
inte
rnat
iona
liza
tion
of
SMEs
Span
ish
814
inno
vatin
g fir
ms
Dis
crim
inan
t an
alys
is a
nd
Logi
t re
gres
sion
m
odel
s.
Inte
rnat
iona
lizat
ion:
Non
e, E
xpor
ters
, Exp
orte
rs +
de
velo
ping
tech
nolo
gica
l tas
ks a
broa
d,
full
rang
e of
inte
rnat
iona
l act
ivity
(exp
orts
of g
oods
, te
chno
logi
cal a
ctiv
ities
and
FD
Is)
The
varia
bles
bel
ong
to e
cono
mic
, org
aniz
atio
nal
and
tech
nolo
gica
l sph
eres
.
Thus
, loc
atio
n as
pect
s lik
e th
e si
ze o
f the
mar
kets
, th
e co
sts o
f pro
duct
ion,
the
leve
l of p
rices
and
so
on a
re im
porta
nt fa
ctor
s for
exp
lain
ing
subs
tant
ial
parts
of t
he in
tern
atio
nal s
trate
gies
of t
he
com
pani
es, w
hate
ver t
he le
vel w
e ta
ke in
to
cons
ider
atio
n. T
hey
are
pres
ent i
ndee
d in
ex
porti
ng, i
nves
ting
and
deve
lopi
ng te
chno
logi
cal
task
s. O
ther
fact
ors r
efer
ring
to fi
rms’
or
gani
zatio
nal a
nd te
chno
logi
cal c
apab
ilitie
s are
al
so v
ery
sign
ifica
nt fo
r the
firm
s.
Ster
lacc
ini A
. Do
inno
vativ
e ac
tiviti
es
mat
ter t
o sm
all
firm
s in
non-
R&
D-
inte
nsiv
e in
dust
ries?
A
n ap
plic
atio
n to
ex
port
perf
orm
ance
Res
earc
h po
licy,
28,
pp
. 819
-83
2, 1
999
Rol
e o
f in
nova
tion
on e
xpor
t pe
rfor
man
ce
143
smal
l fir
ms i
n no
n-R
&D
inte
nsiv
e se
ctor
s in
Nor
ther
n an
d C
entra
l Ita
ly.
Ecle
ctic
ap
proa
ch
Prod
uct i
nnov
atio
n ac
tiviti
es ,
tech
nolo
gica
l and
fin
anci
al d
imen
sion
s of f
irms’
cap
ital s
tock
, and
or
gani
zatio
nal a
nd m
arke
t pos
ition
, exp
ort
perf
orm
ance
.
Even
on
non
R&
D in
tens
ive
sect
ors i
nnov
atio
n is
im
porta
nt d
eter
min
ant o
f firm
s’ e
xpor
t pe
rfor
man
ce.
Inve
stm
ent i
n in
nova
tive
capi
tal g
oods
, and
the
impo
rtanc
e of
such
goo
ds fo
r the
firm
s’ c
apita
l st
ock
bo
th m
atte
r as d
oes s
ize
and
the
posi
tion
of th
e fir
m in
the
valu
e- c
hain
. N
assi
mbe
ni G
. Te
chno
logy
, in
nova
tion
capa
city
, an
d th
e ex
port
attit
ude
of sm
all
man
ufac
turin
g fir
ms:
a lo
git /
tobi
t m
odel
Res
earc
h po
licy
30
pp. 2
45 –
26
2
2001
Com
pare
ex
porte
rs
and
non-
expo
rters
in
term
s of
tech
nolo
gy,
inno
vatio
n ab
ility
165
smal
l Ita
lian
man
ufac
turin
g fir
ms
LOG
IT /
TOB
IT m
odel
1. T
echn
olog
y le
vers
(pro
duct
ion,
qua
lity
cont
rol,
hand
ling,
des
ign,
info
rmat
ion,
and
com
mun
icat
ion
tech
nolo
gies
) 2.
Cap
acity
to in
nova
te (L
iker
t sca
le)-
inno
vatio
n ab
ility
in p
rodu
ct, d
esig
n, p
roce
ss.
3. C
olla
bora
tion
capa
bilit
y be
twee
n cu
stom
ers a
nd
supp
liers
4.
Firm
cha
ract
eris
tics (
size
, age
, pro
duct
type
)
The
prop
ensi
ty o
f sm
all f
irms t
o ex
port
is st
rictly
lin
ked
to th
eir a
bilit
y to
NPD
and
to d
evel
op v
alid
in
ter-
orga
niza
tiona
l rel
atio
ns.
Bas
ile, R
. Ex
port
beha
vior
of
Italia
n m
anuf
actu
ring
firm
s ov
er th
e ni
netie
s:
the
role
of
Res
earc
h Po
licy
30
(8) p
p.
1185
-120
1
2001
Rel
atio
nshi
p be
twee
n in
nova
tion
and
expo
rt be
havi
or o
f Ita
lian
Cra
gg’s
sp
ecifi
catio
n of
the
Tobi
t m
odel
. 40
00 fi
rms
Expo
rt be
havi
or is
def
ined
in a
dua
l way
: as a
pr
obab
ility
for a
firm
to e
xpor
t and
as t
he p
rope
nsity
to
expo
rt fo
r the
exp
ortin
g fir
ms.
Ex
port
Inte
nsity
In
nova
tion
capa
bilit
ies
Inno
vatio
n ca
pabi
litie
s are
im
porta
nt c
ompe
titiv
e fa
ctor
s and
exp
lain
het
erog
enei
ty in
exp
ort
beha
vior
. How
ever
, the
exc
hang
e ra
te d
eval
uatio
n re
duce
s the
impo
rtanc
e of
tech
nolo
gica
l co
mpe
titiv
enes
s in
affe
ctin
g ex
ports
bec
ause
it
allo
ws a
lso
non-
inno
vatin
g fir
ms t
o en
ter f
orei
gn
10
7
inno
vatio
n m
anuf
actu
ring
firm
s m
arke
ts. T
he e
xpor
t int
ensi
ty o
f inn
ovat
ing
firm
s is
syst
emat
ical
ly h
ighe
r tha
n th
at o
f non
-in
nova
ting
firm
s.
Rop
er S
. A: &
L
ove,
J. H
. In
nova
tion
and
expo
rt pe
rfor
man
ce:
evid
ence
from
UK
an
d G
erm
an
man
ufac
turin
g pl
ants
Res
earc
h po
licy,
31,
pp
108
7-11
02,
200
2
Exam
ine
impa
ct o
f fir
ms’
act
ual
inno
vatio
n de
cisi
ons
on
thei
r exp
ort
perf
orm
ance
Plan
t lev
el
surv
ey- 1
700
in U
K a
nd
1300
in
Ger
man
y.
Prob
it,
trunc
ated
re
gres
sion
m
odel
s
Expo
rting
(%),
expo
rt pr
open
sity
(% o
f sal
es)
Inno
vatio
n m
easu
res:
pro
duct
inno
vatio
n (%
pla
nts)
, in
nova
tion
inte
nsity
(inn
ovat
ion
per e
mpl
oyee
), ne
w
prod
ucts
(% sa
les)
si
ze, o
wne
rshi
p, in
tern
al re
sour
ces,
indu
stry
eff
ect o
n in
nova
tion
outp
ut
Sign
ifica
nt d
iffer
ence
s bet
wee
n th
e de
term
inan
ts
of e
xpor
t per
form
ance
am
ong
firm
s in
the
sam
ple.
P
rodu
ct in
nova
tion
has s
trong
eff
ect o
n th
e pr
obab
ility
and
pro
pens
ity o
f exp
ort.
Inno
vativ
enes
s is p
ositi
vely
rela
ted
to e
xpor
t.
Lop
ez R
odri
guez
, J.
& G
arci
a R
odri
guez
, R. M
. Te
chno
logy
and
ex
port
beha
vior
: A
reso
urce
-bas
ed v
iew
ap
proa
ch
Inte
rnat
ion
al B
usin
ess
revi
ew 1
4 pp
539
-557
20
05
Tech
nolo
gic
al c
apac
ity
effe
ct o
n de
cisi
on to
ex
port
and
expo
rt in
tens
ity
1234
Spa
nish
m
anuf
actu
ring
firm
s usi
ng
non-
linea
r re
gres
sion
m
odel
s.
Expo
rts (d
icho
tom
ous v
aria
ble
and
expo
rt %
) Fi
rm’s
leve
l of t
echn
olog
ical
reso
urce
s: R
&D
In
tens
ity, p
rodu
ct in
nova
tion
(dic
hoto
mou
s var
iabl
e),
num
ber o
f pro
duct
inno
vatio
ns, p
aten
ts, t
he fi
rm
unde
rtake
s inn
ovat
ions
in it
s pro
duct
ive
proc
esse
s or
not.
Prod
uct i
nnov
atio
ns, p
aten
ts a
nd p
roce
ss
inno
vatio
ns p
ositi
vely
and
sign
ifica
ntly
aff
ect
both
the
deci
sion
to e
xpor
t and
the
expo
rt in
tens
ity. R
&D
spen
ding
inte
nsity
is n
ot
sign
ifica
nt in
the
deci
sion
to e
xpor
t, al
thou
gh it
is
sign
ifica
nt in
exp
ort i
nten
sity
.
Piva
, M. &
V
ivar
elli
M. I
s de
man
d-pu
lled
inno
vatio
n eq
ualit
y im
porta
nt in
di
ffer
ent g
roup
s of
firm
s?
Cam
brid
ge
Jour
nal o
f Ec
onom
ics
31 (5
) 691
-71
0,
2007
Rol
e of
sale
s gr
owth
on
stim
ulat
ing
R&
D
inve
stm
ents
an
d in
nova
tions
Bal
ance
d pa
nel o
f 216
Ita
lian
firm
s (1
995-
200
0).
Leas
t squ
ares
du
mm
y va
riabl
e co
rrec
ted
estim
ator
Sale
s, R
&D
, Em
ploy
ees,
R&
D /
tota
l inv
estm
ents
, ex
port
inte
nsity
, ind
ustry
eff
ect (
low
tech
to h
igh
tech
). Ex
port
dem
and
has a
stro
nger
influ
ence
on
inno
vatio
n ex
pend
iture
s tha
n do
mes
tic sa
les.
Expo
rting
firm
s, liq
uidi
ty -
con
stra
ined
firm
s, un
subs
idiz
ed
firm
s ar
e se
nsiti
ve
to
sale
s in
de
cidi
ng R
&D
.
Cas
tella
ni, D
. &
Zan
fei,
A.
Inte
rnat
iona
lizat
ion,
In
nova
tion,
pr
oduc
tivity
: How
do
firm
s diff
er in
Ita
ly?
The
Wor
ld
econ
omy
2007
Rel
atio
nshi
p be
twee
n fir
m
hete
roge
neit
y an
d in
tern
atio
nali
satio
n m
odes
Sour
ces:
the
C
IS a
nd
ELIO
S.
Reg
ress
ion
anal
ysis
Prod
uctiv
ity a
nd R
&D
mea
sure
s of i
nnov
ativ
e be
havi
or.
By
com
bini
ng b
oth
type
s of m
easu
res,
thei
r lin
ks w
ith
vario
us in
tern
atio
naliz
atio
n m
odes
can
be
anal
yzed
. In
nova
tion
inpu
ts a
nd o
utpu
ts.
Firm
s’ in
tern
atio
naliz
atio
n (e
xpor
ts) a
nd p
erfo
rman
ce
Inte
rnat
iona
l inv
olve
men
t Ec
onom
ic a
nd in
nova
tive
perf
orm
ance
s and
a fu
rther
m
ode
of in
tern
atio
naliz
atio
n (c
reat
ion
of n
on-
man
ufac
turin
g ac
tiviti
es a
broa
d). T
hat i
s a so
rt of
in
term
edia
te c
ateg
ory
betw
een
pure
exp
orte
rs a
nd th
e cr
eatio
n of
fore
ign
man
ufac
turin
g af
filia
tes.
Firm
s with
a h
igh
enga
gem
ent i
n fo
reig
n ac
tiviti
es, a
lso
exhi
bit b
ette
r eco
nom
ic a
nd
inno
vativ
e pe
rfor
man
ces.
Com
pani
es w
ith th
e hi
ghes
t int
erna
tiona
l inv
olve
men
t, na
mel
y fir
ms
with
man
ufac
turin
g ac
tiviti
es a
broa
d, a
re
char
acte
rized
by
both
the
high
est p
rodu
ctiv
ity
prem
ia a
nd th
e hi
ghes
t R&
D e
ffor
ts a
nd
inno
vativ
e pe
rfor
man
ces.
Com
pani
es w
ith a
low
er c
omm
itmen
t to
fore
ign
mar
kets
, do
show
leve
ls o
f pro
duct
ivity
that
stan
d be
twee
n th
ose
of m
ultin
atio
nals
with
m
anuf
actu
ring
activ
ities
abr
oad
and
thos
e of
mer
e ex
porte
rs; b
ut th
ey d
o no
t inn
ovat
e m
ore
than
the
latte
r.
Pla-
Bar
ber,
J. &
A
legr
e, J
. In
tern
atio
nal
bus
ines
s R
elat
ions
hip
betw
een
Sam
ple
of 1
21
firm
s in
the
Expo
rt in
tens
ity
Firm
size
(the
tota
l num
ber o
f em
ploy
ees a
nd to
tal
Firm
size
is n
ot a
det
erm
inan
t for
inno
vatio
n or
fo
r exp
ort i
nten
sity
. How
ever
, the
resu
lts sh
ow a
10
8
Ana
lysi
ng th
e lin
k be
twee
n ex
port
inte
nsity
, inn
ovat
ion
and
firm
size
in a
sc
ienc
e ba
sed
indu
stry
revi
ew, 1
6 pp
275
-293
20
07
expo
rt in
tens
ity,
inno
vatio
n an
d si
ze
Fren
ch
biot
echn
olog
y in
dust
ry
sale
s)
Firm
exp
erie
nce
rega
rdin
g in
tern
atio
naliz
atio
n In
nova
tion
posi
tive
and
sign
ifica
nt li
nk b
etw
een
inno
vatio
n an
d ex
port
inte
nsity
.
Cha
dha
A. P
rodu
ct
Cyc
les,
inno
vatio
n,
and
expo
rt: A
stud
y of
Indi
an
Phar
mac
eutic
als
Wor
ld
Dev
elop
me
nt, V
ol. 3
7,
No
9, p
p 14
78-1
483,
20
09
The
role
of
FPR
s on
the
expo
rt co
mpe
titiv
enes
s.
131
Indi
an
phar
mac
eutic
al
firm
s 199
8 –
2004
, GM
M,
dyna
mic
pan
el
data
mod
el
Dep
ende
nt: E
xpor
ts
Inde
pend
ent:
Tech
nolo
gy o
utpu
t ind
icat
or g
iven
by
fore
ign
pate
nt ri
ghts
for i
ndiv
idua
l firm
s (FP
Rs)
–du
mm
y. C
ontro
l for
size
(sal
es),
finan
cial
stat
istic
s.
The
tech
nolo
gy p
roxi
ed b
y FP
Rs h
as a
pos
itive
im
pact
on
expo
rts. D
evel
opin
g co
untri
es w
ith
inno
vativ
e sk
ills
for p
roce
ss in
nova
tions
are
ca
pabl
e of
pen
etra
ting
inte
rnat
iona
l mar
kets
in th
e la
ter s
tage
s of t
he p
rodu
ct c
ycle
by
usin
g pa
tent
s
Woe
rter
M. &
R
oper
S.,
Ope
nnes
s an
d In
nova
tion
– H
ome
and
expo
rt de
man
d ef
fect
on
man
ufac
turin
g in
nova
tion:
Pan
el
data
evi
denc
e fo
r Ir
elan
d an
d Sw
itzer
land
Res
earc
h po
licy
39
155-
164
2010
The
role
of
“hom
e” a
nd
“exp
ort”
m
arke
t de
man
d in
st
imul
atin
g m
anuf
actu
ring
inno
vatio
n
Pane
l dat
a,
Irel
and,
Sw
itzer
land
, 19
94-2
005,
45
25
obse
rvat
ions
, O
LS ra
ndom
ef
fect
, TO
BIT
, PR
OB
IT
Dep
ende
nt: P
rodu
ct a
nd p
roce
ss in
nova
tion
(bin
ary)
, Sa
les (
%) o
f new
pro
duct
s In
depe
nden
t: W
eigh
ed h
ome
and
expo
rt m
arke
t gro
wth
ch
arac
teris
tics;
Firm
leve
l cha
ract
eris
tics (
size
, dum
my
for f
orei
gn o
wne
rshi
p, e
duca
tion
of e
mpl
oyee
s, R
&D
, kn
owle
dge,
fina
nce,
skill
s, ag
e); S
ecto
ral d
umm
ies;
Ti
me
dum
mie
s.
Expo
rt de
man
d ha
s a st
rong
er in
fluen
ce o
n in
nova
tion
expe
nditu
res t
han
dom
estic
sale
s (S
witz
erla
nd).
Inno
vatio
n pe
rfor
man
ce d
eter
min
ed la
rgel
y by
fir
m le
vel c
apab
ilitie
s.
Cas
sim
an B
., G
olov
ko E
. &
Mar
tinez
-Ros
E.
Inno
vatio
n, e
xpor
ts
and
prod
uctiv
ity
Inte
rnat
ion
al Jo
urna
l of
In
dust
rial
orga
niza
tion
28 p
p 37
2-37
6
2010
How
firm
pr
oduc
tivity
an
d ex
ports
re
late
to th
e fir
m’s
in
nova
tion
deci
sion
s
Pane
l dat
a of
14
78 S
pani
sh
man
ufac
turin
g fir
ms-
test
ing
diff
eren
ces i
n di
strib
utio
n
Expo
rters
vs n
on- e
xpor
ters
, pro
duct
pro
cess
in
nova
tions
TF
P –
Tota
l fac
tor p
rodu
ctiv
ity
Stro
ng e
vide
nce
that
pro
duct
inno
vatio
n (a
nd n
ot
proc
ess i
nnov
atio
n) a
ffec
ts p
rodu
ctiv
ity a
nd
indu
ces s
mal
l non
-exp
ortin
g fir
ms t
o en
ter t
he
expo
rt m
arke
t.
Wig
nara
ja, G
., In
nova
tion,
le
arni
ng, a
nd
expo
rting
in C
hina
: D
oes R
&D
or
tech
nolo
gy in
dex
mat
ter?
Jour
nal o
f A
sian
Ec
onom
y,
forth
com
ing 20
11
Econ
omet
ric
anal
ysis
of
inno
vatio
n,
lear
ning
, and
ex
porti
ng in
au
tom
obile
s an
d el
ectro
nics
fir
ms i
n C
hina
Wor
ldB
ank’
s In
vest
men
t C
limat
e Su
rvey
200
3,
718
firm
s —19
4 au
tom
obile
an
d 52
4 el
ectro
nics
fir
ms.
Reg
ress
ion
mod
els
Tech
nolo
gy in
dex
(act
iviti
es in
volv
ed in
usi
ng
impo
rted
tech
nolo
gies
), R
&D
-to-
sale
s rat
io, S
hare
of
tech
nica
l pro
fess
iona
ls in
em
ploy
men
t(%),
Leve
l of
educ
atio
n of
gen
eral
man
ager
/ ch
ief e
xecu
tive
offic
er,
Shar
e of
fore
ign
equi
ty(%
), Sh
are
of to
tal R
&D
ex
pend
iture
to to
tal s
ales
(%).
The
tech
nica
l fun
ctio
ns:
(Upg
radi
ng e
quip
men
t, Li
cens
ing
of te
chno
logy
, ISO
ce
rtific
atio
n, P
roce
ss im
prov
emen
t, U
pgra
de/a
dapt
atio
n of
pro
duct
s, In
trodu
ces n
ew
prod
ucts
, R&
D a
ctiv
ity, S
ubco
ntra
cts,
Tech
nolo
gy
linka
ges,
Num
ber o
f yea
rs in
ope
ratio
n, N
umbe
r of
perm
anen
t em
ploy
ees,
expo
rter.
A h
ighe
r TI i
ncre
ases
the
prob
abili
ty o
f exp
ortin
g in
bot
h in
dust
ries,
whi
le th
e R
&D
-to-s
ales
ratio
w
as n
ot si
gnifi
cant
. For
eign
ow
ners
hip,
tech
nica
l m
anpo
wer
, and
the
char
acte
ristic
s of t
he g
ener
al
man
ager
/chi
ef e
xecu
tive
offic
er a
lso
mat
ter.
Chi
na’s
rem
arka
ble
succ
ess i
n th
e ex
port
of
auto
mob
iles a
nd e
lect
roni
cs si
nce
initi
atin
g an
op
en-d
oor F
DI p
olic
y in
197
8 is
link
ed to
te
chno
logy
tran
sfer
from
mul
tinat
iona
ls;
syst
emat
ic in
vest
men
ts in
and
upg
radi
ng o
f min
or
tech
nolo
gica
l act
iviti
es (l
ike
sear
ch, e
ngin
eerin
g,
qual
ity m
anag
emen
t and
des
ign)
; and
hum
an
capi
tal.
10
9
INW
AR
DB
lind,
K. &
Ju
ngm
ittag
, A.
Fore
ign
Dire
ct
Inve
stm
ent,
impo
rt an
d in
nova
tions
in
the
serv
ice
indu
stry
Rev
iew
of
Indu
stria
l or
gani
zatio
n, 2
5, 2
05-
227,
200
4
Impa
ct o
f fo
reig
n co
mpe
titio
n du
e to
in
war
d FD
I an
d im
ports
on
the
inno
vatio
n ac
tiviti
es
2019
Ger
man
se
rvic
e co
mpa
nies
Tw
o pr
obit
mod
els
FDIs
, Im
ports
, pro
duct
inno
vatio
ns, p
roce
ss
inno
vatio
ns, e
xpor
ts, f
orei
gn p
rodu
ctio
n ac
tiviti
es.
The
resu
lts sh
ow th
at b
oth
fore
ign
dire
ct
inve
stm
ent a
nd im
ports
hav
e hi
ghly
sign
ifica
nt
posi
tive
effe
cts o
n pr
oduc
t and
pro
cess
in
nova
tions
. Vic
e ve
rsa,
the
expo
rt an
d fo
reig
n pr
oduc
tion
activ
ities
of d
omes
tic fi
rms s
uppo
rt in
nova
tions
.
Alv
arez
I. &
M
oler
o, J
. Te
chno
logy
and
ge
nera
tion
of
inte
rnat
iona
l kn
owle
dge
spill
over
s: A
n ap
plic
atio
n to
Sp
anis
h m
anuf
actu
ring
firm
s
Res
earc
h Po
licy
34,
1440
-145
2,
2005
Effe
ct o
f in
war
d in
vest
men
t in
a h
ost
econ
omy.
Pane
l dat
a of
Sp
anis
h m
anuf
actu
ring
firm
s, ES
EE
Surv
ey,
18
man
ufac
turin
g in
dust
ries i
n Sp
ain,
fro
m
1991
to 1
999.
Dep
ende
nt v
aria
ble:
Log
arith
mic
var
iatio
n of
sale
s, fir
m i
Inde
pend
ent v
aria
bles
: 1) L
ogar
ithm
ic v
aria
tion
of th
e to
tal n
umbe
r of e
mpl
oyee
s; 2
) Log
arith
mic
var
iatio
n of
th
e ca
pita
l sto
ck a
ccor
ding
to th
e ac
coun
ting
met
hod,
3)
Log
arith
mic
var
iatio
n of
mat
eria
l pur
chas
es, 4
) Sh
are
of to
tal s
ales
in in
dust
ry j
by fo
reig
n-ow
ned
firm
s, 5)
Sha
re o
f for
eign
cap
ital p
rese
nt in
the
asse
ts
of fi
rm
Res
ults
show
that
ben
efits
for d
omes
tic fi
rms i
n Sp
ain
diff
er a
cros
s ind
ustri
es b
y th
eir
tech
nolo
gica
l con
tent
. Kno
wle
dge
that
is n
ot
com
plet
ely
appr
opria
ble
by fo
reig
n af
filia
tes
abro
ad m
ay sp
ill o
ver i
nto
dom
estic
firm
s. In
the
abse
nce
of c
oncl
usiv
e ev
iden
ce, t
wo
ques
tions
ca
n be
put
forw
ard:
the
first
con
cern
s the
role
pl
ayed
by
tech
nolo
gy in
the
gene
ratio
n of
thos
e ex
tern
al e
ffec
ts; t
he se
cond
, the
mic
ro-a
sses
smen
t of
the
dyna
mic
s of t
echn
olog
ical
spill
over
s L
iu, X
. & B
uck,
T.
Inno
vatio
n pe
rfor
man
ce a
nd
chan
nels
for
inte
rnat
iona
l te
chno
logy
sp
illov
ers:
Evi
denc
e fr
om C
hine
se h
igh-
tech
indu
strie
s
Res
earc
h Po
licy
36,
pp 3
55-3
66
2007
Stud
y th
e im
pact
of
diff
eren
t ch
anne
ls fo
r in
tern
atio
nal
tech
nolo
gy
spill
over
on
the
inno
vatio
n pe
rfor
man
ce
of C
hine
se
high
-tech
in
dust
ries
Pane
l of s
ub-
sect
or le
vel
data
fr
om 1
997
to
2002
from
the
Chi
na
Stat
istic
s Ye
arbo
ok o
n H
igh-
Tech
nolo
gy
Indu
stry
Dep
ende
nt v
aria
ble:
Inno
vatio
n pe
rfor
man
ce (I
P): n
ew
prod
uct s
ales
per
em
ploy
ee
Expl
anat
ory
varia
bles
: 1) F
RD
: the
ratio
of f
orei
gn
firm
s’ R
&D
exp
endi
ture
to to
tal s
ales
in a
sect
or; 2
) Im
ports
: exp
endi
ture
on
high
-tech
impo
rts p
er
empl
oyee
in C
hine
se fi
rms i
n a
sect
or; 3
) Exp
orts
: the
ra
tio o
f ind
igen
ous e
xpor
ts to
tota
l sal
es in
a se
ctor
, 4)
DR
D: d
omes
tic R
&D
inte
nsity
mea
sure
d by
the
ratio
of
dom
estic
R&
D e
xpen
ditu
re to
tota
l sal
es in
a se
ctor
; 5)
AC
: abs
orpt
ive
capa
city
mea
sure
d by
the
shar
e of
sc
ient
ists
and
tech
nici
ans i
n to
tal e
mpl
oyee
s;
Con
trol v
aria
bles
: K
I: C
apita
l int
ensi
ty m
easu
red
by
the
book
val
ue o
f dom
estic
fixe
d as
sets
per
em
ploy
ee
in a
sect
or;
Firm
size
(FS)
Lear
ning
-by-
expo
rting
(and
impo
rting
) pro
mot
es
inno
vatio
n in
Chi
nese
indi
geno
us fi
rms.
Fore
ign
R&
D a
ctiv
ities
by
mul
tinat
iona
l ent
erpr
ises
in a
ho
st c
ount
ry si
gnifi
cant
ly a
ffec
t the
inno
vatio
n pe
rfor
man
ce o
f dom
estic
firm
s onl
y w
hen
abso
rptiv
e ab
ility
is ta
ken
into
acc
ount
. The
fin
ding
s ind
icat
e th
at b
oth
inte
rnat
iona
l te
chno
logy
spill
over
sour
ces a
nd in
dige
nous
ef
forts
join
tly d
eter
min
e th
e in
nova
tion
perf
orm
ance
of C
hine
se h
igh-
tech
sect
ors.
Mol
ero,
J. &
G
arci
a, A
. The
in
nova
tive
activ
ity
of fo
reig
n su
bsid
iarie
s in
the
Span
ish
Inno
vativ
e sy
stem
: An
eval
uatio
n of
thei
r im
pact
from
sect
oral
ta
xono
my
appr
oach
Tech
nova
tion
28,
pp
739-
757,
20
08
impa
ct
inno
vativ
e st
rate
gies
ha
ve o
n th
e co
untri
es
they
lo
calis
ed
thei
r ac
tiviti
es
Span
ish
Inno
vatio
n Su
rvey
199
3–20
03
Inno
vatio
n in
side
the
firm
, Inn
ovat
ion
in c
oope
ratio
n,
Type
s of i
nnov
atio
n, N
ew p
rodu
ct to
the
mar
ket,
Inne
r R
&D
, Ext
erna
l R&
D e
xpen
ditu
res,
Expe
nditu
res i
n m
achi
nes a
nd e
quip
men
t, Ex
tern
al k
now
ledg
e pu
rcha
sing
, Tra
inin
g ex
pend
iture
s, Ex
pend
iture
s for
in
trodu
cing
inno
vatio
ns, C
arry
ing
out c
oope
ratio
n,
Coo
pera
tion
with
oth
er g
roup
firm
s, cl
ient
s, su
pplie
rs,
com
petit
ors,
cons
ulta
nts,
R&
D fi
rms,
univ
ersi
ties,
publ
ic re
sear
ch c
entre
s, te
chno
logi
cal c
entre
s
MN
Es su
bsid
iarie
s sho
w n
otic
eabl
e co
inci
denc
es
with
dom
estic
ent
erpr
ises
in th
e w
ay th
ey
orga
nize
thei
r inn
ovat
ive
activ
ities
. The
im
porta
nce
of b
elon
ging
to a
gro
up is
abs
olut
ely
clea
r and
dis
crim
inat
es sh
arpl
y be
twee
n th
e re
latio
nshi
ps o
f the
firm
s with
the
syst
em a
nd th
e im
pact
they
pro
duce
. Cru
cial
role
of s
ize
and
capa
bilit
y of
inte
grat
ing
inne
r and
out
er so
urce
s of
kno
wle
dge
and
hum
an re
sour
ces a
nd fu
nds.
