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9 Journal of Business Research xxx (2015) xxx – xxx Contents lists available at ScienceDirect Journal

Contents lists available at ScienceDirect

Journal of Business Research

available at ScienceDirect Journal of Business Research Drivers of innovation strategies: Testing the Tidd and

Drivers of innovation strategies: Testing the Tidd and Bessant (2009) model

João J.M. Ferreira a , , Cristina I. Fernandes b , Helena Alves a , Mário L. Raposo a

a University of Beira Interior and NECE: Research Unit in Business Sciences, Estrada do Sineiro, 6200-209 Covilhã, Portugal

b Polytechnic Institute Castelo Branco and NECE: Research Unit in Business Sciences, Palacete das Palmeiras, 6060-163 Idanha-a-Nova, Portugal

article info

Article history:

Received 7 February 2014 Received in revised form 7 September 2014 Accepted 29 January 2015 Available online xxxx

Keywords:

Innovative capacity Innovation strategy Managing innovation Tidd and Bessant (2009) model

abstract

Despite innovation's importance in rm strategy and competitiveness, most innovation research fails to examine some important questions relating to innovation. This study focuses on two innovation management issues:

Identication of determinants of the innovation management process and the implications of these determinants for rm innovation performance. Building on Tidd and Bessant's (2009) conceptual model, this study examines innovation capacity constructs within innovation management structures. © 2015 Elsevier Inc. All rights reserved.

1. Introduction

Innovation is crucial to attaining economic and social success in today's globalized business world (Senge, Carstedt, & Porter, 2006). How- ever, scholars have yet to clearly dene, fully develop, and fully under- stand innovation (Mazzarol & Reboud, 2011). Schumpeter (1934) is a pioneer in recognizing innovation as fundamental to generating econom- ic development. As a process, innovation incorporates management activ- ities and decision-making at individual and organizational levels. The skill with which rms perform their daily tasks, confront risks, and invest time and money in organizations determines how innovation outputs arise (Cooper, 1998; Mazzarol & Reboud, 2011). Environmental uncertainty and complexity shape rms' innovation management (Tidd, 2001). Con- guring resources according to consumers' needs or market conditions requires great exibility (Mazzarol & Reboud, 2011; Tidd, 2001). Hence, rms' innovation ability allows them to compete and perform better than competitors do (Barney, 1991; Day, 1994). Thus, application of re- sources and capacities affects innovation level (Grant, 1996; Lowendahl, 1997) and organizational success (Penrose, 1959). Hence, studying fac- tors that foster innovation is fundamental (Fernandes, Ferreira, & Marques, 2012; Ferreira, Raposo, & Fernandes, 2012; Koc & Ceylan, 2007). Despite innovation's universal importance to organizations across different sectors, most studies focus on case studies or a single sector ( Ettlie & Rosenthal, 2011; Miles, 2005 ). Furthermore, the literature

The authors are grateful to funding from the Portuguese Science Foundation (PEst-OE/ EGE/UI0403/2014) through NECE: Research Unit in Business Sciences.

Corresponding author. E-mail addresses: jjmf@ubi.pt (J.J.M. Ferreira), cristina.fernandes@ipcb.pt (C.I. Fernandes), halves@ubi.pt (H. Alves), mraposo@ubi.pt (M.L. Raposo).

0148-2963/© 2015 Elsevier Inc. All rights reserved.

fails to explain causes of innovation management differences by sector. The need for a common conceptualization of managing innovation pro- cesses represents a major gap in the literature. Tidd and Bessant (2009) (T&B) contribute to innovation management by presenting a ve- construct innovation model comprising strategy, organization, process, learning, and networking. Although T&B offer a notable innovation pro- cess model, no studies discuss applications of the model. This study, therefore, empirically tests T&B's managing innovation model and eval- uates the extent to which the model adjusts to business sectors. Section 2 discusses the literature on resource theory, capacity theo- ry, and innovation drivers. Section 3 describes the empirical method. Section 4 presents results. Finally, Section 5 discusses conclusions.

