UNIVERSITA DEGLI STUDI DI NAPOLI PARTHENOPE

When Innovation Resides Outside The Firm Too: The Case Of Roland Online Community

Alberto Francesconi Università di Pavia

afrancesconi@eco.unipv.it

Claudia Dossena Università di Pavia

claudia.dossena@eco.unipv.it

TRACK 01 ICT GENERATION: NEW WAYS TO WORK AND INTERACT OF DIGITAL

NATIVES

WOA 2011 XII WORKSHOP DEI DOCENTI

E DEI RICERCATORI DI ORGANIZZAZIONE AZIENDALE GENERAZIONI E RI-GENERAZIONI NEI PROCESSI ORGANIZZATIVI

NAPOLI 16 – 17 – 18 GIUGNO 2011

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TRACK 01 - Generazione ICT: nuovi modi di lavorare ed interagire dei digital native

WHEN INNOVATION RESIDES OUTSIDE THE FIRM TOO:

THE CASE OF ROLAND ONLINE COMMUNITY

Alberto Francesconi

University of Pavia – Faculty of Economics – Business Research Department Via S. Felice 7, Pavia – ITALY

mail: afrancesconi@eco.unipv.it

Claudia Dossena University of Pavia – Faculty of Economics – Business Research Department

Via S. Felice 7, Pavia – ITALY mail: claudia.dossena@eco.unipv.it

1. INTRODUCTION

Firms are constantly looking for more effective ways to improve their innovative and creative processes. Previous research has emphasized the combination of diverse knowledge assets and skills as an essential element for innovation. Recently, the diffusion of social networks and social media and the increasing familiarity of new generations of managers, employees and other stakeholders toward them, can increase this possibility. From one side, firm’s stakeholders are more likely to share within the Web opinions, experiences and knowledge related to firm’s activities. From the other side, the familiarity of manager and employees with social media can support firms to open their organizational boundaries to the online environment exploiting innovative and creative ideas .

In this paper we conceive firms as open systems and we focus on innovation ‘from the outside’, highlighting the role of so called ‘online communities of creation’. Valuable ideas can come from inside or outside the firm and can go to market from inside or outside the firm as well (Chesbrough, 2006). Therefore innovative ideas can come from inside the firm (as suggested by ‘close innovation’ model) and/or outside the firm (as suggested by the approach known as ‘open innovation’). We argue that the ‘open innovation’ approach, from one side, and the Web 2.0 technologies, from the other side, can foster the exploration and exploitation of knowledge, contributing to increase the firm’s innovation process.

The exploration and exploitation of external knowledge is linked to the concept of ‘absorptive capacity’, seen as the ability of a firm to recognize the value of external knowledge, assimilate it and apply it to commercial ends (Cohen and Levinthal, 1990). As open systems, organizations interact with their online environment and their ‘absorptive capacity’ determines the possibility to innovate beyond firm’s boundaries.

Our research questions arise as follow: which is the role played by online communities within the innovation process? Can online communities contributing to effectively increase the firm’s innovation process?

To answer these questions we selected a representative case study, Roland DG Mid Europe, a firm that significantly has invested on an online community to foster the innovation process. Roland’s internal innovation process significantly benefits from ideas coming from the outside, from the online community, through idea generation, feedbacks on product and services, product evaluations and testing, feedbacks on practicability about new uses and new applications of existing products in different fields and markets.

Five further sections complete this paper. Section 2 provides a theoretical background by reviewing representative literature on open innovation and absorptive capacity. Section 3 outlines the context of analysis and section 4 describes the case-study methodology. Section 5 describes main findings, depicting the role of the online community within the process of innovation and the connections to the absorptive capacity. Section 6 summarizes the main points, draws conclusions, reflects on the limitations of this work and offers suggestions for future researches.

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2. THEORETICAL BACKGROUND

Ever since Schumpeter’s classic work (Schumpeter, 1976), the importance of innovation for organizational performance and survival is widely accepted among organizational scholars (Damanpour, 1996; Wolfe, 1994). Innovation is recognized as a primary mean for organizational renewal (Dougherty, 1992a) and a key lever in creating and maintaining sustainable competitive advantages (Brown and Eisenhardt, 1995).