11
0
Wig
nara
ja, G
., Fo
reig
n ow
ners
hip,
te
chno
logi
cal
capa
bilit
ies a
nd
clot
hing
exp
orts
in
Sri l
anka
Jour
nal o
f A
sian
ec
onom
y 19
, pp
29-
39
2008
links
be
twee
n ex
port
perf
orm
ance
, fo
reig
n ow
ners
hip
and
tech
nolo
gica
l ca
pabi
litie
s
205
clot
hing
en
terp
rises
in
Sri L
anka
Shar
e of
exp
orts
in sa
les (
%),
Num
ber o
f per
man
ent
empl
oyee
s, N
ew im
porte
d eq
uipm
ent (
% o
f eq
uipm
ent),
Rep
lace
men
t cos
t of c
apita
l, Ed
ucat
ion
leve
l of C
EO, Y
ears
of e
xpor
t exp
erie
nce
of C
EO
Econ
omet
ric a
naly
sis i
ndic
ates
that
fore
ign
owne
rshi
p, fi
rm si
ze, h
uman
cap
ital,
tech
nolo
gica
l cap
abili
ties a
nd g
eogr
aphi
cal
loca
tion
are
all p
ositi
vely
ass
ocia
ted
with
exp
ort
shar
es. H
ighe
r lev
els o
f tec
hnol
ogic
al c
apab
ility
ar
e as
soci
ated
with
larg
er fi
rm si
ze, u
nive
rsity
-le
vel m
anpo
wer
and
in-h
ouse
tech
nolo
gica
l eff
ort.
Wan
g, C
. &
Kaf
ouro
s, M
., W
hat f
acto
rs
dete
rmin
e in
nova
tion
perf
orm
ance
in
mer
ging
eco
nom
ies?
Ev
iden
ce fr
om
Chi
na
Inte
rnai
ton
al B
usin
ess
Rev
iew
, 18
, pp
606
– 61
6,
2009
expl
ain
wha
t de
term
ines
th
e in
nova
tion
perf
orm
ance
in
tra
nsiti
onal
ec
onom
ies
Reg
ress
ion
anal
ysis
, in
dust
ry le
vel
data
from
C
hina
200
4
Inno
vatio
n pe
rfor
man
ce (n
ew p
rodu
cts /
sale
s),
Indu
stria
l R&
D (R
&D
exp
endi
ture
s / to
tal c
apita
l),
Fore
ign
capi
tal s
hare
, exp
ort (
expo
rt / s
ales
), im
port
(impo
rt / s
ales
), do
mes
tic te
chno
logy
pur
chas
e, la
bor
qual
ity (e
mpl
oyee
s eng
aged
in sc
i.and
tech
. act
iviti
es /
tota
l em
ploy
ees)
, cap
ital i
nten
sity
, firm
size
Inte
rnat
iona
l tra
de, F
DI a
nd R
&D
do
not a
lway
s ha
ve p
ositi
ve c
onse
quen
ces,
but t
heir
effe
cts a
re
mod
erat
ed b
y te
chno
logi
cal o
ppor
tuni
ties a
nd th
e le
vel o
f for
eign
pre
senc
e.
CO
UN
TR
Y L
EV
EL
Arc
hibu
gi, D
. &
Piet
robe
lli, C
., Th
e gl
obal
isat
ion
of
tech
nolo
gy a
nd it
s im
plic
atio
ns fo
r de
velo
ping
co
untri
es w
indo
ws
of o
ppor
tuni
ty o
r fu
rther
bur
den?
Tech
nolo
gica
l fo
reca
stin
g &
soci
al
chan
ge
70, p
p.
861–
883
2003
To e
xplo
re
the
impa
ct o
f th
e di
ffer
ent
form
s of t
he
glob
alis
atio
n of
te
chno
logy
on
de
velo
ping
co
untri
es.
Dat
a of
N
atio
nal
Scie
nce
foun
datio
n,
deve
lope
d co
untri
es,
east
ern
Euro
pe, A
sia,
La
tin A
mer
ica,
A
fric
a
Scie
ntifi
c pa
pers
, arti
cles
per
mill
ion
popu
latio
n, U
.S.
pate
nts g
rant
ed, P
aten
ts p
er m
illio
n po
pula
tion,
ex
ports
, hig
h te
chno
logy
exp
orts
, stra
tegi
c te
chno
logy
al
lianc
es
Dev
elop
ing
coun
tries
stro
ngly
rely
on
the
natu
re
of th
e te
chno
logy
and
of t
he p
olic
ies i
mpl
emen
ted
in b
oth
adva
nced
and
dev
elop
ing
coun
tries
DiP
ietr
o W
. R. &
A
noru
o, E
. C
reat
ivity
, in
nova
tion
and
expo
rt pe
rfor
man
ce
Jour
nal o
f Po
licy
Mod
ellin
g 28
pp
133-
139
20
06
Rel
atio
nshi
p be
twee
n ex
port
perf
orm
ance
an
d cr
eativ
e ac
tivity
.
Cro
ss-c
ount
ry
regr
essi
on
anal
ysis
, 200
0,
data
from
the
WEF
Inde
xes o
n cr
eativ
ity, i
nnov
atio
n, te
chno
logy
, te
chno
logy
tran
sfer
, and
bus
ines
s sta
rtups
. Ex
port
perf
orm
ance
Cre
ativ
ity a
nd a
ll of
its c
ompo
nent
s hav
e po
sitiv
e ef
fect
s on
the
shar
e of
man
ufac
turin
g of
exp
orts
. Te
chno
logy
inde
x al
one
expl
ains
app
roxi
mat
ely
30%
of t
he c
ross
-cou
ntry
var
iatio
n in
m
anuf
actu
ring
shar
e of
exp
orts
.
Woe
rter
M. &
R
oper
S.
Ope
nnes
s and
in
nova
tion—
hom
e an
d ex
port
dem
and
effe
cts o
n m
anuf
actu
ring
inno
vatio
n: p
anel
da
ta e
vide
nce
for
Res
earc
h po
licy
39,
pp 1
55–
164
2010
Ana
lysi
s of
the
role
of
‘hom
e’ a
nd
‘exp
ort’
mar
ket
dem
and
in
stim
ulat
ing
man
ufac
turin
g in
nova
tion
Com
para
ble
pane
l dat
a fo
r tw
o sm
all o
pen
econ
omie
s –
Irel
and
and
Switz
erla
nd.
1994
–200
5.
inno
vatio
n pe
rfor
man
ce, f
irm-le
vel c
apab
ility
and
ch
arac
teris
tics;
inno
vatio
n ca
pabi
lity,
exp
orts
, Fi
nd li
ttle
evid
ence
of a
ny si
gnifi
cant
mar
ket
dem
and
effe
cts,
with
inno
vatio
n pe
rfor
man
ce
inst
ead
dete
rmin
ed la
rgel
y by
firm
-leve
l ca
pabi
lity
effe
cts a
nd c
hara
cter
istic
s. In
pol
icy
and
stra
tegy
term
s thi
s sug
gest
s the
con
tinue
d va
lue
of m
easu
res t
o im
prov
e in
nova
tion
capa
bilit
y re
gard
less
of m
arke
t dem
and
cond
ition
s. In
mor
e m
etho
dolo
gica
l ter
ms o
ur
resu
lts su
gges
t the
val
idity
of t
he u
sual
11
1
Irel
and
and
Switz
erla
nd
assu
mpt
ion
impl
icit
in m
odel
ling
inno
vatio
n ou
tput
s tha
t sup
ply-
side
fact
ors p
redo
min
ate.
C
aste
llani
, D.
andP
ieri
, F.
Fore
ign
inve
stm
ent
and
prod
uctiv
ity
evid
ence
from
Eu
rope
an re
gion
s
Qua
dern
i de
lDip
arti
men
to d
i Ec
onom
ia,
Fina
nza
e st
atis
tica,
n
83,
2011
Out
war
d an
d in
war
d FD
I. R
elat
ions
hip
betw
een
prod
uctiv
ity
and
FDI i
n Eu
rope
EU c
ount
ries
inw
ard
and
outw
ard
FDI,
prod
uctiv
ity, l
ow te
ch to
hi
gh te
ch in
dust
ry, i
nnov
atio
n st
ock,
oth
er
Reg
ions
with
larg
er o
utw
ard
FDI s
how
hig
her
prod
uctiv
ity g
row
th. I
nwar
d FD
I are
pos
itive
ly
asso
ciat
ed w
ith re
gion
al p
rodu
ctiv
ity g
row
th.
Mon
tobb
io, F
. &
Ram
pa, F
. Th
e im
pact
of
tech
nolo
gy a
nd
stru
ctur
al c
hang
e on
exp
ort
perf
orm
ance
in n
ine
deve
lopi
ng
coun
tries
Wor
ld
deve
lopm
ent
vol
. 33,
no
. 4, p
p.
527–
547,
20
05
How
te
chno
logi
cal
activ
ity is
re
late
d to
ex
port
gain
s in
hig
h te
chno
logy
se
ctor
s
Nin
e la
rge
deve
lopi
ng
coun
tries
. St
ruct
ural
de
com
posi
tion
anal
ysis
, Ec
onom
etric
an
alys
is
inno
vativ
e ac
tiviti
es (p
aten
ts sh
are,
); e
xpor
t sha
re,
expo
rt pe
rfor
man
ce, F
DIs
, dem
and
fact
ors,
indu
stry
ef
fect
,
Tech
nolo
gica
l act
ivity
is re
late
d to
exp
ort g
ains
in
high
tech
nolo
gy se
ctor
s if a
cou
ntry
exp
ands
in
indu
strie
s with
incr
easi
ng te
chno
logi
cal
oppo
rtuni
ties,
in m
ediu
m te
chno
logy
sect
ors i
f it
mov
es a
way
from
low
opp
ortu
nity
sect
ors,
in lo
w
tech
nolo
gy se
ctor
s if i
t is i
nitia
lly sp
ecia
lized
in
grow
ing
sect
ors.
In h
igh-
tech
and
low
-tech
se
ctor
s, ex
port
perf
orm
ance
is a
lso
affe
cted
by
the
grow
th o
f tec
hnic
al c
apab
ilitie
s, fo
reig
n di
rect
in
vest
men
ts, p
rodu
ctiv
ity, a
nd th
e in
itial
leve
l of
tech
nica
l ski
lls a
nd in
med
ium
tech
by
the
grow
th
rate
s of f
orei
gn d
irect
inve
stm
ents
. B
andy
opad
hyay
, S.
& A
char
yya,
R.
Doe
s inp
ut se
ctor
lib
eral
izat
ion
prom
ote
qual
ity
inno
vatio
n an
d ex
ports
?
Inte
rnat
ion
al re
view
of
ec
onom
ics
and
finan
ce
15, 4
43–
462.
20
06
Rel
atio
nshi
p be
twee
n in
put s
ecto
r lib
eral
izat
ion
and
prod
uct
qual
ity
inno
vatio
n an
d ex
port
orie
ntat
ion
11 c
ount
ries:
B
angl
ades
h,
Bra
zil,
Chi
le,
Chi
na,
Ecua
dor,
Indi
a, K
orea
, M
alay
sia,
M
exic
o,
Ven
ezue
la,
Thai
land
R&
D e
xpen
ditu
res (
as %
to G
DP)
, hig
h te
chno
logy
ex
ports
In
put s
ecto
r lib
eral
izat
ion
per s
e m
ay n
ot in
duce
qu
ality
inno
vatio
n an
d ou
twar
d or
ient
atio
n. in
fa
ct, i
n so
me
situ
atio
ns, c
eter
is p
arib
us in
put
sect
or li
bera
lizat
ion
may
incr
ease
the
odds
in
favo
ur o
f low
-qua
lity
prod
uctio
n. w
e sh
ow th
at
tota
l out
put s
ecto
r lib
eral
izat
ion,
or s
urpr
isin
gly,
a
suita
ble
degr
ee o
f out
put s
ecto
r pro
tect
ion
is
need
ed to
be
com
bine
d w
ith in
put s
ecto
r lib
eral
izat
ion
so th
at q
ualit
y in
nova
tion
is
indu
ced.
B
asile
R.,
Cas
tella
ni D
. &
Zan
fei A
. Lo
catio
n ch
oice
s of
mul
tinat
iona
l firm
s in
Eur
ope:
the
role
of
EU
co
hesi
on p
olic
y
Jour
nal o
f in
tern
atio
nal
ec
onom
ics
74, p
p.
328–
340
2008
The
role
of
EU c
ohes
ion
polic
y in
at
tract
ing
fore
ign
inve
stor
s.
5509
fore
ign
subs
idia
ries
esta
blis
hed
in
50 re
gion
s of 8
EU
cou
ntrie
s in
199
1–19
99,
Logi
t mod
el
Mar
ket s
ize,
mar
ket p
oten
tial,
GD
P pe
r cap
ita, o
vera
ll ag
glom
erat
ion,
fore
ign
firm
s agg
lom
erat
ion,
MN
F ex
perie
nce,
wag
es, p
opul
atio
n de
nsity
, R&
D in
tens
ity,
unem
ploy
men
t, st
ruct
ural
fund
s, C
ohes
ion
coun
try,
tax,
dis
tanc
e fo
rm h
ome
coun
try,
Afte
r con
trolli
ng fo
r a v
ery
flexi
ble
corr
elat
ion
patte
rn a
mon
g ch
oice
s, st
ruct
ural
nad
coh
esio
n fu
nds a
lloca
ted
by th
e EU
to la
ggar
d re
gion
s hav
e in
deed
con
tribu
ted
to a
ttrac
ting
mul
tinat
iona
ls.
Yan
g L
. & M
asku
s K
. In
telle
ctua
l pro
perty
rig
hts,
tech
nolo
gy
trans
fer a
nd e
xpor
ts
Jour
nal o
f de
velo
pme
nt
econ
omic
s 90
, pp
Stro
nger
IPR
pr
otec
tion
impr
ove
the
expo
rt ab
ility
of
firm
s in
Mod
el o
f tw
o co
untry
co
mpe
titio
n (n
orth
and
so
uth)
Con
sum
ptio
n, c
ost a
nd p
rodu
ctio
n, e
xpor
ts, I
PR,
licen
sing
St
rong
er IP
R w
ould
enh
ance
tech
nolo
gy tr
ansf
er
thro
ugh
licen
sing
and
redu
ce th
e so
uth’
s firm
s m
argi
nal p
rodu
ctio
n co
sts,
ther
eby
incr
easi
ng it
s ex
ports
. Stro
ng IP
R d
imin
ish
com
petit
ion
and
wel
fare
. Add
ing
FDI a
s add
ition
al c
hann
el o
f
11
2
in d
evel
opin
g co
untri
es
231–
236
2009
de
velo
ping
co
untri
es
tech
nolo
gy tr
ansf
er.
Ferr
etti,
M. &
Pa
rmen
tola
, A
. FD
I kno
wle
dge
spill
over
s and
hos
t go
vern
men
t po
licie
s: th
e Ir
ania
n ex
perie
nce
Euro
pean
bu
sine
ss
revi
ew v
ol.
22 n
o 2
2010
The
influ
ence
of
the
host
go
vern
men
t po
licie
s on
FDI
know
ledg
e sp
illov
ers
mod
el, 1
co
untry
stud
y ab
sorp
tive
capa
city
, FD
I, kn
owle
dge
spill
over
, etc
G
over
nmen
ts c
an p
rom
ote
the
real
izat
ion
of
know
ledg
e sp
illov
ers o
nly
if th
ey c
reat
e th
e co
nditi
ons f
or im
prov
ing
the
abso
rptiv
e ca
paci
ty
of lo
cal f
irms a
nd th
e co
nnec
tions
bet
wee
n lo
cal
firm
s and
fore
ign
inve
stor
s (st
rate
gic
appr
oach
). In
man
y em
ergi
ng c
ount
ries,
gove
rnm
ents
are
di
rect
ly in
volv
ed in
rela
tions
hips
with
fore
ign
inve
stor
s thr
ough
stat
e-ow
ned
com
pani
es
Bas
ile R
., B
enfr
atel
lo L
. C
aste
llani
D.
Loca
tion
dete
rmin
ants
of
Gre
enfie
ld fo
reig
n in
vest
men
ts in
the
enla
rged
Eur
ope:
ev
iden
ce fr
om a
sp
atia
l au
tore
gres
sive
ne
gativ
e bi
nom
ial
addi
tive
mod
el
Dep
artm
ent o
f ec
onom
ics
and
publ
ic
finan
ce,
wor
king
pa
per
serie
s no
. 10
2010
Ana
lysi
s of
indu
stria
l lo
catio
n:
spat
ial
depe
nden
ce
and
nonl
inea
ritie
s
regr
essi
on
mod
el,
data
on
inw
ard
Gre
enfie
ld
FDI o
ccur
red
over
the
2003
-20
07 p
erio
d in
24
9 EU
re
gion
s
Mar
ket s
ize,
regi
onal
diff
eren
ces,
empl
oym
ent d
ensi
ty,
publ
ic in
fras
truct
ure,
edu
catio
n, la
bor c
ost,
FDI,
Gre
enfie
ld
Mul
tinat
iona
l firm
s’ lo
catio
n ch
oice
s are
ver
y sp
atia
lly d
epen
dent
, eve
n co
ntro
lling
for a
larg
e nu
mbe
r of r
egio
nal c
hara
cter
istic
s
App
endi
x 2:
Cor
e Q
uant
itativ
e St
udie
s on
Ope
n In
nova
tion
Res
earc
h A
rea
Mea
sure
d w
ith:
Inde
pend
ent v
aria
bles
D
epen
dent
var
iabl
es
Con
trol
va
riab
les
Aut
hors
, Yea
r
Ope
n in
nova
tion
polic
ies
Exte
rnal
col
labo
ratio
n w
ith lo
cal
univ
ersi
ties (
effe
ct to
R&
D p
roce
ss
and
inbo
und
OI)
- alli
ance
s with
loca
l uni
vers
ities
- e
nrol
ling
com
pani
es’ r
esea
rche
rs a
t lo
cal u
nive
rsiti
es
- R&
D p
erfo
rman
ce o
f lab
s (c
ontri
butio
n to
rese
arch
of l
abs,
cont
ribut
ion
to p
aten
ts a
cqui
sitio
n)
indu
stry
lo
catio
n si
ze
(dum
mie
s)
Asa
kaw
a et
al.,
20
10
Exte
rnal
col
labo
ratio
n w
ith lo
cal
vent
ure
firm
s (ef
fect
to R
&D
pr
oces
s and
out
boun
d O
I)
- joi
nt re
sear
ch p
roje
cts w
ith v
entu
re
busi
ness
- j
oint
rese
arch
pro
ject
s with
loca
l su
pplie
rs
cont
ribut
ion
to c
linic
al st
age
deve
lopm
ent o
f lab
s, co
ntrib
utio
n to
pr
oduc
t com
mer
cial
izat
ion
by la
bs
Ope
nnes
s
Geo
grap
hica
l ext
ensi
on o
f the
R&
D
colla
bora
tive
rela
tions
hips
: Pe
rfor
man
ce (
outp
ut in
dica
tors
) In
boun
d O
I /co
oper
atio
n on
In
nova
tive
perf
orm
ance
Shar
e of
R&
D e
mpl
oyee
s, Pu
blic
and
pr
ivat
e re
sear
ch fu
nds +
labo
r cos
ts,
Num
ber o
f pat
ents
ow
ned
by th
e fir
m,
Num
ber o
f int
erna
tiona
l pub
licat
ions
si
nce
2000
Net
wor
king
(Num
ber o
f ext
erna
l re
latio
nshi
ps, N
umbe
r of e
xter
nal
sour
ces o
f kno
wle
dge
for
inno
vatio
n);
Type
of r
elat
ion
(Num
ber o
f firm
-
size
ag
e
Bel
ussi
et a
l.,
2008
11
3
Inpu
t of i
nnov
ativ
e ac
tiviti
es (R
&D
, in
nova
tions
sour
ces,
exis
tenc
e an
d lo
caliz
atio
n of
ext
erna
l R&
D
rela
tions
hips
)
Ope
nnes
s ind
icat
or (d
umm
y –
YES
/NO
) Sp
atia
l di
stri
butio
n (N
umbe
r of r
elat
ions
with
in
the
regi
on,
Num
ber o
f nat
iona
l rel
atio
ns,
Num
ber o
f for
eign
rela
tions
)
to-f
irm re
latio
ns, N
umbe
r of f
irm-
to-P
RO
rela
tions
, Num
ber o
f PR
O2 -
to-P
RO
rela
tions
, Num
ber o
f PR
O-
to-f
irm re
latio
ns)
Eff
ectiv
enes
s of
OI m
odel
Pa
tent
s In
tern
al so
urce
s (R
&D
) Ex
tern
al so
urce
s (ex
tern
al c
hann
els,
rela
tions
hip)
In
boun
d O
I /co
oper
atio
n on
In
nova
tive
perf
orm
ance
Inte
rnal
inno
vatio
n ef
fort
(R&
D
expe
nditu
res)
, Ope
nnes
s of f
irm’s
in
nova
tion
stra
tegy
(num
ber o
f ext
erna
l so
urce
s use
d fo
r inn
ovat
ion
activ
ities
and
nu
mbe
r of r
esea
rch
colla
bora
tions
es
tabl
ishe
d w
ith P
RO
s and
firm
s)
Inno
vativ
e ca
paci
ty (n
umbe
r of
pate
nts o
wne
d by
the
firm
) Si
ze
Age
In
dust
ry
dum
mie
s
Bel
ussi
et a
l.,
2010
IPR
reg
ime
and
netw
orki
ng
taci
t kno
wle
dge
and
netw
ork
exte
rnal
ities
In
boun
d O
I /co
oper
atio
n
Stre
ngth
of I
PR p
rote
ctio
n (f
rom
st
rong
est –
pat
ents
, to
copy
right
s, tra
dem
arks
, to
trade
-sec
ret p
rote
ctio
n -
wea
kest
)
Kno
wle
dge
shar
ing
(R&
D
pers
onne
l or u
nit s
hare
kno
wle
dge
with
in c
ompa
ny o
cor
pora
tion)
N
etw
ork
exte
rnal
ities
(NE
utili
zatio
n in
com
pany
stra
tegy
, NE
conn
ecte
d to
pro
duct
)
H
urm
elin
na e
t al
., 20
07
Ope
n so
urce
O
pen
tech
nolo
gica
l inn
ovat
ion
Col
labo
ratio
n In
boun
d /
coop
erat
ion
Net
wor
k (D
omes
tic –
par
ticip
atio
n in
do
mes
tic a
ssoc
iatio
ns, s
ocie
ty, e
tc;
Glo
bal;
Stat
e-su
ppor
ted
netw
ork
– K
orea
n IT
Indu
stry
supp
ort p
artn
er;
outs
ide
deve
lope
r net
wor
k)
Cor
e de
velo
per w
eigh
t M
arke
t stru
ctur
e
New
pro
duct
dev
elop
men
t Im
prov
ed p
rodu
ct
Proc
ess i
nnov
atio
n
com
pany
age
and
si
ze
Hw
ang
et a
l.,
2009
Ope
n In
nova
tion
Exte
rnal
kno
wle
dge
sour
cing
In
boun
d O
I Fi
rm’s
ext
erna
l sea
rch
stra
tegi
es
(bre
ath
– so
urce
s of k
now
ledg
e, d
epth
) C
olla
bora
tion
with
ext
erna
l par
tner
s
1. In
nova
tive
perf
orm
ance
2.
Turn
over
per
tain
ing
to p
rodu
cts
sign
ifica
ntly
impr
oved
, 3. T
urno
ver
perta
inin
g to
pro
duct
s new
to th
e fir
m
R&
D in
tens
ity
Mar
ket
orie
ntat
ion
Size
Laur
sen
&
Salte
r, 20
06
OI f
or S
ME
s C
olla
bora
tion
mod
es in
a v
alue
ne
twor
k In
boun
d / O
utbo
und
Exte
rnal
Info
rmat
ion
usag
e (d
epth
, br
eath
) C
olla
bora
tion
partn
ers /
type
Inno
vatio
n pe
rfor
man
ce (M
ajor
/ M
inor
pro
duct
inno
vatio
n, se
rvic
e /
prod
uct i
nnov
atio
n)
Size
Le
e at
al.,
201
0
tech
nolo
gy
licen
sing
D
river
s O
utbo
und
dr
iver
s of t
echn
olog
y lic
ensi
ng
licen
sing
reve
nues
re
lativ
e lic
ensi
ng p
erfo
rman
ce
reve
nues
R
&D
inte
nsity
in
dust
ry, c
ount
ry
Lich
tent
hale
r, 20
07
Stra
tegi
c ap
proa
ch to
OI
Exte
rnal
tech
nolo
gy a
cqui
sitio
n an
d ex
tern
al te
chno
logy
ex
ploi
tatio
n In
boun
d, O
utbo
und
Clu
ster
s Ex
tent
of t
echn
olog
y ac
quis
ition
Ex
tent
of t
echn
olog
y ex
ploi
tatio
n
reve
nues
R
&D
inte
nsity
in
dust
ry, c
ount
ry
Lich
tent
hale
r, 20
08
Mar
ket f
or
tech
nolo
gy
inte
rmed
iary
serv
ices
O
utbo
und
Stru
ctur
al o
rgan
izat
ion
Hyb
rid o
rgan
izat
ion
Inte
rmed
iarie
s Ex
tern
al te
chno
logy
exp
loita
tion
Size
R
&D
inte
nsity
Li
chte
ntha
ler &
Er
nst,
2008
2 P
RO
– P
ublic
Res
earc
h O
rgan
izat
ions
11
4
In
form
al o
rgan
izat
ion
reve
nues
in
dust
ry, c
ount
ry
Tec
hnol
ogy
com
mer
cial
izat
ion
tech
nolo
gy c
omm
erci
aliz
atio
n re
venu
es
Out
boun
d
Syst
emat
ic p
roce
ss, P
lann
ing
proc
ess,
In
telli
genc
e pr
oces
s, N
egot
iatio
n pr
oces
s, Ef
fect
ive
real
izat
ion
proc
ess
Lice
nsin
g re
venu
es
Succ
ess r
elat
ive
to c
ompe
titor
s re
venu
es
R&
D in
tens
ity
indu
stry
, cou
ntry
Lich
tent
hale
r, 20
08
Tec
hnol
ogy
licen
sing
A
ppro
ach
to te
chno
logy
lice
nsin
g O
utbo
und
Pate
nt re
gim
e Te
chno
logi
cal t
urbu
lenc
e Tr
ansa
ctio
n fr
eque
ncy
Com
petit
ive
inte
nsity
proa
ctiv
e re
activ
e re
venu
es
R&
D in
tens
ity
indu
stry
co
untry
Pa
tent
fam
ilies
Pr
oduc
t di
vers
ifica
tion
Alli
ance
s
Lich
tent
hale
r, 20
10
Tec
hnol
ogy
com
mer
cial
izat
ion
tech
nolo
gy c
omm
erci
aliz
atio
n in
telli
genc
e O
utbo
und
Stru
ctur
al o
rgan
izat
ion
Hyb
rid o
rgan
izat
ion
Info
rmal
org
aniz
atio
n
tech
nolo
gy c
omm
erci
aliz
atio
n in
telli
genc
e, e
xter
nal
tech
nolo
gy c
omm
erci
aliz
atio
n re
venu
es
reve
nues
R
&D
inte
nsity
in
dust
ry
coun
try
Lich
tent
hale
r et
al, 2
009
Com
mer
cial
iza
iton
of O
SS
Coo
pera
tion
in O
I com
mun
ities
O
utbo
und,
Inbo
und
tech
nica
l par
ticip
atio
n
Inno
vatio
n pe
rfor
man
ce
age,
size
sp
ecia
lizat
ion
R&
D in
tens
ity
Stam
, 200
9
Inno
vatio
n st
rate
gies
U
rban
stru
ctur
e D
egre
e of
ope
nnes
s of i
nnov
ator
Ex
tern
al k
now
ledg
e re
latio
n In
boun
d
urba
n st
ruct
ure
Deg
ree
of o
penn
ess (
in h
ouse
in
nova
tor,
outs
ourc
ing
inno
vato
r, co
-dev
elop
er)
Exte
rnal
kno
wle
dge
rela
tion
(sou
rces
, acq
uisi
tion,
col
labo
ratio
n)
size
, ind
ustry
na
ture
of
inno
vatio
n ty
pe o
f inn
ovat
ion
(pro
duct
, pro
cess
)
Teirl
inck
&
Spith
oven
, 200
8
Kno
wle
dge
sour
cing
Ex
tern
al so
urce
s of k
now
ledg
e an
d in
form
atio
n In
boun
d
brea
dth
of o
penn
ess
Com
mitm
ent t
o R
&D
Fi
nanc
ial c
omm
itmen
t to
inno
vatio
ns
radi
cal i
nnov
atio
ns
Exte
rnal
inno
vatio
ns
Inno
vatio
n co
oper
atio
n So
urce
s of i
nfor
mat
ion
for
Inno
vatio
n
Size
ne
w fi
rms
grou
p in
tern
atio
nal
Expo
rts
Teth
er &
Taj
ar,
2008
PART II: PUBLICATIONS
PUBLICATION I
Podmetina Daria, Smirnova Maria, Väätänen Juha, and Torkkeli Marko, 2009. Innovativeness and International Operations: Case of Russian R&D companies, International Journal of Innovation Management, Vol. 13 (2), 2009, pp. 295-317.