2. Managing innovation: the T&B model

According to the Oslo Manual (OECD, 1997), non-technological in- novation covers all innovation types including those not exclusively pertaining to introducing new technologies, making signicant changes in goods and services, and using new processes. Perspectives on innova- tion vary according to measurement and analysis, the object on focus, the inherent concepts, strategic considerations, and the methodology and models ( Souitaris, 2002 ). Recent research focuses on identifying and characterizing rms and factors driving innovation ( Lemon & Sahota, 2004). According to the T&B model, measurement of rms' in- novative capacities depends on strategy, organization, learning, pro- cesses, and networks.

2.1. Strategy

Numerous authors study strategic innovation (Rumelt, Schendel, & Teece, 1994; Thakur & Hale, 2012). When studying strategic innovation,

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scholars consider innovation as simultaneously market oriented and strategic (de Brentani, 1989; Laing, 1993; Sundbo, 1997). Scholars posit strategy as an inspiration for innovation. Firms instill management poli- cies that satisfy consumer demands. To meet demands, rms deploy in- ternal resources and encourage new ideas (Sundbo, 1997; Teece, 1992). Some studies (Koc & Ceylan, 2007; Macdonald & Williams, 1994) report that new ideas, fundamental for a rm's innovative capacities, depend on knowledge creation. Alongside the importance of generating new ideas is the use and dissemination of such knowledge inside rms ( Monge, Cozzens, & Contractor, 1992). Firm structure and organization, an appro- priate innovation strategy, and communication of the strategy to em- ployees represent fundamental factors for innovation (Lemon & Sahota, 2004; Roberts & Berry, 1985; Slappendel, 1996; Wheelwright & Clark, 1995 ). Practical consequences of these factors include encouraging members of staff to participate in innovation processes as a means of driving further innovation ( Slappendel, 1996; Wei & Wang, 2011; Wheelwright & Clark, 1995).

2.2. Process

Diverse studies consider innovation to be the sum of functionally in- novative events implemented in mutually interrelated stages and con- secutive processes ( Bernstein & Singh, 2006; Guan & Chen, 2010; Nelson, 1993; Roper, Dub, & Loveb, 2008; Rothwell, 1994 ). Edquist and Hommen (1999), in their more systemic vision of innovation, de- scribe innovation as a process that relates diverse resources and capac- ities. Indeed, studies addressing innovation as a process are numerous ( Bernstein & Singh, 2006; Brown & Svenson, 1998; Cantisani, 2006; Chen & Guan, 2011; Galanakis, 2006; Guan & Chen, 2010; Rothwell, 1994). The T&B model describes innovation as a process inherent in or- ganizational renewal, product and service revival, and production and distribution means. All rms try to organize and manage innovation- related processes to identify and generate optimal solutions ( Tidd & Bessant, 2009). The effectiveness of innovation processes depends on organizational culture ( Koc & Ceylan, 2007 ). Management practices and processes use team orientation and management to drive innova- tion ( Amabile, Conti, Coon, Lazenby, & Herron, 1996; Chen & Guan, 2011). Hence, a rm's innovative capacities interrelate with their capac- ity to introduce new processes (Cantisani, 2006; Guan & Chen, 2010). Process innovation may thereby include innovating in products, meet- ing speci c and different consumer needs, and acquiring technology (Cooper, 1998; Koc & Ceylan, 2007; Roberts & Berry, 1985).