Various types of innovation can be highlighted, such as market innovation (Levitt, 1962), technological innovation (Utterback, 1971), organizational innovation (Daft, 1978), product innovation (Dougherty, 1992a), process innovation (Davenport, 1994), service innovation (Frambach, Barkema, Nooteboom, & Wedel, 1998), and strategic innovation (Tushman & Anderson, 2004).

Innovativeness includes at its core the degree of being ‘new’ (Gupta, Tesluk, & Taylor, 2007; Tushman & Moore, 1982). However most new ideas emerge as novel recombination of old ideas. Restricting the definition of innovation only to those ideas that are utterly new to the world would make this concept almost empty (Gupta et al., 2007). Therefore, the degree of innovativeness needs to be specific to a particular domain. In our work, we focus on firm’s innovativeness which manifests itself in the ability to transform new knowledge in the form of new products which are mainly conceived as upgrades, modifications, extensions, and new applications of existing ones.

March (1991) launched the argument that firm’s innovation capabilities include both explorative and exploitative abilities. A firm, whose resource and possible investments are limited, can become agile and resilient managing well the trade-off between these two innovation capabilities. Exploration includes things captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, innovation (March, 1991). The essence of exploration is experimentation with new alternatives and a high level of innovativeness. Exploitation includes things such as refinement, choice, production, efficiency, selection, implementation, execution (March, 1991). The essence of exploitation is the refinement and extension of existing knowledge and competences and a lower level of innovativeness than exploration. We follow the argument that exploration and exploitation are two ends of a continuum (Gupta, Smith, & Shalley, 2006; Levinthal & March, 1993) and they hence vary in the degree to which they require new knowledge (Cardinal, 2001). Whereas exploration employs varied and dispersed knowledge in new ways, exploitation leverages existing knowledge in well-understood ways (Rosenkopf & Nerkar, 2001; Taylor & Greve, 2006; Vassolo, Anand, & Folta, 2004; Vermeulen & Barkema, 2001).

An interesting argument concerns the implications of innovativeness and knowledge integration within and across organizational boundaries (Brown & Eisenhardt, 1997; Child, 2001; Grant & Baden-Fuller, 2004; Henderson & Stern, 2004; Holmqvist, 2003; Jansen, Van den Bosch, & Volberda, 2006; Katila & Ahuja, 2002; Lavie & Rosenkopf, 2006; Sidhu, Commandeur, & Volberda, 2007). As innovation occurs primarily through new combinations of resources, ideas, and technologies, a fertile innovation environment relies also on a constant inflow of knowledge from outside of the firm’s boundaries (Fey & Birkinshaw, 2005). Von Hippel (1988) shows that a production network presenting strong knowledge-transfer mechanisms among manufacturers, users and suppliers, can be more effective. A number of recent studies (i.e. Rigby & Zook, 2002; Chesbrough & Crowther, 2006) have outlined the benefits of opening the innovation process to external knowledge sources, suggesting that the ability to combine internal and external information and knowledge inputs can increase the productivity of in-house activities (Cassiman & Veugelers, 2006). Von Hippel (2005) highlights a specific knowledge crucial in innovation processes, especially to invent and design radical innovation: the knowledge held by users. This view highlights that users can become designers themselves and create new knowledge and new products, i.e. using ‘tool kits’ such as in the software development case (Thomke and Von Hippel, 2002).

In brief, research has shown that some of the most important and novel products have been developed by users − both user firms and final users – and that many users engage in developing or modifying existing products. In other words, literature argues the innovation locus can lie also outside of the firm in places where technical knowledge, marketing experience and customer activities intersect.

