International Journal of Organisational Innovation Final Issue Vol 7 Num 3 January 2015

8/18/2019 International Journal of Organisational Innovation Final Issue Vol 7 Num 3 January 2015

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The International Journal of Organizational Innovation Vol 7 Num 3 January 2015 1

THE INTERNATIONAL JOURNAL ofORGANIZATIONAL INNOVATION

VOLUME 7 NUMBER 3, JANUARY 2015

Table of Contents

Page: Title: Author(s):

3. Information Regarding IAOI, ICOI and IJOI

4. 2014 IJOI Board Of Editors

6. Senior Entrepreneurship In Australia: An Exploratory ApproachAlex Maritz

24. Innovation Capabilities, Service Capabilities And Corporate PerformanceIn Logistics ServicesLi-Hsing Ho, Pi-Yun Chang,

34. Exploring The Effects Of Psychological Capital And Social Capital On TeamCreativity In ISD TeamsSheng Wu

47. Teething Problems In Litigation And Regulation Of E-CommerceJ. Ndumbe Anyu, Chigbo Ofong

65. Entrepreneurial Orientation And Organizational Learning On SMEs’ InnovationKaren Yuan Wang*, Antoine Hermens, Kai-Ping Huang And John Chelliah

76. An Empirical Examnation Of The Link Between Corporate Philanthropy AndFinancial Performance Under The China ContextShan Shan Zhou, Wei-Hwa Pan, Zi Wang

96. Identifying Niche Markets For Taiwan's Inbound TourismShu-Mei Wang

115. A Grey Relation Analysis Of The Performance Of Listed HospitalityCompanies In TaiwanShu-Mei Wang, Cheng-Hsien Hsieh, Ping-Ru Sie


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126. An Empirical Study Of Purchase Intention On Fast Fashion Goods In TaiwanKuei-Ling Hu, Ren-Jye Shiau

145. A Study Of The Application Of Competitive Dynamics Theory Integrated With AHP- A Case Study Of Taiwan’s Listed Automakers

Wen Pei, Bai-Ling Tan


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Information Regarding:

The International Journal of Organizational Innovation (IJOI),The 2014 International Conference on Organizational Innovation, andThe International Association of Organizational Innovation (IAOI).

The International Journal of Organizational Innovation (IJOI) (ISSN 1943-1813) is an inter-national, blind peer-reviewed journal, published quarterly. It may be viewed online for free.(There are no print versions of this journal; however, the journal .pdf file may be downloadedand printed.) It contains a wide variety of research, scholarship, educational and practitionerperspectives on organizational innovation-related themes and topics. It aims to provide aglobal perspective on organizational innovation of benefit to scholars, educators, students,practitioners, policy-makers and consultants. All past issues of the journal are available onthe journal website. Submissions are welcome from the members of IAOI and other associa-tions & all other scholars and practitioners. Student papers are also welcome.

For information regarding submissions to the journal, go to the journal homepage:http://www.ijoi-online.org/ To Contact the IJOI Editor, email: [email protected]

The International Association of Organizational Innovation (IAOI) is the publisher of this journal. It also holds an Annual Conference (See Below). For more information on the Inter-national Association of Organizational Innovation, go to: http://www.iaoiusa.org

The International Conference on Organizational Innovation (ICOI):

The 2015 International Conference on Organizational Innovation will be held August 4-6,2015 in Yogyakarta. Indonesia. It will again be hosted by Airlangga University which didsuch a great job hosting our 2012 Conference in Surabaya, Indonesia. The conference loca-tion will be at the Royal Ambarukmo Hotel, Yogyakarta. Indonesia. Plan on joining us there!

The conference website is: http://www.iaoiusa.org/2015icoi/index.html

To see an introduction to the conference hotel and region, see the following video - it willconvince you to attend!!

https://www.youtube.com/watch?feature=player_embedded&v=MfnsB31RFgc For more information on the conference location, please visit http://www.yogyes.com/


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THE 2014 BOARD OF EDITORS

Position: Name - Affiliation:

Editor-In-Chief Frederick L. Dembowski - International Association of Org. Innovation, USA

Associate Editor Chich-Jen Shieh - International Asso. of Org. Innovation, Taiwan R.O.C.Associate Editor Kenneth E Lane - Southeastern Louisiana University, USAAssociate Editor Sergey Ivanov - University of the District of Columbia, USA

Assistant Editor Ahmed M Kamaruddeen - Universiti Utara, MalaysiaAssistant Editor Alan E Simon - Concordia University Chicago, USAAssistant Editor Alex Maritz - Australian Grad. School of Entrepreneurship, Australia

Assistant Editor Anton de Waal - Swinburne University of Technology, AustraliaAssistant Editor Asma Salman - American University in the Emirates, DubaiAssistant Editor Barbara Cimatti - University of Bologna, ItalyAssistant Editor Ben Hendricks - Fontys University of Applied Sciences, the NetherlandsAssistant Editor Bettina Stevanovic, University of Western Sydney, AustraliaAssistant Editor Carl D Ekstrom - University of Nebraska at Omaha, USAAssistant Editor Catherine C Chiang - Elon University, USAAssistant Editor Chandra Shekar - American U. of Antigua College of Medicine, AntiguaAssistant Editor Chung-Hung Lin - I-Shou University, Taiwan, R.O.C.Assistant Editor Dafna Kariv, College of Management Academic Studies, IsraelAssistant Editor Davorin Kralj - Institute for Cretaive Management, Slovenia, Europe.Assistant Editor Denis Ushakov - Northern Caucasian Academy of Public ServicesAssistant Editor Eloiza Matos - Federal Technological University of Paraná - Brazil

Assistant Editor Earl F Newby - Virginia State University, USAAssistant Editor Fernando Cardoso de Sousa - Portuguese Association of Creativity

and Innovation (APIC)), PortugalAssistant Editor Fuhui Tong - Texas A&M University, USAAssistant Editor Gloria J Gresham - Stephen F. Austin State University, USAAssistant Editor Hassan B Basri - National University of Malaysia, MalaysiaAssistant Editor Heather Farmakis – Academic Partnerships, USAAssistant Editor Henry T Burley - La Trobe University, AustraliaAssistant Editor Hong-Cheng Liu - I-Shou University, Taiwan R.O.C.Assistant Editor Hsin-Mei Lin - National Chi Nan University, Taiwan R.O.C.Assistant Editor Chun-Ming Hsieh - Tongji University, ChinaAssistant Editor Ilias Said - Universiti Sains Malaysia, MalaysiaAssistant Editor Ileana Monteiro - Portuguese Assc. of Creativity and Innovation, PortugalAssistant Editor Ismael Abu-Jarad - Universiti Utara MalaysiaAssistant Editor Janet Tareilo - Stephen F. Austin State University, USAAssistant Editor Jeffrey Oescher - Southeastern Louisiana University, USAAssistant Editor Jian Zhang - Dr. J. Consulting, USAAssistant Editor John W Hunt - Southern Illinois University Edwardsville, USAAssistant Editor Julia N Ballenger - Texas A & M University - Commerce, USAAssistant Editor Julius Ndumbe Anyu - University of the District of Columbia, USAAssistant Editor Jun Dang - Xi'an International Studies University, P.R.C. ChinaAssistant Editor Jyh-Rong Chou - I-Shou University, Taiwan R.O.C.