2.3. Organization

Organizational innovation involves introducing new methodologies to manage internal and external rm relationships (OECD, 2005). Innovation within organizational environments necessarily involves new methodologies, responsibilities redistribution, and decision-making concerning labor division and structuring new activities (Armbruster, Bikfalvi, Kinkel, & Lay, 2008; Armbruster et al., 2006; Birkinshaw, Hamel, & Mol, 2008; Camisón & Villar-Lopez, 2012). Organizational inno- vation represents a key sustainable resource for generating competitive advantage (Camisón & Villar-Lopez, 2012; Hamel, 2006, 2007). Internal organizational capacitiessuch as technologies (Afuah, 2002), marketing (Day, 1994), integration factors (Fowler, King, Marsh, & Victor, 2000; Wang & Ahmed, 2004), R&D (Deeds, 2001), and culture (Bogner & Thomas, 1994)bear important consequences for rm innovation. A pro-knowledge creation and dissemination culture among employees with different capacities enable rms to resolve problems and create syn- ergies (Amabile et al., 1996; Damanpour & Gopalakrishnan, 1998; Lemon & Sahota, 2004). Nevertheless, as Dussage, Hart, and Ramanantsoa (1992) report, the choice of an appropriate organizational strategy or culture de- pends on costs, deadlines, and risks the rm may incur. Other researchers defend a pro-innovation orientation, where by organizational culture

drives innovation (Hult, Hurley, & Knight, 2004; Hurley & Hult, 1998; Keskin, 2006; Lee & Tsai, 2005; Ussahawanitchakit, 2008).

2.4. Learning

Management theories emphasize the crucial relationship between in- novation and learning in attaining and maintaining competitive advan- tage (Baker & Sinkula, 2002; Brockmand & Morgan, 2003; Darroch & McNaugton, 2002; Dodgson, 1993; Fiol & Lyles, 1985; Garvin, 1993; Gnyawali, Steward, & Grant, 1997; Nevis, Dibella, & Gould, 1995; Vrakking, 1990; Wolfe, 1994). Researchers defending this position report that learning dominates all innovation-based activities and increases rms' exibility regarding innovation processes (Brown & Eisenhard, 1995; Jiménez & Sanz-Valle, 2011; Miles & Snow, 1978; Weerd- Nederhof, Pacitti, da Silva Gomes, & Pearson, 2002). Learning, innovation, and performance interrelates positively (Keskin, 2006; Lee & Tsai, 2005; Salavou & Lioukas, 2003). According to these authors, innovation requires individuals to acquire and convey knowledge throughout the organiza- tion. Knowledge acquisition always depends on the organization's core knowledge (Salavou & Lioukas, 2003). Greater core knowledge, gives or- ganizational members greater capacity to absorb knowledge from the en- vironment (Chang & Cho, 2008; Darroch & McNaugton, 2002). As Nonaka (1994) proposes, innovation occurs whenever employees share their knowledge with the rm. Yli-Renko, Autio, and Sapienza (2001) report a positive correlation between knowledge acquisition and product inno- vation levels. Chang and Cho (2008) verify that sharing memories, using external information, and implementing formal processes collectively ex- pand the knowledge reserve, thus enabling innovation. Other authors argue that investing in internal research and development, outsourcing such practices, or engaging in research-based networks are the factors that enhance and drive innovation capacities (Castellani & Zanfei, 2004; Frenz & Ietto-Gillies, 2007; Fu, Diez, & Schiller, 2012; Moritra & Krishnamoorthy, 2004).

2.5. Networking

The original and broadest approach to explaining why rms cooper- ate is the resource-based view. Wernerfelt (1984) claims that inter-rm collaboration is essential to use complementary resources. From this viewpoint, rms represent resource sets, and the most common motive for cooperative relationships is resource interdependence. Firms ally simply because they are not self-sufcient; through cooperation, rms reduce uncertainty and access other resources ( Chesnais, 1991; Dosi, 1982; Pfeffer & Salancik, 1978 ), especially technological resources ( Hagedoorn, 1993 ). Hagedoorn (1993) explains that rms cooperate considering market and industry conditions. Particularly in sectors with high interdependence and complexity levels, technological

high interdependence and complexity levels, technological Fig. 1. Conceptual model. Please cite this article as:

Fig. 1. Conceptual model.

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3

complementarities prove an important motive. Other motivations in the literature include access to new markets and time reduction of innova- tion process (Arora & Gambardella, 1994; Hagedoorn, 1993; Rycroft & Kash, 2004 ). Gulati and Gargiulo (1998) analyze how network-type choice creates concerns about coordination and appropriation costs. Ahuja (2000) argues that rms' commercial, social, capital, and techno- logical realities shape network formation. Hence, rms building and participating in networks represent an important factor for innovation (Rampersad et al., 2010). Fig. 1 depicts the T&B model's ve constructs of managing innovation processes.