Therefore, the concept of ‘open innovation’ has been introduced in an effort to interpret the alternative to the more traditional model of ‘closed innovation’ (Chesbrough, 2003): knowledge and information from outside the firm is explored and exploited by the firm. In turn, knowledge and information from inside the firm is made available to others. Part of the approach towards open innovation is to build relations with customers or users. However Chesbrough and Crowther (2006) consider that the successful adoption of such an approach across the organization requires to move from a set of ‘ad hoc processes’ to clearly defined

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practices, systems, roles and responsibilities. Becker and Zirpoli (2007) underline that while the advantages and challenges of the open innovation context have now been reasonably well understood, extant literature does not provide a detailed answer to the question ‘How to organize for open innovation?’ yet.

A key concept related to this question is known as ‘absorptive capacity’ (Cohen and Levinthal, 1990). Absorptive capacity describes the organizational abilities necessary in order to innovate beyond firm’s boundaries exploring and exploiting sources of knowledge external to the firm. More precisely Cohen and Levinthal (1990) define absorptive capacity as the ability of a firm to recognize the value of external knowledge, assimilate it and apply it to commercial ends. A firm that lacks absorptive capacity will be less likely to recognize the value of new knowledge, less likely to assimilate that knowledge and less likely to apply it successfully to commercial ends (Szulanski, 1996). Henderson and Cockburn (1994) put forward the concept of ‘integrative capabilities’ as the ability to access new knowledge from outside the boundaries of the firm and the ability to integrate knowledge. Zahra and George (2002) suggest that the absorptive capacity of a firm is constituted of four organizational capabilities: acquisition, assimilation, transformation and exploitation of knowledge. The acquisition capability refers to the identification and acquisition of externally generated knowledge critical to the firms’ operations. Assimilation refers to the analysis, the interpretation, and the understanding of the information obtained. Transformation refers to the combination of acquired knowledge with the existing one, leading to adding, deleting knowledge or interpreting the same knowledge differently. Exploitation is the incorporation of the acquired or transformed knowledge in the operations.

Many research on absorptive capacity adopt an ability-oriented perspective focusing on the recipient firm’s capacity to absorb knowledge from others. Recently Lane, Koka and Pathak’s (2006) underline that there is a need for a more process-oriented perspective and not just a ‘firm’s ability’. They propose a process view of absorptive capacity and differentiate three main processes: (1) recognizing and understanding potentially valuable new knowledge outside the firm through exploratory learning, (2) assimilating valuable new knowledge through transformative learning, and (3) using the assimilated knowledge to create new knowledge and commercial outputs through exploitative learning.

Based on this literature, external knowledge integration appears crucial but such processes should be further studied. Are there specific instruments or organizational setting that favour it?

With the advent of the so called Web 2.0 phenomenon additional opportunities have emerged for firms. Basically, Web 2.0 stands for participation and user-interaction (O’Reilly, 2005), a social platform (McAfee, 2006) where collaboration, interaction and sharing of knowledge are encouraged. The Internet is not only used for transaction purposes in a more or less passive manner, but actively by engaging in discussions (e.g. forums or weblogs), development processes (open source communities) or collaborative content production (e.g. youtube). Due to an extremely increasing user-friendliness of Web 2.0 technologies, every user is able to communicate his thoughts, idea, comments and opinions within user-based networks via simple and widely used publishing tools (von Hippel, 2002; Smith, 2007).

We follow the argument that the open innovation, from one side, and the Web 2.0 technologies, from the other side, can foster the exploration and exploitation of collective intelligences distributed in user-based networks (Lee & Col, 2003; von Hippel, 2005). We do this focusing on a particular context: the online communities. A fundamental distinction exists in the production versus consumption orientation of these communities. On the intersection of these communities Sawhney and Prandelli (2000) located their concept of a community of creation (see table 1). The authors refer to the development of knowledge socialization and relational intelligence that promotes learning with partners, rather than from partners such as suppliers and customers (2000: 47-48) in a community “that is governed by a central firm that acts as the sponsor and defines the ground rules for participation” (2000: 25).

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Table 1. Communities of creation at the intersection between communities of production and consumption.