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Assistant Editor Kai-Ping Huang - University of Technology, Sydney, AustraliaAssistant Editor Ken Kelch - Alliant International University, USAAssistant Editor Ken Simpson - Unitec, New ZealandAssistant Editor Kerry Roberts - Stephen F. Austin State University, USAAssistant Editor Krishnaswamy Jayaraman, Universiti Sains MalaysiaAssistant Editor Madeline Berma - Universiti Kebangsaan, MalaysiaAssistant Editor Marius Potgieter - Tshwane University of Technology, South AfricaAssistant Editor Mei-Ju Chou - Shoufu University, Taiwan R.O.C.Assistant Editor Melissa Kaulbach - Sarasota UniversityAssistant Editor Michelle Williams - Stephen F. Austin State University, USAAssistant Editor Michael A Lane - University of Illinois Springfield, USAAssistant Editor Muhammad Abduh - University of Bengkulu, IndonesiaAssistant Editor Nathan R Templeton - Stephen F. Austin State University, USAAssistant Editor Noor Mohammad - Faculty of Law, Universiti Kebangsaan, MalaysiaAssistant Editor Nor'Aini Yusof - Universiti Sains Malaysia, MalaysiaAssistant Editor Olivia Fachrunnisa, UNISSULA, IndonesiaAssistant Editor Opas Piansoongnern - Shinawatra University, ThailandAssistant Editor Pawan K Dhiman - EDP & Humanities, Government of IndiaAssistant Editor Ralph L Marshall - Eastern Illinois University, USA

Assistant Editor Ray Thompson - Texas A&M University-Commerce. USAAssistant Editor Richard Cohen - International Journal of Organizational Innovation, USAAssistant Editor Ridong Hu - Huaqiao University, P.R. ChinaAssistant Editor Shang-Pao Yeh - I-Shou University, Taiwan R.O.C.Assistant Editor Shanshi Liu - South China University of Technology, Taiwan R.O.C.Assistant Editor Sheng-Wen Hsieh - Far East University, Taiwan R.O.C.Assistant Editor Siriwan Saksiriruthai - Suan Sunandha Rajabhat University, ThailandAssistant Editor Stacy Hendricks - Stephen F. Austin State University, USAAssistant Editor Thomas C Valesky - Florida Gulf Coast University, USAAssistant Editor Tung-Yu Tsai - Taiwan Cooperative Bank, Taiwan R.O.C.Assistant Editor Wen-Hwa Cheng - National Formosa University, Taiwan R.O.C.Assistant Editor Yung-Ho Chiu - Soochow University, Taiwan R.O.C.Assistant Editor Yulun Hsu - Nan Jeon Institute of Technology, Taiwan, R.O.C.

Assistant Editor Zach Kelehear - University of South Carolina, USA


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The International Journal of Organizational Innovation vol 7 Num 3 January 2015

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SENIOR ENTREPRENEURSHIP IN AUSTRALIA:AN EXPLORATORY APPROACH

Alex MaritzSwinburne University of Technology, Melbourne, Australia

[email protected]

Abstract

The population and labour force in Australia are ageing, and this paper explores the role ofsenior entrepreneurship in active ageing. Senior entrepreneurship is the process whereby peo-ple aged 50+ participate in business start-ups. The phenomenon is explored from two promi-nent arguments: (1) as populations age, the number of older business founders will increase,and (2) on the promotion of entrepreneurship in older age segments as a prospective policyoption. We adapt an institutional framework to guide the study, with particular emphasis onentrepreneurial attitudes, activity and aspirations. We highlight unique Australian entrepre-neurship activity and prevalence rates, scope of senior entrepreneurship, entrepreneurial ac-tivity and age, barriers and advantages to senior entrepreneurship, motivation, skills and op-portunities for entrepreneurs and finally policy implications and recommendations to enhanceactive ageing, extending working lives and senior entrepreneurship.

Keywords: Senior entrepreneurship, Australia, ageing population

Introduction

“Rarely, if ever, have people thought ofAgeing as a time of opportunity, but, withthe advent of 20-30 years of life, todaysseniors are determined to add meaningfullife to those years, to remain self-reliant,and to give back to their communities and

the world” (Isele, 2014).

There is a growing population ofhealthy older people with skills, financialresources and time available to contributeto economic activity through extendingtheir working lives, including through en-trepreneurship (OECD/EC, 2012). There is

also the opportunity to enhance entrepre-neurial activity in older people who do notnecessarily portray entrepreneurial skillsand attitudes (Hatak et al., 2013). In es-sence, entrepreneurial inactivity in olderage groups increases the strains on socialsecurity and pensions systems, not dis-

counting the current Australian economicplatform of redundancies, social welfarecuts and ageing population (Steffens et al.,2012). Ageing workforces and the in-creasing dependency ratios found in de-veloped economies attract prominent pol-icy interest and research towards olderworkers, including the promotion of busi-


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ness start-ups and self-employment(jointly referred to as entrepreneurship inthis research) as a late-career alternative(Kautonen, 2012). This is, however, notprevalent in the Australian context,whereby only limited policy and research

is available regarding senior entrepreneur-ship. We define senior entrepreneurship asthe process whereby people aged 50+ par-ticipate in business start-ups (Hart et al.,2004). The senior entrepreneur is oftenreferred to as the seniorpreneur (Mayhew,2014).

Two lines of argumentation explainthe recent surge of interest in senior entre-preneurship (Kautonen et al., 2014). Thefirst is the argument as populations’ age;

the number of older business founders willincrease. Business start-ups by ageingpopulations are thus a result of either beingpulled or pushed into self-employment.The former argument is when mature indi-viduals choose self-employment as a late-career option, often referred to as opportu-nity entrepreneurship (Maritz, 2004). Thischoice may be motivated by factors suchas an attractive work-life balance, flexiblework environment, or as a means to sup-plement a preferred lifestyle (Walker andWebster, 2007). The latter argument is,however, based on terminology of neces-sity entrepreneurship, whereby individuals,to resume economic activity, have no otheroption but to engage in entrepreneurial ac-tivities (Maritz, 2004). In such cases, olderemployees may be pushed from traditionallabour markets by factors such as em-ployment equity, age discrimination, pro-motion and training, as well as a lack ofattractive employment options.

The second line of argumentation forincreasing interest in senior entrepreneur-ship is of particular interest to this re-search. This argumentation is based on thepromotion of entrepreneurship in older agesegments as a prospective policy option(Kautonen, et al., 2014). The objective

here is to increase entrepreneurial inten-tions; one’s desire to own one’s own busi-ness or to start a business (Bae et al.,2014). Here the objective is to prolongworking lives of older people, reduceolder-age unemployment, and increase the

social inclusion of older individuals(Kautonen et al., 2008). Botham andGraves (2009) expand the objective to en-hance the innovative capacity of the econ-omy by employing the human and socialcapital of mature individuals (Terjesen,2005) through new innovative start-ups. InAustralia, the first line of argumentationbears well (push and pull arguments), yetthe latter argumentation of policy implica-tions is distinctively lacking.

One of the most important determi-nants of business start-up activity by olderpeople not captured by this push-pullmodel is health (Halabisky et al., 2012).As people age, the risk of their health dete-riorating increases, which impacts theirlifestyle and desire to put energy into start-ing a business (Curran and Blackburn,2011). Health insurance also plays a sig-nificant role and being covered by aspouse’s insurance scheme increases thelikelihood of moving into self-employment(Karoly and Zissimopoulos, 2004).

The aim of this paper is to provide anoverview of the research on senior entre-preneurship and propose initiatives to en-hance entrepreneurial activity in this agegroup within an Australian context. Thepurpose is to enhance entrepreneurial in-tentions and self-efficacy in mature-agedindividuals (Maritz & Brown, 2013a). Thisis of particular interest to policy providers,

the supply chain and entrepreneurship eco-system (Isenberg, 2011) of the proposedinitiatives. We proceed with an overviewof entrepreneurship activity in Australia.

Entrepreneurship in Australia


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Entrepreneurship has been regardedas crucial for economic well being, andentrepreneurial activity in new and estab-lished firms drives innovation and creates

jobs (Maritz and Donovan, 2014). Entre-preneurship is not only a driving force for

job creation, competitiveness and growth,but it also contributes to personal fulfil-ment and the achievement of social objec-tives (Flash Eurobaramoter 354, 2013).Within Australia, entrepreneurship fuelscompetitiveness thereby contributing indi-rectly to market and productivity growthalong with improving competitiveness ofthe national economy (Steffens et al.2012). With a total entrepreneurial activityrate (TEA) of 10.5% in 2012, Australiaranks second only to the United States

among the innovation-driven (developed)economies (GEM 2013). The reasons forsuch high levels of activity are predomi-nantly founded as a combination of busi-ness opportunities and entrepreneurialskills. Furthermore, a large proportion ofthe Australian population report that highmedia attention for entrepreneurship pro-vides successful role models for prospec-tive entrepreneurs (Steffens et al., 2012).Figure 1. represents TEA in 54 participat-ing countries, between factor-driven, effi-ciency-driven (developing) and innovation- driven (developed) economies. Australiaactivity rates are depicted 2nd from ex-treme right.