June 19, 2009 13:30 WSPC/150-IJIM 00230
International Journal of Innovation ManagementVol. 13, No. 2 (June 2009) pp. 295–317© Imperial College Press
INNOVATIVENESS AND INTERNATIONAL OPERATIONS:CASE OF RUSSIAN R&D COMPANIES
DARIA PODMETINA
Lappeenranta University of TechnologyP. O. Box 20, FI-53851 Lappeenranta, Finland
MARIA SMIRNOVA
St. Petersburg State University, Graduate Schoolof Management, St. Petersburg, Russia
JUHA VÄÄTÄNEN
Lappeenranta University of TechnologyP. O. Box 20, FI-53851 Lappeenranta, Finland
MARKO TORKKELI
Lappeenranta University of Technology/Kouvola Research UnitPrikaatintie 9, FI-45100 Kouvola, Finland
The number of Russian companies entering international markets has increased dramati-cally in the last 10 years. The development of innovative industries has intensified as well.Do innovations play significant role in internationalisation? Do innovators internationalizemore actively? Does operating on international markets make companies more innovative?This paper studies innovations and internationalisation of companies in Russia, based on thesurvey of R&D-oriented companies located in the two most developed areas of Russia (St.Petersburg and Moscow). The study aims to identify the clusters of companies accordingto their exports and R&D expenditures, and fulfil in-depth analysis of innovations-relateddeterminants that could explain the structure of the clusters. The main results of the studyshow the significant impact of innovation activities, competition and new product develop-ment on export intensity.
Keywords: Innovation; R&D; export intensity; internationalisation; Russia; competition.
295
June 19, 2009 13:30 WSPC/150-IJIM 00230
296 D. Podmetina et al.
Introduction
The opening of borders in the post-communist countries was highly anticipatedby people and companies. However, together with obvious benefits of free trade,investments and economic development, there are a number of threats for domesticcompanies which have to be taken into consideration. Market liberalisation affectedRussian companies with increased competition from imported goods, foreign directinvestments (FDIs) and emerging of new effective companies. Companies had tolearn to be competitive and find their own niche either on the domestic market oron the global one. In the communist system, domestic companies did not haveto put much effort on the improving quality of products and services, person-nel training, innovation and marketing research, because they were enrolled inthe direct sales, barter system, or had guaranteed governmental orders. The cen-tralised research institutes were responsible for conducting research and providingtechnology development opportunities. The supply of technology was not oftenin balance with the demand from the enterprises. This not balanced connectionbetween research institutions and companies still remains the weakest link in Rus-sia (Krot, 2008). One of the most important factors that could contribute to theunderstanding of market players’ changing behaviour is firm’s attitude to inno-vations, technology development, technology transfer and commercialisation ofinnovations.
Globalisation has increased opportunities and pressures for domestic firms inemerging economies to innovate and to improve their competitive position (Gorod-nichenko et al., 2008). Exporting allows firms in developing countries to enlargetheir markets and to benefit from economies of scale (World Bank, 2001). Besides,export and import operations proved to be effective channels of technology transferbetween countries (Pack, 1993). Some companies in the developing countries estab-lish R&D centres or acquire companies from developed countries in order to obtainskills and knowledge (Bell and Pavitt, 1993). Russian economy is currently highlydependent on export of natural resources, such as oil and gas. Last eight years,Russian gross domestic product (GDP) has been growing more than 5% annually,thanks to high oil and gas prices on world markets. FDIs and exports are importantcooperation channels for developing countries and the rest of the world.
Despite the substantial science base and the strong technology education, edu-cation innovation activity has been modest in Russia; only about 1.4% of GDPis spend on R&D and about 60% of R&D is publicly financed (Rosstat, 2007).The business sector is minor actor in R&D because only about 10% of industrialenterprises reported technological innovations in 2007, while the average in theEuropean Union is 50% (Rosstat, 2007; OECD, 2005). The amount of R&D per-sonnel in Russia is relatively high: about 1.3% of total labor force, compared with
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 297
less than 2% in OECD countries. In theory, this should positively influence levelof innovation capacity of companies in Russia, but only half of R&D personnelwork as researchers, which means that the share of support personnel is extremelyhigh.
Many researchers claim there is interdependency between innovation, competi-tion and decision to internationalise (Sutton, 2007; Gorodnichenko, 2008; Wakelin,1998; and others). And there is even more research support on the fact that theinternationalised companies tend to transfer their experience from the internationaloperations into increased innovativeness on the domestic market (Molero, 1998;Filipescu, 2007; Castelliani and Zanfei, 2006; and others). Authors agree with thestatement that “these two features (internationalisation and innovation process) rein-force each other to the extent that today’s economic analysis has to consider both ofthem simultaneously when trying to account for new dynamic of the firms operatingat the international level” (Molero, 1998). The innovation is a wide concept, and it isnot guaranteed that innovation successfully commercialized in one country wouldbe as successful in another country, and vice versa.
Despite the natural resource export orientation is the growth driver of Rus-sian economy. However, the development of knowledge intensive sector has beenremarkable in the last five years. The export intensity of R&D oriented companiescould depend on numerous factors, such as innovative and absorptive capacities,competition, industry, size of the company, level of regional development, etc.
In this paper, we aim to study how Russian companies decide on innovation-internationalisation challenge, how innovativeness is reflected on export inten-sity, and how competition matters in this context. We aim to find dependenciesin Innovation–Export phenomena and try to track the interconnections betweenthem.
The objective is to define set of variables, influencing innovation and interna-tionalisation and test them on the data of over 170 Russian companies, collected inyear 2008. The sample consists of companies, active in innovations or representingan industry with high innovation intensity (Frascati manual, 1993; Oslo manual,2007).
The paper is structured as follows. Section 1 is the introduction; it describes theresearch gap of the study between innovation literature and international businessliterature and sets the objectives for research. Section 2 reviews the literature andstudies the main theories on innovations and internationalisation, focusing on themain influencing factors, and formulates hypotheses and sets of variables. Section 3describe the data and the methodology of the research. Section 4 presents the resultsof analysis of the data. Section 5 concludes the results of the study and sets theperspectives for future research.
June 19, 2009 13:30 WSPC/150-IJIM 00230
298 D. Podmetina et al.
Literature Review and Hypotheses Development
The existence of a strong relationship between internationalisation and innovationis obvious for technology oriented companies, when international technology trans-fer is a form of export per se (Robinson, 1988). The understanding of innovationhas expanded from pure product and process innovations to organizational and evenmarketing innovations (Oslo manual, 2007). Moreover globalization pushes compa-nies to enter foreign markets and acquire specific knowledge in order to implementtechnology and business innovations. Thus, “innovation has moved from an inter-national reality dominated by the idea of technology transfer, where agents developknowledge and transfer it to other countries, to a much more complicated situa-tion where, although, that reality has not disappeared, there are also new ways ofdeveloping innovation in which the international ambit also affects the creation ofknowledge stage and which multinational companies acquire new protagonism”(Molero, 2008).
There is substantial research evidence on the dual relationship between inno-vation and internationalisation. Filipescu (2007) tested empirically the predictionof product-cycle models of international trade which shows that innovation drivesexports of firms in industrialized countries.
There are many factors influencing the dual relationship between innovationand internationalisation: firm’s heterogeneity and internationalisation modes, rela-tionship between (economic and innovative) performances and a further mode ofinternationalisation (Castellani et al., 2007), influence of innovation characteristicson firm’s behaviour and relationship between trade and innovation on firm level(Wakelin, 1998), size of the company, innovativeness and export (Wakelin, 1998),and influence of the firm’s technological capacity on both its decision to export andits export intensity (Lopez Rodriguez and Garcia Rodriguez, 2005). Some factorscould be classified as domestic, exporting, controlling non-manufacturing activ-ities abroad and manufacturing abroad (Castellani et al., 2007), or exporter vs.non-exporters (Filipescu, 2007; Wakelin, 1998), non-exporting, low exporting, highexporting (Lachenmaier and Wossmann, 2006). Based on these theories we formour first hypothesis:
H1: There is a relationship between innovation and internationalisation.
The successful innovations also depend on macro-economic conditions, forexample, the amount of effective demand within the national economy (Geroskiand Walters, 1995), and the accessibility of foreign markets (Hughes, 1986). Thebehaviour of innovating firms depends on their own decision-making, but “is shapedby institutions that constitute constraints and incentives for innovations, such aslaws, health regulations, subsidies, taxes, public expenditures, etc. Additionally,
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 299
micro-economic conditions (e.g. market conditions, competition, and price set-ting) and macro-economic conditions (e.g. wealth, inflation, openness) will influ-ence the decisions about innovation taken by firms” (Faber and Hasen, 2004).The development of a market economy in Russia has to be based on networksof innovative companies utilizing FDIs (Dyker, 2004).
Cooperation with foreign partners
The import of technology was complemented by a huge effort to develop local capa-bilities in the developing countries in East Asia: the technology cooperation withforeign partners covers not only “the acquisition of competencies for operating andmaintaining, but also the acquisition of various combinations of design, engineer-ing and project management skills”. Companies invest in postgraduate educationand training in the developed countries for their personnel to get enrolled into theinformal international networks (Bell and Pavitt, 1993).
Dyker (2004) studies the process of development and dissemination of technol-ogy in Russia through the cooperation between Russian organizations and foreignfirms. It is important to understand that FDI in Russia facilitates the technologytransfer from abroad. The interesting point is that success of privatization in Russiacan be estimated by “the diversity of enterprise forms, sizes, and strategies whichis essential for knowledge diffusion and generation”.
Co-operation and licensing deals with partners from developed economies areways to speed up the innovation development process in Russia. But for Russiancompanies and research institutes, it is difficult to find partners when Russian sci-entists are not educated to prepare business plans or create new ventures. Venturecapital industry in Russia is mainly foreign-owned, but on the other hand, foreigndirect investments in R&D are quite modest. Probably the highest foreign R&Dinvestment occurs in the ICT sector. Sun Microsystems, Motorola, Microsoft andIntel have R&D or dedicated development centres with more than 200 workers inSt. Petersburg or Moscow (OECD, 2005).
Entry mode and export intensity
Innovations can also be factors, facilitating entry to international markets (Basile,2001; van Dijk, 2002). Internationalization itself can be regarded as an innovation forthe firm, whereas knowledge is a vital source. Innovations and R&D play importantroles in overcoming barriers to internationalisation, but being conditional on havingentered export market, R&D does not increase export intensity level when such R&Dis treated as endogenous (Harris and Li, 2008). The customer orientation componentof market orientation influences the innovative capability of the firms (Akman andYilmaz, 2008).
June 19, 2009 13:30 WSPC/150-IJIM 00230
300 D. Podmetina et al.
Entry to the foreign market can play “a more creative role” serving as an instru-ment for introduction and diffusion of innovations. Geroski considers two typesof entry, “imitative” and “innovative”, which are different by nature, employingdifferent management and control mechanisms and having different barriers andeffects. However, innovative entry is rather seldom observed (10% of all new firmsare innovative entrants). “Entry often plays a major role early in the life of mostproducts. . .in early stages, outsiders are the source of most innovations and use theseas a vehicle of entry. . .there is a shift from product towards process innovation. . .”(Geroski, 1991).
The effect of R&D and innovation on export is industry- and country-dependant.Both positive and negative effects could be found in the literature. There is a pos-itive effect of R&D on exports for large samples of Brazilian and German firms,respectively (Willmore, 1992; Wagner, 2001). And there is a negative effect of R&Dfor Indian engineering firms (Lall, 1981). We can also suggest that non-exportingand low exporting strategies are prevalent among non-innovating firms. Innova-tors showed export share at 12.6% higher than non-innovators (Lachenmaier andWossmann, 2006).
Innovating and non-innovating firms behave differently in terms of the proba-bility of export and the level of export. Thus, the innovative capacity fundamentallychanges the behaviour of the firm. Large innovating firms do more exports. Smallinnovating firms are more domestic (Wakelin, 1998). Based on these theories wepropose to test relationship between innovations and export on the survey data(Hypothesis 1.1).
H1.1: There is positive relationship between innovations and international opera-tions. Companies with higher R&D expenditures have higher export intensity.
Competition
Since the work of Joseph Schumpeter in 1934, innovation has been recognised asa tool for “competition and dynamic efficiency of markets” (Mansury and Love,2008). The monopolistic firms were considered to be more willing to finance theirR&D (less competition, more innovations). From the other perspective, implement-ing innovations is significant driver for increasing competitiveness of domesticcompanies both on the home and foreign markets.
Many researchers (Aghion et al., 2005) hypothesized that there is invertedU-shaped relationship between intensity of competition and extent of innovation.However, research related to transition economies has proved that competition hasa negative effect on innovation. No support was found for the inverted-U effectof competition on innovation (Gorodnichenko et al., 2008). However, transitionalcountries should be the biggest beneficiaries of globalization, especially from
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 301
the transfer of capabilities of FDIs (Sutton, 2007), because competition causedby foreign companies should strengthen domestic companies. We aim to test theeffect of competition on innovation and suppose it is negative rather than positive(Hypothesis 2).
H2: Competition has rather negative effect on innovations.
As a factor of competition, innovation contributes to explaining heterogeneityin export behaviour (Basile, 2001). Technological resources can generate a dou-ble competitive advantage for a firm, in lowering costs by creating new and moreefficient production processes, and in differentiation by means of product innova-tions (Lopez Rodriguez and Garcia Rodriguez, 2005). Mansury and Love (2008)state that “it is fair to say that theoretical support for the proposition that com-petition is good for innovation exists, but that it is yet far from conclusive”. Wesuggest that effect of competition on non-exporting companies is more pronounced(Hypothesis 2.1.)
H2.1: Competition has stronger effect on non-exporting companies and companieswith low export intensity.
Economic performance and productivity
Numerous academic studies have found a positive relationship between innovationand firm performance in manufacturing (Crépon et al., 1998; Mairesse and Mohnen,2003). However, “reflecting the lack of maturity of the analysis of service sectorinnovation, studies of the relationship between innovation and business performancein the service sector are still relatively rare” (Mansury and Love, 2008). Moreproductive firms are more likely to be engaged into internationalisation activities,and firms with high engagement in foreign activities also exhibit better economicand innovative performances (Castellani et al., 2007). The importance of the effectof the product markets structure on innovation activity and effect of innovation onproductivity growth has been studied also by Geroski (1994).
Pianta and Vaona (2007) tested relationship of labour productivity levels andthe diffusion of innovations in firms and proved that industries with a good exportperformance have to rely in all countries on improvements in both products and pro-cesses. “Advanced economies, such as the European ones, can expand their foreignmarkets only through a strategy of technological competitiveness where innovationplays a key role” (Pianta and Vaona, 2007). Considering the above mentioned aca-demic studies, we aim to test relationship between labour productivity and exportof the companies in our sample. The proposition is that companies with higherproductivity are more export oriented (Hypothesis 3).
H3: The more productive companies are more export oriented.
June 19, 2009 13:30 WSPC/150-IJIM 00230
302 D. Podmetina et al.
Size
While traditional “Schumpeterian approach” states that small firms are not strongin introducing innovations and increasing productivity, recent research has foundthat small firms are not any weaker in innovation performance. They spend less onR&D than large firms, but they outperform large firms when considering innovationcounts (Pianta and Vaona, 2007). Small and medium-sized enterprises report that themost important factors hampering their innovative activity include under-developedinfrastructure in the area of technology commercialization, incomplete legislation,and lack of financing (OECD, 2005). Both the size of the firm, and FDI and capitalemployed play an important role in export intensity (Jauhari, 2007).
Often, for both developing and industrialised countries, an inverted U-shapedrelationship between size and export propensity has been found (e.g. Wagner, 1995;Kumar and Siddharthan, 1994). Another explanation for the non-linear relationbetween exports and size is pointed out by Wakelin (1998). “Although size is anadvantage in exporting, this may not apply to very large firms which can be moreorientated towards the domestic market due to, for example a domestic monopolygiving them no incentive to export” (Wakelin, 1998). Hypothesis 4 is formulated inorder to specify the effect of company’s size of the export orientation of innovativecompanies.
H4: The larger innovative companies are more export oriented, the small innovativecompanies are more domestic oriented.
Patents
Product innovations, patents and process innovations positively and significantlyaffect both the decision to export and the export intensity. Technological capacityof the firm is the key factor in its international competitiveness, providing it withgreater capacity to enter and sell products in foreign markets. R&D spending has apositive effect on export intensity (Lopez Rodriguez and Garcia Rodriguez, 2005).Faber and Hesen (2004) tested the relationships among R&D and other innovationactivities, patents granted and sales of product innovations, and proved that patentsdo depend on sales of product innovations. The attitude of firms towards patentingreflects their orientation on innovation. This orientation has not only a positiveeffect on the number of patents granted as reported before, but also on the numberof successfully introduced product innovations (Porter, 1990). We suggest that theeffect of new product development and patents on the export intensity is positive(Hypothesis 5).
H5: Product innovation and patents have positive effect on export intensity.
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 303
Data and Methodology
The study is based on the survey of 176 R&D oriented Russian companies con-ducted in early 2008. The sample was drawn on companies, active in innovationsor representing an industry with high innovation intensity (Frascati manual, 1993;Oslo manual, 2007). Thus, the sample was based on expecting the firms to beinnovation-oriented and emphasizing R&D as a source of their long-term compet-itive advantage. Innovativeness indicators, such as R&D expenditure, new productdevelopment, and patenting activity, are used to evaluate the innovative capacity onthe firm level.
There are significant difficulties in obtaining data in Russia due to low willing-ness of firms to disclose information, higher opportunism and strict knowledge-protection policies, in particular in the innovation-active industries. The proce-dure of data collection had to be made with guarantees of confidentiality of allthe data gathered and limited opportunities to present the details of the compa-nies taken part in the study in reports and further publications. The data gath-ering was conducted as follows. At the first stage of collecting the information,the interviewer approached the companies by the phone and allocated the qual-ified respondent. Usually the respondent represented the top management body.Then, the interviewer offered him/her to answer the questions. The response rateequalled 17%.
An important advantage of our study is that we have combined data on R&Dexpenditures (officially reported) and data on innovation activities and patents,reported by companies in out interviews. This approach allows avoiding the commonmethod bias. Concerns about the common method use arise when both dependentand independent variables are measured by the same key informant (Luo et al.,2006; Podsakoff et al., 2003).
Most studies use mainly patents data and R&D expenditures, which is proble-matic. Patents have several weakness because they measure inventions rather thaninnovations, they are very industry-, country- and process-dependant, and compa-nies often use other methods to protect their inventions. Using R&D expenditurescan also been problematic, because not all innovations are generated by R&D expen-ditures. R&D does not necessary lead to innovation, and formal R&D measures arebiased against small firms.
To achieve sample results, a number of industries and regions were included in thesample. The survey was conducted in Saint-Petersburg and Moscow — the Russianregions with the highest impact of FDIs and highest innovation sector development(Väätänen et al., 2007; Torkkeli et al., 2009). The industrial composition of thesample is as follows (Table 1): the largest number are service companies (27.8%),
June 19, 2009 13:30 WSPC/150-IJIM 00230
304 D. Podmetina et al.
Table 1. Industries and R&D expenditures.
Share, % Sales, % R&D exp./sales %
Services 27.8 9.5 1.6Machine building 22.7 29.8 3.3ICT 14.2 24.3 0.6Electronics 14.2 10.0 5.6Energy, oil and gas 7.4 19.7 2.0Others 7.4 4.4 1.1Construction 6.3 2.3 0.6
All 100.0 100.0 2.3
Table 2. Industries and export.
Exporters/total, % Exporters, % in industry Exports/sales %
Machine building 13.1 57.5 20.3Services 10.2 36.7 10.3ICT 9.1 64.0 11.9Electronics 7.4 52.0 39.7Energy, Oil and Gas 3.4 46.2 10.9Others 2.3 30.8 20.7
All 45.5 45.5 17.0
followed by machine building (22.7%), ICT (14.2%), electronics (14.2%), energy,oil and gas industry (7.4%), and construction (6.3%).
However, when analysing the share of sales in certain industries, machine build-ing is the leader (30%), followed by ICT (24%), energy, oil and gas industry (20%),electronics (10%) and services (9.5%). The industrial composition of the sampleindicates companies’ R&D orientation. The average share of R&D expenditure ofsales is 2.3% when including all companies (and 6.5%, when including only com-panies with R&D expenditures). The highest share of R&D is in electronics (5.6%)and machine building (3.3%).
Enterprises are classified as exporting and non-exporting in order to analyselink between export and innovations in Russian companies. The share of export-ing companies is high — 45.5% (Table 2). By the number of companies, the mostexport intensive is ICT sector, followed by machine building, electronics, and ser-vices. By the share of exports in the total sales, the leading industries are electronics,machine building and ICT.
The average sales per exporting company is slightly lower (59.9 million euros)than non-exporting company — 60.3 million euros (Appendix 1). Productivity
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 305
(sales per employee) of exporting companies is higher — 17.5 thousands eurosper employee against 15.8 thousands euros per employee for non-exporting com-panies. There are 15% of foreign companies among exporters, and 10.4% amongnon-exporters.
If considering R&D companies separately (Appendix 2), the most R&D intensiveindustries are machine building and ICT. However, the share of R&D expenditures oftotal sales is highest in electronics, machine building and energy, oil and gas sectors.The share of exporters is higher for R&D companies than for other companies(21.7% against 17%).
The key method of the study is to link the firm’s innovativeness and the level ofinternationalisation — measure through export activities (Table 2). The interactioneffects are tested separately for each dependent variable by applying the methodscorresponding with the level of measurement (cross-tabulation, T-test for indepen-dent samples, ANOVA, linear regression analysis and GLM univariate test).
Dependent variables
As our dependent variables, we measure export activity of firm i as (a) whether firmi exported in a given year t (EXPORTD), (b) a volume of export by a given firm(EXPORT), and (c) export as a share of sales of firm i in a given year t (EXPORTS).See Table 3 for definitions of variables used in the study to explore the data and testthe hypotheses formulated in the previous part of the paper.
Independent variables
Our key independent variables (Table 3) are linked to the field of innovation activi-ties of the firms in the sample, and cover R&D expenditures of the firm (R&D, R&DD
and R&DS), number of technologically new or significantly modified products intro-duced (NPD), labor productivity (PRODUCTIVITY and PRODUCTIVITYR D), andnumber of patents (PATENTS, PATENTSE and PATENTSR DE).
We also consider the role of the competition from the side of the imports on thekey product/service line in domestic market for the firms in our sample (COMPE-TITION). We also analyze the role of the size of the firm by proposing the variableSIZE that is based on splitting the sample into sub samples of small, medium andlarge firms.
Results
The study aims to identify the clusters of companies according to their exports andR&D expenditures and fulfil in-depth analysis of innovations-related determinantsthat could explain the structure of the clusters. The distribution of the firms in the
June 19, 2009 13:30 WSPC/150-IJIM 00230
306 D. Podmetina et al.
Table 3. Definition of variables.
Variable Description
EXPORT Export of a firm in year tEXPORTD Dummy variable equals 1 if company i exports in year tEXPORTS Export as a share of salesR&D R&D expenditure of a firm in year tR&DD Dummy variable equals 1 if company i has R&D expenditure in year tR&DS R&D expenditure as a share of salesR&DRDE Ratio between the R&D expenditure of firm i and the number of R&D
employeesCOMPETITION Importance of competition from imports in the market for the main product
line/service in the domestic marketPRODUCTIVITY Labour productivity, euro/personPRODUCTIVITYR D Labour productivity of R&D employees, euro/personSIZE Size of firm in terms of a number of employees (small and medium
sized — less than 200 employees, large — more than 200 employees)EMPR&D Number of R&D employees in the firm iNPD Number of technologically new or significantly improved products
introduced by firm i during the last three yearsPATENTS Number of patents that the firm i has applied for the last three yearsPATENTSE Ratio between the number of patents the firm i has applied for over the last
three years and the number of employeesPATENTSRDE Ratio between the number of patents the firm i has applied for over the last
three years and the number of R&D employees
Table 4. Export and R&D expenditures.
No R&D expenses R&D expenses Total
No Export Cluster 3 Cluster 1 9645 (25.6%) 51 (29.0%)
Export Cluster 2 Cluster 4 8025 (14.0%) 55 (31.3%)
Total 70 106 176
Pearson chi square = 4.447 (0.035).
sample according to our key variables — EXPORTD and R&DD is presented inTable 4. This distribution allows splitting the sample into four clusters:
Cluster 1: Non-exporting innovators [R&D, but no export (29.0%)]Cluster 2: Non-innovating exporters [export, but no R&D (14.0%)]
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 307
Cluster 3: Non-exporting non-innovators [no export, no R&D (25.6%)]Cluster 4: Exporting innovators [both export and R&D (31.3%)]
When describing the clusters, we see that there is no significant difference intotal sales of the firms. The relationship between clusters and sales of the companiesis presented in Appendix 3.
Hypotheses testing
While testing research hypotheses, the main emphasis was set on understandingthe mechanisms, underlying both exporting and innovation decisions. There can bea link between firm’s innovation activities and its internationalisation (see litera-ture review in Section 2). There is no clear research evidence, in particular whenconsidering Russia. The research question thus stays open and requires furtherinvestigation. Distribution of sample firms across the clusters assumes plurality ofmotivations underlying both internationalisation and innovation decisions. We limitour research to a number of key variables linked to firm’s innovation activities.
Testing relationship between innovation and internationalisation
The detailed distribution of firms when analyzing both R&D expenditures and exportas a share of sales are presented in Table 5. Table 5 shows that there is statisticallysignificant relationship between export and innovation activities by the firms in a
Table 5. Export (EXPORTS) — R&D expenditure (R&DS) relationship.
Export as % of sales R&D expenditures as % of sales Total
0 Less than 5% 5–9% More than 10%
0 Count 45 25 11 15 96% of Total 25.6% 14.2% 6.3% 8.5% 54.5%
from 1% to 25% Count 11 4 5 1 21% of Total 6.3% 2.3% 2.8% 0.6% 11.9%
from 26% to 50% Count 10 17 7 2 36% of Total 5.7% 9.7% 4.0% 1.1% 20.5%
from 51% to 75% Count 2 2 3 3 10% of Total 1.1% 1.1% 1.7% 1.7% 5.7%
from 76% to 100% Count 2 8 2 1 13% of Total 1.1% 4.5% 1.1% 0.6% 7.4%
Total Count 70 56 28 22 176% of Total 39.8% 31.8% 15.9% 12.5% 100.0%
Pearson Chi-Square = 24.490 (p = 0.017).
June 19, 2009 13:30 WSPC/150-IJIM 00230
308 D. Podmetina et al.
sample. The four clusters were defined and described earlier: R&D, but no export(29.0%), Export, but no R&D (14.0%), No export, no R&D (25.6%), and Bothexport and R&D (31.3%). There is a correlation between the R&D expenditure(R&D) and export (EXPORT). When looking in depth of the export-innovationrelationship on example of the sample firms, we may find a statistically significantrelationship on the level of export and R&D expenditures as share of sales (exportand R&D intensity). In total, 60% of firms (n = 106) have R&D expenditures,while only 45% (n = 80) are exporting.
The existing relationship between exporting and innovativeness, revealed by ourdata, is not easy to explain. We need to address the variables that were selectedas independent ones, to try to explain the selection mode of the firms in a samplebetween the spending on R&D and making decision to go international, since inmany cases this seems to be a matter of compromise.
When comparing R&D expenditure, there are no significant differences betweenexporting and non-exporting companies (Table 6). The share of R&D of the totalsales is 3.7% for exporting companies and 3.8% for non-exporting companies. Sim-ilarly, there are surprisingly few differences between exporting and non-exportingcompanies in the structure of R&D spending. Exporting companies spend 3.0%more on acquisition of machinery and equipment and 0.5% more on acquisition ofexternal knowledge. Non-exporting companies spend 2.7% more on internal R&Dand 1.7% more on acquisition of external R&D.
Testing the role of competition in domestic market
Competition is one of the factors that we could use as an explanation for bothdriving the innovation and export activities. We measure competition as perceivedimportance of competition from the side of import. But at the same time, thereare some significant differences in perception of the level of competition by firms
Table 6. R&D operations.
Export No Export
Share companies with R&D 69% 53%R&D expenditure/sales, % 3.7% 3.8%R&D expend./R&D pers. 4,565.9 3,541.7
R&D expenditures. TOP4, %
Internal R&D 19.9% 22.6%Machinery & equipment 21.8% 18.0%Acquisition of external knowledge 15.3% 14.8%Acquisition of external R&D 10.6% 12.3%
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 309
Table 7. Competition perceived by clusters [mean(std. deviation)].
No R&D expenses R&D expenses
No Export 2.63 (1.41) 2.42 (1.26)Export 3.08 (1.25) 3.41 (1.29)
F = 6.832 (0.000).
from different clusters (Table 7). For the defined clusters, we can see statisticallysignificant differences in terms of perceived competition.
The highest level of competition is perceived by exporting firms with R&Dexpenditure, while the lowest level of competition is perceived by non-exportingfirms with R&D activities. The explanation for this difference is not in the influenceon the level of R&D expenditure. We did not find significant results by running theregression with COMPETITION as independent variable, influencing R&D, whilethe impact of COMPETITION on EXPORTS was significant (Appendix 4). Thus,the stronger the competition in the home market, the more the firm will be inclinedto export. The same is not true for the level of the R&D expenditure of firms.
There is a statistically significant relationship between the level of competitionas perceived by the given firm, and the cluster the firm belongs to (Table 8). As wesee from the regression results above, these differences are largely explained by thedriving power of competition that is influencing the export activity of the firm. Dueto our cluster approach, we see that the most firms, perceiving the competition as aserious factor, are combining the R&D and exporting activities.