From an organizational point of view, the comparison of communities’ characteristics described in

current literature shows that firm involvement takes different levels from very active participation where firms delegate employees to contribute to discussions and organize brand feasts for community members to passive involvement, where firms just offer the online space for interaction to their consumers, to no involvement, which happens, for instance, in brand or fan communities organized by consumers themselves. The activities and the output generated by the members vary along the types of communities. Communities of consumption deliver information in their discussion of products or reports on usage, communities of creation generate knowledge by linking personal experience with product tests or answering marketing surveys, while communities of production innovate new virtual products or services or – for physical products – contribute detailed building instructions online. 3. CONTEXT OF ANALYSIS

Roland DG Corporation is a multinational leading firm (see tab. 1), founded in 1981 in Japan, where its headquarter resides. Roland is a world class manufacturer in the world of digital graphics and visual communication (tables 2 and 3).

Net sales (Euro in

million）

Operating profit

(Euro in million）

Ordinary profit （Euro in million）

Net profit （Eeuro in million）

Net profit per share （euro）

Net sales growth （％）

Operating profit ratio （％）

2011/3（forecast） 273,6162182 14,18881 12,52469 3,240653 0,181301 10.0 5.2 2010/3 248,7683 6,201033 5,771866 -0,7182 -0,04038 -27.3 2.5 2009/3 341,994 41,81318 39,71114 25,32964 1,423172 -13.0 12.2 2008/3 393,2839 83,94167 81,95349 39,92134 2,243233 24.4 21.3 2007/3 316,2352 54,60062 53,58464 30,60227 1,719473 25.1 17.3 2006/3 252,8322 42,82041 43,16199 26,72225 1,462148 16.2 16.9

Tab. 2 Roland’s financial performance.

Printers （euro in million）

Cutting plotters （euro in million）

3D products （euro in million）

Supplies （euro in million）

Other （euro in million）

2011/3 (forecast） 123,0572 10,59781 18,56807 89,51209 31,61826 2010/3 104,9884 10,93939 17,49077 89,74857 25,58364 2009/3 167,0513 14,87197 23,02615 106,2146 30,82124 2008/3 215,0042 19,95191 27,93968 100,758 29,61256 2007/3 173,0947 19,46144 24,20855 78,60773 20,84528 2006/3 136,5366 16,69374 25,5924 61,26586 12,73489

Tab. 3. Consolidated Sales by Category.

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Roland DG Corporation production includes color graphics/sign making devices, vinyl sign cutters,

engraving/routing systems, prototyping/modeling machines, 3d scanners, metal printers. The competitive advantage of Roland DG Corporation is mainly related to the outstanding and well recognized quality of its products and the constant research of new and original applications of them, i.e. in different fields or markets through innovative applications (fig. 1).

Fig. 1. Photoengraver Metaza MPX-901 (left side of fig. 1) and some objects inscribed with this Roland’s product (right side)

Product innovation and technical improvements mainly follow a ‘closed innovation’ model within the R&D department in Japan. The subsidiaries are responsible for sales, promotions, distributions and customer services. The same products (i.e. printers, cutting plotters, etc.) are distributed worldwide through local subsidiaries without any technical adaptations to local markets. Open innovation process is mainly related to new idea generation, feedbacks on product and services, product evaluations and testing, feedbacks on practicability about new uses and new applications of existing products in different markets.

At present Roland DG Corporation has more than 800 employees worldwide, distributed in 8 subsidiaries located in U.S.A., Belgium, U.K., Spain, Italy, Denmark, Australia and Germany. Roland DG Mid Europe is the Italian subsidiary, a medium firm with 30 employees, revenues for about 30 million Euros (in 2010) and a leadership position with a market share of about 50%. It is responsible for sales, promotion, distribution and customer service of Roland’s products in the Italian, French and Balkan area2.

Main organization units of Roland DG Mid Europe are: administration (back-office and accounting), customer support (for technical issues), sales (which includes a specific office for niche markets such as dental equipment and textile industry), PR and communications (responsible for Web activities) and a unit for customers and dealers training on Roland’s products (named ‘Roland academy’).