Despite relatively high TEA rates,Australia’s Global Innovation Index Rank-ing (2013) is somewhat lagging at 53%,significantly below innovation - drivenecon-omies such as Switzerland, Sweden,UK, Netherlands, UK, Finland, HK, Sin-

gapore, Denmark and Ireland (GII, 2013).Cognisance of entrepreneurship and inno-vation being two distinctively differentdisciplines (Maritz and Donovan, 2014),reasons for Australia’s variation betweenthe two is primarily due to lower levels ofwealth creation and investment in innova-tion (Stephens et al., 2012).

Entrepreneurship and Age

Whilst early-stage entrepreneurship ismore common in the mid-career ages of25-54, there are notable differences be-

tween other innovation-driven economies.

The Australian TEA rate is relatively lowbetween young adults (18-24 years), butsharply increases in the 25-34 year old agegroup. The TEA rate for middle-agedgroups (35-44 years and 45-54 years) issurprisingly constant across these agegroups. This is positive for Australia, as itsignals low age discrimination with respectto entrepreneurial pursuits (GEM 2013).Australia has an 8% TEA rate for the age

group 55-64, approximately 3 percentagepoints above the average of innovation-driven economies. Interesting on an inter-national and Australian front, is that thissector represents the fastest growing seg-ment of entrepreneurship (Mayhem, 2014).Overall, this is a good indication of seniorentrepreneurship activity, yet opportunisticwhen we consider, for example, higherrates in the UK and USA. In Chile, Repub-lic of Korea, Singapore, Netherlands, UKand USA, the 35-44 year olds had thehighest level of participation in entrepre-neurship amongst all age groups; testi-mony of their initiatives to promote entre-preneurship and enterprise behaviour inmature age groups (Xavier et al., 2012).Australia’s ageing population is of rele-vance, and discussed in Section 3.

Australia has a significant lack of en-trepreneurship policy and initiatives aimedat the 50+ market, which further provides

opportunity to enhance this activity evenfurther. Higher rates in the UK, for exam-ple, may well be as a result of sustainedentrepreneurship initiatives aimed at this


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Figure 1: Total early-stage entrepreneurial actiity

Source: Steffens et al., 2011

market. Examples include (1) Best Agers,(2) the fe:male scheme, and (3) PRIME(Halabisky et al., 2012). Of significance isPRIME, an initiative aimed at unemployedpeople over the age of 50 who want to finda way back to work through self-employment (www.prime. org.uk ). A so-cial entrepreneurship endeavour; designed

to engage, empower, connect and celebrateseniors who choose to become entrepre-neurs was developed by Senior Entrepre-neurship Works at the Lawrence N. Fieldfor Entrepreneurship, NY. In particular,this social entrepreneurship platform de-veloped entrepreneurship education andtraining specifically targeted at the 50+age group (Isele, 2014).

Figure 2 represents age distribution ofTEA activity in Australia. Please refer to

Figure 5 for a more specific notation byage and gender.

Australia Framework Conditions

The Global Entrepreneurship Monitor(GEM 2012) conceptual model identifies 9institutional or framework conditions, con

sisting of (1) finance and entrepreneur-ship; (2) entrepreneurship policies; (3) na-tional policy regulation; (4) governmentprograms; (5) entrepreneurship education(primary and secondary); (5) entrepreneur-ship education (post school); (6) R&Dtransfer; (7) professional and commercialinfrastructure; (8) internal market dynam-

ics, openness and physical infrastructure;and (9) cultural support for entrepreneurs.These conditions in turn impact on thequantity and quality of entrepreneurial ac-tivity (Xavier et al, 2012).

Exploratory studies have been con-ducted in Australia using these conditions,however such findings require validation.Compared to other innovation - driveneconomies, Australia scores high in entre-preneurship education, cultural support for

entrepreneurship and internal marketopenness (Steffens et al. 2012). This studyproposes validation of such conditions in asenior entrepreneurship context; includingentrepreneurship profile factors such asattitudes, activity and aspirations. Figure 3.depicts the GEM Model, to be conceptual-ised and developed for this research. The


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institutional conditions resonate well withthe unique caveats of senior entrepreneur-ship highlighted in this report. Of particu-lar significance within as Australian con-text, is the study of entrepreneurial em-ployee activity (EEA). This refers to the

fact that entrepreneurial activity is not re-stricted to new firms but can also be at-tributed in already established firms. Aus-tralia’s EEA rates highly, similar to theUS, but well behind the levels of Sweden,Denmark and Finland. From a corporateventuring perspective, these Scandinaviancountries exhibit prominent innovationindex measures; hence rank high in em-ployee entrepreneurial behaviour (GEM2012). Nonetheless, High EEA rateswithin Australia present a dynamic and

diverse nature of entrepreneurial activitywithin the Australian economy. The FlashEurobarometer (2013) is a similar entre-preneurship measurement frame-work,significant to the European Commission.Australia has unique characteristics re-garding its ageing population, discussed inthe next section.

Australia’s Aging Population

Australia and many other OECDcountries have an ageing population. Theolder population provide a wealth of skills,knowledge, wisdom and mentorship. Chal-lenges associated with the ageing popula-tion include Australia’s widening retire-ment savings gap and rapidly escalatinghealthcare expenditure. This will changetheir lifestyles, the services they demandand the structure and function of the labourmarket (Hajkowicz et al., 2012).

Australia’s population, like that ofmost developed countries, is ageing as aresult of sustained low fertility and in-creasing life expectancy. The median ageof the Australian population has increasedby 4.7 years over the last two decades,

from 32,4 % in 1991 to 37.1 years in 2011(ABS, 2011). The future growth, distribu-tion and age structure of the population arekey factors underpinning many analyses oflong-term policy issues in Australia (ABS,2009). In addition to the future size of the

population, the most profound change thatis projected to occur is the ageing of thepopulation. This is characterised by anupward shift in the age structure, so theproportion of younger people declines asthe proportion of older people increases.The increase in an ageing population willbe accompanied by a sharply increasingnumber of older people. These changeshave a vital economic effect, particularlyon the future provisions of income support,health and aged care services (Productivity

Commission, 2012; Adair et al., 2013;Schofield et al., 2013; Kelly, 2011). Thesestudies identified a central part of the Aus-tralian governments’ strategy to managethe anticipated costs of an ageing popula-tion. Hood (2014) further suggests therewill be a real issue with taxation and futurehealthcare funding as Australia’s workingage population will be outnumbered byretirees and those close to retirement. Col-lectively, it is projected that Australiang-overnments will face additional pressureson their budgets equivalent to approxi-mately 6% of national GDP by 2060, prin-cipally reflecting the growth of expendi-ture on health, aged care and the Age Pen-sion (Productivity Commission, 2013).

Between 2012 and 2030, Australians be-tween the age of 0-49 will decline by4,1%, representing 63,5% of the popula-tion. Those aged 50+ will increase by

4,2% over the same period, representing36,5% of the population (ProductivityCommission, 2013a). This paces emphasison the necessity to increase the workinglives of this increasing aged population.


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Figure 2: Age distribution of early-stage entrepreneurs


Figure 3: The GEM Institutional conditions Model



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Labour participation rates declinesignificantly after the age off 55 years; forexample, a 10% reduction between the ageof 55 and 60; and 20% reduction over thenext five-year range (Productivity Com-mission, 2013). As such, their require-

ments for increasing social benefits willincrease over this period, necessitating al-ternate income sources. Senior entrepre-neurship is proposed within this context(Kautonen, 2012). Even though there arefinancial benefits of older worker partici-pation in the workforce, some people over61 may not be able to work because ofchronic health conditions (Schofield, et al.,2014) and other social capital issues ofageing members (Menyen and Adair,2013). Figure 4 provides a demographic

profile of the population structure (1991and 2011). Noteworthy is the increase ofthe ageing population of 50+ year olds,and the decrease of the younger popula-tion, those below 44 years old.