Testing the role of productivity in influencing firm’s export activity
When testing the research hypothesis we measure both overall labor productivity andproductivity of R&D employees. This hypothesis is partly supported, since there is asignificant positive impact from the side of the productivity of the R&D employees,while the overall labor productivity has a significant, but negative influence on theexport of a given firm (Appendix 5).
Testing the size effect on both innovations and internationalisationof the firm
The size of the firm may have a crucial role in firm’s innovating and exportingactivities. The relationship between the size of the firm and the cluster the firmbelongs to was proved to be insignificant. We applied t-test for independent samplesacross a number of variables that could help us explain the differences in innovative
June 19, 2009 13:30 WSPC/150-IJIM 00230
310 D. Podmetina et al.
Table 8. Distribution of firms across the sample.
How important is competition R&D and Export — Cluster Number of Case Totalfrom imports in the market(from “not important” to Cluster 1 Cluster 2 Cluster 3 Cluster 4
“extremely important”)R&D, Export, No export, Export +
no export no R&D no R&D R&D
Not important number of firms 15 3 12 4 34% 8.5% 1.7% 6.8% 2.3% 19.3%
Slightly important number of firms 14 6 11 9 40% 8.0% 3.4% 6.3% 5.1% 22.7%
Fairly important number of firms 9 3 7 12 31% 5.1% 1.7% 4.0% 6.8% 17.6%
Very important number of firms 9 10 7 11 37% 5.1% 5.7% 4.0% 6.3% 21.0%
Extremely important number of firms 3 2 6 13 24% 1.7% 1.1% 3.4% 7.4% 13.6%
These products cannot number of firms 1 1 2 6 10be imported % 0.6% 0.6% 1.1% 3.4% 5.7%
Total number of firms 51 25 45 55 176% 29.0% 14.2% 25.6% 31.3% 100.0%
Pearson chi square = 27.663 (0.024).
and exporting activities according to the size (Table 9). Indeed, smaller firms aremore limited in terms of R&D expenditures, have less employees, and less exports.But they out-perform the larger firms in terms of higher labor productivity, highershare of R&D spending as percentage of sales and higher number of patents peremployee and per R&D employee. These innovation activities, though, do not leaddirectly to higher export sales.
Testing the role of product innovation and patents on export intensity
The basic indicators of new product development (NPD) are presented in Table 10.In the last three years, 28.8% of exporting companies have introduced new productscompared with 26.0% of non-exporting companies.
NPs were mainly developed by own company — 91.3% of exporters and 88.0%of non-exporters. Non-exporters are more likely to co-operate with external partnersin the product development phase. The sales mix also does not show large differencesbetween exporters and non-exporters.
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 311
Table 9. Results of testing the difference between small/medium sized and large companies.
Size of the firm by the number of employees All sample
Mean Std. Deviation
EXPORT SME 1,151,832.791*** 1,334,983.2590LSE 39,874,664.903*** 46,900,918.6148
PRODUCTIVITY SME 37,539.195*** 16,220.1458LSE 31,176.803*** 13,174.8124
R&D SME 202,230.859*** 229,884.5340LSE 3,640,291.565*** 5,873,241.4924
R&DS SME 0.0897** 0.09570LSE 0.0484** 0.04624
R&DE M P SME 15.81*** 20.951LSE 573.69*** 1,312.426
R&DR DE SME 24,775.0618 51,062.74785LSE 40,295.8503 79,133.44190
PATENTS SME 19.07 24.935LSE 14.00 9.266
PATENTSE SME 0.40018*** 0.741290LSE 0.01808*** 0.028480
PATENTSR DE SME 3.6409 8.77868LSE 0.2107 0.29686
NPD SME 6.6500 3.85630LSE 6.1429 2.82468
***p < 0.001, **p < 0.01.
Table 10. New product development (NPD).
Export No Export
New product introduced in the last 3 years 28.8% 26.0%New product developed by:
Own company 91.3% 88.0%In cooperation with others 8.7% 12.0%
Turnover, 2006, distributed %New product 21.1% 17.2%Significantly improved 44.4% 43.0%Unchanged 34.5% 39.8%
Average duration of NPD from idea to market (months) 13.86 13.56
June 19, 2009 13:30 WSPC/150-IJIM 00230
312 D. Podmetina et al.
The final regression model tests the hypothesis on the role of product innova-tion (NPD) measured as a number of new technological products or significantlymodified products introduced by the firm over the last three years and number ofpatents (PATENTS) in enforcing the exporting activities of the firm (Appendix 6).Following the results of the previous analysis we also have included into modelR&D expenditures of the firm (R&D and R&DS).
The regression test shows that export is influenced by the number of new prod-ucts (NPD) and total R&D expenditure (R&D). From the previous test, we learnedthat R&D is significantly higher by the larger firms (Table 9). The number of patentshas no direct influence on export activity that may be explained by some limitationsof our study (industries selected, stage of internationalisation and innovation activi-ties of the firms in the sample). Development and introduction of new technologicalproducts or significantly modified products seems to be one of the drivers underpin-ning higher internationalisation activities in Russian firms, while correlation withthe level of R&D expenses was already supported by previous tests. It is interestingthat the share of the R&D expenditures has no significant effect on export, whilethe share of the R&D is slightly (insignificant) higher in smaller and medium sizedfirms. Nevertheless, this factor has not proved to be significant determinant in exportdevelopment and is one more explanation for easier internationalisation of largercompanies.
Conclusion
The research paper studied the innovations and internationalisation of R&D orientedcompanies in Russia. The main results of the study show the impact of innovationactivities, competition and new product development on export intensity.
Test results show that there is a statistically significant relationship betweenexport and innovation activities by the firms in the sample. There is a correla-tion between the R&D expenditure (R&D) and export (EXPORT). When lookingin-depth at the export-innovation relationship of the companies, we can detect astatistically significant relationship on the level of export and R&D expenditures asshare of sales (export and R&D intensity). This relationship is again statistically sig-nificant (p = 0.017), and implies that there is a strong link between innovativenessand export behavior of the firm.
We measure competition as perceived importance of competition from the sideof import. But at the same time, there are some significant differences in perceptionof the level of competition by firms from different clusters. For the clusters defined,there are statistically significant differences in terms of competition perceived. Thehighest level of competition is perceived in case of exporting firms with R&D
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 313
expenditure, while as the lowest level of competition is perceived by non-exportingfirms with R&D activities.
There is a statistically significant relationship between the level of competition asperceived by the given firm, and the cluster the firm belongs to. Results of regressionanalysis show that these differences are largely explained by the driving power ofcompetition that is influencing the export activity of the firm. Due to our clusterapproach, we see that the most firms, perceiving the competition as a serious factor,are combining the R&D and exporting activities.
When testing the research hypothesis, we measured both overall labor produc-tivity and productivity of R&D employees. This hypothesis was partly supported,since there was a significant positive impact from the side of the productivity of theR&D employees, while the overall labor productivity had a significant, but negativeinfluence on the export of a given firm.
The size of the firm may have a crucial role in firm’s innovating and exportingactivities. The relationship between the size of the firm and the cluster the firmbelongs to was insignificant. T -test was applied for independent samples acrossa number of variables that could help explain the differences in innovative andexporting activities according to the size.
Indeed, smaller firms are more limited in terms of R&D expenditures, and haveless employees and less export. But they out-perform the larger firms in terms ofhigher labor productivity, higher share of R&D spending as percentage of sales andhigher number of patents per employee and per R&D employee. These innovationactivities, though, do not lead directly to higher exports. However, when analyzingthe innovators only, the exports by large innovators seem to be higher than those ofwhole sample.
The final regression model results revealed that exports are influenced by thenumber of new products (NPD) and total R&D expenditure (R&D), while numberof patents and share of R&D expenses had an insignificant relationship. The resultsof the study are subject to limitations due to the cross-sectional nature of the survey,selection of pro-innovation oriented sectors and limited number of regions presentedin the study.
Further research of the relationship between exporting and innovativeness shouldprovide interesting perspectives, especially to increase understanding of the mech-anism underlying both exporting and innovations decisions. We aim to analyzetraditional inward and outward internationalisation modes, together with level ofcooperation with foreign partners, acquisition of foreign technology, outsourcingmodes, and others in order to estimate the influence of internationalisation on com-panies’ innovation abilities and on their innovation output.
June 19, 2009 13:30 WSPC/150-IJIM 00230
314 D. Podmetina et al.
Appendices
Appendix 1. Financial indicators.
Export No Export
% of total 45.3% 54.7%Sales/company, mln 59.9 60.3Employees/company 3,431 3,805Productivity (Sales/employees) 17,468 15,853% of Foreign companies 15.0% 10.4%
Appendix 2. Industries and R&D companies.
Share of R&D R&D/sales% Export % Numberexp %
Electronics 10.8% 8.5% 60.2% 11Energy, Oil and Gas 13.4% 4.9% 14.7% 5Machine building 32.9% 4.8% 21.9% 16Services 6.4% 4.0% 2.7% 8Construction 1.1% 2.1% 0.0% 0Others 4.4% 1.8% 29.0% 2ICT 31.0% 0.7% 14.8% 11All 100.0% 3.7% 21.7% 55
Appendix 3. Cluster — Sales relationship ( mln).
No R&D expenses R&D expenses
No Export 55.43* (108.28**) 64.63 (157.03)Export 64.66 (142.28) 57.78 (102.7)
F = 0.058 (p = 0.982) * Mean ** Std. Deviation.
Appendix 4. Impact of competition on the share ofexport in sales.
Dependent variable: EXPORTS
R2 = 0.072 T-value B-coefficient Sig.
COMPETITION −3.672 0.268 0.000
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 315
Appendix 5. Influence from productivity and productivity of R&D employees on export.
Dependent variable – EXPORT
R2 = 0.107 T-value B-coefficient Sig.
Labour productivity, euro/person −2.173 −0.239 0.033Labour productivity (R&D employees), euros/person 2.522 0.278 0.014
Appendix 6. Linear regression model.
Dependent variable – EXPORT
R2 = 0.800 T-value B-coefficient Sig.
NPD 2.592 0.477 0.041R&DS −1.491 −0.273 0.186R&D 4.007 0.749 0.007PATENTS 0.061 0.012 0.953
References
Aghion, P, N Bloom, R Blundell, R Griffith and P Howitt (2005). Competition and innova-tion: An inverted U relationship. Quarterly Journal of Economics, 202, 701–728.
Akman, G and C Yilmaz (2008). Innovative capability, innovative strategy and marketorientation: An empirical analysis in Turkish software industry. International Journalof Innovation Management, 12(1), 69–111.
Basile, R (2001). Export behaviour of Italian manufacturing firms over the nineties: Therole of innovation. Research Policy, Elsevier, 308, 1185–1201.
Bell, RM and K Pavitt (1993). Technological accumulation and industrial growth: Contrastsbetween developed and developing countries. Industrial and Corporate Change, 2(2).
Castellani, D and A Zanfei (2007). Internationalisation, innovation and productivity:How do firms differ in Italy? The World Economy, Special Issue on “Exports andGrowth”.
Crépon, B, E Duguet and J Mairesse (1998). Research, innovation and productivity: Aneconometric analysis at the firm level. Economics of Innovation and New Technology,7, 115–158.
Dyker, D (2006). Closing the EU East-West Productivity Gap. Imperial College Press.Faber J and AB Hesen (2004). Innovation capabilities of European nations: Cross-sectional
analysis of patents and sales of product innovations. Research Policy, 33, 193–207.Filipescu, D (2007). Innovation and internationalization. A focus on the Spanish exporting
firms. Research work, Doctoral programme: Creation, strategy and management of thefirm, Universitat Autonoma de Barcelona, Business Economics Department.
June 19, 2009 13:30 WSPC/150-IJIM 00230
316 D. Podmetina et al.
Frascati, M (1993). The measurement of scientific and technological activities: Proposedstandard practice for surveys of research and experimental.
Geroski, PA and CF Walters (1995). Innovative activity over the business cycle. EconomicJournal, 105, 916–928.
Geroski, PA (1991). Market Dynamics and Entry. Cambridge, MA: Blackwell.Geroski, P (1994). Market Structure, Corporate Performance and Innovative Activity.
Oxford University Press, Oxford.Gorodnichenko, Y, J Svejnar and K Terrell (2008). Globalization and innovation in emerging
markets. IZA Working Paper No. 3299, Available at SSRN.Harris, R and QC Li (2008). Exporting, R&D, and absorptive capacity in UK establishments.
Oxford Economic Papers, 28 March, Oxford University Press.Hughes, K (1986). Export and Technology. Cambridge: Cambridge University Press.Jauhari, V (2007). Analyzing export intensity of the selected electronics firms in India.
International Journal of Innovation Management, 11(3), 379–396.Krot, P (2008). The Russian innovation system — An internaitonal perspective. Research
Report 206, Lappeenranta University of Technology, Finland.Kumar, N and NS Siddharthan (1994). Technology, firm size and export behaviour in devel-
oping countries: The case of Indian entreprises. Journal of Development Studies, 31.Lachenmaier, S and L Wossmann (2006). Does innovation cause exports? Evidence from
exogenous innovation impulses and obstacles using German micro data. Oxford Eco-nomic Papers, 58, 317–350.
Lopez Rodriguez, J and R Garcia Rodriguez (2005). Technology and export behaviour: Aresource-based view approach. Internaitonal Business Review, 14, 539–557.
Luo, X, RJ Slotegraaf and X Pan (2006). Cross-functional “coopetition”: The simultaneousrole of cooperation and competition within firms. Journal of Marketing, 70, 67–80.
Mansury, MA and JH Love (2008). Innovation, productivity and growth in US businessservices: A firm-level analysis. Technovation, 28, 52–62.
Molero, J (1998). Patterns of internationalization of Spanish innovatory firms. ResearchPolicy, 27, 541–558.
Molero, J (2008). The challenges of the internationalization of innovation for science andtechnology policies. ICEI Paper, Instituo Compluense de Estidios Internacionales.
Oslo Manual (2007). Guidelines for Collecting and Interpreting Innovation Data,3rd ed.
Pack, H (1993). Technology gaps between industrial and developing countries: Are theredividends for latecomers?. In World Bank (ed.), Proceedings of the World Bank AnnualConference on Development Economics 1992, Washington DC.
Pianta, M and A Vaona (2007). Innovation and productivity in European Industries. Eco-nomics of Innovation and New Technology, 16(7), 485–499.
Podsakoff, PM, SB Mackenzie and J-Y Lee (2003). Common method biases in behaviouralresearch: A critical review of the literature and recommended remedies. Journal ofApplied Psychology, 88(5), 879–903.
Robinson, R (1988). The International Transfer of Technology: Theory, Issues, and Practice.Cambridge, Massachusetts: Ballinger Publishing Company.
June 19, 2009 13:30 WSPC/150-IJIM 00230
Innovativeness and International Operations: Case of Russian R&D Companies 317
Porter, ME (1990). The Competitive Advantage of Nations. London: Macmillan.Rosstat (2007). Data from Official Russian Statistical Agency (1998–2008).Schumpeter, JA (1934). Theory of Economic Development. Cambridge: Harvard University
Press.Sutton, J (2007). Quality, trade and the moving window: The globalization process. The
Economic Journal, 117(524), F469–F498.Torkkeli, M, D Podmetina and J Väätänen (2009). Knowledge absorption in emerging
economy — Role of foreign investments and trade flows in Russia. InternationalJournal of Business Excellence, 2(3/4).
van Dijk, M (2002). The determinants of export performance in developing countries:The case of Indonesian manufacturing. Eindhoven Centre for Innovation Studies, TheNetherlands, Working Paper.
Väätänen, J and D Podmetina (2007). International technology transfer in the Russianeconomy — The effect of foreign direct investment spillovers. Global Business andFinance Review, 12(3), Special issue.
Wagner, JW (1995). Review of beyond the bilingual classroom: Literacy acquisition amongPeruvian amazon communities, by Barbara Trudell. Notes on Literacy, 21(2), 56–59.
Wakelin, K (1998). Innovation and export behaviour at the firm level. Research Policy, 26,829–841.
Willmore, L (1992). Transnationals and foreign trade: Evidence from Brazil. Journal ofDevelopment Studies, January, 314–335.
PUBLICATION II
Väätänen Juha, Podmetina Daria and Aleksandrova Marina, 2010. The Role of FDI in the Development of Innovative Capacity: The Case of Russian Companies in eds. Soete L. and Fu X. The Rise of Technological Power in the South, Palgrave, MacMillan, UK, 2010.
PUBLICATION III
Podmetina Daria, Väätänen Juha, Torkkeli Marko, and Smirnova Maria, 2011. Open innovation in Russian firms: an empirical investigation of technology commercialization and acquisition, International Journal of Business Innovation and Research, Vol. 5 (3), pp. 298-317.
298 Int. J. Business Innovation and Research, Vol. 5, No. 3, 2011
Copyright © 2011 Inderscience Enterprises Ltd.
Open innovation in Russian firms: an empirical investigation of technology commercialisation and acquisition
Daria Podmetina* and Juha Väätänen Lappeenranta University of Technology, P.O. Box 20, Lappeenranta FI-53851, Finland E-mail: [email protected] E-mail: [email protected] *Corresponding author
Marko T. Torkkeli Kouvola Research Unit, Lappeenranta University of Technology, Prikaatintie 9, Kouvola FI-45100, Finland E-mail: [email protected]
Maria M. Smirnova St. Petersburg State University Graduate School of Management, St. Petersburg 199004, Russia E-mail: [email protected]
Abstract: The open innovation paradigm suggests that while the costs of innovation and R&D are rising and, at the same time, the life cycles of products are shortening, firms need new and more open business models (BMs) to gain cost and time saving by using also external R&D and to receive new revenues from internal invention sitting on a shelf by external commercialisation channels. Based on study of R&D oriented Russian companies (survey of over 150 companies, 2008), we investigate BMs companies are applying when trade on technology/innovation. Innovations are developing fast in Russia. This paper aims to classify companies based on their strategies in acquisition and commercialisation of technologies; form and analyse the clusters. Based on the previous survey and the current study, we develop a model, how Russian companies explore for knowledge/innovation/technology circulation.
Keywords: open innovation; Russia; R&D investments; transition economy.
Reference to this paper should be made as follows: Podmetina, D., Väätänen, J., Torkkeli, M.T. and Smirnova, M.M. (2011) ‘Open innovation in Russian firms: an empirical investigation of technology commercialisation and acquisition’, Int. J. Business Innovation and Research, Vol. 5, No. 3, pp.298–317.
Open innovation in Russian firms 299
Biographical notes: Daria Podmetina is a Project Manager in the Department of Industrial Management of the Lappeenranta University of Technology, Finland. The current research project deals with innovativeness of Russian companies. Her research interests also focus on the emerging economies (especially Russia), international operation of the companies and innovation and technology management. She has published in journals such as the Int. J. Innovation Management, Int. J. Business Excellence, Int. J. Technology Marketing and Multinational Business Review.
Juha Väätänen is an Professor of International Business in the Department of Industrial Management of the Lappeenranta University of Technology, Finland. His research interests focus on doing business in emerging economies, privatisation, internationalisation and innovation management. He has published in journals such as the Int. J. Innovation Management, Int. J. Business Excellence, Int. J. Technology Marketing and Multinational Business Review.
Marko T. Torkkeli is a Professor of Technology and Business Innovations at the Lappeenranta University of Technology in Kouvola, Finland. He is a Member of the Editorial Boards of Int. J. Innovation Management and Int. J. Services Sciences. He is a Visiting Researcher at INESC Porto (Portugal) and serves as the Director of Publications of the International Society for Professional Innovation Management (ISPIM). His work has been published in journals and conferences in the field of technology management, innovation management and information systems.
Maria M. Smirnova is a Senior Lecturer of Marketing in the Graduate School of Management at Saint Petersburg State University, Russia. Her research interests include industrial marketing, relationship marketing, innovations and international marketing. Her teaching activities are mainly devoted to international marketing, the methodology of marketing research (including quantitative methods), SPSS-based research and structural equation modelling.
1 Introduction
The current economic situation is tough for all range of companies, business faces financial problems, competition is tight, knowledge has spread widely and R&D investments are huge. The development sets new requirements, especially to the research and development of companies. Traditional, centralised and tightly closed approach to innovation and R&D processes do not fit in fast changing environment anymore. After Chesbrough (2006) launched a term ‘open innovation’ that combines the ideas of openness under one term, the open approach has become an essential issue. Open innovation suggests that firms need more open business models (BMs) to gain cost and time saving by using also external R&D, and to receive new revenues from internal invention sitting on a shelf by external commercialisation channels (Christensen, 1997).
Despite the substantial science base and education focused on technology and sciences, innovation activity has been modest in Russia: only about 1.4% of GDP is spend on R&D (Rosstat, 2007). Approximately 60% of R&D is publicly financed and business sector is minor actor in R&D. Only about 10% of industrial enterprises reported technological innovations in 2007, while the average in the European Union is 50%
300 D. Podmetina et al.
(OECD, 2005; Rosstat, 2007). The amount of R&D personnel in Russia is relatively high: about 1.3% of total labour force, compared with less than 2% in OECD countries. In theory, this should positively influence level of innovation capacity of companies in Russia, but only half of R&D personnel work as researchers, which means that the share of support personnel is extremely high.
Russia is a country with rich natural resources, with an educated labour force, and a history of major scientific breakthrough. Currently Russia is a resource-dependent economy, exporting mainly natural resources such as oil, gas and metals, and depends on commodity exports for its growth. According to World Bank estimates, the gas and oil sector contributed approximately 20% of the Russian gross domestic product (GDP) and more than 60% of exports in 2006. The prices for oil and other natural resources have dropped dramatically, which has put the whole economy on the risk due to decreased export income. If the Russian Federation wants to achieve sustainable growth in future years, it has to move away from a resource-based economy. The Russian economy has to diversify, embrace innovation and shift to a knowledge-based economy (EIU, 2007).
The open innovation paradigm suggests that while the costs of innovation and R&D are rising and, at the same time, the life cycles of products are shortening, firms need new and more open BMs to gain cost and time saving by using also external R&D and to receive new revenues from internal invention sitting on a shelf by external commercialisation channels.
The current economic situation is tough for all range of companies, business faces financial problems, competition is tight, knowledge has spread widely and R&D investments are huge. Rapid technology progress and advances in communication tools have facilitated existing types of interactions between producers and consumers of technologies on all business hierarchy levels and created new ways of interactions. This has led to fundamental changes in the ways companies interact both within and across firm and industry boundaries (Geoffrion and Krishnan, 2003; Mendelson, 2000). Globalisation process brings fiercer competition. To survive competition, companies need to rethink the way they are doing business – to adapt their BM (Chesbrough, 2006). A BM has two main purposes, creating value and capturing a share of that value (Chesbrough, 2007). Adapting the BM is an innovation itself. However it is essential, especially when companies are not accustomed to evaluate external ideas (Fetterhoff and Voelkel, 2006). The main focus of our paper is the BMs, to specify innovation circulation within company and trough the companies’ borders: inward innovation – inside circle of innovation – outward innovations.
We continue the study of R&D oriented Russian companies (survey of over 150 companies, 2008) in order to investigate BMs companies are applying when trade on technology/innovation. The research objective of this paper, based on the previous research, is to classify surveyed Russian companies based on their strategies in acquisition and commercialisation of technologies. Based on the classification, we perform further analyse of the clusters. As a result, we propose model how Russian companies explore for knowledge/innovation/technology circulation.
This paper is structured as follows: Section 1 introduces the research topic and sets the research objectives. Section 2 reviews the literature on open innovation and BMs. Section 3 describes the survey data and presents the results of the analysis. Section 4 develops the model and proposes the matrix for analysing the technology acquisition and commercialisation clusters. Section 5 presents empirical results of the clusters’ analysis and describes the case studies. Section 6 presents the conclusions of the study.
Open innovation in Russian firms 301
2 Literature review
The rapid technology progress together with the globalisation of business processes pressure companies to consider adapting their existing BMs in order to survive the competition fight. The inner-innovation circles of the companies are in the large extent accompanied by the external innovation circles, which include interactions between producers and consumers of technologies on all business hierarchy levels. Rapid technology progress and advances in communication tools have facilitated existing types of interactions and created new ways of interactions, which has led to fundamental changes in the ways companies interact both within and across firm and industry boundaries (Geoffrion and Krishnan, 2003; Mendelson, 2000).
Many companies that formerly accepted their business design as a ‘given’ now consider it to be a conscious choice and a competitive weapon. They are using creative business designs to enter new markets, attack incumbents and renew their own leadership positions.
This development sets new requirements for companies, especially to research and development operations. Traditional, centralised and tightly closed approach to innovation and R&D processes do not fit in the fast changing environment. Several studies have suggested new approaches to the business already in 1990s’ (Chesbrough, 2003; Hagedoorn and Shekenraad, 1994; OECD, 2005; Watkins, 2003), but not until Chesbrough (2006) launched a term ‘open innovation’ that combines the ideas of openness under one term, the open approach has become an essential issue. Open innovation suggests that firms need more open BMs to gain cost and time saving by using also external R&D, and to receive new revenues from internal invention sitting on a shelf by external commercialisation channels (Christensen, 1997). The variety of the mechanisms of the open innovation paradigm makes the approach difficult to adopt and adapt. On the other hand, there are many companies that have successfully implemented open innovation even before the actual term had been launched.
The open innovation paradigm suggests that while the costs of innovation and R&D are rising and, at the same time, the life cycles of products are shortening, firms need new and more open BMs to gain cost and time saving by using also external R&D and to receive new revenues from internal invention sitting on a shelf by external commercialisation channels.
Traditionally, BM is focused on all elements of the system and system as a whole (Magretta, 2002) and defines customers and their value, business concept, sources of profit, delivery and distribution channels, cost policy, etc. The main idea of BM is how to do business in order to get profit (Rappa, 2001; Turban, 2002) or, in other words, strategic choices for creating and capturing value within a value network (Chesbrough, 2007). BMs define (describe) relationship with main stakeholders (customers, partners, suppliers, etc.), ‘connections with factor and product markets’ (Amit and Zott, 2001; Elias et al., 2002; Mitchell and Coles, 2003) as well as skills required for success (Rhyne, 2009). One of the newest definitions is proposed by Osterwalder et al. (2005) defining BMs as a “conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific firm”. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing and delivering this value and relationship capital, to generate profitable and sustainable revenue streams. BM is a
302 D. Podmetina et al.
mediator between technical domain (feasibility, performance) and economic domain (value, price, profit) (Chesbrough and Rosenbloom, 2002).
Firms adopt a variety of mechanisms for technology acquisition and commercialisation. The strategies of large and small firms are different. Small firms develop technology expertise to gain entry to global markets. For manufacturing companies, high expertise in very precisely targeted niche areas is the key to effective operation in international and global markets. For service companies, knowledge rather than technology acquisition is central and there is a significant and growing outsourced market in product development and delivery to market.
The portfolio approach to technology acquisition is quite common. The portfolio includes: in-house R&D; outsourced R&D; technology licensing; collaborative partnerships with companies; collaborative external partnerships with universities or public research organisations (both formal and informal) and acquisition of specialist technology capability. Essential to the process is an organised search for new ideas (Laursen and Salter, 2006). The search process for innovations is problematic since companies are not accustomed to evaluate external ideas (Dittrich and Duysters, 2007; Fetterhoff and Voelkel, 2006). The performance measurements for research organisations, which can be applied to any research are also problematic (Wonglimpiyarat, 2008).
Typically, the perspective of the innovation commercialisation process is in launching, finding customers or in barriers of commercialisation (Bond and Houston, 2003; Sandberg, 2005). This means that commercialisation is the last phase of the innovation development (Cooper, 1975). Commercialisation of an innovation is encompassed by multiple uncertainties. Uncertainties related to markets, technology and BM are high. The commercialisation of innovation includes many risks. Taking that into account, it is not surprising that most innovations will not achieve commercial success; as a matter of fact, most innovations fail. Commercialisation is often understood to be the final phase of the innovation process: fuzzy front end, the new product development (NPD) process and commercialisation (Aurora, 1995; Chesbrough, 2003, 2006).
The open innovation (Chesbrough, 2003) concept focuses on collaboration between companies to exploit a technological innovation. Not much different from business design thinking, a BM encompasses six functions: 1 articulate the value proposition 2 identify a market segment 3 define the required value chain 4 specify the revenue generation mechanism 5 describe the position of actors within the value network 6 formulate a competitive strategy.
Chesbrough (2006) proposes a categorisation of BMs in six types of varying levels of integration and adaptive capability. In particular the advanced Type 6 – BM, which is capable of adapt to the market. Chesbrough (2007) argues that companies have to develop their BMs by experimenting various strategies. This will develop their capabilities further. Similarly R&D partnerships are important sources to develop BMs, especially the role and nature of partnerships is significant (Chesbrough and Schwartz, 2007; Kock and Torkkeli, 2009).
Open innovation in Russian firms 303
The role of innovation communities and of the public domain has been stressed by von Hippel and von Krogh (2006). Comparable approaches such as ‘creation nets’, flexible and temporary business networks at a wide geographical scale, have been suggested by Brown and Hagel (2006). The academic-industry partnerships play also important role of the success of knowledge transfer (Salmi and Torkkeli, 2009).
The concept of open innovation at business level has now widely been accepted as an important paradigm, and empirically based studies are becoming available focusing on key issues such as IPR and patenting strategies. However, the challenge remains, as Chesbrough (2010) states the changing of BM is not easy to achieve even it is considered vital.