Roland DG Mid Europe, differently from the other subsidiaries, has developed in autonomy a wide and cohesive online community in Italy. The online community (OC) supports marketing aims such as brand awareness, image building, corporate reputation, and so forth. At the same time the OC is a virtual place where different stakeholders (such as users firms, dealers, employees, etc.) can share ideas and opinions about Roland’s product and initiatives. The OC is conceived by Roland DG Mid Europe as an important knowledge source about stakeholder’s interests, insights, expectations, critics and suggestions especially for new and original applications of Roland’s products. It works also as a community of practice for technical support. This type of knowledge can potentially suggests new business areas for Roland: for example, the use of Roland’s engraving machines for making gold and silver jewelry, Roland printers for interior design (decoration on vinyl, backlighting materials, drapery, etc), plotters for decorating vehicles.

The OC significantly benefits from a great deal of members and their heterogeneity. Members differ in terms of roles, professions, experiences, knowledge, thus increasing the variety of knowledge that can be shared within the community and the potential for creativity and innovation (fig. 2). Although internally sponsored and regulated (all moderators are Roland employee), Roland’s online community can be considered mostly outside the firm’s boundaries, as suggested by its members’ composition.

1 Photoengraver is the one of Roland’s products that can be used whit different materials and that has many different applications. For this reason many threads in the forum are about new and original applications and uses of this product. 2 Main competitors are Mimaki, Mutoh, HP, SummaGraphics, CIELLE, Gravograph, Oce, and Agfa.

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Fig. 2. Roland’s online community composition

The OC was born in 2004 through the development of the forum. The forum was conceived as a tool to support a continuous training for user firms, dealers and retailers of Roland’s products, and for technical support with regard to product applications. At present, Roland DG Mid Europe exploits many different web tools and applications (such as blogs, forums, wikis, social networks, TV and radio podcasting, etc.). This has significantly increased the number of OC members in the last years: from 2.204 forum users (of which 659 active) on May 2009 to more than 4,661 users (of which 706 active) on February 2011. 4. METHODOLOGY

Our analysis (made in February 2011) is based on 11 semi-structured interviews to Roland’s Community Manager and Communication Manager and the analysis of contents retrieved on Roland DG Mid Europe’s forum. Interviews, of about an hour and half, have been done via Skype. The forum has been analyzed through the collection of comments left in the last three years3. We focused on the forum being recognized by Roland as the core of OC for innovation purposes.

Within the forum discussions are grouped by Roland’s staff in 7 forum areas and then grouped in topics. In table 4 we report some descriptive statistics of our dataset.

Forum area n. topics n. threads n. mex ‘In rilief’ 2 10 353 ‘Applications’ 17 2606 27099 ‘Laboratorio dell’artigiano tecnologico’ 10 3070 27442 ‘Software & computer’ 4 570 4767 ‘RolandANDyou’ 4 429 5447 ‘I was there!’ 3 360 5174 ‘Conversation drawing room’ 3 1638 19414 TOT. 43 8683 89696

Table 4. The Roland’s forum area.

After this, we selected and focused only on discussions about Roland’s products and customer services

in 2 forum areas: applications and ‘Laboratorio dell’artigiano tecnologico’ (Technological craftsmen’s workshop).

From our analysis we found at first that community members do not suggest the development of utterly new products. Therefore we restricted our concept of innovation to new applications and new uses of existing Roland’s products (as suggested in literature; i.e. Gupta et al., 2007). We included also the modifications and the improvements of customer service suggested by user firms, dealers and retailers.

We selected suggested innovation, that is new applications and uses of Roland’s products, using two criteria:

the materials adopted in the digital printing and visual communications using Roland products4; in fact, through interviews with Roland’s Community and Communication Manager we were able to

3 Though the forum was born in 2004, a new platform has been introduced in 2008 and previous discussions are not available. 4 This criterion originates by the crucial role played by the material used in visual communication in Roland opinion.