42.47 ± 8.22, 50.3% had attained graduate level educational qualica- tions, and 13.5% had attained only the minimum educational level. Regarding location, 31.2% of these businesses were in rural sur- roundings. In the most recent year (2012), 33.0% of rms received 500,000 in revenue, whereas 16.4% received less than 50,000 in revenue. The sample's structure ensured equal representation of Portugal's 22 mainland and archipelago regions. Finally, 46 owners or managers responded to questionnaires either face-to-face or via telephone.

3.2. Methods

3. Method

3.1. Sample

Tables 1 and 2 summarizing qualitative variables report frequencies and percentages for each category. Tables display medians, mean, min-

The study sample is comprised of 1000 Portuguese rms with an av- erage of 6.99 ± 6.39 years in business: 10% were agricultural rms, 60% were service rms, 20% were transformative industrial rms, 5% were construction rms, and 5% were extractive industrial rms. Regarding managers' characteristics, 11.5% were female with an average age of

imums, maximums, and standard deviation (SD) for quantitative variables. Analysis consisted of ve MANOVA estimates for innovation perfor- mance (low innovation performance, medium innovation performance, and high innovation performance). Eight items forming each of the ve constructs in the T&B model (strategy, process, organization, learning,

Table 1

Item description.

Construct

Item

Item description

Measure

Strategy

S1

Employees recognize innovation's importance in competitiveness. The rm shares innovation strategies with employees, and employees are aware of targets. Employees understand and recognize that for the organization to remain competitive, distinctive competence(s) are necessary. The rm anticipates threats and opportunities (through forecasting techniques). Senior managers perceive innovation to be a determinant factor in future rm development. The rm's senior management demonstrates commitment to supporting innovation. The organization deploys mechanisms to analyze new technological and market developments, assessing their impact on organizational strategy. A link exists between innovation projects and all business strategies. The rm employs mechanisms that help design, develop, and launch new products. Firms normally implement innovation projects within deadlines and budgets. The rm uses mechanisms to verify that employees fully understand all consumer needs (not only regarding marketing). The rm implements management mechanisms to tailor procedures and succeed. The rm systematically researches ideas for new products. The rm uses mechanisms guaranteeing the involvement of all departments in developing new products and processes. The rm deploys a clear system for selecting innovative project. The rm system is exible and encourages rapid implementation of small-scale projects. Firm structure does not compromise but rather fosters innovation. Employees work well together and across departmental borders. Employees suggest ideas for better products and processes. The rm structure enables swift decision-making. Communication between hierarchical levels is functional and effective. The rm adopts a pro-innovation support and reward system. The rm fosters creativity and new ideas and encourages employees to submit proposals pro-actively. The rm works well as a team (or in teams). The rm displays a high level of commitment to employee training. The rm reviews employee projects to improve them and achieve better performance levels in subsequent actions. The rm works with universities and other research centers to build knowledge resources. The rm systematically compares products and processes with those of its competitors. The rm shares experiences with other rms, thereby achieving a better understanding. The rm registers and records its developments to bene t employees. The rm learns from other rms. The rm seeks to identify where and when the rm may improve innovative performance. The rm maintains good relationships (winwin) with suppliers. The rm reports a thorough understanding of consumers' needs. The rm analyzes its errors to improve its activities and processes. The rm works closely with consumers to develop new concepts. The rm collaborates closely with other rms to develop new products and processes. The rm attempts to develop external networks with individuals who can assist the rm (e.g., with specialists in speci c elds). The rm shares its needs and skills with education sector entities. The rm works closely with end users to develop new products and services. Low innovation performance Medium innovation performance High innovation performance

Likert type scale: 1

not at all important ;

S2

7 very important

S3

α = 0.72

S4

S5

S6

S7

S8

Process

P1

Likert type scale: 1

not at all important ;

P2

7 very important

P3

α = 0.88

P4

P5

P6

P7

P8

Organization

O1

Likert type scale: 1

Not at all important;