3 Data and methodology
The study is based on the survey of over 150 R&D oriented Russian enterprises, conducted in 2008. The study was designed on a basis of face-to-face structured interviews, with the key respondents representing top management of the firms. Survey of Russian companies was conducted on the regions having the highest impact of foreign direct investment and highest innovation sector development, mainly in St. Petersburg and Moscow.
The composition of data sample is presented in Figure 1. The largest industries are electronics industry (26%), food industry (15%), machine building (14%), finance (11%), biotechnology and chemistry (11%), construction (7%), energy (7%) and IT (6%).
The sample was selected to focus sectors to be innovation-oriented and emphasising R&D as a source of their long-term competitive advantage. About 34% of companies have R&D intensiveness ratio over 5% and 60% of firms over 3%. The average R&D intensiveness is 5.13%, what is significantly higher than other relative studies on Russian companies have reported. This is unusual; because in the prior research shown that the productivity of Russian R&D is very low in international comparison (Schaffer and Kuznetsov, 2007). About 12% of studied companies did not have any R&D operations, 50% conducted single R&D projects and 38% of companies had their own internal R&D department.
Figure 1 Companies by industries, % (see online version for colours)
Finance 11 %
Others 3 %
IT 6 %
Energy 7 %
Construction 7 %
Biotech.,Chemistry
11 %
Electronics 26 %
Food 15 %
Machinery building
14 %
0 %
5 %
10 %
15 %
20 %
25 %
30 %
304 D. Podmetina et al.
The majority of surveyed companies are large- or medium-sized, over 250 employees (37%), or medium size, with 50–250 employees (37%) companies. Their R&D operations mainly focus on NPD (3.4), business/manufacturing process development (1.97), the basic research (1.57), derivative research (1.22) and platform development (0.98). The scale is from 5 (most important) to 1 (less important).
3.1 Technology acquisition
While acquiring new technologies, companies aim for improving products (73 answers), for utilisation of ‘well tried’ technologies/solutions (50 answers), for acquired technologies support the core of company’s R&D function (27 answers) and for the development of new breakthrough product/creation of whole new knowledge (25 answers).
The majority of the companies (99) delegate the responsibility of acquisition of external technologies to one person or a team in the R&D department. Only 6.3% of companies utilise the services of intermediaries. It is a responsibility of all employees to follow the development and look for potential technologies in 9% of the companies.
Companies ranked the importance of external sources for looking and acquiring external technologies from 5 (most important) to 1 (not important). Publications and conferences (2.3), patent databases (2) and university and research organisation (1.4) are the main sources for innovation search and acquisition of external technologies. The fact that external sources of technology such as competitors, suppliers, customers, companies in other industries, contract developers, contract manufactures, etc. are not as important for Russian companies, let us suggest, that important link is missing – networking and relationship with company’s external stakeholder.
Russian companies acquire external technologies as patents 32%, open sources 25% and licensing 19%. Only 10% of companies acquire the complete technology. The Russian companies seem to have very weak connections with stakeholders, and weak relationship networks. This is supported with the fact that only 19% of studied companies use strategic alliances as a form of collaboration to develop technologies. About 9 companies use 1–2 alliances/coprojects to develop technologies, 14 companies use 3–10 alliances and only 7 companies use over 10 alliances.
Previous studies have shown that companies active in acquisition have more access to new technologies, innovations and flexibility. However, 58% of companies in our survey have not made any acquisition of patents and/or other immaterial property, 11% companies made 1–2 acquisitions, 4.5% of companies made 3–10 acquisitions and 5% of companies made over 10 acquisition. 109 (69%) companies have not made any acquisition of personnel with specialised skills/competences. Russian companies are not very active in licensing technologies as well: 98 companies (62%) answered that they have not licensed technologies/IPR outside from own company.
The largest benefit of buying external technologies, according to companies’ estimations, is that product development processes have become faster (59%), products’ ‘time to the market’ shortened (24%), completely new products and technologies emerged (15%), R&D expenditures decreased (12%) and profit increased (9%). The main problem for companies acquiring external technologies is the required time and resources spending to adopt technology (71 answers). However, fear of loosing own innovation ability (41 answers) and lack of supply of adequate technologies (36 answers) are also serious barriers for companies on the way to open technology paradigm.
Open innovation in Russian firms 305
3.2 Technology commercialisation
While taking technology to the market, Russian companies goals are to increase products success potential, improve technologies and products based on them (27 answers); to get reciprocal entry to others’ technologies (24 answers) and to gain extra profit (14 answers). The methods how companies find potential buyers for their ‘surplus’ technologies/IPR are as follows: 25 companies do not have defined selling process/person in charge, 21 companies have particular person/group of people in charge of selling process and 21 companies utilise the services of intermediaries. The external channels (multiple answers possible) companies use to take technologies to markets are as follows: 45% of companies use spin-off companies, 40% use joint ventures, 25% use licensing of IPR/technologies and 24% sell IPR/technologies.
Russian companies tend to sell technologies to other companies (70 answers) as patents (69%) as licensing (29%) and as a complete technology (6%). The challenges that companies face are the following: finding the buyer for technology is difficult (59%), lack of the marketplaces for technologies (49%) and the complexity of IPR and fear of infringement of IPR (42%).
The combined results on buying and selling technologies by Russian companies are presented in Figure 2. About 40% of companies tend to be self-sufficient with their in-house R&D and state that their in-house R&D completely matches with technology requirements. The remaining 60% of companies have a need in acquisition of external technologies: sometimes (51%), and 9% of companies do it on the regular basis, stating that ‘the utilisation of external technologies is vital for their business’.
Figure 2 Russian companies buying and selling technologies, % (see online version for colours)
No buy 39,9 %
Seldom buy 51,3 %
"Open" buy 8,9 %
No sale 36,1 %
Seldom sell 29,7 %
"Open" sell 12,7%
0 %
25 %
50 %
75 %
100 %
Matching of Internal R&D withTechnology requirements
Availability commercialization of"surplus" technologies
4 Model development for open innovation
Firms can capture value from new technology in two basic ways: through incorporating the technology in their current businesses or through launching new ventures that exploit the technology in new business arenas (Chesbrough and Rosenbloom, 2002). Companies take their technology to the market (local or foreign) as set by its BM. The commercialisation of technology is naturally necessary when company considers benefit from the value created within innovation process.
306 D. Podmetina et al.
Some companies can successfully imply existing BM when taking the technology to the market. However, in some cases, BM does not fit the requirements of the technology or business environment or companies’ technology commercialisation objectives prove that changes in BMs are necessary. A study in Netherlands has revealed that only quite a few companies have BM making them capable of technology acquisition and commercialisation with external partners (van der Meer, 2007). Adapting existing BM or developing a new one is the important factor for successful innovation performance of the company.
Based on the results of the survey of Russian R&D companies conducted in 2008 (Torkkeli et al., 2009) the open innovation BM is proposed (Figure 3). Companies possess innovation capacity formed of internal R&D production capacity and acquired external technologies (purchased and non-commercial channels, spill-over effect). Internal R&D capacity is influenced by the effective/non-effective cooperation with external and internal stakeholders both on the home markets and abroad.
The technology can be produced by company itself and in cooperation with local and foreign partners. The strategic orientation of the company plays important role on the forming the innovation capacity. The degree of involvement into international operation (international cooperation and international acquisitions) have effect on innovation capacity of the company.
Company’s need for technology and innovation (internal R&D production and external technologies purchased) can be over estimated and creates the surplus of technologies, which cannot be ‘consumed’ by the company itself. This surplus is to be commercialised. Some companies produced technologies in order to sell them on the market. The innovation performance of the company depends on the innovation capacity and involves the rate of successful commercialisation of the technologies and internal R&D consumption.
Figure 3 Open innovation business process (see online version for colours)
Open innovation in Russian firms 307
4.1 Theoretical support for the proposed model
The role of interaction with external and internal stakeholders is an important factor enhancing innovativeness and contributing to successful new products or services brought to the market. The role of firm’s partners and stakeholders as a source of knowledge for enhancing innovativeness has been studied in the literature (Gianella and Tompson, 2007; Kock and Torkkeli, 2008). Intensive relational ties are created as an outcome of interaction between parties that occurs on different levels and in different functional spheres of organisation. Intensity of interaction is one of the constructs used to describe and analyse the interaction process between the firms and potential stakeholders.
The existence of strong relationship between internationalisation and innovation is obvious for technology oriented companies, when international technology transfer is a form of export per se (Robinson, 1988). However, the globalisation processes influence companies more often enter foreign markets and acquire specific knowledge enabling them to implement more technology innovations.
Thus “innovation has moved from an international reality dominated by the idea of technology transfer, where agents develop knowledge and transfer it to other countries, to a much more complicated situation where, although, that reality has not disappeared, there are also new ways of developing innovation in which the international ambit also affects the creation of knowledge stage and which multinational companies acquire new protagonism.” (Molero, 2008)
The successful innovations also depend on macro-economic conditions, e.g. the amount of effective demand within the national economy (Geroski and Walters, 1995). The behaviour of innovating firms depends on their own decision making, but
“is shaped by institutions that constitute constraints and incentives for innovations, such as laws, health regulations, subsidies, taxes, public expenditures, etc.
Additionally, micro-economic conditions (e.g. market conditions, competition, and price setting) and macro-economic conditions (e.g. wealth, inflation, openness) influence the decisions about innovation taken by firms.” (Faber and Hesen, 2004)
The development of a market economy in Russia has to be based on networks of innovative companies utilising (Dyker, 2006).
Dyker studies the process of development and dissemination of technology in Russia through the cooperation between Russian organisations and foreign firms. It is important to understand that FDI in Russia facilitates the technology transfer from abroad. The interesting point is that success of privatisation in Russia can be estimated by ‘the diversity of enterprise forms, sizes and strategies which is essential for knowledge diffusion and generation’.
Cooperation and licensing deals with partners from developed economies is one way to speed up the innovation development process in Russia. But for Russian companies and research institutes, it is difficult to find partners when Russian scientists are not educated to prepare business plans or create new ventures. Venture capital industry in Russia is mainly foreign-owned, but on the other hand, foreign direct investments in R&D are quite modest. Probably the highest foreign R&D investment occurs in the ICT sector. At least Sun Microsystems, Motorola, Microsoft and Intel have R&D or
308 D. Podmetina et al.
dedicated development centres, with more than 200 workers, in St. Petersburg or Moscow (OECD, 2005).
4.2 Acquisition vs. commercialisation clusters
After the analysis of acquisition and commercialisation of technology of 150 Russian R&D companies, we found out main models of innovations circulation: ‘no sell, no buy’, ‘seldom buy, no sell’, ‘seldom sell, no buy’, ‘seldom buy and seldom sell’, ‘open sell’ and ‘open buy’. We propose the cluster framework for further analysis (Figure 4).
Figure 4 Technology acquisition vs. technology commercialisation clusters (see online version for colours)
5 Empirical results
The distribution of the companies by clusters (Figure 5) shows us two empty clusters: ‘no buy, seldom sell’ and ‘no buy, active sell’. The only possible combination for companies, who do not sell technology, is the cluster ‘no buy, no sell’. This means, that 15.8% of companies who do not sell technology, they do not buy either. Interesting research question is ‘Are these companies self-sufficient in the terms of technology and R&D or they just do not have any experience in acquiring and selling technologies?’
The R&D intensity of companies (Figure 6) proves companies with no sales and no acquisition of technology to be the least effective in terms of innovations and R&D. The more companies involved in the acquisition or commercialisation of technology, the higher their R&D intensity is. The synergy effect is observed for companies acquiring and selling technologies: companies who sell and buy technologies have the highest R&D intensity. Slightly lower R&D intensity ration is observed in the ‘active sell, active buy’ cluster, what can be explained by the limited number of observation. To compare, for the whole survey 34% of companies have R&D intensiveness ratio over 5% and 60% of firms over 3%. The average R&D intensiveness is 5.13%, what is significantly higher than other relative studies show.
Open innovation in Russian firms 309
Figure 5 Companies distribution in the clusters, % (see online version for colours)
Figure 6 R&D intensity of clusters, % (see online version for colours)
There are both domestic and international companies in the sample. In our model, proposed that international operations influence the innovativeness of the companies, and more specifically, the openness of the companies. We analyse the number of companies with pure domestic sales and companies with both domestic and internationals ales in the clusters (Figure 7). The lowest share of international companies is in the ‘no buy, no sell’ cluster. The more actively companies become involved in the acquisition and commercialisation of technologies, the higher share of international companies. Companies with experience in international sales are more eager to sell and buy technologies both in Russia and abroad.
The sample was build on the expectation that companies are innovation-oriented and emphasising R&D as a source of their long-term competitive advantage. The top three industries of the companies in the survey are (Figure 1) electronics (26%), food industry (15%) and machine building (14%). The electronics industry is the absolute leader for all clusters except for ‘no buy, no sell’ (Figure 8).
310 D. Podmetina et al.
Figure 7 Domestic vs. international sales in clusters (see online version for colours)
Figure 8 The top 3 industries in the clusters (see online version for colours)
*Biotechnology and chemistry.
While traditional ‘Schumpeterian approach’ states that small firms are not strong in introducing innovations and increasing productivity, recent research has found that small firms are not any weaker in innovation performance. They spend less on R&D than large firms, but they outperform large firms when considering innovation counts (Pianta and Vaona, 2007). Small- and medium-sized enterprises report that the most important factors hampering their innovative activity include underdeveloped infrastructure in the area of technology commercialisation, incomplete legislation and lack of financing (OECD, 2005). One of authors’ previous study proved that larger innovative companies are more export oriented; the small innovative companies are more domestic oriented (Podmetina et al., 2009). Based on our survey (Figure 9), we can suggest that small companies are less involved into the acquiring and commercialising technology. However, the small number of observation in some of the clusters makes statistical analysis impossible.
The companies involved in the acquisition and commercialisation of technology are mainly focused on the NPD, the other R&D operations (basic research, platform development, derivative research and business process development) are less important for companies (Figure 10).
Open innovation in Russian firms 311
Figure 9 Size of companies in the clusters (see online version for colours)
Figure 10 Main focus of R&D in clusters (see online version for colours)
5.1 Case companies implementing open innovation paradigm in clusters
Openness of Russian companies’ is very relative concept, high degree of ‘openness’ of some companies can just mean that they want to sell or buy technology, but not willing to exchange knowledge within an open market.
About 10% of companies in the survey self-reported that they apply open innovation paradigm (self-reported openness). It can be considered that a self-reported openness in terms of technology acquisition is not a very surprising response to receive from firms, as it is reasonably intuitive, and, furthermore, a concept that has been around for quite a while that an integration of external knowledge may help the focal firm to succeed (Komkov and Bondareva, 2006). The positioning these companies into the technology acquisition – commercialisation matrix let us see how well companies estimate their openness. Are these companies active in the acquiring and selling technologies (Figure 11)? Most of these companies just buy technology, but not sell or sell rarely. Just one company is active both in acquiring and selling technology.
Companies with self-reported openness can be characterised as large (Table 1), effective in R&D organisation and with R&D intensity much above average. If most of the companies in our study focus on NPD in their R&D operations, these companies with self-reported openness focus on business process development most.
312 D. Podmetina et al.
Figure 11 OI implementation in clusters (see online version for colours)
Table 1 Case companies with self-reported openness
Indicators Meaning
Size Medium (4) to large (7) Internationalisation Domestic (7) vs. international (8) R&D organisation R&D department (9), 2 departments for R and 4
departments for D R&D intensity 1.5%–3% (1), 3%–5% (2), 5%–10% (7), over 10% (3) Focus of R&D Top 3: business process development, basic research
and platform development
6 Conclusions
This paper studied the emergence of phenomena of open innovation in Russia and the development of technology commercialization and technology acquisition strategies. The effect of internal R&D, industry, size of the company and internationalisation on the open innovation are discussed. The results of the previous studies have already indicated significant differences between industry clusters (high-, medium- and low tech companies) and also established a viable matrix for analysing innovation strategies of Russian companies.
The main findings of the currents study show that sufficient internal R&D and technology acquisition is a precondition for implementing Open Innovation business models in Russian companies. The results also clearly show that implementing Open Innovation business model is a stage process also in Russia as referred by Chesbrough (2007). There is also clear evidence that companies with international operations use open innovation business models more actively both for technology acquisition and technology commercialization. Similarly the higher internal R&D performance, more open innovation oriented business model is. The role of industry proved also to be significant. High-tech industries were the most active in external technology acquisition and technology commercialization. This is result of well organised R&D
Open innovation in Russian firms 313
operations & nature of their business. On the other hand company size is not a significant factor whether company applies open innovation oriented business model. However, small- and medium sized companies are more active in technology acquisition, but large companies are dominant in technology commercialization.
Based on the results of the survey of Russian R&D companies the conceptual model was developed which involved the innovation capacity formed of internal R&D production capacity and acquired external technologies (purchased and non-commercial channels, spill-over effect). Internal R&D capacity is influenced by the effective/non-effective cooperation with external and internal stakeholders both on the home markets and abroad. The technology can be produced by company itself and in cooperation with local and foreign partners. The strategic orientation of the company plays important role on the forming the innovation capacity. The degree of involvement into international operations (international cooperation and international acquisitions) have an effect on innovation capacity of the company. Company’s need for technology and innovation (internal R&D production and external technologies purchased) can be over estimated and creates the surplus of technologies, which cannot be ‘consumed’ by the company itself. This surplus is to be commercialised. Some companies produced technologies in order to sell them on the market. The innovation performance of the company depends on the innovation capacity and involves the rate of successful commercialisation of the technologies and internal R&D consumption.
The cluster analysis of acquisition and commercialization of technologies have found a significant share (40%) of companies who are self-sufficient in terms of technology – they rely on their own R&D production. And the rest of the companies acquire technology from the external sources sometimes (51%) or on the regular basis (9%). The companies buying technology on the regular basis are of the most interest for the open innovation studies due to the nature of their business concentrated on the utilization of external technologies and intensified cooperation.
The revealing of “empty clusters” (there were no companies who commercialize technology, but do not acquire external technology) have defined the open innovation process development in the Russian companies as the stage process – companies first need to get experience in the utilization of external technologies and then they start getting familiar with the externalizing the own technologies.
The R&D intensity was significantly higher for the companies who do develop open innovations. The results of the cluster analysis show that the more companies get involved into acquiring or commercializing technologies, the higher their R&D intensity is. The synergy effect in the case of combing the buying and selling technologies was also observed when R&D intensity was analysed.
The authors suppose the influence of the international operations on the intensity of open innovation development in the company. The comparison of domestic and international companies within the clusters’ matrix proved that there are more companies with international sales among companies, implementing open innovations. The direct effect between the open innovations and internationalization is the subject of future study. However, even now, it is possible to conclude, that companies with more experience in international cooperation, have better performance in implementing open innovation strategies.
We can suggest, openness of Russian companies’ is very relative, high degree of ‘openness’ of some companies can just mean that they want to sell or buy technology, but not willing to exchange knowledge within an open market. Towards the open innovation
314 D. Podmetina et al.
concept Russian companies experience many problems both of internal and external character. Like, mentioned in this paper, interaction with external and internal stakeholders (competitors, suppliers, customers, companies in other industries, contract developers, contract manufactures, etc.) is weak for most of the companies, communication is missing and strong ties are not created. With this kind situation, knowledge exchange, transfer of technologies and effective cooperation with partners is rather impossible.
The other problem for effective innovativeness of Russian companies is existing business environment. Russia is falling behind in all indicators measuring innovative output, compared with most developed countries. Russia’s innovation performance is disappointing, despite the available stock of human capital and overall investment in R&D. The link between science and business, weak communication with authorities, bureaucracy, corruption and political risks, as well as not sufficient financing of innovations, lack of venture capital, foreign investments, research grants – all these facts make companies’ way towards open innovation unsmooth and unsteady.
What should be done in Russia to improve the conditions for innovations? The development of innovative activities requires good macro-economic conditions, attractive investment environment for local and foreign companies, and more easily available financing. These are factors that are also requirements for sustainable growth. In addition, greater competitiveness, better enforced IPR regime, support of commercialisation of R&D outputs, public–private partnerships, well channelled government funding, restructured organisations in research institutes, favourable tax treatment and support for small innovative companies are other means that Russia could use to boost the innovative activity. All steps intended to spur the innovations should be well-planned and carefully targeted.
To summarise, there are companies in Russia that implement Open Innovation oriented business models and their main characteristics are high R&D performance and international orientation. However, as with everything in Russia, differences between good and bad performers are extremely large. This is even can be seen in data which focuses R&D oriented companies. Promising is that best performers are catching up very fast with the best practices in the world in Open Innovation business model implementation
As proposal for future research and consideration for managerial application we would suggest pay more attention on the ties/relationship of companies with their internal and external stakeholders in order to understand better motivations and competences of companies in acquiring technologies on the market. We also consider the analysis the relationship between company’s performance, productivity and degree of openness, commercialisation and acquisition of technology.
Acknowledgements
We gratefully acknowledge anonymous referees for constructive comments and suggestions, which helped greatly to improve the earlier version of the manuscript.
Open innovation in Russian firms 315
References Amit, R. and Zott, C. (2001) ‘Value creation in e-business’, Strategic Management Journal,
Vol. 22, Nos. 6–7, pp.493–520. Aurora, A. (1995) ‘Licensing tacit knowledge: intellectual property rights and the market for know-
how’, Economics of Innovation and New Technology, Vol. 4, pp.41–59. Bond III, E.U. and Houston, M.B. (2003) ‘Barriers to matching new technologies and market
opportunities in established firms’, Journal of Product Innovation Management, Vol. 20, pp.120–135.
Brown, J.S. and Hagel III, J. (2006) ‘Creation nets: getting the most from open innovation’, McKinsey Quarterly, No. 2, pp.40–51.
Chesbrough, H. (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston, Massachusetts: Harvard Business Press, p.227.
Chesbrough, H. (2006) Open Business Models: Hoe to Thrive in the New Innovation Landscape.Boston, Massachusetts: Harvard Business School Press, p.256.
Chesbrough, H. (2010) ‘Business model innovation: opportunities and barriers’, Long Range Planning, Vol. 43, Nos. 2–3, pp.354–363.
Chesbrough, H. and Rosenbloom, R.S. (2002) The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies. Boston, MA: Harvard Business School.
Chesbrough, H. and Schwartz, K. (2007) ‘Innovating business models with co-development partnerships’, Research-Technology Management, Vol. 50, No. 1, pp.55–59.
Chesbrough, H., Vanhaverbeke, W. and West, J. (Eds.) (2006) Open Innovation: Researching a New Paradigm. Oxford: Oxford University Press.
Chesbrough, H.W. (2007) ‘Why companies should have open business models’, MIT Sloan Management Review, Vol. 48, No. 2, pp.22–28.
Christensen, C. (1997) The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA, USA: Harvard Business School Press.
Cooper, R.G. (1975) ‘Why new industrial products fail’, Industrial Marketing Management, Vol. 4, No. 4, pp.315–326.
Desai, R. and Goldberg, I. (Eds.) (2007) Enhancing Russia’s Competitiveness and Innovative Capacity. Washington, DC: Finance and Private Sector Development Department, World Bank.
Dittrich, K. and Duysters, G. (2007) ‘Networking as a means to strategy change. The case of open innovation in mobile telephony’, The Journal of Product Innovation Management, Vol. 24, No. 6, pp.510–521.
Dyker, D. (2006) Closing the EU East–West Productivity Gap. London: Imperial College Press. Economist Intelligence Unit (EIU) (2007) Country Report Russia – June 2007. London:
The Economist Intelligence Unit Ltd. Elias, A.A., Cavana, R.Y. and Jackson, L.S. (2002) ‘Stakeholder analysis for R&D project
management’, R&D Management, Vol. 32, No. 4, pp.301–310. Faber, J. and Hesen, A.B. (2004) ‘Innovation capabilities of European nations: cross-sectional
analysis of patents and sales of product innovations’, Research Policy, Vol. 33, pp.193–207. Fetterhoff, T.J. and Voelkel, D. (2006) ‘Managing open innovation in biotechnology’, Research
Technology Management, Vol. 49, No. 3, pp.14–18. Geoffrion, A.M. and Krishnan, R. (2003) ‘E-business and management science: mutual impacts’,
Management Science, Vol. 49, No. 11, pp.1445–1456. Geroski, P.A. and Walters, C.F. (1995) ‘Innovative activity over the business cycle’, Economic
Journal, Vol. 105, pp.916–928. Gianella, C. and Tompson W. (2007) ‘Stimulating innovation in Russia: the role of institutions and
policies’, OECD Economics Department Working Papers No. 539, OECD Publishing.
316 D. Podmetina et al.
Hagedoorn, J. and Shekenraad, J. (1994) ‘The effect of strategic technology alliances on company performance’, Strategic Management Journal, Vol. 15, No. 4, pp.291–309.
Kock, C. and Torkkeli, M. (2008) ‘Open innovation: a ‘Swingers’ Club’ or ‘Going steady’?’ IE Business School Working Paper WP08-11, 5 February 2008.
Komkov, N.I. and Bondareva, N.N. (2006) ‘Problems in the commercialization of scientific research and ways of addressing them’, Studies on Russian Economic Development, Vol. 18, pp.2–18.
Laursen, K. and Salter, A. (2006) ‘Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms’, Strategic Management Journal,Vol. 27, No. 2, pp.131–150.
Magretta, J. (2002) ‘Why business models matter’, Harvard Business Review, Vol. 80, No. 5, pp.86–92.
Mendelson, H. (2000) ‘Organizational architecture and success in the information technology industry’, Management Science, Vol. 46, No. 4, pp.513–529.
Mitchell, D.W. and Coles, C. (2003) ‘The ultimate competitive advantage of continuing business model innovation’, Journal of Business Strategy, Vol. 24, No. 5, pp.15–21.
Molero, J. (2008) ‘The challenges of the internationalization of innovation for science and technology policies’, ICEI Paper, Instituo Compluense de Estidios Internacionales.
OECD (2005) Fostering Public–Private Partnership for Innovation in Russia. Paris: OECD Publishing.
Osterwalder, A., Pigneur, Y. and Tucci, C.L. (2005) ‘Clarifying business models: origins, present, and the future of the concept’, Communications of AIS, Vol. 16, pp.1–25.
Pianta, M. and Vaona, A. (2007) ‘Innovation and productivity in European industries’, Economics of Innovation and New Technology, Vol. 16, No. 7, pp.485–499.
Podmetina, D., Smirnova, M., Väätänen, J. and Torkkeli, M. (2009) ‘Innovativeness and international operations’, Int. J. Innovation Management, Vol. 3, No. 2, pp.1–23.
Rappa, M. (2001) Managing the Digital Enterprise. North Caroline State University. Available at: http://digitalenterprise.org/.
Rhyne, L.C. (2009) ‘Business model design for biotechnology firms’, Int. J. Business Innovation and Research, Vol. 3, No. 3, pp.298–310.
Robinson, R. (1988) The International Transfer of Technology: Theory, Issues, and Practice.Cambridge, Massachusetts: Ballinger Publishing Company.
Rosstat (2007) Russia in Figures 2006. Moscow: Rosstat, Russian Federal State Statistics Service. Salmi, P. and Torkkeli, M. (2009) ‘Success factors of interorganisational knowledge transfer: a
case of a collaborative public–private R&D project’, Int. J. Business Innovation and Research,Vol. 3, No. 2, pp.109–125.
Sandberg, B. (2005) ‘The hidden market – even for those who create it? customer-related proactiveness in developing radical innovations’, DSc Economic Dissertation, Publications in the Turku School of Economics and Business Administration Series A-5, Turku, Finland.
Schaffer, M. and Kuznetsov, B. (2007) ‘Productivity’, in R. Desai and I. Goldberg (Eds.), Enhancing Russia’s Competitiveness and Innovative Capacity. Washington, DC: Finance and Private Sector Development Department, World Bank.
Torkkeli, M., Podmetina, D. and Väätänen, J. (2009) ‘Knowledge absorption in emerging economy –role of foreign investments and trade flows in Russia’, Int. J. Business Excellence, Vol. 2, Nos. 3/4, pp.269–284.
Turban, E. (2002) Introduction to E-Commerce. USA: Prentice Hall. van der Meer, H. (2007) ‘Open innovation – the Dutch treat: challenges in thinking in business
models’, Creativity and Innovation Management, Vol. 16, No. 2, pp.192–202.
Open innovation in Russian firms 317
von Hippel, E. and von Krogh, G. (2006) ‘Free revealing and the private collective model for innovation incentives’, R&D Management, Vol. 36, No. 3, pp.295–306.
Watkins, A. (2003) ‘From knowledge to wealth: transforming Russian science and technology for a modern knowledge economy’, World Bank Policy Research Working Paper No. 2974.
Wonglimpiyarat, J. (2008) ‘Systematic evaluation of economic and financial impacts in the development and commercialisation of research’, Int. J. Business Innovation and Research,Vol. 2, No. 4, pp.420–436.