Within the broader policy context,several policies aim to make labour mar-kets more receptive to older workers. TheGovernments have implemented variouspolicies to increase training and employerdemand for such workers, and to discour-age age discrimination (Hajjkowicz et al.,2012; Productivity Commission, 2012).An example includes the Experience +program, which provides advice and fi-nancial support to employers to assist themin the recruitment of mature age workers(DEEWR, 2013). Other initiatives includeflexible working hours APEPSA, 2011),increasing the age limit for voluntary con-cessionary superannuation (AHRC, 2012)and statutory workers’ compensation

schemes (AHRC, 2012). The effectivenessand efficiency of such programs are how-ever uncertain (Productivity Commission,2013). Relevance to senior entrepreneur-ship may be similar incentives for agedentrepreneurs involved in start-ups.

An interesting international initiative;that of the OECD and European Union, isthe declaration of 2012 as the EuropeanYear of Active Ageing and Solidarity be-tween Generations. Three dimensions ofactive ageing included (1) active ageing in

employment, (2) participation in societyand (3) independent living (EC, 2012).

This initiative provided the ageingpopulation the opportunity to (1) stay inthe workforce and share their experiences,(2) keep playing an active role in societyand (3) live as healthy and fulfilling livesas possible (Halabisky et al., 2012).

Another important issue related to theageing population, are the implications of

reach and communications with the over50 year olds. It is a fallacy that this agegroup are not internet and technologysavvy, with the following Australian statis-tics as examples, (1) the 50+ age groupconstitutes over 38% of the Web’s use(WSL), (2) two-thirds of Australians 50+by from e-retailers online (ThirdAge), (3)89% of senior 65+ have personal emailsand use them regularly (Nielsen), (4) 36%of adults 50+ own a smartphone (Pew), (5)44% of smartphone owners 50+ access theinternet or check email daily from theirdevices (Pew), (6) adults 50+ account for34,7% of current tablet users (ComScore),and (7) 71% of all 50+ internet users en-gage in social media (WSL). This informa-tion is particularly useful when adoptingpolicy initiatives directed at this age group,notwithstanding unique and niche initia-tives to reach senior entrepreneurs(Walker, 2004). Such initiatives may fur-ther be challenged by senior engagement

in the communities in which they resideand/or work (Menyen and Adair, 2013).

Despite these distinctive characteris-tics of the ageing population, there is awealth of research that reflects on specificsattributable to senior entrepreneurs. These


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nuances are discussed in the following sec-tion.

Senior Entrepreneurship Nuances

Senior entrepreneurship is a signifi-

cant phenomenon across the globe, withactivity rates of 8-16%, depending on theindices used (GEM 2012; OECD/EC.2012). Terms indicative of senior entre-preneurship include third-age individuals(Kautonen et al., 2014), mature age (GEM2012), late career (Zissimpoulos andKaroly, 2007) and older entrepreneurs(Weber and Schaper, 2004). There is alsosenior entrepreneurship significance re-garding gender and social imperatives(Terjesen, 2005), albeit outside the ambit

of this research. We now explore a fewprominent nuances from the literature.

Scope of Senior Entrepreneurship

The depth of entrepreneurship activ-ity and prevalence research has shown thatolder people are significantly less likely toengage in entrepreneurial activity thanyounger people. GEM (2012) identifiessuch prevalence, as depicted in Figure 2.Maritz (2004) identified that necessity en-trepreneurship prevalence rates for entre-preneurs in the 55-64 year old range inNew Zealand were less than half theprevalence rates of entrepreneurs in theother age groupings (25-34 years and 45-54 years). Xavier et al. (2012) identifiedsimilar findings across different stages ofeconomic development, and Kautonen(2008) found that business start-up ratesamong the 50-64 year olds in Finland wereapproximately half of those in the 20-29

year age group in the period 2000-2006. Inthe UK, Curran and Blackburn (2001) re-vealedthat a fairly small percentage of therespondents expressed any interest in busi-ness start-ups; indicating a negative rela-tionship between economic activity andage. The Eurobarometer (2009) datasetrevealed the entrepreneurial activity rates

in the European Union (35 countries).Third-aged (senior) early-stage activityentrepreneurs represented less than half ofthe other age groups. Despite the inverserelationship between entrepreneurship ac-tivity and age, many seniors still partici-

pate in start-ups. This is particularly so inserial entrepreneurs (Kautonen, 2008). Theimplication of labour market declines afterthe age of 55 indicates that policy makersshould target those in the 50s age group inparticular because this group has high la-bour market participation and will be eas-ier to convert into self-employment thantrying to bring people back into the labourmarket after retirement (Halabisky et al.,2012).

The bell shaped curve in Figure 5 reso-nates well with Figure 2 (age distribution)and Figure 4 (population structure), de-spite using participation rates from theEuropean union. In essence, the Figureshows the decline in entrepreneurial activ-ity after age 50+. It is however importantto be mindful of the gender differences inlabour market participation (Figure 5), par-ticularly the largest gap between men andwomen in the 55-59 and 60-64 age groups(17%). Although the gap closes in theolder age groups, the participation rate formen is nearly double that of women. Hal-abisky et al. (2012) suggest that older menare more likely to consider entrepreneur-ship because they have a stronger attach-ment to the labour market.

We now further explore reasons whyentrepreneurial activity rates decline withage.

Entrepreneurial Activity and Age

Many researchers have studies thatempirically examined the effect of age andentrepreneurial activity (Kautonen andDown, 2012; Levesque and Minniti, 2006;Small, 2011; Halabisky, 2012). Cogni-sance is taken that it is difficult to isolate


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Figure 4: Population Structure, Age and Sex (1991 and 2011)

Source: 31010.0 Australian Demographic Statistics, June 2011

Figure 5: Labour force participation rates by gender and age, 2011

Source: Eurostat, Labour Force Survey.


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age as an indicator, as broader socio-economic factors play a substantialrole.There is always the notion of futurepayments and income over time, risk asso-ciations, opportunity cost of time and func-tion of age when comparing various life

stages and activities. Such activitiesinclude retirement, entrepreneurial en-deavours and waged labour (Levesque andMinniti, 2006). A further implication ofentrepreneurial activity declining with ageis that senior entrepreneurs tend to propor-tionally employ less staff than other agegroupings (Kautonen and Down, 2012).Weber and Shaper (2004) identified theage and socio-economic conundrum;whereby socio-cultural factors such as ad-vanced age is culturally perceived as an

asset or a burden. Such factors are likely toaffect older individuals’ interest in entre-preneurship. A Canadian study (Uppal,2011) identified that higher-income sen-iors are more likely to be self-employed; aclear reflection on funding requirementsfor senior start-ups. An interesting findingwas that senior’s self-employment is oftena family affair, in itself unique to this sec-tor of entrepreneurship activityThe promo-tion of entrepreneurship among older agesegments is a prospective policy option toprolong the working lives of older people,reduce older-age unemployment and en-hance the social inclusion of older indi-viduals (Kautonen et al., 2008). Older peo-ple are now living longer than previousgenerations and have different decisions tomake about their career and lifestyle.Many older people may wish to remaineconomically active in order to maintain alifestyle (Walker and Webster, 2007) orchoose self-employment as a flexible al-

ternative to organisational employment(Curren and Blackburn, 2001). The poten-tial for continued or increased earnings isparticularly important for the ageing popu-lation with lower levels of investments andsavings (Halabisky et al., 2012). Remain-ing active and contributing to society hasthe additional benefit of improving an

older person’s quality of life and reducingtheir risk of landing in poverty (Jayo et al.,2010).

From an economic perspective, main-taining labour market attachment or pro-

moting start-ups of the ageing populationmay be able to, in the short-run, offset ex-pected labour and skill shortages in certainregions in Australia and facilitate a trans-fer of human capital between generations.Other benefits include increased tax reve-nues to potentially offset rising social andhealth care costs (Halabisky et al., 2012).Whilst the inverse relationship betweenage and entrepreneurial activity in not dis-puted, we find it appropriate to explorebarriers and advantages for senior entre-

preneurship.