O2

7 Very important

O3

α = 0.73

O4

O5

O6

O7

O8

Learning

L1

Likert type scale: 1

not at all important ;

L2

7 very important

 

α = 0.87

 

L3

L4

L5

L6

L7

L8

Networking

N1

Likert type scale: 1 not at all important ;

N2

7 very important

N3

α = 0.62

N4

N5

N6

N7

N8

Innovation

LIP

0 innovation 1 innovation 2 innovation

 

performance

MIP

HIP

4 Table 2 Firm innovation performance. J.J.M. Ferreira et al. / Journal of Business Research

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Table 2 Firm innovation performance.

J.J.M. Ferreira et al. / Journal of Business Research xxx (2015) xxxxxx

 

Innovation performance

 

p

Low innovation

 

Medium innovation

High innovation

performance

performance

performance

N%

 

N

%

N

%

Sector

Agriculture Services Industry transformative Extractive industry Construction Average ± SD Urban Rural b50,000 [ 50,000 to 100,000 [ [ 100,000 to 200,000 [ [ 200,000 to 300,000 [ [ 300,000 to 400,000 [ [ 400,000 to 500,000 [ b500,000

100

100.0

0

0.0

0

0.0

0.000

333

55.5

139

23.2

128

21.3

151

75.5

49

24.5

0

0.0

0

0.0

50

100.0

0

0.0

0

0.0

50

100.0

0

0.0

Firm age (years) Location

6.42 ± 6.05

6.84 ± 6.89

9.88 ± 5.98

0.000

423

61.5

149

21.7

116

16.9

0.000

 

161

51.6

139

44.6

12

3.8

Revenue in the last nancial year (approximate)

89

54.3

37

22.6

38

23.2

0.000

56

46.7

36

30.0

28

23.3

 

36

37.9

29

30.5

30

31.6

82

78.8

13

12.5

9

8.7

13

17.3

60

80.0

2

2.7

7

6.3

101

90.2

4

3.6

301

91.2

12

3.6

17

5.2

⁎⁎⁎ p b 0.001.

and networking) were dependent variables in the MANOVAs. Subse- quently, ANOVA with a single factor (innovation performance) evaluat- ed which items were signicantly different to apply the Tukey post-hoc test. Furthermore, chi-squared independence tests identied signicant differences between rms' innovation performance.

3.3. Variable measurements

The original items in the T&B (2009) model measured the ve con- structs in Table 1. The innovation performance variable had three levels:

low innovation performance (for rms reporting zero innovation), me- dium innovation performance (for rms reporting one innovation), and high innovation performance (for rms reporting more than one inno- vation). The reference year was 2012.

4. Results

4.1. Innovation performance

Of all managers, 58.4% report low innovation performance, 28.8% medium innovation performance, and only 12.8% high innovation per- formance. Table 2 presents a ranking of rms' characteristics by innova- tion performance. Results reveal signicant differences (p b 0.001) between innovation performance in different business sectors. Firms reporting high innova- tion performance all belong to the service sector (21.3%). All agricultural rms and 75.5% of transformative industrial rms report low innovation performance. All rms in the extractive industrial and construction sec- tors report medium innovation performance. Firms with high innovation performance (9.88 ± 5.98) are signicantly more mature (p b 0.001) than rms reporting low (6.42 ± 6.05) or medium (6.84 ± 6.89) innova- tion performance. Regarding location, rms located in urban areas report signicantly (p b 0.001) higher proportions of high performance levels (16.9%) than do rms in rural environments (3.8%). Firms reporting low innovation performance also generate less revenue than rms with high innovation performance do. Firms achieving the highest innovation performance are mature, urban-based service-sector rms with reve- nues of less than 200,000.

4.2. Managing innovation processes

This study analyzes the importance of each construct of the innova- tion management process using average scores (with a scale ranging

from 1 = not important to 7 = very important) and standard deviations for each construct (i.e., strategy, process, organization, learning, and networking). These data appear in Table 1.