PUBLICATION IV
Podmetina Daria, Väätänen Juha and Torkkeli Marko, 2011. Open vs Traditional innovation. Does Internationalization matter? Case Russia, submitted to the journal Conradi. The earlier version is in the Proceedings of the 3rd ISPIM Innovation Symposium, December 12-15, 2010, Quebec City, Canada
1
OPEN VS TRADITIONAL INNOVATION. DOES INTERNATIONALIZATION
MATTER? CASE RUSSIA
Daria PodmetinaLappeenranta University of Technology,
P.O. Box 20,Lappeenranta FI-53851, FinlandE-mail: [email protected]: [email protected]
Juha VäätänenLappeenranta University of Technology,
P.O. Box 20,Lappeenranta FI-53851, Finland
E-mail: [email protected]
Marko T. TorkkeliKouvola Research Unit,
Lappeenranta University of Technology,Prikaatintie 9,
Kouvola FI-45100, FinlandE-mail: [email protected]
Abstract: The attractiveness of the Open Innovation concept in innovation studies is explained by its potentialbenefits for companies’ innovativeness, competitiveness and effectiveness. This paper proposes the framework forthe analysis the innovation strategies of the companies based on the open innovation approach. The main idea of thepaper to find out how companies do select between open and closed approaches to innovation strategies and what isthe role of internationalization in this context. The empirical findings proved open innovation (OI) to be the mosteffective innovation strategy: the more companies enrolled in OI, the higher their innovation and economicperformance is. The results proved also higher role of R&D cooperation with foreign and local companies forcompanies with higher involvement in OI. The degree of internationalization was higher for companies with OI. Theresults have significant managerial implication due to contribution to open innovation, internationalization andinnovation output. The focus of the study on Russian companies is especially interesting because of their increasedinternationalization and that their strategies are interesting for other participants of the global markets. The study isbased on the sample of 206 companies from the most innovative regions of Russia.
Keywords: internal R&D, innovations, innovation portfolio, open innovation, internationalization
Introduction
Two distinguishing features of Russian economic and political system are the turbulent and
unstable environment and dependency on the exports of raw materials. The environment
turbulence, crisis and competition represent not only a threat for companies, but also opportunity
to learn and to develop new strategies both for inter-functional coordination and for interacting
with other organizations on the new level (Kotler & Caslione, 2009). We assume the measures
2
applied in the country in order to increase the competitiveness of the companies, operating in the
other, than oil, areas, were mostly targeted to the improving the innovation capability, knowledge
absorption, cooperation and new channels for commercialization of innovations. Traditional
innovation strategies can solve this problem by mobilizing company’s internal forced to achieve
better R&D and innovation output. However, the decisions proposed by the open innovation
framework, aim to solve this problem by cooperating and implementing the principles of using
external sources of innovations and external channels for commercializing the surplus of
innovations produced by the firm. Following the open innovation (OI) approach (Chesbrough,
2003, 2006, Gassman and Enkel, 2004, Lichtenthaler, 2009) we analyzed the external technology
acquisition, technology commercialization, and cooperation with external partners as the main
construct of companies’ openness. The attractiveness of the OI concept in innovation studies is
explained by its potential benefits for companies’ innovativeness, competitiveness and
effectiveness.
The openness of the economies brought by globalization gave better chances to companies from
economies in transition to innovate and improve their competitive advantage (Gorodnichenko, et
al., 2008), enlarge markets and benefit from the economies of scale (World Bank report, 2001),
and to find more effective channels of technology transfer between countries (Pack, 1993).
The increasing number of Russian internationalizing companies proves that companies learnt to
be competitive and found their own niche on the domestic and on the global market. The players
from emerging economies, like Russia have became familiar with international attitude to
innovations, technology development, technology transfer and commercialisation of innovations.
This paper proposes the framework for the analysis the innovation strategies of the companies
based on the combination of traditional and open innovation approach (portfolio) and evaluate the
role of internationalization on the innovation strategy. Authors aim to contribute to the
3
understanding the relationship between innovation strategies and internationalisation in Russian
companies.
Previous study showed two important results: first, the significant involvement in internal R&D
correlates positively with adopting the OI strategies; and second, the internationalization
correlates both with internal R&D and innovation output. This study is based on the survey
consisting of 206 Russian R&D oriented companies selected from the most innovative regions.
The paper is structured as follows: Chapter 1 introduces the research topic and sets the research
objective. Chapter 2 reviews the literature and propose the framework for analysing companies’
innovation portfolio. Chapter 3 describes the research design, data and measures. Chapter 4
presents the key findings of the paper. Chapter 5 presents the conclusions and the main
implications of the results.
Literature Review and Research Propositions
Study of innovation portfolio of product and process innovation emerged in the 1970s (Utterback
et al, 1976), and then until late 1990s innovation portfolio was studied as stage of the
development of innovation management (Qingrui, 2005). Later on the innovation portfolio
included also R&D together with new product and process portfolios (Cooper et als, 1999,
Wildemann, 2009) and became important driver of companies’ innovation performance (Ernst,
2009). However, these research streams are focused on the effective management of innovation
project and the portfolio theory deals with optimization of innovation projects. The particular
characteristics and key goals of innovation portfolio management are also discussed in some
recent publications (Coulon et als, 2009). The innovation portfolio tool is applied not only on the
large companies, but adapted to the needs of SMEs (Ahsen et al, 2009).
4
Chesbrough (2007) argues that companies have to develop their business models by
experimenting with various strategies. Similarly R&D partnerships are important sources to
develop business models (Chesbrough and Schwartz, 2007; Kock and Torkkeli, 2009). The Open
Innovation paradigm, considers firms’ openness in two perspectives: “inbound” open innovation
as the acquisition of external technology and “outbound” open innovation as technology
commercialization or outward technology transfer. This division of holistic innovation process of
the firm on stages and processes introduce a good research possibility to analyse open
innovations as portfolio. The portfolio includes: in-house R&D; outsourced R&D; technology
licensing; collaborative partnerships with companies; collaborative external partnerships with
universities or public research organizations; and acquisition of technology capability, etc.
Essential to this process is an organised search for new ideas (Laursen and Salter, 2006). The
portfolio management is all about effective resource allocation to achieve company’s strategic
objectives. Applied the same logic we can define the innovation portfolio as tool for optimizing
distribution of the companies resources between internal innovations, and external (outsourcing,
acquisition) and combinations of methods (cooperation, co-development) in order to achieve
company’s innovation objectives and better innovation and economic output.
Authors propose the framework for the analysing the innovation portfolio if the companies. The
two level of the analysis – traditional approach and open innovation approach and the 4
components if innovation strategies provide the holistic understanding of companies’ innovation
strategies (Table 1). The components of innovation strategies include the R&D, Technology
development (innovations), NPD, and technology exploitation. The traditional approach includes
internal R&D, internal technology innovations, internal NPD and internal technology
exploitation. The Open Innovation approach includes external R&D acquisition, external
5
technology acquisition (ET), NPD outsourcing to external organizations and the technology
commercialization (TC).
Table 1 Portfolio of Innovation Strategies
Components of innovationsstrategy
Innovation strategiesTraditional innovation approach Open innovation approach
R&D Internal R&D External R&D acquisitionTechnology innovation Internal technology innovation External technology acquisition (ET)
NPD Internal NPD NPD developed by other organizationTechnology exploitation Internal technology use Technology commercialization
Research proposition 1: In this paper authors classified the innovation strategies of Russian
companies by applying the open vs traditional innovation framework (Table 1). The aim is study
the mechanisms companies apply on the building the portfolio of innovation strategies: when (or
for what type of innovations) companies apply open innovation approach.
Authors claim that making a decision on applying traditional approach against open innovation is
industry and size dependent. However, Most of the observed companies do use the combination
of methods. What proves our idea on that just “we” is not enough and just “they” also. But the
question remains how much “we” and how much “they” is best for the company? And what
influence this distribution most?
Research proposition 2: The optimal ratio between open and traditional approaches to company’s
innovation strategy is understudied question (Enkel et al, 2010) and authors aim to contribute to
the understanding of the mechanism of how companies combine two approaches, and find out
possible factors influencing the selection process.
The existence of strong dual relationship between internationalization and innovation was
discussed in many studies (Castellani & Zanfei, 2006, Filipescu, 2007). Some studies have
focused on factors that specifically induce companies to cooperate with foreign partners located
6
in other countries to carry out innovative activities (Faria and Schmidt, 2007). The companies’
cooperation with foreign partners in some part relates with psychical distance concept– what
means that companies export or import to countries which they know better, have better
experience and less market uncertainty (Johanson and Vahlne, 1977).
Research proposition 3: Authors aim to analyze the effect of internationalization on the
innovation strategies both for traditional approach and open innovation.
Data and Methodology
The empirical study was conducted during November 2009 – February 2010. 206 Russian
companies from various industries agreed to participate in the study through structured
interviews. The key respondents were representatives of the innovation department or top
management of the firm. The numbers of criteria were used in order to select companies,
including region, industry and annual revenue of the company.The sampling method was based
on the stratified sample approach, which means not a representative, but a meaningful structure
of the sample. The questionnaire structure was developed based on the recommendations for
conducting the innovation surveys (Frascati manual, 1993, Oslo manual, 2007) and using the
constructs and scales for analysing cooperation of the companies with internal and external
partners, international activities of the companies, and the number of other indicators. Due to the
selection of the key respondents it was possible to obtain information on the innovation activities
of the companies and on the cooperation with external partners in relation to R&D. Key
information on the sample is presented in the table 2. The share of companies conducting internal
R&D is high - 78,6 %, of which 42,7 % conduct R&D systematically and 35,9 % irregularly. The
100 % of IT companies have internal R&D, 93,3 % of electrical machinery firms, 91,3 % in
7
electrical and optic industry, 87,5 % in rubber an plastic industry, 86,1 % in metallurgy, 75 %
both in aircraft and machinery and equipment, and 72,7 % in oil refinery industry.
Table 2 Description of the Sample
Key Industries % Number of employees %
Metallurgy 17.5 less than 20 5.4Machine building 13.6 from 20 to 50 5.9Electronics and optics equipment 11.2 from 50 to 100 5.4IT and telecommunications 10.2 100-250 27.3Chemical industry 10.2 from 100 to 500 11.7Electronic equipment 7.3 from 500 to 1000 21.0Rubber and plastic industry 3.9 From 1000 to 3000 13.2Aircraft 3.9 more than 3000 10.2
Source: Russian Companies Innovation Survey, 2009-2010
The R&D intensity (ratio of R&D expenditures in company’s sales) is between 1.5 and 3.0 % for
38 % of companies. This corresponds with an average level of R&D intensity for most of high
and medium tech industries. The R&D intensity ratio was lower than 1.5 % in 20.7 % of
companies. 3 to 10 % was registered for 24.5 % of companies, and the rest 13.6 % of companies
have R&D intensity higher than 10 %. Out of the 206 companies in the sample, 1.9 % assessed
their economic situation as “near bankruptcy”, 10.7% as “bad”, 53.4 % - as “satisfactory”, 28.6%
as “good”, and only 3.9 % as “excellent”. A list of variables was applied for describing the
patterns of innovation strategies of Russian companies (Table 3).
Main Findings
The framework proposed for the analysis of innovation strategy portfolio of the companies in the
sample (Table 1) includes internal R&D, internal technology innovations, internal NPD and
internal technology exploitation (Traditional approach) and external R&D acquisition, external
technology acquisition (ET), NPD outsourcing to external organizations and the technology
commercialization (TC) (Open approach).
8
Table 3. Measurement
Variable Description
Internal R&D A dichotomous question was used to measure whether company conducts internal R&D. The resultsof the analysis of this dummy is used in the analyzing the possible innovation strategies of the firmsand in order to estimate the role of cooperation depending on innovation strategy.
R&D acquisition The companies were asked to select from the proposed scale the option which is describing mosttheir possible acquisition of R&D: not acquired, acquired – less that 5 %, from 5 to 10 %, from 10 to25 %, from 25 to 50 %, from 50 to 100 %. The scales reflect the approximate share of acquired R&Dwith respect to internal R&D.
NPD Internal NPD measured as product innovation dummy indicator, and the outsourced NPD as theshare of NPD outsourced to the external organizations.
Technologyinnovation
internal technology innovation measured as dummy variable for the companies implemented thetechnology or process innovations.
TechnologyAcquisition
A dichotomous question of the next variable “technology acquisition” consists of not acquiringtechnologies, acquiring sometimes, and acquiring often. The scale was used to evaluate the share ofacquired technology to the internally produced – less that 5 %, from 5 to 10 %, from 10 to 25 %,from 25 to 50 %, from 50 to 100 %.
TechnologyCommercialization
A dichotomous question of the next variable “technology commercialization” consists of notcommercializing technologies, selling sometimes, and selling often. The scale was used to evaluatethe share of commercialized technology to the internally consumed – less that 5 %, from 5 to 10 %,from 10 to 25 %, from 25 to 50 %, from 50 to 100 %.
The content analysis of the innovation strategy portfolio of the companies in the sample (N=206)
show that Russian companies apply more external (open) innovation strategies associated with
R&D and technology innovations (Table 4). The least popular option for the open approach is the
NPD, which can be explained by the extreme strategic importance of NPD for all the companies
and tendency to keep control over the majority of new product development.
Table 4. Innovation portfolio strategies of the sample companies (N = 206)
Components of innovationsstrategy
Innovation strategiesTraditional innovation approach
(internal)Open innovation approach (external)
R&D 162 ( 78,6 %) 64 (31,1%)
Technology innovation 108 (52,4 %) 42 (20,4 %)NPD 135 (65,5%) 22 (10,7 %)Technology exploitation 179 (86,9 %) 27 (13,1 %)
More than 75 % of the analysed companies have internal research and development activities,
and more than half of these companies are satisfied with the internal R&D and do not externalize
it (Table 5). However, 55 companies (31.6 %) combine internal and external R&D and indicate
9
the increase in the innovation output due to externalization. 5.2 % of companies without own
internal research and development are acquiring R&D. We detected a statistical significance
(Pearson Chi-Square Significant at 0.024) between the internal R&D and external R&D. From
the previous studies, we learned that companies, which are more active in internal innovation, do
apply open innovation practices more eagerly. However, the nature of this relationship is to be
researched with more sophisticated statistical methods.
Table 5. Internal R&D and Acquisition of the External R&D (N=174)
External R&D Internal R&DYes No Total
Yes (N and % of total) 55 (31,6%) 9 (5,2%) 64 (36,8%)
No (N and % of total) 78 (44,8%) 32 (18,4%) 110 (63,2%)Total (N and % of total) 133 (76,4%) 41 (23,6%) 174 (100,0%)
Pearson Chi-Square Significant at 0.024
More than 80 % of the analysed companies have internal technology innovations, and two thirds
of these companies do not look for external technology (Table 6).
Table 6. Technology Innovations and Acquisition of the External Technology (N=206)
External technology acquisition Technology InnovationsYes No Total
Yes(N and % of total) 58 (28,2%) 6 (2,9%) 64 (31,1%)
No (N and % of total) 108 (52,4%) 34 (16,5%) 142 (68,9%)
Total (N and % of total) 166 (80,6%) 40 (19,4%) 206 (100,0%)Pearson Chi-Square Significant at 0.014
However, 58 companies (28.2 % of the sample) combine internal and external technology
innovations and indicate the increase in the efficiency of innovations due to externalization. 2.9
% of companies without own technology development is acquiring external technologies. We
detected a statistical significance (Pearson Chi-Square Significant at 0.014) between the open and
closed approaches to technology innovations. From the previous studies, we learned that
companies, which are more active in internal technology innovation, do apply open innovation
10
practices more eagerly. However, the nature of this relationship also is to be researched with
more sophisticated statistical methods.
We analysed the companies experience on the international markets (with scale from “no
experience” to “experience over 10 years”) and cross-tabulated it with the internal R&D dummy
variable (Table 7). We have 108 companies without international experience (N=206) and share
of companies with internal R&D is 69.4 %. We found statistically significant relationship
(Pearson Chi-Square significant at 0.005) between companies’ experience on the international
market and the internal R&D, which show us that the longer companies operate on the
international market, the higher share of companies with internal R&D among them. This
conclusion contributes to the general understanding of relationship between internationalization
and innovation, which claims that the positive relationship between experience in
internationalization and innovativeness of the firm.
Table 7. Internal R&D and Internationalization
Internal R&DTotalyes no
Companiesexperience oninternationalmarket
no experience Count (%) 75 (69,4%) 33 (30,6%) 108less than 1 year Count (%) 2 (50,0%) 2 (50,0%) 41-3 years Count (%) 7 (87,5%) 1 (12,5%) 83-10 years Count (%) 30 (93,8%) 2 (6,3%) 32more than 10 years Count (%) 45 (88,2%) 6 (11,8%) 51
Total Count (%) 159 (78,3%) 44 (21,7%) 203Pearson Chi-Square significant at 0.005
The share of international companies in the sample is 46.8 % (N=95). This indicator includes all
types of international activities. However, the most common mode of internationalization for the
Russian companies is export - 92 (44.7 %) companies are exporters. 8.7 % of companies (N=18)
have export share less than 10 % (but more than 0), 15.5 % (N=32) have exports share between
10 and 30 %, 13.1 % (N=27) – 30 - 50 %, 4.9 % (N=10) of companies have export share 50 – 70
%, 2.4 % of companies (N=5) have export share more than 70 %.
11
When we analyse share of international companies for groups of companies with different
innovation strategies (Table 8) we find almost fair distribution between 48 and 53 %, which does
have any statistically significant effect. There is no relationship between internationalization as
dummy variable and type of innovation strategy regardless open innovation or closed innovation
approach is considered.
Table 8. Innovation portfolio strategies and Internationalization
Components of innovations strategy Innovation strategiesTraditional innovation approach Open innovation approach
R&D (162) 52.8 % 48.4 %
Technology innovation (150) 48.2 % 50 %NPD (135) 48.1 % N/ATechnology (206) N/ A 50 %
The companies were asked to evaluate the innovation output based on the number of indicators
(Table 9) using the Likert scale from 1 to 5 (from no effect to very significant influence).
Table 9. Internationalization and Innovation: Results for all companies compared to international
All companies InternationalN Mean Mean N
The assortment of products and services expanded 195 3,8462 3,8925 93Quality of products and services improved 196 3,9745 4,0532 94The production flexibility improved 193 3,6839 3,8261 92Company entered new markets - in Russia 190 3,5474 3,7444 90
CIS (Commonwealth of Independent States) 172 2,7151 3,4767 86International (In other countries) 165 2,2606 2,7625 80
Unit labor costs decreased 194 3,2784 3,3441 93Production capacity increased 191 3,5183 3,6522 92Material costs per unit decreased 192 3,4323 3,5652 92Energy costs per unit decreased 192 3,3646 3,4891 92The negative impact on the environment and health risksdecreased
192 3,4479 3,5326 91
The fulfilling governmental standards, requirements andregulations improved
191 3,5812 3,7473 93
Image of the company improved 192 3,8281 3,8925 92Cooperation with external partners improved 191 3,7539 3,8913 76
We analysed the mean of this evaluations for all companies in the sample and only for
international companies. The more significant difference in the innovation output between all
companies and international ones was registered for quality improve, production flexibility
12
improve, entering new markets, increase in production capacity, decreasing energy costs,
environmental impact, fulfilling governmental regulations and improved cooperation with
external partners.
The analysis of the exports of the companies with different innovation portfolios show the
significant difference in exports shares. Companies with active open innovation strategies
(acquisition of R&D, external technology acquisition, technology commercialization and
complex OI strategies) are much more export oriented (export shares about 40 %, Figure 1) and
companies with tradition innovation orientation are less active exporters (20 %, Figure 2).
Figure 1. Companies with active open innovation strategies (acquisition of R&D, external technology acquisition, technologycommercialization and complex OI strategies) and share of exports
0,00 %
2,00 %
4,00 %
6,00 %
8,00 %
10,00 %
12,00 %
14,00 %
16,00 %
18,00 %
< 10 % 10 - 30 % 30 - 50 % 50 - 70 % > 70 %
R&D A ET TC OI
13
Figure 2. Companies with traditional innovation strategies (Internal R&D, internal NPD, internal Technology Innovations) andshare of export
Conclusion
The research of the Russian companies is rather exiting and up to date due to the intensive
internationalization of companies, active learning and increasing competitiveness on the
international markets. The Russian business and political environment has also become more
innovation friendly in the recent years. Russian companies are actively catching up with modern
management and innovation theories and business practices, and increasing the education level
and quality of the human capital. The active search for external technologies, outsourcing (in and
out), cooperating with local and foreign partners have become the actual goals of the companies
in Russia. In this paper authors classify the innovation strategies of Russian companies by
applying the open vs traditional innovation framework. The framework includes internal R&D,
0,00 %
5,00 %
10,00 %
15,00 %
20,00 %
25,00 %
30,00 %
35,00 %
< 10 % 10 - 30 % 30 - 50 % 50 - 70 % > 70 %
IntR&D NPD TechInn
14
internal technology innovations, internal NPD and internal technology exploitation (Traditional
approach) and external R&D acquisition, external technology acquisition (ET), NPD outsourcing
to external organizations and the technology commercialization (TC) (Open approach). The
content analysis of the innovation strategy portfolio of the companies in the sample show that
Russian companies apply more external (open) innovation strategies associated with R&D and
technology innovations. One third of companies combine internal and external R&D (both open
and closed approach) and indicate the increase in the innovation output due to externalization.
And 5.2 % of companies purely relay on acquisition of external R&D. We detected a statistical
significance (Pearson Chi-Square Significant at 0.024) between the internal R&D and external
R&D. From the previous studies, we learned that companies, which are more active in internal
innovation, do apply open innovation practices more eagerly. We also detected a statistical
significance (Pearson Chi-Square Significant at 0.014) between the open and closed approaches
to technology innovations. Companies, which are more active in internal technology innovation,
do apply open innovation practices more eagerly.
The analysis of the internationalization effect on innovation strategy revealed the dual
relationship between them. We found statistically significant relationship (Pearson Chi-Square
significant at 0.005) between companies’ experience on the international market and the internal
R&D, which show us that the longer companies operate on the international market, the higher
share of companies with internal R&D among them. However, no relationship was found
between internationalization as dummy variable and type of innovation strategy regardless open
innovation or closed innovation approach is considered.
The results show that innovation output was higher for international companies for all analysed
indicators. The more significant difference in the innovation output between all companies and
15
international ones was registered for quality improve, production flexibility improve, entering
new markets, increase in production capacity, decreasing energy costs, environmental impact,
fulfilling governmental regulations and improved cooperation with external partners.
The analysis of the exports of the companies with different innovation portfolios show the
significant difference in exports shares. Companies with active open innovation strategies
(acquisition of R&D, external technology acquisition, technology commercialization and
complex OI strategies) are much more export oriented and companies with tradition innovation
orientation are less active exporters.
Contribution: The study contributed to the theory of open innovation by developing the portfolio
framework for analyzing the open vs closed innovation strategies. And to the international
business study by analyzing the role of international experience and export share of the
companies with different innovation strategies. Selecting the sample of companies from Russia
has both scientific (limited amount of research papers available) and practical implications
(provide new knowledge on the companies and their business practices). The results have
significant managerial implication due to contribution to open innovation, internationalization
and innovation output. The focus of the study on Russian companies is especially interesting
because of their increased internationalization and that their strategies are interesting for other
participants of the global markets.
16
REFERENCES
von Ahsen A. & Heesen M. (2009) Innovation portfolio management: a framework for SMEs in the automotive industry,International Journal of Technology Intelligence and Planning, Vol. 5, Number 2 / 2009, pp 138-164
Castellani, D., Zanfei, A. (2007). Internationalisation, innovation and productivity: how do firms differ in Italy? The WorldEconomy, Special Issue on “Exports and Growth”
Chesbrough, H (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard BusinessPress, Boston, Massachusetts. 227p.
Chesbrough, H (2006). Open Business Models: Hoe to Thrive in the New Innovation Landscape. Harvard Business School Press ,Boston, Massachusetts.256 p.
Chesbrough, H.W. (2007), “Why companies should have open business models”, MIT Sloan Management Review, Vol. 48 No. 2,pp. 22-8.
Chesbrough, H. and Schwartz, K. (2007), “Innovating business models with co-development partnerships”, Research-TechnologyManagement, Vol. 50 No. 1, pp. 55-9
Cooper, R. G. (1999), The Invisible Success Factors in Product Innovation, Journal of Product Innovation Management, 16: 115–133.
Coulon M., Ernst H., Lichtenthaler U. & Vollmoeller, J. (2009) An overview of tools for managing the corporate innovationportfolio, International Journal of Technology Intelligence and Planning, Vol. 5, Number 2 / 2009, pp 221-239.
Enkel, E. (2010) Attributes required for profiting from open innovation in networks. International Journal of TechnologyManagement .
Faria, P. and Schmidt, T., (2007). International Cooperation on Innovation: Empirical Evidence for German and PortugueseFirms, ZEW Discussion Papers 07-060, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European EconomicResearch.
Filipescu, D. (2007). Innovation and Internationalisation. A focus on the Spanish exporting firms, Research work, Doctoralprogramme: Creation, strategy and management of the firm, Universitat Autonoma de Barcelona, Business EconomicsDepartment;
Frascati Manual, (1993). The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys ofResearch and Experimental
Johanson, J./Vahlne J.-E., (1977) The Internationalization Process of the Firm: A Model of Knowledge Development andIncreasing Foreign Market Commitment, Journal of International Business Studies, 8, 1, 1977, pp. 23–32.
Gassmann, O. and Enkel E. (2004) Towards a Theory of Open Innovation: Three Core Process Archetypes, paper presented atR&D Management Conference.
Gorodnichenko,Y., Svejnar, J., and Terrell, K. (2008). Globalization and Innovation in Emerging Markets, IZA Working PaperNo. 3299, Available at SSRN
Kock C. and Torkkeli M. (2008) Open Innovation: A “Swingers’ Club” or “Going steady”?, IE Business School Working paperWP08-11, 05.02.2008
Kotler F. and Caslione J. (2009). Chaotics: The Business of Managing and Marketing in The Age of Turbulence, AmacomPublishing; May 2009.
Laursen, K. and Salter, A. (2006), “Open for innovation: the role of openness in explaining innovation performance among UKmanufacturing firms”, Strategic Management Journal, Vol. 27 No. 2, pp. 131-50.
Lichtenthaler, U. and Ernst, H. (2007) External technology commercialisation in large firms, results of a quantitativebenchmarking study. R&D Management, 37, 5, pp. 383-397.Lichtenthaler U. (2009) Outbound open innovation and its effect on firm performance: examining environmental influences, R&DManagement 39, 4.
17
Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition, 2007.
Pack, H. (1993), Technology Gaps Between Industrial and Developing Countries: Are There Dividends for Latecomers?, inWorld Bank (ed), Proceedings of the World Bank Annual Conference on Development Economics 1992: Washington DC.
Podmetina D., Smirnova M., Väätänen J., and Torkkeli M. (2009) Innovativeness and International Operations, Forthcoming inInternational Journal of Innovation Management, Vol. 3 No. 2 (2009) pp. 1–23.
Qingrui Xu, Zhu Ling, Wang Fang (2005) Towards Total Innovation Management (TIM): the emerging new trend of innovationmanagement, a case study of haier group, Science Research Management;2003-05
Salmi P., Torkkeli M. (2009) Success factors of interorganisational knowledge transfer: a case of a collaborative public–privateR&D project, International Journal of Business Innovation and Research 2009 - Vol. 3, No.2 pp. 109 - 125
Torkkeli M., Podmetina D., and Väätänen J. (2009). Knowledge Absorption in Emerging Economy –Role of Foreign Investmentsand Trade Flows in Russia, International Journal of Business Excellence, Vol 2 No ¾.
von Hippel, E. & von Krogh, G. (2006) Free revealing and the private collective model for innovation incentives. R & DManagement, 36(3): 295-306.
Wildemann h. (2009) R&D-portfolio management of German industrial enterprises, International Journal of TechnologyIntelligence and Planning, vol. 5, number 2 / 2009, pp 191-220
PUBLICATION V
Podmetina Daria, Väätänen Juha, Torkkeli Marko, and Smirnova Maria, 2011. Cooperation and open innovation in emerging economies. Study of innovation strategies of Russian companies. Accepted to the Divisional Roundtable Paper Session at the 2011 Academy of Management Annual Meeting, August 12-16, 2011, San Antonio, Texas.
1
COOPERATION AND OPEN INNOVATION IN EMERGING ECONOMIES. STUDY OF
INNOVATION STRATEGIES OF RUSSIAN COMPANIES
DARIA PODMETINA Lappeenranta University of Technology
P. O. Box 20, FI-53851 Lappeenranta, Finland [email protected]
MARIA SMIRNOVA
St. Petersburg State University, Graduate School of Management, St. Petersburg, Russia
JUHA VÄÄTÄNEN Lappeenranta University of Technology
P. O. Box 20, FI-53851 Lappeenranta, Finland [email protected]
MARKO TORKKELI
Lappeenranta University of Technolog Kouvola Research Unit
Prikaatintie 9, FI-45100 Kouvola, Finland [email protected]
This paper analyses the scale of Russian companies’ innovation strategies from closed to open innovation and the role of R&D cooperation with external partners within the open innovation framework. The results of the survey of 206 companies show that the cooperation with external partners clearly depends on the degree of openness of innovation strategy and the proximity of the partner – both in sense of importance and intensity of cooperation. The importance of cooperation with external partners is high for all companies. However, the companies with closed innovation strategy consider the cooperation least important, the increase of importance and intensity of cooperation is observed for companies with internal R&D, in-bound open innovation and out-bound open innovation. However, the most significant effect of cooperation is recorded for companies with full range of open innovation strategies – both in-bound and out-bound. The importance of cooperation with partners on the domestic market is higher than cooperation with foreign partners.
Keywords: Open Innovation, Innovation Strategy, Cooperation, Russia.
2
COOPERATION AND OPEN INNOVATION IN EMERGING ECONOMIES. STUDY OF INNOVATION STRATEGIES OF RUSSIAN COMPANIES
INTRODUCTION
The role of cooperation in the global and turbulent business environment cannot be underestimated. The cooperation skills create great advantage for the companies’ innovativeness, and the capability to utilize external knowledge is a significant factor of innovation performance (Cohen & Levinthal, 1990). The need for collaborative approach has significantly increased in the open innovation era (Enkel et al, 2010).