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distinguish amongst traditional and new materials adopted in digital printing and visual communications (see tab. 5); accordingly to our interviews, this distinction is a key factor because traditional materials are often related to traditional uses in printing and visual communication, such as banners, posters, stickers, and so forth; on the contrary, new materials (i.e. gold, marble, vinyl, wood, etc.) allow a higher degree of innovative use of Roland’s products in new fields or new markets, such as decoration of parquets, the creation of mosaics and frescoes, chocolates with the corporate brand and so forth;

at least a community member explicitly recognizes the real practicability of a new application for digital printing and visual communication.

new materials adopted in the digital print and visual communication traditional materials adopted in the digital

print and visual communication stone: marble – tuff; wood; plaster; drapery: leather - cotton - faux leather – jute; nylon – polyester; glass; vinyl; wax; ceramics – porcelain; chocolate; precious stones: diamond – amber; metals and alloys: steel - aluminum - silver - copper - brass – gold.

plexiglass; PVC; paper – cardboard; dibond – etalbond; forex – polystyrene; plasterboard

Tab. 5. Traditional materials versus new materials in the field of digital print and visual communication.

Starting from 89.696 messages left in 8.683 discussions (‘threads’), we selected 239 messages, grouped in 197 discussions that satisfy these two criteria (see table 6): 202 come from the forum area ‘applications’ (grouped in 200 threads) and 37 from the area called ‘laboratorio degli artigiani tecnologici’ (grouped in 31 threads).

tot. n. of messages left in the forum: 89696 (n. threads: 8683)

239 messages analized5 (n. threads: 197)

231 messages about Roland products

193 messages about the use of new materials (new applications of Roland products)

38 messages about original uses of traditional materials

8 messages about services

1 message about a new service

7 messages about an improvement of existing services

Table 6. Our dataset.

5. FINDINGS AND DISCUSSION

The OC developed by Roland DG Mid Europe is a ‘community of creation’ (see table 1). It is governed and technically supported by Roland DG Mid Europe that acts as the sponsor, defines the rules for participation and the organization of contents, delegates employees to contribute to discussions.

The forum, in particular, is explicitly conceived by Roland DG Mid Europe as a community to foster the innovation process through idea generation, feedbacks on product and services, product evaluations and testing, feedbacks on practicability about new uses and new applications of existing products in different fields and markets. The forum promotes the exploration and exploitation of knowledge depicting a circular and virtuous process, as shown in fig. 3. The degree of innovativeness and the role played by Roland DG Mid Europe’s absorptive capabilities in the innovation process are connected to the specific domain, that is the organizational role of the firm. In fact, as previously said, R&D and production are centralized in the Japanese headquarter where a more traditional model of ‘close innovation’ is applied and no interest towards online communities exists yet. On the contrary, for Roland DG Mid Europe the aims of the OC are focused on new applications of existing products or customer service improvements mainly for marketing purposes.

5 At least one community member has explicitly highlighted the novelty and originality of the idea proposed.

Fig. 3. The innovation process in

In particular, phases 1 and 2 of the innovation process (left side of fig. 3) are mainly ‘distributed’ outside the firm, within the community. In these phases aims. In phase 3 the assimilation and internaliznetwork around the idea (i.e. by moderating discussions, contributing to organize topics and highlighting them within the forum); at the same time Roland tries to recognize the real practicability ofcollecting feedbacks from community members and experts (‘marketing knowledge’). mainly performed inside the firm. The former includes a deeper offline assessment of the innovative ideafor marketing aims. The latter includes existing product/service to be exploited for commercial purposes. This phase includes the allocation of resources for novel projects and marketing initiatives (such as the involvement otraining, commercial campaigns, and so forth). true also for phases 4 and 5: thanks to the small size of Roland DG Mid Europe, the coordinating confrontation mechanisms amongst units and people (including the CEO) around novel projects and marketing initiatives are quite simple and informal.