4.2.1. Strategy

Fig. 2 shows average rm innovation performance scores for the strategy construct. Analysis yields signi cant differences between rms with different innovation performance in all items (except S6 and S8). In particular, items S1 (rm employees recognize innovation's importance for competitiveness) and S7 (rm has mechanisms to ana- lyze technological and market developments and evaluate these devel- opments' effect on rm strategy) are more important to rms with high innovation than to other rms. Firms with high innovation place more value on mechanisms for ana- lyzing developments in technologies and markets and for analyzing these developments' effect on the organization's strategy than other rms do. Firms reporting low innovation rates focus less than other rms do on:

sharing innovation strategies with all employees (i.e., ensuring employees are aware of the rm's targets); employees' recognition of competencies that make the rm competitive; and innovation as a determinant of the rm's development among the professionals holding senior management positions.

4.2.2. Process

Signicant differences between rms with different innovation per- formance appear in the eight items composing the process construct (Fig. 3). Firms with high innovation performance attribute greater im- portance to all the process-related items. Notable items are P1 ( rm has mechanisms to help design and launch new ideas), P5 (rm system- atically researches new product ideas), and P7 (rm has a clear system for choosing innovation projects).

4.2.3. Organization

Signicant differences between rms with different innovation per- formance appear in the eight items composing the organization con- struct (Fig. 4). High-innovation rms emphasize fostering innovation, using support systems, rewarding innovation initiatives, and ensuring good organization and teamwork. Medium-innovation rms emphasize staff members' involvement to generate ideas that improve products and processes. Low-innovation rms emphasize structures conducive to assistance and swift decision-making.

J.J.M. Ferreira et al. / Journal of Business Research xxx (2015) xxx – xxx Low

J.J.M. Ferreira et al. / Journal of Business Research xxx (2015) xxxxxx

Low Innovation Performanceet al. / Journal of Business Research xxx (2015) xxx – xxx Medium Innovation Performance High

Medium Innovation PerformanceResearch xxx (2015) xxx – xxx Low Innovation Performance High Innovation Performance 5 8.00 7.00 6.00

High Innovation Performancexxx Low Innovation Performance Medium Innovation Performance 5 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00

5

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 S1*** S2*** S3*** S4*** S5*** S6
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
S1***
S2***
S3***
S4***
S5***
S6
S7***
S8
Median ± SD of the strategy construct items by innovation performance (* p < 0.05, **

p < 0.01, *** p < 0.001)

Fig. 2. Strategy by innovation performance. Median ± SD of the strategy construct items by innovation performance (*p b 0.05, **p b 0.01, ***p b 0.001).

4.2.4. Learning Fig. 5 displays average scores by rm type for each item in the learning construct. Signi cant differences arise in all eight items in this construct. In items L1 (major commitment to employee training), L5 (rm shares ex- periences with other rms), and L6 (rm records its development prog- ress for other organizational staff members' bene t), rms reporting high innovation levels report signicantly higher average scores than medium and low-innovation rms do. Low-innovation rms report sig- nicantly lower scores on items L2 ( rm reviews projects to improve subsequent actions) and L8 (rm deploys measures to identify when and where to improve innovation) than do other rms. Conversely, low-innovation rms report signicantly higher scores than do other rms for items L3 (rm works with universities and other research cen- ters that may help in advancing knowledge), L4 ( rm systematically compares products and processes with competitors), and L7 ( rm learns from other organizations).

Firms with high innovation performance emphasize L1 (training staff) and L6 (documenting development progress for other organiza- tional members' benet) more than do medium- and low-innovation rms. Medium-and high-innovation rms emphasize L5 (sharing expe- riences with other rms and understanding these rms) and L8 (using measures that identify how, where, and when the rms may innovate) more than do rms with low innovation performance. Low-innovation rms emphasize L3 (working with universities and research centers that may help in raising knowledge levels), L4 (systematically compar- ing products and processes with competitors), and L7 (learning from other organizations) more than middle- and high-innovation rms do.