Barriers to Senior Entrepreneurship

There is a lack of empirical data thataddress barriers to older people staringnew businesses (Kautonen, 2012). Compu-tations based on the Eurobarometer (2009)captured respondents’ perceptions con-cerning barriers to starting a business. Thethree prominent barriers included lack offinancial support, lack of information onhow to start a business and complexity ofadministrative procedures. Senior entre-preneurs perceive all three barriers lessfrequently than the other-age entrepre-neurs. The reason may be higher levels ofhuman, social and financial capital amongolder individuals accumulated over theirlong working careers (Hatak et al., 2013).In a study by Kautonen et al. (2008), socialbenefits were found to be a barrier. In suchcases, when senior entrepreneurs received

income from their ventures, social benefitsoften diminish. In addition, older entrepre-neurs required unique and specific types ofsupport and information; not meeting ge-neric local government support initiatives.This includes communication, media, mes-sage and mentorship initiatives. From ahuman capital perspective, senior entre-


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preneurs skills may be out-dated, and theymay have lower levels of digital literacy(Halabisky et al., 2012).

A qualitative study by Kibler et al.(2012) identified barriers to senior entre-

preneurs, including ageism, informationand regulations, resources and social envi-ronment. Regarding ageism, many respon-dents felt that society still has the percep-tion that older people should not be in-volved in start-ups and entrepreneurial ac-tivity. Perceived age discrimination wasseen as an abstract barrier and a series ofdiscrete external practices. This often im-peded the ability of senior entrepreneurs todevelop a market and to sieze new oppor-tunities, further hampering development of

their business. Regarding information andregulations, respondents advised of limitedaccess to benefits and clarity on regula-tions was requested. From a social capitalperspective, they also found that older en-trepreneurs that have already retired canfind it more difficult to rebuild the net-works that they had during their career,particularly when they operate smallhome-based businesses. Communicationand media was perceived another hurdle,whereby new media avenues (such asinternet and online media) were geared upto new tech-savvy young entrepreneurs.Regarding resources, there was no surprisethat financial resources were perceived asone of the main barriers to establishing andmanaging businesses. Financial institu-tions were also reported as being scepticalto provide finance to older entrepreneurs.

Acquisition of social capital was alsoseen as a deterrent, particularly when en-

tering a new industry or innovative busi-ness. The majority of respondents identi-fied finding suitable mentors as a barrier tostarting a new business. From a social per-spective, it was found that family andfriends were more supportive of youngentrepreneurs. In many cases, starting up anew business by older entrepreneurs was

seen as a risky and foolish alternative bythe social environment.

Halabisky et al. (2012) identified aunique set of barriers to entrepreneurshipgiven their age, inclusive of (1) declining

health, (2) financial disincentives, (3) agediscrimination, (4) opportunity cost oftime and (5) lack of awareness.

When it comes to managing thegrowing business, there are many ques-tions regarding the ability of senior entre-preneurs to maintain and grow their busi-nesses. Many of the barriers reportedabove come to play in this stage of the en-trepreneurial process. Evidence on busi-ness performance by senior entrepreneurs

is ambiguous (Halabisky et al., 2014), withevidence from the UK that firms run byolder people have higher survival rates(Cressy, 2006), but other evidence fromFinland suggests that they have lower sur-vival rates (Kautonen, 2008). Other studiesfind that firms run by senior entrepreneursare less profitable, have lower levels ofsales and income and generate less em-ployment growth (Halabisky et al., 2012).

Another interesting avenue is howolder people can support entrepreneurshipin other ways beyond business start-ups.Due to the social capital gained over along working career, many older peoplehave significant skills and value to add.Roles include that of business coach, men-tor and in the case of wealthier individuals,as business angels (Kautonen, 2012).There is again limited research regardingthe extent and effectiveness of such activ-ity, but anecdotal evidence suggests that

many governments have programswhereby they promote older aged indi-viduals as mentors and coaches (Kibler etal., 2012). From this positive perspective,we explore advantages for older entrepre-neurs.


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Advantages For Senior Fntrepreneurship

Despite entrepreneurial activity ratesfor senior entrepreneurs being less thanhalf that of other age groups, prior re-search suggest that mature individuals are

actually more capable of starting and man-aging a business than their younger coun-terparts (Weber and Schaper, 2004). A re-cent empirical study by Kautonen andMinniti (2014) found that ageing well hasthe potential to influence the market forlabour by altering the employment behav-iour of individuals approaching retirement.Older entrepreneurs can posses advantagessuch as more developed networks, sub-stantial industry experience, superior tech-nical and managerial skills and most often,

a stronger financial position (Kautonen,2012). Lechner and Dowling, 2003) postu-late that networks may assist senior entre-preneurs in mobilising resources, obtainingsupport, creating legitimacy during start-up and growth, and establishing viablebusiness relations. Technical, managerialskills and industry knowledge not only en-hance human and social capital, but alsomay be an avenue to identify opportunitiesand make creative and innovative deci-sions (Maritz and Brown, 2013). Wealth insenior entrepreneurs may allow resource tofund ventures, but can just as well be usedto fund retirement, serving as a disincen-tive to entrepreneurship (Singh and DeNo-ble, 2003). Overall, anecdotal evidencepoints that older people are in a better po-sition to start a business than younger in-dividuals. Furthermore, senior entrepre-neurs place significant value on non-pecuniary benefits of self-employment,such as lifestyle and health preferences

(Platman, 2004).

Halabisky et al. (2012) postulate thatolder entrepreneurs can possess advan-tages when starting a business such as (1)more developed networks, (2) a highertechnical and managerial skills level, (3)more work and industry experience and (4)

a stronger financial position. The paradox,however, is that these advantages diminishover time while older people are out of thelabour market. Despite barriers and advan-tages to senior entrepreneurship, there isan opportunity to enhance entrepreneurial

activity in this age group. We now discusssuch policy implications.

Conclusions and Policy

Implications/Considerations

GEM (2012) findings suggest that acombination of business opportunities andentrepreneurial skills drive the quantityand quality of senior entrepreneurs. Thevisibility (particularly media) of entrepre-

neurship is likely to serve as a catalyst forstrong rates of entrepreneurial activity inAustralia (Steffens et al., 2012).

We apply Lundstrom and Stevenson’s(2005) framework of three factors that in-fluence entrepreneurial activity, relevantfrom a policy perspective. These includemotivation, skills, and opportunity. Moti-vation refers to the social value placed onentrepreneurship and its desirability andfeasibility as a career and employment op-tion; Skills refer to the technical, businessand entrepreneurial skills and know how;and opportunity refers to the favourabilityof the business environment for entrepre-neurship (Kautonen, 2012). Entrepreneur-ship policy needs to recognise that thereare some factors in the decision to start abusiness that cannot be changed, such asthe age of a person, their health or an indi-vidual’s preference for leisure over work.Therefore, policy should focus on contex-

tual factors that influence an older per-son’s decision to enter into self-employment (Halabisky et al., 2012).

Motivation

Australia, has recently experiencedmajor economic reforms; particularly in


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the manufacturing industry. Examples in-clude the discontinuation of production ofmotor vehicles by Ford, Holden and Toy-ota. Another significant economic blow isthe imminent redundancy of 3000 Qantasemployees. These huge redundancies will

have a significant negative economic ef-fect on productivity and lifestyle. Anecdo-tal evidence points that at least 40% ofthese redundancies come from ageing em-ployees (inclusive of early retirement ini-tiatives). It would thus be high on policyagenda to ensure that these individuals re-main economically active (Adair et al.,2013; Schofield et al., 2013; Kelly, 2011).One avenue is to enhance senior entrepre-neurship; to increase the number of olderpeople engaged in entrepreneurship.