In 2009 two managers (the Community for OC management, reporting direcAt present an internal position of forum moderator has been created and the external collaboration interrupted. This is due to the increasing importance of the moderator role recognizeEurope. As the Community manager said: “to have a deep knowledge of topics and a deep understanding of the business. The adecide firmly are very important. Besides, it is very important to create valuable and interesting contentsbecause credibility on the Web arises important for the growth of the communitycommunication competencies and a deep understanding of the businessknowledge arising from the OC andmaintains a non invasive control on discussions. A moderation process which is not excessively tight allows Roland to have a wide OC, where together and share opinions, ideas, suggestions, favoring

Though no formal and structured systems of evaluation have been implemented yet, Europe’s managers are deeply convinced increase the innovation processes, as emerged by interviewsover time and reinforced the presence of Roland o

The innovation process in Roland DG Mid Europe and the process view of absorptive capacity.

In particular, phases 1 and 2 of the innovation process (left side of fig. 3) are mainly ‘distributed’ outside the firm, within the community. In these phases Roland scans the forum for knowledge exploration aims. In phase 3 the assimilation and internalization of knowledge begins: Roland tries to reinforce the network around the idea (i.e. by moderating discussions, contributing to organize topics and highlighting them within the forum); at the same time Roland tries to recognize the real practicability ofcollecting feedbacks from community members and experts (‘marketing knowledge’). mainly performed inside the firm. The former includes a deeper offline assessment of the innovative ideafor marketing aims. The latter includes the transformation of ideas into a recognized novel application of an existing product/service to be exploited for commercial purposes. This phase includes the allocation of resources for novel projects and marketing initiatives (such as the involvement of dealers and retailers in training, commercial campaigns, and so forth). The whole innovation process is quite unstructured. This is true also for phases 4 and 5: thanks to the small size of Roland DG Mid Europe, the coordinating

sms amongst units and people (including the CEO) around novel projects and marketing initiatives are quite simple and informal.

Community manager and the Communication managerdirectly to the Italian CEO, plus an external moderator though not rewarded.

At present an internal position of forum moderator has been created and the external collaboration interrupted. This is due to the increasing importance of the moderator role recognize

As the Community manager said: “a moderator needs to listen to, to be wells and a deep understanding of the business. The authority. Besides, it is very important to create valuable and interesting contents

arises only when contents are relevant for users. These competencies are very of the community”. In other words, a moderator needs relational and

a deep understanding of the business to recognize potentially valuable new and to nurture the whole forum. At the same time Roland DG Mid Europe

non invasive control on discussions. A moderation process which is not excessively tight allows C, where a multitude of heterogeneous and spontaneous

together and share opinions, ideas, suggestions, favoring the exploration of new knowledgeThough no formal and structured systems of evaluation have been implemented yet,

convinced the OC (in particularly the forum) contributeas emerged by interviews. As a consequence they have

the presence of Roland on the Web, as shown in fig. 4. This strategy has increased

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Roland DG Mid Europe and the process view of absorptive capacity.

In particular, phases 1 and 2 of the innovation process (left side of fig. 3) are mainly ‘distributed’ for knowledge exploration

Roland tries to reinforce the network around the idea (i.e. by moderating discussions, contributing to organize topics and highlighting them within the forum); at the same time Roland tries to recognize the real practicability of the idea collecting feedbacks from community members and experts (‘marketing knowledge’). Phases 4 and 5 are mainly performed inside the firm. The former includes a deeper offline assessment of the innovative ideas

into a recognized novel application of an existing product/service to be exploited for commercial purposes. This phase includes the allocation of

f dealers and retailers in The whole innovation process is quite unstructured. This is

true also for phases 4 and 5: thanks to the small size of Roland DG Mid Europe, the coordinating and sms amongst units and people (including the CEO) around novel projects and

Communication manager) were responsible the Italian CEO, plus an external moderator though not rewarded.

At present an internal position of forum moderator has been created and the external collaboration interrupted. This is due to the increasing importance of the moderator role recognized by Roland DG Mid

, to be well-disposed for dialogue, uthority and the ability to

. Besides, it is very important to create valuable and interesting contents ese competencies are very

moderator needs relational and to recognize potentially valuable new

At the same time Roland DG Mid Europe non invasive control on discussions. A moderation process which is not excessively tight allows

a multitude of heterogeneous and spontaneous stakeholders can meet the exploration of new knowledge (fig. 2).