This paper addresses the R&D cooperation within the open innovation framework. Authors apply the classification proposed by Gassman and Enkel (2004) to define three core processes within Open Innovation: 1) The Outside-In process – search and incorporating the external knowledge of suppliers, customers, competitors, universities and research organizations, etc; 2) The Inside–Out process – transfer of the ideas, technologies, intellectual property to the market; 3) Combination of Outside-In and Inside-Out processes. The authors suggest the differences mainly come from the degree of openness of innovation strategy (adopting zero, one or more of the constructs of OI) and the proximity of the partner – both in the sense of location and in the sense of intensity of cooperation.
The cooperation with stakeholders increases innovation capability of the firm (Lundvall et al., 2002). Companies build links and cooperation in R&D with their stakeholders such as customers, suppliers, competitors and public institutions (Enkel & Gassmann, 2008, Smirnova et al., 2009). The recent trend has been the growing importance of innovation networks (Dittrich & Duysters, 2007; Chesbrough & Prencipe, 2008, Torkkeli et al., 2008). Many studies show that external links and cooperation increase company’s innovation capability and have a positive effect on innovation output (Bayona et al., 2001; Kaufmann & Tödtling 2001; Klomp & van Leeuwen, 2001; Hagedoorn, 2002; Loof & Heshmati, 2002; Romijn & Albaladejo, 2002; Belderbos et al. 2004b; Vivero, 2004; Veugelers & Cassiman, 2005). Open innovation framework still lacks empirical evidence how to best utilize the concept (Enkel et al, 2010) and how important cooperation with external partners is in this framework.
This paper studies the role of R&D cooperation with external stakeholders in the framework of the open innovation concept. The paper aims to analyze the degree of openness of innovation strategy. The analyzed factors are the type and importance of R&D cooperation, openness of the innovation model applied, and the innovation and financial performance.
The study is based on the survey consisting of 206 Russian R&D oriented companies selected from the most innovative regions. The interviews were conducted in September – December 2009. The survey consists of 110 questions and provides the opportunity to analyze the types and importance of R&D cooperation with external partners, different types of innovation activities, as well as innovation and financial performance with statistical methods.
3
The paper is structured as follows: Chapter 1 introduces the research topic and sets the research objective. Chapter 2 reviews the literature of open and closed innovation strategies, and the role of R&D cooperation in this context. Chapter 3 describes the research design, survey data and variables. Chapter 4 presents the open innovation strategies and cooperation the sample companies. Chapter 5 presents the key findings of the paper. Chapter 6 discusses on the results and Chapter 7 presents the conclusions and the main implications of the results.
LITERATURE REVIEW
Towards open innovation
The traditional strategy orientation states that companies have to diversify strategies in order to use opportunities and avoid threats emerged due to market turbulence (Porter, 1979). However, business environment was considered still relatively stable in the mid to late 1980s. Since beginning of 1990s, market and environmental turbulence have increased and companies have been forced to competition fight and the flexibility has become a mean for companies’ survival. In earlier times companies had orientation to control all stages of innovation process themselves and thus most of R&D were produced internally (in-house R&D) (Wheelwright & Clark, 1992). Not only R&D, but NPD, technology innovations along with commercialization of new products and technologies were conducted within company’s borders. This approach is nowadays referred as traditional or closed approach to innovations.
According to Kotler and Caslione (2009), the world economy has entered a new era of uncertainty, characterized by increased risks and turbulence, and consequently chaos. Enterprises need to set new strategic behaviours (chaotics) (warning system, scenario construction system and quick response system) which allow them to manage during the time of recession. Kotler and Caslione claim, that the main forces: globalisation and technology have caused an increased fragility in the economy, which have resulted in the intensified periods of turbulence. Currently this intensified turbulence is already accepted as normal for the economy and companies have learned how to behave in this situation. What was considered extraordinary and stressful for companies 20 years ago has become everyday situation for modern companies. Due to the degree of turbulence, increased competition and newly emerged technology opportunities, companies have intensified the use of knowledge, both internal and external (Cohen & Levinthal, 1990; Klevorick et al., 1995).
It has become obvious, that traditional approach to innovation and R&D does not fit to this changed environment. Thus many companies have started transition towards new, more open policy on innovations. Companies have to develop more open business models if they want to get the best use of their internal R&D, search and acquire new technologies and use effectively commercialization channels, decrease costs and save time (Christensen, 1997). When Chesbrough (2003; 2006) launched a term “Open Innovation” to describe the new phenomena, it was very appropriate time to describe the latest transformation processes in the field of
4
innovations. Nowadays, open approach has become essential for many companies’ innovation practices. The organised search for new ideas is important for open innovation framework development (Laursen & Salter, 2006). The open innovation can be exploratory (emergent innovation process) and focused (predetermined search) (Holmes & Smart, 2009).
Chesbrough (2003) introduced several factors that influenced to the beginning of open innovation era: 1) access to the best available knowledge sources improved both inside and outside the company because of the increase of the educated labor force availability; 2) increased the number of possible sources of financing for R&D projects; 3) companies started to cooperate more and search for ideas and technology outside and incorporate them into innovation policy. Gassman and Enkel (2004) define three core processes within OI: 1)The Outside-In process – search and incorporating the external knowledge of suppliers, customers, competitors, universities and research organizations, etc; 2) The Inside–Out process – transfer of the ideas, technologies, intellectual property to the market; 3) Combination of Outside-In and Inside-Out processes. And in more modern work they raise a question of necessity to find the optimal ratio between introducing the open innovation practices and investing in the traditional innovations (Enkel et al., 2010). There is empirical evidence, that turbulence of technology and competition on technology markets strengthen the effect of outbound innovations on companies’ performance (Lichtenthaler, 2009).
In our study we follow the same approach to open innovation process: R&D cooperation, external technology acquisition (ET) and technology commercialisation (TC). We consider that companies possess the innovation portfolio which includes in-house R&D, outsourced R&D, technology acquisition, collaborative external partnerships with suppliers, customers, universities and research organizations, and technology commercialisation.
Cooperation supports Open Innovation
The cooperation is the core of open innovation framework (Chesbrough, 2006) and the number of cooperative partners and quality of cooperation matter for the success of introducing the open innovation principles (Kock and Torkkeli, 2008). Open innovation phenomena evolve high degree of cooperation with partners such as other companies in the industry, suppliers, clients (Chesbrough, 2003). The customer value increases when companies exploit the new ideas and develop new product and technologies both themselves (in-house) (Wheelwright & Clark, 1992) and in cooperation with suppliers or competitors (inter-firm). The cooperation gives opportunity to access knowledge and technologies in order to increase the innovativeness of the company, decrease costs and risks (Faria & Schmidt, 2007).
There have been multiple studies on collaborative approach to innovations (Freytag, 2002; Andrew et. al, 2006; Blomqvist & Levy, 2006, Miles et al, 2004; Simonin, 1997; Johnsen & Ford, 2000; Ford & Johnsen, 2001, Hakansson & Eriksson, 1993). Collaborative innovations represent one of the options as addition to in-house R&D and outsourcing (Baglieri & Zamboni,
5
2005). Unique advantage of this mode is creation of additional value within the partner relationship (Walter et. al, 2001). The competence to cooperate in R&D sphere or in NPD is valuable for all organizations. Companies with high skills in cooperation (cooperation capability) have access to large range of technologies and can better manage their R&D resources (Torkkeli et al., 2009). The role of contribution of external partners and collaboration is difficult to overestimate. Large companies do not fully rely on internal innovations and tend to increase cooperation in R&D activities (Dodgson, 1993; Freeman & Hagedoorn, 1994) and intent to create own values of cooperation (Smith & Blanck, 2002).
Cooperation in R&D may occur on different levels: strategic (partner selection and management), executive (teams and processes) or infrastructural level (Deck & Strom, 2002). Decision on innovation strategy is based on social interactions and analysis of innovation practices (Neyer et al., 2009). Independent from the level of cooperation, the firms need to develop specific organizational competencies to support this interaction. This cooperation capability is about how companies develop and manage partnerships (Dyer & Singh, 1998). The core of cooperation capability is the integration of skills and tacit knowledge with external partners. The motives for cooperation depend on the type of partner (Tether, 2002, Belderbos et al, 2004b).
The intensified cooperation in innovations in the last decades indicates the lack of companies’ internal resources and capabilities to satisfy the need for innovations and R&D (Hagedoorn, 2002; De Propris, 2002). The simultaneous implementation of innovation and cooperation strategies in the companies has been discussed in large number of studies. Some companies decide to cooperate based on their internal R&D expertise, and try to balance internal and external R&D based on this their internal knowledge – choice between “making and buying” (Cassiman & Veugelers, 2002). Companies can externalize due to their internal weaknesses on innovations (Keupp & Gassmann, 2009). Other companies cooperate with competitors in product R&D, process R&D or both (Lin & Saggi, 2002).
The literature review on R&D cooperation leads us to the conclusion that cooperation is more important for companies with experience on internal R&D and for companies who already have R&D cooperation. Based on our observations, companies experienced with internal R&D and R&D cooperation seem to be more eager expand their technology portfolio towards technology acquisition and cooperate in commercializing internal R&D.
Hypothesis 1: Companies with experience in internal R&D value more the cooperation with external partners and their cooperation is more successful, than companies without experience in internal R&D.
Cooperation with External Partners
Companies can cooperate in innovations with a variety of external parties: suppliers (Hakansson & Eriksson, 1993), competitors (Clark & Fujimoto, 1991), customers (von Hippel, 1988) and research organisations (Gemünden et al., 1996), etc. It is believed that the key sources for
6
innovators are often lead users, suppliers or universities (von Hippel, 1988). Companies use channels (suppliers, users, universities) when they search for innovative opportunities (Laursen & Salter, 2006). The results of their analysis of U.K. manufacturing firms show that the most important channel is suppliers of equipment, materials, and components, followed closely by clients and customers – which indicates that innovations are determined by relations with suppliers and customers.
The partner selection and relationship has been focus of many studies. Many of these studies have been motivated by the open approach to innovations and they have studied the vertical and horizontal linkages. Miotti and Sachwald, 2003 proposed framework to predict the efficiency of R&D co-operation with different partners. Zeng et. al, 2009 found out that vertical and horizontal cooperation with customers, suppliers has a distinct role. Faria et al (2010) emphasised the effect of technology level in partner selection. Tomlinson, 2010 found evidence for link between vertical cooperation and positive innovation performance. Tether and Tajar, 2010 supported the supply chain approach in partner selection. In the previous papers we studied whether certain group of external partners was involved in NPD process (suppliers in Russia; suppliers abroad; customers in Russia; customers abroad; intermediaries; shareholders; competitors; consultants; research organizations and partners in joint ventures). Results indicated that the role of external partners for the firms following joint NPD approach is higher – they depend more on “core” stakeholders. At the same time for those firms following own R&D resources based NPD strategy external partners can still have vital importance.
Hypothesis 2: The importance and the success of cooperation with external partners is more significant for those companies who introduce the more diversified innovation strategy such as open innovation
Some studies have focused on factors that specifically induce companies to cooperate with foreign partners located in other countries to carry out innovative activities (Faria & Schmidt, 2007). The existence of strong relationship between internationalization and innovation is obvious for many companies, especially when international technology transfer is a form of export per se (Robinson, 1988, Filipescu, 2007). The companies’ cooperation with foreign suppliers in some part relates with psychical distance concept– what means that companies export or import to countries which they know better, have better experience and less market uncertainty (Johanson & Vahlne, 1977).
Hypothesis 3: The physical distance factor matters: For companies the cooperation with external domestic partners is more important and more successful, than with foreign partners.
RESEARCH DESIGN
The empirical study was conducted during November 2009 – February 2010. 206 Russian companies from various industries agreed to participate in the study through structured interviews. The key respondents were representatives of the innovation department or top
7
management of the firm. The numbers of criteria were used in order to select companies, including region, industry and annual revenue of the company.The sampling method was based on the stratified sample approach, which means not a representative, but a meaningful structure of the sample. The questionnaire consists of 110 questions (some questions include two ore more sub-questions). The questionnaire structure was developed based on the recommendations for conducting the innovation surveys (Frascati manual, 1993, Oslo manual, 2007) and using the constructs and scales for analysing cooperation of the companies with internal and external partners, international activities of the companies, and the number of other indicators. The structure of the questionnaire is presented in the table in the Appendix 1.
Due to the selection of key respondents it was possible to obtain information on the innovation activities of the companies and on the cooperation with external partners in relation to R&D. Key information on the sample is presented in the table in Appendix 2. The average age of companies in the sample is 27 years, while the year of foundation varying from 1720 till 2009.
The share of companies conducting internal R&D is high - 78,6 %, of which 42,7 % conduct R&D systematically and 35,9 % irregularly. The R&D intensity (ratio of R&D expenditures in company’s sales) is between 1.5 and 3.0 % for 38 % of companies. This corresponds with an average level of R&D intensity for most of high and medium tech industries. Out of the 206 companies in the sample, 1.9 % assessed their economic situation as “near bankruptcy”, 10.7% as “bad”, 53.4 % - as “satisfactory”, 28.6% as “good”, and only 3.9 % as “excellent”.
Operationalization
Describing existing patterns of innovation strategies and cooperation of Russian companies a number of variables have been applied. The key respondents had to identify cooperation in R&D, conducting internal R&D, acquiring R&D or technologies or commercializing technologies and estimate role of cooperation on the scale from 1 to 5.
The effect of cooperation can be also negative on the innovations of the companies in the sample. The role of external stakeholders on the implementation the innovation is shown on the Figure 1, where the companies were asked to estimate the pressure from the different external stakeholders on their innovations (Linkert scale from 1 to 5). The highest pressure companies feel from the Russian competitors and consumers, as well as from the quality control and foreign competitors located in Russia. The pressure from the supplier’s side (both local and foreign) is significantly lower.
R&D Cooperation with external stakeholders: A dichotomous question was used to find out whether external organizations (partners) were involved in R&D process. Importance and success of cooperation with the external stakeholders was estimated with a 5-point Likert scale from not important to absolutely important.
8
Internal R&D: A dichotomous question was used to measure whether company conducts internal R&D. The results of the analysis of this dummy is used in the analyzing the possible innovation strategies of the firms and in order to estimate the role of cooperation depending on innovation strategy.
Figure 1. The influencing factors of innovations implementation
2,242,46 2,48
2,612,75
2,88
3,16
3,51 3,59
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
4,00
Pressure fromforeign
suppliers
Pressure fromforeign
consumers
Pressure fromRussiansuppliers
Pressure fromcompetitors
oninternational
market
Governmentalpolicy on
innovations
Pressure fromforeign
competitorsin Russia
Better controlfor quality ofthe goods
Pressure fromRussian
consumers
Pressure fromRussian
competitors
R&D acquisition: The companies were asked to select from the proposed scale the option which is describing most their possible acquisition of R&D: not acquired, acquired – less that 5 %, from 5 to 10 %, from 10 to 25 %, from 25 to 50 %, from 50 to 100 %. The scales reflect the approximate share of acquired R&D with respect to internal R&D.
Technology Acquisition: A dichotomous question of the next variable “technology acquisition” consists of not acquiring technologies, acquiring sometimes, and acquiring often.
Technology Commercialization: A dichotomous question of the next variable “technology commercialization” consists of not commercializing technologies, selling sometimes, and selling often.
OPEN INNOVATION AND COOPERATION IN RUSSIAN COMPANIES
Open Innovation
The globalization process pushed companies out of the traditional borders, and nowadays, most of the companies aim for time and cost saving and actively cooperating with partners both in home countries and all over the world in order to improve their R&D, innovation and NPD functions and to modernize the innovation commercialization channels. This phenomenon was named Open Innovation by Chesbrough in 2003 and combined the ideas of openness under this
9
one term. For the classifying the sample companies (Table 1) regarding the open innovation paradigm, authors applied the Gassman’s and Enkel’s (2004) taxonomy of OI process on outside-in process (external knowledge, innovation, technology search and acquisition), inside-out process (transfer of innovations to the market) and combination of outside-in and inside-out processes. This taxonomy is often simplified to the categories of technology acquisition and technology commercialization. These are not characterizing the processes of inbound and outbound open innovations as a whole, but provide researchers with opportunity of analyzing the process in parts.
The authors claimed that the differences in the adopting open innovation mainly come from degree of openness to the number of external partners both in sense of outside-in process and inside-out process (intensity of cooperation), and in the sense of location of partner (geographic proximity). The companies, who adopt more complex set of open innovation activities, benefit more from the open innovation effect.
Table 1. Innovation Strategies
Innovation Strategy N Share, %
Internal Research and Development Internal R&D 162 78,6 No Internal R&D 44 21,4
The Outside-In Process of Open Innovation External Technology Acquisition (ET) 64 31,1 No External Technology Acquisition 142 69,9
The Inside-Out Process of Open Innovation Technology Commercialization (TC) 27 13,1 No Technology Commercialization 179 86,9
Combination of Outside-in and Inside-out processes of Open Innovation Internal R&D and ET and TC 14 6,8 Other then OI 192 93,2
Russian companies traditionally stage open innovation path – from internal R&D, though adopting outside-in process, and towards inside-out process. The companies involving the all stage of OI are more productive and more innovative (Podmetina et als., 2009, 2010). That means that companies who do not have internal R&D function are not involved in external acquisition processes (R&D, technology). And companies, who do not have experience in external acquisition, do not commercialize the technology through external channels.
Cooperation
The analysis of cooperation was dome based on the data indicating the role of external partners (both in Russia and abroad) in R&D, R&D and technology acquisition and technology commercialisation processes. Companies were asked to estimate the importance of cooperation
10
with competitors, customers, suppliers, sub-contractors (developers and producers), other companies in own or other industries, universities or research organizations when searching for technologies to acquire. In R&D cooperation we study the involvement of external partners in R&D, NPD, modification of product, technology developing, technology acquisition, modification of technologies, organizational innovation and business processes, and in marketing innovations.
The figure 2 (Linkert Scale 1 to 5) shows the involvement intensity of external partners (consumers, suppliers, intermediaries, research organizations) in R&D process. Companies cooperate more intense with external partners in product and service modification, technology modification, and in NPD, then in technology acquisition and organizational and marketing innovations.
Figure 2. Involvement of external partners in R&D process
2,84
2,95
2,80
2,48
2,83
2,57 2,57
2,20
2,30
2,40
2,50
2,60
2,70
2,80
2,90
3,00
Mutual NPD Product andservice
modification
Technologydevelopment
Technologyacqusition
Technologymodification
Organizationalchanges
Marketinginnovations
The figure 3 shows the involvement of external partners (consumers, suppliers, intermediaries, research organizations) in the different stages of R&D process. Companies cooperate more intense with external partners in testing prototypes of the product or market testing, launching the product, then in design and engineering stage. The role of cooperation with external partners depends on the choice Russian companies are making regarding the traditional and open approach to innovations. The optimal ratio between open and closed approaches to company’s innovation strategy is understudied question (Enkel et al, 2010). However, the role of cooperation is the distinctive factor for these strategies comparison.
11
Figure 3. Involvement of external partners on the different stages of R&D process
2,522,48
2,52
2,39
2,70
2,59
2,45
2,20
2,25
2,30
2,35
2,40
2,45
2,50
2,55
2,60
2,65
2,70
2,75
Idea generation Preliminaryproject planning
Preliminaryproject
assessment
Design andengineeringdevelopment
Testingprototype or
market testing
Launching theproduct
After salesservices
KEY FINDINGS
The role of R&D cooperation is studied in many research papers (Suzumura, 1992; Leiponen, 2001; Tether, 2002; Veugelers and Cassiman, 2005), they support the evidence that cooperation on R&D with suppliers, customers, or research institutes and universities is important for innovating companies. The role of external cooperation is very important for the most successful Russian firms, and also influence the creation of radically new products (Smirnova, et al., 2009). Based on this background, the role of cooperation on innovation with external was analyzed. Following our observations, the more company is enrolled into the innovations process, the more sophisticated innovation models they implement, and the more significant cooperation is for companies.
The share of companies implementing the internal R&D is high in the sample – 78.6 % (Table 1). The share of companies which launched new or significantly modified products (services, concepts of products/services) in 2006-2008 was 89.3 %. The share is significantly higher, than found in the other studies about NPD in Russia - 38.8 % of companies with NPD (Dynkin and Ivanova, 1998) and 59 % in the work of Kadochnikov (2004). 80.6 % of companies in the sample implemented new or significantly improved technologies or production processes in 2006 – 2008. The products were developed mostly by company itself (65.5 %). 36.1 % of companies developed new products (services) in cooperation with external partners.
The open innovation strategies implantation was analyzed with the simplified framework propose by Gassman’s and Enkel’s (2004) - outside-in process (external technology search and acquisition), inside-out process (transfer of innovations to the market) and combination of outside-in and inside-out processes (table 1). 31.1 % of companies sin the sample acquire external technology, and 13.1 % of companies commercialize their innovations to the market. The combination of the outside-in and inside-out is valid for 6.8 % of companies.
12
The main assumption of this research paper is to prove the important role of cooperation for companies with open innovation strategies compared with companies focusing on the traditional approach to innovations: The companies more successful in cooperation with external stakeholders are more actively implement the open innovation approach. The research aims to contribute to the following research proposition: 1. Companies with experience in internal R&D value more the cooperation with external partners and their cooperation is more successful, than companies without internal R&D; 2. The importance and the success of cooperation with external partners is more significant for those companies who introduce the more diversified innovation strategy such as open innovation; 3. The physical distance factor matters: For companies the cooperation with external domestic partners is more important and more successful, than with foreign partners.
Cooperation with external stakeholders
The results of analysis of the share of companies involving external partners in collaboration among companies with internal R&D, external technology acquisition (ET), technology commercialization (TC) and open innovation (OI) strategy reveal a clear trend –companies following the OI strategy have on average higher share of partners involved in the innovation activities (Table 2).
Table 2. Intensity of involvement of external partners, %
Type of partner Innovation Strategy
Internal R&D ET TC OI Suppliers in Russia 50,0 59,4 70,4 85,7 Suppliers abroad 22,2 32,8 40,7 57,1 Clients in Russia 55,6 45,3 59,3 57,1 Clients abroad 23,5 28,1 33,3 42,9 R&D partners 52,5 62,5 63,0 85,7 Intermediaries in Russia 27,8 34,4 37,0 57,1 Intermediaries abroad 14,8 20,3 37,0 50,0 Stakeholders 24,7 34,4 44,4 50,0 Competitors in Russia 13,6 17,2 22,2 28,6 Competitors abroad 7,4 15,6 18,5 28,6 Consultants 42,0 48,4 59,3 71,4 External commercial R&D organizations 28,4 39,1 44,4 64,3 State R&D centers 33,3 40,6 48,1 71,4 Universities 28,4 32,8 37,0 42,9 Partners in JVs 27,8 40,6 44,4 64,3 Other partners not included in list 20,4 28,1 44,4 64,3 Mean 29,5 36,2 44,0 57,6
The share of external partners by the companies with OI strategy is particularly high in case of supplies in Russia and R&D partners, as well as consultants. Interesting result is that customers are not among the most actively involved groups of partners by OI companies.
The results presented in the Table 2 support the Hypothesis 2: the trend of increase in share of involved partners for companies with more diversified open innovation strategy and Hypothesis
13
3: the companies cooperate more intensively with suppliers, client and intermediaries in Russia, than with those abroad. The same conclusion can be dome for the competitors, except for the companies with OI.
Cooperation with external stakeholders for companies with internal R&D
Cooperation with external stakeholders was assessed on the base of analysis of importance of collaboration with given group of external partners and perceived success of collaboration with these partners. Table 3 represents the results of comparison of importance and success of collaboration between firms with and without internal R&D. Additional comparison opportunity is provided by results for the whole sample.
Table 3. Intensity of involvement, importance and success of cooperation with external partners. Case of companies with internal R&D
Type of partner %1 Importance of collaboration Success of collaboration
Whole sample
Int R&D
No int R&D
T-test Whole sample
Int R&D
No int R&D
T-test
Mean Mean Mean Sig Mean Mean Mean Sig Suppliers in Russia 50,0 3,9 4,0 3,6 0,194 4,0 4,1 3,5 0,049 Suppliers abroad 22,2 3,8 3,9 3,0 0,078 3,8 3,9 3,4 0,356 Clients in Russia 55,6 4,2 4,3 3,8 0,054 4,1 4,2 3,6 0,017 Clients abroad 23,5 3,9 4,0 3,1 0,101 3,7 3,8 3,1 0,256 R&D partners 52,5 4,3 4,4 3,4 0,000 4,2 4,4 3,2 0,000 Intermediaries in Russia 27,8 4,0 3,9 4,1 0,676 3,7 3,7 3,8 0,776 Intermediaries abroad 14,8 3,7 3,8 3,1 0,233 3,4 3,5 3,1 0,576 Stakeholders 24,7 3,9 4,0 3,7 0,448 3,9 4,0 3,5 0,364 Competitors in Russia 13,6 3,6 3,5 3,7 0,683 3,3 3,3 3,4 0,747 Competitors abroad 7,4 3,2 3,2 3,2 0,975 2,8 2,8 3,0 0,820 Consultants 42,0 3,9 4,0 3,7 0,264 3,7 3,8 3,6 0,503 External commercial R&D organizations 28,4 3,9 4,0 3,7 0,507 3,8 3,9 3,3 0,141 State R&D centers 33,3 4,0 4,1 3,8 0,541 3,8 3,9 3,7 0,451 Universities 28,4 3,9 3,9 3,7 0,429 3,6 3,7 3,5 0,611 Partners in JVs 27,8 3,9 4,0 3,4 0,188 3,9 4,1 2,9 0,007 Other partners not included in list 20,4 3,8 3,8 3,2 0,244 3,8 3,9 3,2 0,277 Mean 29,5 3,9 3,9 3,5 3,7 3,8 3,4
There are not many statistically significant differences in perceived importance and success of collaboration with partners by firms with and without internal R&D. Generally, importance of collaboration in the sphere of innovations is perceived almost equally important by all the firms in the sample, with the only case when firms with internal R&D have higher importance of collaboration – in case of external R&D partners. The means of importance of collaboration varies insignificantly among the groups of partners with relatively highest mean in case of collaboration with customers in Russia. Success of collaboration though is perceived differently. There is statistically significant between firms with and without internal R&D in case of success of collaboration with suppliers and clients in Russia, R&D partners and partners in joint ventures.
1
% means the share of companies involving this type of partners among companies with internal R&D; Int R&D – results for companies with internal R&D; No Int R&D – results for companies without internal R&D; T-test - T-test for differences in means between firms with and without internal R&D
14
Descriptive summaries of each of columns show that in case of firms with no internal R&D generally both importance of collaboration and perceived success have lower scores as in case of firms with internal R&D.
The results presented in the Table 3 support the Hypothesis 2: the trend of increase in importance and success of cooperation partners for companies with internal R&D compared with companies without internal R&D. The Hypothesis 3 is supported as well: the cooperation importance and success is higher when companies cooperate with domestic suppliers, client, competitors and intermediaries, than with those abroad.
Cooperation with external stakeholders for companies with in-bound open innovation
The next step in analysis of collaboration with external partners was conducted as comparison between companies with and without inbound open innovation (external technology acquisition) (Table 4).
Table 4. Intensity of involvement, importance and success of cooperation with external partners. Case of companies with ET
Type of partner %2 Importance of collaboration Success of collaboration
Whole sample
ET No ET T-test Whole sample
ET No ET T-test
Mean Mean Mean Sig Mean Mean Mean Sig Suppliers in Russia 59,4 3,9 4,2 3,7 0,058 4,0 4,2 3,9 0,236 Suppliers abroad 32,8 3,8 3,9 3,6 0,505 3,8 3,7 3,9 0,668 Clients in Russia 45,3 4,2 4,2 4,2 0,731 4,1 4,0 4,1 0,703 Clients abroad 28,1 3,9 4,0 3,8 0,648 3,7 3,5 3,9 0,321 R&D partners 62,5 4,3 4,5 4,1 0,072 4,2 4,4 4,1 0,132 Intermediaries in Russia 34,4 4,0 4,1 3,9 0,482 3,7 3,9 3,5 0,167 Intermediaries abroad 20,3 3,7 3,9 3,6 0,448 3,4 3,5 3,3 0,584 Stakeholders 34,4 3,9 4,3 3,6 0,071 3,9 4,3 3,5 0,073 Competitors in Russia 17,2 3,6 3,6 3,5 0,825 3,3 3,4 3,3 0,780 Competitors abroad 15,6 3,2 3,4 2,7 0,249 2,8 3,1 2,3 0,199 Consultants 48,4 3,9 4,2 3,8 0,046 3,7 4,0 3,6 0,145 External commercial R&D organizations 39,1 3,9 4,3 3,6 0,036 3,8 4,3 3,5 0,011 State R&D centers 40,6 4,0 4,2 3,9 0,376 3,8 4,1 3,7 0,219 Universities 32,8 3,9 4,0 3,8 0,411 3,6 3,9 3,5 0,258 Partners in JVs 40,6 3,9 4,1 3,7 0,168 3,9 4,3 3,4 0,012 Other partners not included in list 28,1 3,8 4,2 3,3 0,053 3,8 4,1 3,5 0,201 Mean 36,2 3,9 4,1 3,7 3,7 3,9 3,6
Comparing the firms acquiring external technologies and those without inbound open innovation, some cases of differences in perceived importance of collaboration and success of collaboration can be marked. Thus firms acquiring external technologies (ET) place higher importance on collaboration with consultants and external commercial R&D organizations. They also perceive higher success in collaborating with external commercial R&D organizations and partners in joint ventures. There are more cases of differences among groups of firms which could be identified at
2 % means the share of companies involving this type of partners among companies with ET; ET – results for companies with ET; No ET– results for companies without ET; T-test - T-test for differences in means between firms with and without ET
15
the level p <0.1. Overall results (summary line at the end of the table) indicate again that firms with ET share higher perceived importance and success of collaboration with external partners vis-à-vis other firms. The cooperation importance and success is higher when companies with ET and without ET cooperate with domestic suppliers, client, competitors and intermediaries, than with those abroad (Hypothesis 3).