An objective for motivation-orientedpolicy is increasing older peoples aware-ness of entrepreneurship as a late-careeroption (Kautonene et al. 2014). Anotherpotential specific target group for motiva-tion-oriented measures are older women,whose entrepreneurial activity rates aresignificantly lower than those of older men(GEM 2012; Kautonen, 2012; Terjen,2005). Another motivation-related objec-tive concerns removing ageist bias in sen-ior entrepreneurship; which requires thepromotion of the economic potential ofolder workers in general. PRIME is an in-dustry example of such proportion (Kauto-nen et al., 2011).Skills

Empirical and anecdotal evidencemaintains that older people are generallymore capable of starting and running abusiness than their younger counterparts

(see section 4). The examples providedabove indicate that there may be thousandsof skilled technical workers soon to bemade redundant. Honing on their skillsmay bear significant fruit for entrepreneu-rial activity. Research suggests that train-ing and education may give mature indi-viduals the skills to start and remain self-

employed (Uppal, 2011). . Skills-orientedmeasures are common in policy initiativesworldwide, including training and mentor-ing as integral components. Examples ofskills-oriented initiatives include PRIME,SCORE, NEIS and female (Kautonen,

2012).

Opportunity

A positive entrepreneurial environ-ment provides an appropriate regulatoryframework relevant for (potential) seniorentrepreneurship. Such a system does notpunish entrepreneurs for business failureand government should review regulationsto make sure that they do not set disincen-tives to enterprising activity (Kautonen,

2012). There is only one program in Aus-tralia targeted at opportunity-oriented sen-ior entrepreneurship. The New EnterpriseIncentive Scheme (NEIS) features a dedi-cated course targeted at socially disadvan-taged older people. From a finance per-spective, PRIME is an example of an op-portunity-oriented initiative, whereby thescheme provides micro-finance loans(Kautonen et al., 2011).

Halabisky et al. (2012) postulate ini-tiatives and schemes designed specificallyto support older people in Business start-up activities. These include, (1) to promotethe benefits of entrepreneurship, (2) im-prove entrepreneurship skills with training,(3) develop and support networks, (4) im-prove access to funding, and ensure thereare no disincentives for entrepreneurshipin social support systems.

Policy Recommendations

A principal concern for policy makersis to appreciate the scale of the policy is-sue and the appropriate scale of an inter-vention. To do so, policy makers need tounderstand the target groups; not only whoand how many, but also the variation be-tween the different segments within the


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target group (Halabisky et al., 2012).Strong policy recommendations regardingsenior entrepreneurship require cautionand careful formulation. The phenomenonof senior entrepreneurship is still under-researched and there is a lack of empirical

evidence on the subject matter (Kautonen,2012). However, policy intervention couldmake a positive difference in the followingareas:

Creating positive awareness of en-trepreneurship as a late - career optionwith the aim of educating and trainingsenior entrepreneurs, as well as differentstakeholder groups in order to removenegative age-biased or gender-based biasas a potential barrier to senior entrepre-

neurship Enhance entrepreneurial intentionsand self-efficacy in the 50+ age-group

Developing specific entrepreneur-ship education and training interventionsspecific to the needs of senior entrepre-neurs Avoiding excessive jargon in com-munication and information and the wayprocedures and regulations are commu-nicated and targeted to this age group Training mentors, facilitators andenterprise support officials in appropri-ate communication skills; acknowledg-ing older entrepreneurs experience andskills; and avoiding unnecessary redtape Encouraging skilled and experi-enced older individuals to partake inmentorship and coaching activities. Theyoften have the human and social capital,business experience, empathy and skillsto add significant value to entrepreneurs;

whilst being senior entrepreneurs them-selves Ensuring that start-up financingschemes do not discriminate againstolder entrepreneurs Reviewing the regulations relatingto tax systems and social benefit systems

to ensure that they do not set a disincen-tive to senior entrepreneurship Legislative support mechanisms forstart-up senior entrepreneurs, along thelines of employment incentives similarto AHRC and APRA (2012).

Cognisance must be taken what suchpolicy initiatives can actually achieve. Inthis instance, it is important to distinguishbetween economic and social objectives.An economic objective should be to pro-vide a positive and supportive environmentwhere those older people with more entre-preneurial ambitions can thrive. This in-cludes moving people from social supportto self-employment, or prolonging ageingemployees’ working careers through busi-

ness start-up, generating added value tosociety (Halabisky et al., 2012). A socialobjective may be to get economically inac-tive people over the age of 50 into work, toremain economically active in ways thatsuit them best whilst exploiting their po-tential for entrepreneurship. This may in-clude engagement in community and so-cial activities as an important componentof productive ageing (Menyen and Adair,2013). Promoting senior entrepreneurshipmay be part of the portfolio of activities totackle the problem of older un- and under-employment as a broader social and educa-tion issue.

In considering the introduction of po-tential inclusive senior entrepreneurshipinitiatives, it is important to consider theirrelevance to the needs and barriers to agedpeople (Thompson et al., 2013). An exam-ple would be using appropriate media andintegrated marketing communications to

appropriately communicate with potentialsenior entrepreneurs. Furthermore, entre-preneurship education and training shoulddeliver outcomes around specific peda-gogy, audience, objectives, content andcontext (Maritz and Brown, 2013).


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Limitations of this study are linked tothe absence of a depth of knowledge andlack of substantial empirical studies in thesenior entrepreneurship domain. To thebest of our knowledge, there are no em-pirical studies in Australia regarding this

phenomenon; which gives rise to futureresearch collaboration and avenues. It isdeemed essential to conduct empiricalvalidation of this phenomenon in Austra-lia. Phase 2 of this research will involvemulti-methods of quantitative and qualita-

tive analyses using prominent databases tosignify senior entrepreneurship in Austra-lia. The research is, however, governed byan overriding aim to recommend and de-velop policy recommendations to activeageing, extending work lives and enhanc-

ing senior entrepreneurship. Further inves-tigation is required to enhance the entre-preneurship ecosystem (Isenberg, 2011).within the senior entrepreneurship contextin Australia.

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INNOVATION CAPABILITIES, SERVICE CAPABILITIES ANDCORPORATE PERFORMANCE IN LOGISTICS SERVICES

Li-Hsing HoAssociate Professor, Ph. D. Program of Technology Management,

Chung Hua University, Taiwan

Pi-Yun Chang*Doctoral Candidate, Ph. D. Program of Technology Management,

Chung Hua University, Taiwan

Lecturer, Department of Finance, Chihlee Institute of Technology, Taiwan*Corresponding Author: [email protected]

Abstract

This study aims to identify the factors that contribute to innovation capabilities, service capa-bilities and corporate performance in logistics services. The author proposes a model, inwhich innovation capabilities and service capabilities are assumed to increase the extent towhich corporate performance in logistics services. Furthermore, innovation capabilities mayincrease service capabilities. From the results, the major findings of this study are as the fol-lowing: Firstly, innovation capabilities and service capabilities, relate positively to corporateperformance. Secondly, innovation capabilities enhance service capabilities. Thus, the find-ings provide managers in the logistics services with valuable insights that firms can increasetheir competitive advantage through enhancing logistics capabilities.

Keywords: innovation capabilities, service capabilities, corporate performance, logisticsservice providers.

Introduction

In today’s dynamic and time-basedcompetition marketplace, global opera-

tions require the integration of globalmanufacturing with logistics service capa-bilities and transport support for efficientand effective business performance (Bow-ersox and Closs, 1996). That is to say, theyrequire integrated transportation providersthat offer one-stop shopping for multimo

dal capacity linking all regions of theworld. The changing structure of globalmarkets and consequently demands ofshippers have forced service providers to

rethink their business processes to bettersatisfy shippers’ needs. They have had tobecome involved in logistics managementin order to more effectively manage andcontrol transport chains and seamlesslyintegrate global production systems.


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Though cooperative operating strate-gies may be viewed by shipping firms as ameans to internally generate corporategrowth, they may not always be applicableto shipping firms wishing to improve theirmarket share and competitiveness (Panay-

ides, 2003). Furthermore, the concentra-tion resulting from both horizontal andvertical integration in the logistics serviceindustry has also led to poor financial re-sults and increased the pressure (Notte-boom and Winkelmans, 2001). As a result,the increasing competition will continue todrive logistics firms to emphasize theirorganizational capabilities in order to sur-vive and grow in the markets (Lu, 2007).Therefore, it is increasingly important forlogistics service firms to build logistics

service capabilities that are inimitable anddurable to reduce cost and increase servicesatisfaction (Lai, 2004; Tseng et al., 2005).