Though no formal and structured systems of evaluation have been implemented yet, Roland DG Mid contributes to effectively

As a consequence they have strengthen the OC . This strategy has increased

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the number of community members (fig. 5) as well as the number of comments specifically related to innovative use of existing products (fig. 6). At present Roland DG Mid Europe plans to replicate the Italian experience in other Europeans countries (i.e. France).

Fig. 4. Adoption of web application and tools to support the OC over time.

Fig. 5. Number of forum member’s over time (on May of each year).

Fig. 6. Number of forum comments specifically related to innovative use of existing products (out of 239 ‘creative ideas’).

Of our 239 messages containing a new and original idea, about the 60% of them are embedded in the

website area where main applications of Roland’s products are showed. Main ideas were reported by the Community manager to the Italian CEO through reports and meetings. Recently, 30 ‘creative ideas’ were chosen to participate to a creative competition between Roland OC members. This event (called ‘Roland experience day’), organized in collaboration with Roland’s dealers, represents a first attempt to concretely exploit knowledge shared in the OC for commercial ends. The aim is to strengthen the relationship between

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Roland’s dealers and Roland’s customers in order to enrich their commercial offer trough original ideas about new applications of Roland’s products coming from customers themselves.

Finally, it is important to underline that Roland’s people allocated to manage the OC have remained unvaried from the beginning though the growth of the OC and the increasing number of innovations. In our opinion this reflects improved capabilities in OC management and improved absorptive capacities developed in time by Roland DG Mid Europe. 6. CONCLUSIONS

In our work, we focused on firm’s innovativeness in terms of knowledge transformation in the form of new products conceived as upgrades, modifications, extensions, and new applications of existing ones, thus emphasizing the analysis of a more incremental rather than radical degree of innovation. This is a first limitation of this study because it stresses the concept of exploitation rather than exploration.

Being the analysis based on a single case study, a second important limitation arises in terms of generalization and exploitation of such a successful experience, especially within large firms. In fact, Roland DG Mid Europe is a medium firm and the coordination and confrontation mechanisms amongst internal people and units around the exploitation of knowledge for innovation aims are quite simple and informal, depicting a local community of practice It would be interesting to move towards larger firms with set of process and practices more likely structured with clearly defined practices, systems, roles and responsibilities. It could be also interesting to analyze firms which use Web 2.0 tools to support internal online communities to spread knowledge for innovation purpose as well as firms in search of more radical processes of innovation.

From our analysis we found that an online community can effectively become an important source of knowledge for innovation processes, even though knowledge exploration is not sufficient. Accordingly to the concept of absorptive capacity, knowledge must be assimilated, transformed and exploited to be useful within open innovation processes. Innovative ideas arising from the community must be transformed in new concrete opportunity of business. Therefore, we tried to analyze the development in time of Roland’s absorptive capacity. Coherently, we analyzed the distribution in time of the ‘innovative comments’ arising from the forum and the number of new applications of existing products effectively marketed by Roland thanks to the online communities suggestions. Though we have to improve our work through a deeper content analysis, we found that Roland DG Mid Europe has increased its ability to explore and exploit knowledge from the outside. Roland DG Mid Europe, favoring the heterogeneity of its online community members and stimulating the voluntary flows of ideas between them, significantly increases its ability to develop co-creation processes with them, linking the places where technical knowledge, marketing experience and users activities really intersect.

We tried also to connect the ‘open innovation process’ to a more process-oriented view of the absorptive capacity, as suggested in literature. Nevertheless, further research is needed to deepen this connection. Moreover, we aim at a better understanding of key issues such as: how can we evaluate the development in time of firm’s absorptive capacity within open innovation contexts? How can we measure the innovation performance within open innovation contexts when traditional measure of innovativeness (i.e. number of patents) are not applicable? Which is the role played by the organizational context (i.e. in terms of structure, culture, systems, processes and so forth) in terms of absorptive capacity and the real contribution of social media?

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