Cooperation with external stakeholders for companies with outbound open innovation
Finally, we have compared collaboration with external partners between the firms with and without technology commercialization (TC) (see Table 5).
Table 5. Intensity of involvement, importance and success of cooperation with external partners. Case of companies with technology commercialization
Type of partner %3 Importance of collaboration Success of collaboration
Whole sample
TC No TC T-test Whole sample
TC No TC T-test
Mean Mean Mean Sig Mean Mean Mean Sig Suppliers in Russia 70,4 3,9 4,1 4,0 ,480 4,0 4,0 4,0 ,926 Suppliers abroad 40,7 3,8 3,7 3,8 ,924 3,8 3,7 3,8 ,664 Clients in Russia 59,3 4,2 4,4 4,2 ,494 4,1 4,3 4,0 ,378 Clients abroad 33,3 3,9 3,9 3,9 ,947 3,7 3,7 3,7 ,908 R&D partners 63,0 4,3 4,1 4,3 ,412 4,2 3,9 4,2 ,234 Intermediaries in Russia 37,0 4,0 3,9 3,9 ,942 3,7 4,0 3,6 ,313 Intermediaries abroad 37,0 3,7 3,8 3,7 ,824 3,4 3,6 3,3 ,564 Stakeholders 44,4 3,9 3,9 3,9 ,838 3,9 3,8 3,9 ,727 Competitors in Russia 22,2 3,6 3,4 3,6 ,640 3,3 3,3 3,3 ,845 Competitors abroad 18,5 3,2 3,2 3,2 ,974 2,8 2,8 2,8 ,966 Consultants 59,3 3,9 3,6 4,0 ,107 3,7 3,6 3,8 ,607 External commercial R&D organizations
44,4 3,9 4,0 3,9 ,807 3,8 4,0 3,7 ,590
State R&D centers 48,1 4,0 3,7 4,1 ,263 3,8 3,6 3,9 ,297 Universities 37,0 3,9 3,5 3,9 ,251 3,6 3,7 3,6 ,986 Partners in JVs 44,4 3,9 3,6 4,0 ,217 3,9 3,8 3,9 ,930 Other partners not included in list 44,4 3,8 3,6 3,8 ,711 3,8 3,6 3,8 ,615 Mean 44,0 3,9 3,8 3,9 3,7 3,7 3,7
In case of analysis of technology commercialization the results reveal no differences in perceived importance and success of collaboration with external partners between the groups of firms. The highest means as expected obtains collaboration with clients in Russia, but also various forms of collaboration with R&D partners has relatively higher scores.
Cooperation with external stakeholders for companies with open innovation
To make overall conclusions we have split the sample on the base of open innovation strategy criteria, in other words in companies applying all the there elements (internal R&D, technology commercialization and external technology acquisition) and those who have either some or no of these elements. This analysis allows testing assumption that only all the elements implemented
3 % means the share of companies involving this type of partners among companies with TC; TC– results for companies with TC; No TC– results for companies without TC; T-test - T-test for differences in means between firms with and without TC
16
by a company can lead to difference in collaboration policy with external partners. Results of this overall analysis are presented in Table 6.
Table 6. Intensity of involvement, importance and success of cooperation with external partners. Case of companies with open innovation strategy
Type of partner %4 Importance of collaboration Success of collaboration
Whole sample
OI No OI T-test Whole sample
OI No OI T-test
Mean Mean Mean Sig Mean Mean Mean Sig Suppliers in Russia 85,7 3,9 4,7 3,9
0,075 4,0 4,3 3,9
,285 Suppliers abroad 57,1 3,8 4,0 3,7
0,552 3,8 3,8 3,8
,846 Clients in Russia 57,1 4,2 4,6 4,2
0,301 4,1 4,4 4,0
,347 Clients abroad 42,9 3,9 4,3 3,8
0,421 3,7 3,7 3,7
,991 R&D partners 85,7 4,3 4,5 4,3
0,516 4,2 4,5 4,1
,300 Intermediaries in Russia 57,1 4,0 4,2 3,9
0,487 3,7 4,3 3,6
,083 Intermediaries abroad 50,0 3,7 4,2 3,6
0,221 3,4 4,0 3,2
,150 Stakeholders 50,0 3,9 4,4 3,8
0,308 3,9 4,7 3,8
,115 Competitors in Russia 28,6 3,6 3,5 3,6
0,862 3,3 3,3 3,3
,905 Competitors abroad 28,6 3,2 3,5 3,1
0,515 2,8 3,1 2,7
,542 Consultants 71,4 3,9 4,1 3,9
0,585 3,7 4,2 3,7
,192 External commercial R&D organizations
64,3 3,9 4,7 3,8 0,033
3,8 4,7 3,7 ,019
State R&D centers 71,4 4,0 4,3 3,9 0,424
3,8 4,0 3,8 ,758
Universities 42,9 3,9 4,3 3,8 0,331
3,6 4,4 3,6 ,102
Partners in JVs 64,3 3,9 4,0 3,9 0,830
3,9 4,4 3,8 ,137
Other partners not included in list 64,3 3,8 4,3 3,6 0,133
3,8 4,4 3,6 ,222
Mean 57,6 3,9 4,2 3,8 3,7 4,1 3,6
While this overall assumption on the role of open innovation strategy elements combination in shaping company’s collaboration with external stakeholders no strong evidence was found to support it. In fact that results confirm statistically significant difference between firms with OI strategy and without OI strategy – in case of collaboration with external commercial R&D organizations, the overall trend identifies higher scores both on importance and perceived success of collaboration by firms following OI strategy.
DISCUSSION
Companies from transitional economies, such as Russia, experience pressure from the both global turbulence of the market and from the ongoing transformation process within companies. Companies need more resources to compete with foreign rivals and need more knowledge to fulfil the innovation gap caused by the centrally planned economy heritage. Developing the 4 % means the share of companies involving this type of partners among companies with OI; OI– results for companies with OI; No OI– results for companies without OI; T-test - T-test for differences in means between firms with and without OI
17
cooperation skills and increasing the innovativeness provides opportunity for companies to compete successfully both on domestic and international markets.
As discussed earlier, the role of cooperation depends on the type of innovation (Srivatas and Dwyer, 2000; Nord and Tucker, 1987; Smirnova, et als, 2009). The role of R&D cooperation is studies in many scientific papers (Suzumura, 1992; Leiponen, 2001; Tether, 2002; Veugelers and Cassiman, 2005), they support the evidence that cooperation on R&D with suppliers, customers, or research institutes and universities is important for innovating companies. The initial findings of this paper show how the process of cooperation is developing in Russia. Our analysis proved that importance of cooperation with external partners, differs for companies with different innovation strategies. Cooperation is important for all companies (5-point Likert scale; not important, absolutely important), however, the clear difference is observed for companies, grouped based on their innovation strategies.
Our main assumption has been that following at least some of the open innovation strategy elements would have impact on company’s collaboration policy in regard to external stakeholders. Summing up the findings, we may conclude that all in one, the results show that firms with OI involve more actively external partners (as Table 2).
Research proposition on the role of internal R&D in reliance on cooperation has been supported by study results. We also see that importance of cooperation is more significant for those companies who introduce the more diversified innovation strategy and particularly external technology acquisition. Our results also reveal that physical distance factor matters: thus companies value higher cooperation with domestic partners than with foreign partners. Indeed, for Russian firms collaboration seems to mean first of all collaboration with local partners.
CONCLUSION
This study has shown that cooperation with external partners play important role for open innovation implementation. The results of the study show that companies with more open and sophisticated innovation strategies tend to indicate higher importance of cooperation. The open innovation theory puts cooperation on the mile stone place in the process of implementing open innovation principles in practice. The logic behind this statement is defined by the nature of this externalization process – the acting through the companies’ borders on all stages of innovation process always involve certain level of cooperation with external partners. In addition, the effect of partner location was found in the data analysis. The companies value more the cooperation with domestic suppliers, than foreign suppliers. This is explained by the easier transfer of knowledge locally due to proximity, better communication and cultural similarity.
This study has shown that cooperation with external partners (on the example of suppliers) plays an important role for open innovation implementation. Open innovation considers inbound innovation – search and acquisition of external knowledge, R&D and technology, outbound innovation – promoting the internal innovation through external commercialization channels, and
18
coupled process – combination of inbound and outbound innovation. The role of cooperation for increasing innovativeness of companies is seen even more important for companies from the transition economies, because the issue of competing on the local and international markets is of extreme importance there. Companies from transitional economies, such as Russia, experience pressure from the both global turbulence of the market and from the ongoing transformation process within companies. Developing the cooperation skills and increasing the innovativeness provides opportunity for companies to compete successfully both on domestic and international markets.
The results are crucially important to managers because they show how cooperation matters for companies with different innovation strategies. These insights are essential especially now, when the internationalization of Russian companies is increasing on the international markets and their business strategies are interesting for other participants of the global markets. Based on the findings of this paper, we foresee the more detailed future research into the cooperation with different types of stakeholders and open innovation paradigm implementation.
Based on the findings of this paper, we foresee the more extensive future research both conceptual and empirical on cooperation with different types of stakeholders and open innovation paradigm implementation.
REFERENCES Andrew J. P., Sirkin H. L. and Butman J. (2006). Payback: Reaping the rewards of innovation, Harvard Business School Press.
Baglieri E., Zamboni S. (2005). Partnering along the demand chain: collaboration in new product development process, 21st IMP Conference Proceedings.
Bayona C., García-Marco T. and Huerta E. (2001). Firms’ motivations for cooperative R&D: an empirical analysis of Spanish firms, Research Policy, Volume 30, Issue 8, October 2001, Pages 1289-1307
Belderbos, Ren´e, Martin Carree, Bert Diederen, Boris Lokshin, and Reinhilde Veugelers (2004a) Heterogeneity in R&D Cooperation Strategies, International Journal of Industrial Organization, 8/9, 1237–1264.
Belderbos, R, Carree, M. and Lokshin, B. (2004b). Cooperative R&D and Firm Performance. Research Policy, 33(10), 1477–1492.
Cassiman B. and R. Veugelers, 2002, R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium, American Economic Review, 92, 4, 1169-1184.
Blomqvist K. and Levy J. (2006). Collaboration capability – a focal concept in knowledge creation and collaborative innovation in networks, International Journal of Management Concepts and Philosophy, Vol. 2, No. 1, pp. 31-48.
Cervantes, M. and Malkin, D. (2001) Russia’s Innovation Gap, Organization for Economic Cooperation and Development, The OECD Observer, Nov 2001, 229-239
Chesbrough, H.W. and Prencipe, A. (2008). Networks of innovation and modularity: a dynamic perspective. International Journal of Technology Management, 42, 4, 414–425.
19
Chesbrough, H. (2007) Why companies should have open innovation business models, MIT Sloan Management Review, 48, 2, pp. 22-28,
Chesbrough, H. (2006). Open Business Models: Hoe to Thrive in the New Innovation Landscape. Harvard Business School Press , Boston, Massachusetts.256 p.
Chesbrough, H. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business Press, Boston, Massachusetts. 227p.
Christensen, C. (1997). The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail , Harvard Business School Press, Boston, MA, USA
Clark K. and Fujimoto T. (1991). Product development performance, Boston, MA: Harvard Business School Press.
Cohen, W.M. and Levinthal D.A. (1990). Absorptive Capacity - A New Perspective on Learning and Innovation, Administrative Science Quarterly, 35, 1, 128-152.
Deck, M. and Strom, M. (2002). Research-Technology Management, Volume 45, Number 3, 1, pp. 47-53.
De Propris, L. (2002). Types of innovation and inter-firm co-operation. Entrepreneurship & Regional Development, 14: 337 – 353.
Desai, R. and Goldberg, I. (eds.) (2007), Enhancing Russia’s Competitiveness and Innovative Capacity, Finance and Private Sector Development Department, World Bank, Washington D.C
Dittrich, K. and Duysters, G. (2007) Networking as a means to strategy change: the case of open innovation in mobile telephony. Journal of Product Innovation Management, 24, 6, 510–521.
Dodgson, M. (1993), Technological Collaboration in Industry, Routledge, London.
Dyer, J. and H. Singh (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage, Academy of Management Review, 23(4), pp. 660–679.
Dynkin, A., and Ivanova, N. (1998) Technological Innovation in Russia, Research Technology management, 41 (Jan/Feb): 44-47.
Enkel, E. and Gassmann, O. (2008) Driving open innovation in the front end. The IBM case. Working Paper University of St. Gallen and Zeppelin University, St. Gallen and Friedrichshafen.
Enkel E., Gassmann O. and Chesbrough H. (2009) Open R&D and open innovation: exploring the phenomenon, R&D Management, 39, 4, 2009
Enkel E., Gassmann, O. and Chesbrough, H., The Future of Open Innovation. R&D Management, Vol. 40, Issue 3, pp. 213-221, June 2010.
Faria, P. and Schmidt, T., (2007). International Cooperation on Innovation: Empirical Evidence for German and Portuguese Firms, ZEW Discussion Papers 07-060, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
Filipescu, D. (2007). Innovation and Internationalisation. A focus on the Spanish exporting firms, Research work, Doctoral programme: Creation, strategy and management of the firm, Universitat Autonoma de Barcelona, Business Economics Department;
20
Ford D. and Johnsen T. (2001). Managing networks of supplier and customer relationships for technological innovation: initial case study, 17th IMP Conference Proceedings.
Frascati Manual (1993). The Measurement of Scientific and Technological Activities: Proposed Standard Practice for Surveys of Research and Experimental.
Freeman, C. (1982), The Economics of Industrial Innovation, Frances Pinter, London.
Freytag V. (2002). Innovation in co-operation and co-operation innovation, 18th IMP Conference Proceedings, Dijon, France.
Freeman, C., Hagedoorn, J. (1994), "Catching up or falling behind: patterns in international interfirm technology partnering", World Development, Vol. 22 No.5, pp.771-80.
Gassmann, O. and Enkel E. (2004) Towards a Theory of Open Innovation: Three Core Process Archetypes, paper presented at R&D Management Conference.
Gemunden H. G., Ritter T. and Heydebreck P. (1996) Network configuration and innovation success: an empirical analysis in German high-tech industries. International Journal of Res Marketing;13(5):449– 62.
Hagedoorn, J. and Shekenraad, J. (1994) The effect of strategic technology alliances on company performance, Strategic Management Journal, 15: 4, pp. 291-309
Hagedoorn, J. (2002). Inter-firm R&D partnerships: an overview of major trends and patterns since 1960, Research Policy, Elsevier, vol. 31(4), pages 477-492.
Hakansson, H. and Eriksson, A-K. (1993). Getting innovations out of supplier networks, Journal of Business-to Business Marketing, Vol. 1 (3), pp. 3-34.
Holmes S. and Smart P. (2009) Exploring open innovation practice in firm-nonprofit engagements: a corporate social responsibility perspective, R&D Management 39, 4.
Johnsen T. and Ford D. (2000). Managing collaborative innovation in complex networks: findings from exploratory interviews. U.K: 16th IMP-conference in Bath, 2000.
Johanson, J., J-E. and Vahlne (1977) The Internationalization Process of the Firm - A Model of Knowledge Development and Increasing Market Commitment, Journal of International Business Studies, Vol. 8, 23-32.
Johanson, M. (2007). Networks in Transition, Proceedings of the 23th IMP Conference, Manchester Business School, UK.
Kadochnikov, S., Essine, P. and Slobodyan, S. (2004) What explains the product differentiation of Russian companies: competitive pressure or technological spillovers? CERGE-EI Policy Brief, 3 (June): 1-3.
Kaufmann, A. and Todtling, F. (2001). Science-industry interaction in the process of innovation: the importance of boundary-crossing between systems, Research Policy, Elsevier, vol. 30(5), pages 791-804.
Keupp M. M. and Gassmann O. (2009) Determinants and archetype users of open innovation, R&D Management 39, 4.
Klevorick, A.K. et al. (1995) On the sources and significance of interindustry differences in technological opportunities, Research Policy, 24, 185-205.
21
Klomp, L. and van Leeuwen G. (2001) ‘Linking Innovation and Firm Performance: A New Approach’, International Journal of the Economics of Business, 8(3), 343–364.
Kock C. and Torkkeli M. (2008) Open Innovation: A “Swingers’ Club” or “Going steady”?, IE Business School Working paper WP08-11, 05.02.2008
Kornai, J. (1990). The Affinity between Ownership Forms and Coordination Mechanisms: The Common Experience of Reform in Socialist Countries. Journal of Economic Perspectives, 4 (3), p. 131-47.
Kotler F. and Caslione J. (2009). Chaotics: The Business of Managing and Marketing in The Age of Turbulence, Amacom Publishing; May 2009.
Laursen, K. and Salter, A. (2006). Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms, Strategic Management Journal, Vol. 27 No. 2, pp. 131-50.
Leiponen, A. (2001) Why do firms not collaborate? The role of competencies and technological regimes In: A. Kleinknecht and P. Mohnen, Editors, Innovation and Firm Performance: Econometric Exploration of Survey Data, Palgrave (2001), pp. 253–277.
Lichtenthaler, U. and Ernst, H. (2007) External technology commercialisation in large firms, results of a quantitative benchmarking study. R&D Management, 37, 5, pp. 383-397.
Lichtenthaler U. (2009) Outbound open innovation and its effect on firm performance: examining environmental influences, R&D Management 39, 4.
Lin, P. and Saggi, K. (2002) Under-provision of Inputs in Joint Ventures with Market Power, Bulletin of Economic Research, Blackwell Publishing, vol. 54(2), pages 189-96, April.
Loof, H. and Heshmati, A. (2002). Knowledge Capital and Performance Heterogeneity: A Firm-level Innovation Study, International Journal of Production Economics, 76(1), 61–85.
Lundvall, B. A., Johnson, B., Andersen, E.S. and Dalum B. (2002). National systems of production, innovation and competence building, Research Policy, Vol. 31, pp. 213–231.
Miles, R. E., Miles G. and Snow C. C. (2004). Collaborative Entrepreneurship. How Groups of Networked Firms Use Continuous Innovation to Create Economic Wealth? Stanford University Press.
Miotti, L. and Sachwald, F. (2003). Co-operative R&D: why and with whom? An integrated framework of analysis. Research Policy, 32: 1481 – 1499.
Neyer A.K., Bullinger A. C. and Moeslein K. M. (2009) Integrating inside and outside innovators: a sociotechnical systems perspective, R&D Management 39, 4;
Oslo Manual (2007): Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition.
Porter, M.E., 1979. How competitive forces shape strategy, Harvard business Review, March/April. Robinson, R. (1988). The International Transfer of Technology: Theory, Issues, and practice, Ballinger Publishing Company, Cambridge, Massachusetts
Rominj H. and Albaladejo, M. (2002). Determinants of Innovation Capability in Small Electronics and Software Firms in Southeast England, Research Policy, Amsterdam; Sep; Vol. 31 (7); pp. 1053-1067.
22
Salmi P. and Torkkeli M. (2009) Success factors of interorganisational knowledge transfer: a case of a collaborative public–private R&D project, International Journal of Business Innovation and Research 2009 - Vol. 3, No.2 pp. 109 - 125
Schmidt, T. (2007), “Motives for Innovation Co-operation - Evidence from the Canadian Survey of Innovation”, ZEW Discussion Paper No. 07-018, Mannheim.
Smith P. G. and Blanck E. (2002) From experience: leading dispersed teams. The Journal of Product Innovation Management 19(4), 294–304.
Kotaro Suzumura K. (1992) Cooperative and Noncooperative R&D in an Oligopoly with Spillovers The American Economic Review, Vol. 82, No. 5 (Dec., 1992), pp. 1307-1320.
Tether, B. (2002) Who co-operates for innovation, and why. An empirical analysis, Research Policy, Amsterdam; Vol. 31; pp. 947-967.
Torkkeli M., Podmetina D. and Väätänen J. (2009). Knowledge Absorption in Emerging Economy –Role of Foreign Investments and Trade Flows in Russia, International Journal of Business Excellence, Vol 2 No ¾.
Veugelers, R. (1997) Internal R&D expenditures and external technology sourcing, Research Policy, Elsevier, vol. 26(3), pages 303-315, October
Veugelers, R. and Cassiman, B. (1999) Make and buy in innovation strategies: evidence from Belgian manufacturing firms, Research Policy, Elsevier, vol. 28(1), pages 63-80, January
Veugelers, R. and Cassiman, B. (2005). R&D cooperation between firms and universities: some empirical evidence from Belgian manufacturing, International Journal of Industrial Organization, vol. 23, Nº 5-6, pp. 355 - 379.
Vaatanen, Juha (2008). Russian Enterprise Restructuring - the Effect of Privatisation and Market Liberalisation on the Performance of Large Enterprises. Dissertation. Lappeenranta University of Technology.
Vivero, Rafael (2004). The Impact of Process Innovations on Firm’s Productivity Growth: The Case of Spain, Applied Economics, 34, 1007–1016.
von Hippel, E. and von Krogh, G. (2006) Free revealing and the private collective model for innovation incentives. R & D Management, 36(3): 295-306.
von Hippel, Eric, The Sources of Innovation, Oxford University Pre New York, 1988.
Walter, A., Ritter, T. and Gemunden, H.G. (2001). Value-creation in buyer-seller relationships: theoretical considerations and empirical results from a supplier’s perspective. Industrial Marketing Management, Vol. 30, No. 4, pp. 365-377
Wheelright, S. and Clark K. (1992), Revolutionizing Product Development, Quantum Leaps In Speed, Efficiency, And Quality. New York: The Free Press.
23
Appendix 1 Structure of the Questionnaire
Sections Content
Section 1 Company profile Section 2 General information about company (age, ownership, privatisation data, number of
employees, level of education, B2B or B2C orientation, main clients, and main markets, etc).
Section 3 Information about strategy of a firm, competition, and orientation. Section 4 Innovation activities – goals and objectives of innovations, barriers and constraints,
motivation of innovations, and conducting internal R&D. This section consists of sub-sections: A – Product innovations, B – Technology innovations, C – Technology and innovation search and acquisition, D – Technology commercialization, E – Organizational Innovations, F – Marketing Innovations, G – Innovation output, H – Innovation costs.
Section 5 Data on the cooperation of companies in innovation process. This section includes sub-sections: A – The role of cooperation within the company in case of research and development, B – The role of cooperation within external partners in case of R&D.
Section 6 Information of companies’ international operations. Section 7 Data on the market from the company’s point of view Section 8 The quantitative characteristics of the company Section 9 Information about the respondent. Section 10 Feedback about the survey.
Appendix 2 This is the title of my table and it goes above my table
Key Industries % Number of employees %
Metallurgy 17.5 less than 20 5.4 Machine building 13.6 from 20 to 50 5.9 Electronics and optics equipment 11.2 from 50 to 100 5.4 IT and telecommunications 10.2 100-250 27.3 Chemical industry 10.2 from 100 to 500 11.7 Electronic equipment 7.3 from 500 to 1000 21.0 Rubber and plastic industry 3.9 From 1000 to 3000 13.2 Aircraft 3.9 more than 3000 10.2 Ownership type Key regions New companies (after 1991) 86.4 Saint-Petersburg and region 29.1 Privatized companies 12.6 Yekaterinburg and region 14.6 State companies 1.0 Nizhniy Novgorod and region 13.6 Samara and region 11.2 Rostov-on-Don and region 9.7 Krasnoyarsk and region 5.8 Saratov and region 5.3 Perm and region 3.9 Novosibirsk and region 3.4 Tatarstan and region 2.4
ACTA UNIVERSITATIS LAPPEENRANTAENSIS 395. HONG, JIANZHONG. Cultural aspects of university-industry knowledge interaction. 2010. Diss.
396. AARNIOVUORI, LASSI. Induction motor drive energy efficiency – Simulation and analysis. 2010.
Diss. 397. SALMINEN, KRISTIAN. The effects of some furnish and paper structure related factors on wet web
tensile and relaxation characteristics. 2010. Diss.
398. WANDERA, CATHERINE. Performance of high power fiber laser cutting of thick-section steel and medium-section aluminium. 2010. Diss.
399. ALATALO, HANNU. Supersaturation-controlled crystallization. 2010. Diss. 400. RUNGI, MAIT. Management of interdependency in project portfolio management. 2010. Diss. 401. PITKÄNEN, HEIKKI. First principles modeling of metallic alloys and alloy surfaces. 2010. Diss. 402. VAHTERISTO, KARI. Kinetic modeling of mechanisms of industrially important organic reactions in
gas and liquid phase. 2010. Diss. 403. LAAKKONEN, TOMMI. Distributed control architecture of power electronics building-block-based
frequency converters. 2010. Diss. 404. PELTONIEMI, PASI. Phase voltage control and filtering in a converter-fed single-phase customer-
end system of the LVDC distribution network. 2010. Diss. 405. TANSKANEN, ANNA. Analysis of electricity distribution network operation business models and
capitalization of control room functions with DMS. 2010. Diss. 406. PIIRAINEN, KALLE A. IDEAS for strategic technology management: Design of an electronically
mediated scenario process. 2010. Diss. 407. JOKINEN, MARKKU. Centralized motion control of a linear tooth belt drive: Analysis of the
performance and limitations. 2010. Diss. 408. KÄMÄRI, VESA. Kumppanuusohjelman strateginen johtaminen – Monitapaustutkimus
puolustushallinnossa. 2010. Diss. 409. KARJALAINEN, AHTI. Online ultrasound measurements of membrane compaction. 2010. Diss. 410. LOHTANDER, MIKA. On the development of object functions and restrictions for shapes made with
a turret punch press. 2010. Diss. 411. SIHVO, VILLE. Insulated system in an integrated motor compressor. 2010. Diss. 412. SADOVNIKOV, ALBERT. Computational evaluation of print unevenness according to human vision.
2010. Diss. 413. SJÖGREN, HELENA. Osingonjakopäätökset pienissä osakeyhtiöissä. Empiirinen tutkimus
osakeyhtiölain varojenjakosäännösten toteutumisesta. 2010. Diss. 414. KAUPPI, TOMI. Eye fundus image analysis for automatic detection of diabetic retinopathy. 2010.
Diss. 415. ZAKHVALINSKII, VASILII. Magnetic and transport properties of LaMnO3+δ, La1-xCaxMnO3,
La1-xCaxMn1-yFeyO3 and La1-xSrxMn1-yFeyO3. 2010. Diss.
416. HATAKKA, HENRY. Effect of hydrodynamics on modelling, monitoring and control of crystallization.
2010. Diss. 417. SAMPO, JOUNI. On convergence of transforms based on parabolic scaling. 2010. Diss. 418. TURKU. IRINA. Adsorptive removal of harmful organic compounds from aqueous solutions. 2010.
Diss. 419. TOURUNEN, ANTTI. A study of combustion phenomena in circulating fluidized beds by developing
and applying experimental and modeling methods for laboratory-scale reactors. 2010. Diss. 420. CHIPOFYA, VICTOR. Training system for conceptual design and evaluation for wastewater
treatment. 2010. Diss. 421. KORTELAINEN, SAMULI. Analysis of the sources of sustained competitive advantage: System
dynamic approach. 2011. Diss. 422. KALJUNEN, LEENA. Johtamisopit kuntaorganisaatiossa – diskursiivinen tutkimus sosiaali- ja
terveystoimesta 1980-luvulta 2000-luvulle. 2011. Diss. 423. PEKKARINEN, SATU. Innovations of ageing and societal transition. Dynamics of change of the
socio-technical regime of ageing. 2011. Diss. 424. JUNTTILA, VIRPI. Automated, adapted methods for forest inventory. 2011. Diss. 425. VIRTA, MAARIT. Knowledge sharing between generations in an organization – Retention of the old
or building the new 2011. Diss. 426. KUITTINEN, HANNA. Analysis on firm innovation boundaries. 2011. Diss. 427. AHONEN, TERO. Monitoring of centrifugal pump operation by a frequency
converter. 2011. Diss. 428. MARKELOV, DENIS. Dynamical and structural properties of dendrimer macromolecules. 2011. Diss. 429. HÄMÄLÄINEN, SANNA. The effect of institutional settings on accounting conservatism – empirical
evidence from the Nordic countries and the transitional economies of Europe. 2011. Diss. 430. ALAOUTINEN, SATU. Enabling constructive alignment in programming instruction. 2011. Diss. 431. ÅMAN, RAFAEL. Methods and models for accelerating dynamic simulation of fluid power circuits.
2011. Diss. 432. IMMONEN, MIKA. Public-private partnerships: managing organizational change for acquiring value
creative capabilities. 2011. Diss. 433. EDELMANN, JAN. Experiences in using a structured method in finding and defining new
innovations: the strategic options approach. 2011. Diss. 434. KAH, PAUL. Usability of laser - arc hybrid welding processes in industrial applications. 2011. Diss. 435. OLANDER, HEIDI. Formal and informal mechanisms for knowledge protection and sharing. 2011.
Diss. 436. MINAV, TATIANA. Electric drive based control and electric energy regeneration in a hydraulic
system. 2011. Diss. 437. REPO, EVELIINA. EDTA- and DTPA-functionalized silica gel and chitosan adsorbents for the
removal of heavy metals from aqueous solutions. 2011. Diss.