Logistics capability which encom-passes a number of aspects relating to sup-ply of services, particularly has been rec-ognized as a crucial source to lead superiorperformance (Bowersox and Closs, 1996;Kim, 2006; Shang and Marlow, 2005;Tracy et al., 2005). Further, the applicationof logistics management has been reportedto contribute to logistics service firms’more efficient, effective and economic op-erations and, more importantly, to providevalue-added services to customers (Waru-savitharana, 2004). However, firms’ logis-tics service offering and quality are rela-tively easily imitated by competitors (Sla-ter, 1996). Thus, in today’s dynamic mar-ketplace, it is imperative for logistics ser-vice firms to integrate innovation capabili-ties into their logistics service activities.

Through learning-by-doing, logistics ser-vice firms can build their core capabilitywhich will be extremely difficult for com-petitors to buy and imitate. In addition,Langley et al.’s (2006) report has indicatedthat service offering and innovation capa-bilities are key challenges for the logisticsindustry in future.

Many studies have explored logisticsservice attributes in the shipping industry.Such studies have identified several impor-tant customer service dimensions, namely:price, transit time, value-added services,equipment availability, carriers’ reputa-

tion, responsiveness, and cargo tracing.However, few studies have assessed logis-tics service attributes from a capability-based perspective. The competitiveness ofa logistics service firm is determined notonly by its services offering to shippers butalso its capabilities to add value to clients.Although an understanding of firms’ capa-bilities is crucial for logistics service firmsto achieve superior performance and sus-tainable competitive advantage, to ourknowledge, apart from Jenssen and

Randøy (2006), and Lu (2007), who inves-tigated application of the capability con-cept in the shipping industry, no otherstudy has empirically explored logisticsservice capabilities and innovation capa-bilities in the logistics service context. Ac-cordingly, this study focuses on the inte-gration of innovation capabilities in thelogistics service activities of Taiwaneselogistics service firms and develops a con-ceptual model to examine the effects ofservice capabilities and innovation capa-bilities on firm performance based on theresource-based view (RBV) of the firm.

Literature Review andDevelopment of Hypotheses

Innovation Capability

A large number of empirical studieshave found innovation capability to be acrucial source of firms’ competitiveness.

In particular, innovation capability canimprove logistics firms’ service differen-tiation and increase knowledge of cus-tomer logistics requirements. Though in-novation capability contributes to firm per-formance and competitive advantage, itssuccess appears to depend upon the re-sources and the capabilities in the organi-


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zation to manage them. Typically, re-sources include tangible and intangibleresources, such as technology, equipment,knowledge, organizational culture, strate-gic orientation, and relationship network(Bessant and Tidd, 2007; Chapman and

Soosay, 2003; Han et al., 1998; Hult et al.,2004).

Undoubtedly, innovation capabilitiescan make logistics service firms’ logisticsservice capabilities extremely difficult forcompetitors to imitate. While many studieshave demonstrated the effects of innova-tion capability on service quality (Panay-ides, 2006), few have examined the rela-tionship between innovation and servicecapability and firm performance. Hence, it

is worthwhile examining the relationshipbetween innovation capability and logis-tics service capability.

Some studies indicate that differentfirms focus on different types of innova-tion and this is associated with differencesin their performance. This implies that in-novation capability is a multidimensionalconcept. Some studies focusing on themanufacturing area have used object datasuch as patent or R&D expenditure tomeasure innovation capability (Sher andYang, 2005), while others have used per-ceptual measures (Hurley and Hult, 1998;Panayides, 2006). A scale commonly usedto measure innovation capability is drawnfrom Hurt et al. (1977) and slightly re-vised.

Service Capability

Logistics service is to add value di-

rectly by providing a number of serviceattributes to shippers, such as storage,cargo tracking, inland transport service,customs clearance service, consolidation,packing, labeling, assembly and documen-tation service (Lu, 2004). Lai (2004) de-fined logistics service capability as theability of logistics service providers to cre-

ate and deploy to satisfy the logistics needsof their customers in pursuit of better ser-vice performance. According to the re-source-based view of the firm, logisticsservice capability can be regarded as a po-tential source of superior performance and

sustainable competitive advantage. In thisstudy, logistics service capabilities areviewed as complex bundles of individualskills, assets and accumulated knowledgeexercised through organizational processesthat enable firms to co-ordinate logisticsactivities and make use of their resources.In other words, logistics service capabilityrefers to the ability of logistics servicefirms to manage and integrate processeswithin transport chains to provide one-stoplogistics services for enhancing competi-

tive advantage and superior firm perform-ance.

Lu and Yang (2007) evaluated keylogistics service capabilities for interna-tional distribution center operators in Tai-wan. Four key logistics capabilities wereidentified, namely, customer response, in-novation, economic scale, and flexible op-eration and logistics knowledgeability. Thecustomer response capability was per-ceived as the most important logistic capa-bility, followed by flexible operation andlogistics knowledgeability capability, in-novation capability, and economic scalecapability. Results also showed that logis-tics capabilities had significantly positiveimpacts on international distribution centeroperators’ competitive advantage and or-ganizational performance.

The development of logistics man-agement has forced logistics services firms

to develop their logistics service capabili-ties to meet customers’ requirements andenhance competitive advantage. Further,the literature review has indicated that lo-gistics service-related capabilities are rec-ognized as a key source of superior per-formance. Such review also provides this


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study with a theoretical foundation formeasuring logistics service capability.

Logistics Performance

Logistics models have predominantly

utilized two different performance meas-ures: cost and customer responsiveness(Beamon, 1999; Morgan, 2004). Costsmay include inventory costs and operatingcosts. Customer responsiveness measuresinclude lead time, speed and quality ofshipped, and fill rate. In addition, the linkin a supply chain that directly impacts cus-tomers is delivery (Gunasekaran et al.,2004). It is a primary determinant of cus-tomer satisfaction; hence, measuring andimproving delivery is always desirable to

increase competitiveness. According toStewart (1997), an increase in deliveryperformance is possible through a reduc-tion in lead-time attributes. Another im-portant aspect of delivery performance ison-time delivery. On-time delivery reflectswhether perfect delivery has taken place orotherwise and is also a measure of cus-tomer service level. A similar concept, ontime order fill, was used by Christopher(1998), describing it as a combination ofdelivery reliability and order complete-ness. Another aspect of delivery is the per-centage of finished goods in transit, whichif high signifies low inventory turns, lead-ing to unnecessary increases in tied upcapital. Various factors that can influencedelivery speed include vehicle speed,driver reliability, frequency of delivery,and location of depots. An increase in effi-ciency in these areas can lead to a decreasein the inventory levels.

Research Hypotheses

Innovation capability stresses the or-ganization’s ability to turn inventions ornew ideas into practice in the new product,service, or process fields. By integratinginnovation capabilities into logistics ser-vice activities, an effect of learning-by-

doing can make liner shipping firms’ lo-gistics service capabilities extremely diffi-cult for competitors to imitate (Slater,1996). Several studies have concluded thatinnovation in service or processes can cre-ate high service quality and better value to

customers, which, in turn improves firmperformance (Panayides, 2006; Richey etal., 2005; Tuominen and Hyvönen, 2004).

Clayton and Turner (2000) assertedthat process innovation can create betterrelative value to firms via the achievementof low relative cost and high relative qual-ity, which, in turn increases market share.Petroni and Panciroli (2002) and Richey etal. (2005) indicated that innovation capa-bility is positively related to firms’ opera-

tion service quality such as flexibility ofproduction and delivery times. Panayides(2006) also found that firms’ innovationcapability had a significantly positive im-pact on logistics service quality. Hence,logistics service firms can use innovationto improve their service process or to dif-ferentiate their logistics services. Based onthe preceding review of the literature oninnovation capability, this study hypothe-sizes that:

H1: The innovation capability has apositive effect on logistics servicefirms’ logistics service capability.

H2: The innovation capability has apositive effect on logistics servicefirms’ performance.

The logistics capability concept hasbeen discussed in several logistics studiesbased on the resource-based view and its

effects on firm performance have alsobeen demonstrated (Autry et al., 2005;Kim, 2006; Lai, 2004; Lu and Yang,2007). As regards logistics service capabil-ity, it is the ability of logistics service pro-viders to create and deploy to satisfy thelogistics needs of their customers in pur-suit of better service performance (Lai,


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2004). It has been argued in the logisticsand transportation literature that capabili-ties in services and operational dimen-sions, such as reliability of sailing, cus-tomer response, service reliability, value-added services, and information system,

are drivers for firm performance (Lai,2004).

The performance of these service ca-pabilities has been found to be positivelyrelated to firm performance. For example,Innis and La Londe (1994) found customerservice capability positively impacted oncustomer satisfaction, customer loyalty,and market share. Lai (2004) pointed outthat differences in service performanceexisted between different logistics service

provider types. In addition, Song andPanayides (2008) reported that informationintegration, relationship with shipping line,and value-added services had a signifi-cantly positive impact on firm perform-ance. Hence, based on the resource-basedview and the preceding review of the lit-erature on logistics capabilities and ship-ping service attributes, a logistics servicefirm with the ability to create and deployresources to satisfy customers’ logisticsservice needs will achieve superior per-formance. Accordingly, this study hy-pothesizes that:

H3: The logistics service capabilityhas a positive effect on logisticsservice firms’ performance.

Methodology

Quantitative Data Collection

Participants.

We identified a total of 500 LSPsfrom the Directory of the Taiwan LogisticsAlmanac, database of Taiwan YellowPages, and members of the Taiwan Asso-ciation of Logistics eover, Management in2013. We also cross-checked the survey

samples to avoid double mailings. In theend, we yielded 272 finished question-naires. Out of these, 251 were usable.

Measuring Tools.

The measurement instrument was de-signed based on various previous studies.All the questionnaire items were measuredon a five point scale. Respondents wereasked to indicate their level of agreementtoward each statement, from 1 (stronglydisagree) to 5 (strongly agree).

Innovation Capability.

As regards LSPs, innovation capabil-ity in this study was defined as the ability

of LSPs to turn inventions or new ideasinto practice in the new product, service,or process fields. We use and adjust themeasuring scales developed by Hurt et al.(1977), Lu and Yang (2007), and Panay-ides (2006). The measurement of innova-tion capability comprises 6 items.

Service Capability.

As regards LSPs, service capability inthis study was defined as the ability ofLSPs to create and deploy to satisfy thelogistics needs of their customers in pur-suit of better logistics performance. Weuse and adjust the measuring scales devel-oped by Kim (2006), Lai (2004), and Luand Yang (2007). The measurement ofservice capability comprises 9 items.

Corporate Performance.

Since the widely used operationaliza-tions of logistics performance is mainly“soft” (e.g. self-reported perceptual data)by nature, in contrast, the use of “hard”logistics performance measures (e.g. fi-nancial reports-based figures) is much lesscommon (Stank et al., 2001). Therefore,the evaluation of cost and customer re-


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sponsiveness in this study is from respon-dents’ (i.e., LSPs) perceptions of their lo-gistics performance. We use and adjust themeasuring scales developed by Coyle et al.(2003), and Voss et al. (2005). The meas-urement of logistics performance com-

prises 6 items.

Purification and Reliability of

Measurement Variables

To purify the measurement scales andto identify their dimensionality, principalcomponents reliability test with Varimaxrotation was applied to condense the col-lected data into certain factors. After reli-ability test, we used item-to-total correla-tion and internal consistency analysis

(Cronbach’s alpha) to confirm the reliabil-ity of each research factor. According toRobinson and Shaver (1973) if α is greaterthan .7, the variable has high reliability,and if α is smaller than .3, it implies thatthere is low reliability. The reliability offour latent variables was investigated bycalculating Cronbach’s alpha. The range ofthe values was between .81 and .90, whichindicated all measures were quite reliable.

Structural Equation Model

In order to find out the relationship inthe whole research model in this study, astructure equation model (SEM) was used.The criteria of Chi-square, GFI, AGFI,CFI, RMR, and RSEMA were used toevaluate the overall goodness of fit of themodel. According to Hair et al. (2010), the

value of overall fit of a hypothesizedmodel can be regarded as appropriatelysignificant when each criteria Chi-squareis small (p value>.05), and fit indices suchas the ratio of Chi-square to degrees offreedom (Chi-square/d.f.≤2); goodness of

fit index (GFI>.9), and adjusted goodnessof fit index (AGFI>.9); root mean squareresidual (RMR


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The square roots of average varianceextracted (AVE) are given on the diagonal.The correlation coefficients of constructsare given under the diagonal. transportservices, and warehousing and storage ser-vices, 50.5 % of respondents were from

freight transport services, and 45.8 % fromwarehousing and storage services. 14.6 %of sampled firms had over 1000 employ-ees, whereas 42.2 % of sampled firms hadless than 100 employees. In the modalclass most sampled firms employed be-tween 101 and 500 (29.4 %) full-timeworkers, 13.8 % employed between 501and 1000. 27.5 % of respondents reportedthat their firms’ annual revenue was be-tween NT$ 101 million and NT$ 1,000million, while 50.5 % of respondents’

firms’ annual revenue was NT$ 100 mil-lion or less.

Assumption Tests

The hypotheses in this study weretested by using Structural Equation Model-ing. The resulting measurement model hasX2/df equal to 1.63 and all values in themodel reflect acceptable fit of the data. Forfinalized model, standardized path coeffi-cients and significance are as below: First,we find support for H1-H2. Antecedents ofccorporate performance, including innova-tion capabilities (β=0.36, t-value=3.27,p=.001 < .01), and service capabilities(β=0.33, t-value=1.94, p=.001 < .01), bothpositively relate to ccorporate perform-ance. Regarding the decedents of ccorpo-rate performance, the hypotheses H3 isalso confirmed. Service capabilities(β=0.41, t-value=5.17, p=.001 < .01) wasfound to be positively related to ccorporate

performance. Conclusion and Future Re-search

The findings of this study providesome guidance for logistics service firmsto develop logistics service capability andinnovation capability. Research findingsreveal that logistics service capabilities

and innovation capabilities are crucialsources of superior performance. It istherefore necessary for shipping managersto assess strengths and weaknesses in theircapabilities relative to their competitorsand to deploy resources and constantly en-

hance their firms’ logistics service capa-bilities and innovation capabilities to gaincompetitive advantages.

Further, logistics service capabilityhas found to have a positive effect on firmperformance. This study finding thus sug-gests logistics service firms have to im-prove their logistics service capabilities interms of logistics value-added service ca-pability, service reliability capability, rela-tionship building capability, and informa-

tion integration and flexibility capability.More specifically, logistics service firmscould first to improve knowledgeability ofsales personnel, cargo safety, accuracy ofdocumentation, reliability of advertisedsailing schedules. Mor logistics servicefirms should not only build good relation-ships with customers and downstreamcompanies but integrate their informationsystems with their supply chain partners.

Finally, this study provides a generalframework for identifying key resourcesand logistics service capabilities based onfirms’ logistics service activities. Suchframework can help shipping managers toimprove their understanding of logisticsservice capability and innovation capabil-ity and identify how such capabilities mayaffect firm performance, hence developeffective logistics strategies.


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References

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Business Logistics 26(2), 165-182.

Beamon, B.M., 1999. Measuring supplychain performance. InternationalJournal of Operations & ProductionManagement 19(3), 275-92.

Bessant, J., Tidd, J., 2007. Innovation andEntrepreneurship. John Wiley &Sons, NJ.

Bowersox, D.J., Closs, D.J., 1996. Logis-tics Management: the Integrated Sup-ply Chain Process, International Edi-tions. McGraw-Hill, Singapore.

Chapman, R.L., Soosay, C., 2003. Innova-tion in logistics service and the newbusiness model: a conceptual frame-work. International Journal of Physi-cal Distribution & Logistics Man-agement 33(7), 630-650.

Christopher, M., 1998. Logistics and Sup-

ply Chain Management: Strategies forReducing Cost and Improving Ser-vice, 2nd ed. Financial Times-PitmanPublishing, London.

Clayton, T.,

Documents

International Journal of Organisational Innovation Final Issue Vol 7 Num 3 January 2015