4.2.5. Networking Signi cant differences between rms with different innovation performance appear in the eight items composing the networking construct ( Fig. 6 ). Firms reporting high innovation performance em- phasize N5 (collaborating with other rms in product or process

Low Innovation PerformanceN5 (collaborating with other fi rms in product or process Medium Innovation Performance High Innovation Performance

Medium Innovation Performancefi rms in product or process Low Innovation Performance High Innovation Performance 8.00 7.00 6.00 5.00

High Innovation PerformanceLow Innovation Performance Medium Innovation Performance 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 P1***

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 P1*** P2*** P3*** P4*** P5*** P6***
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
P1***
P2***
P3***
P4***
P5***
P6***
P7***
P8***
Median ± SD of the process construct items by innovation performance (* p < 0.05, **

p < 0.01, *** p < 0.001)

Fig. 3. Process by innovation performance. Median ± SD of the process construct items by innovation performance (*p b 0.05, **p b 0.01, ***p b 0.001).

6 J.J.M. Ferreira et al. / Journal of Business Research xxx (2015) xxx – xxx

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Low Innovation Performanceet al. / Journal of Business Research xxx (2015) xxx – xxx Medium Innovation Performance High

Medium Innovation PerformanceResearch xxx (2015) xxx – xxx Low Innovation Performance High Innovation Performance 8.00 7.00 6.00 5.00

High Innovation Performancexxx Low Innovation Performance Medium Innovation Performance 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 O1*** O2*** O3*** O4*** O5*** O6***
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
O1***
O2***
O3***
O4***
O5***
O6***
O7
O8***
Median ± SD of the organization construct items by innovation performance (* p <
0.05, ** p < 0.01, *** p < 0.001)

Fig. 4. Organization by innovation performance. Median ± SD of the organization construct items by innovation performance (*p b 0.05, **p b 0.01, ***p b 0.001).

development). Medium-innovation rms emphasize the importance of N1 (good relations with suppli ers), N2 (grasping consumers' needs), N3 (analyzing errors to improve on activities and processes), N5 (collaborating in developing new products or processes), N7 (sharing needs and competences with educational entities), and N8 (working closely with users of new products and services). Firms achieving high-innovation performance emphasize N8 (working closely with consumers to develop new concepts).

5. Results, discussion, and managerial implications

The literature reports innovation's relevance not only for business competitiveness but also for regional development. This study broadens analysis of innovation-related activities by applying T&B's conceptual model to empirical data. Testing the T&B model identies characteristics that differentiate rms with high, medium, and low innovation. Mature rms in urban areas report the highest innovation levels. Results corrob- orate theoretical ndings regarding innovation and sector: Service rms

are more innovative than rms in other sectors are (Lemon & Sahota,

2004).

Most variables in the strategy construct reect statistically signicant differences between rms with high innovation performance and rms with medium and low innovation performance. Sundbo (1997) and Teece (1992) posit these differences. Thus, the study highlights two fac- tors that drive innovation: employee awareness of innovation's impor- tance to rm competitiveness, and employee understanding of the correlation between distinctive competences and rm competitiveness (Lemon & Sahota, 2004; Roberts & Berry, 1985; Slappendel, 1996; Wheelwright & Clark, 1995). Similarly, rms strive to inform employees of targets, work toward anticipating threats, and capitalize on opportuni- ties in the environment. These rms' leaders perceive innovation to be a determining factor in rm development and develop mechanisms for sys- tematically analyzing new technological and marketplace developments to foster innovation. Thus, as per the T&B (2009) model, rms that devel- op clearly innovative strategies and that share and foster corresponding goals can achieve high innovation performance. Senior management's

Low Innovation Performanceachieve high innovation performance. Senior management's Medium Innovation Performance High Innovation Performance

Medium Innovation PerformanceSenior management's Low Innovation Performance High Innovation Performance 8.00 7.00 6.00 5.00 4.00

High Innovation PerformanceLow Innovation Performance Medium Innovation Performance 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 L1***

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 L1*** L2*** L3*** L4*** L5*** L6***
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
L1***
L2***
L3***
L4***
L5***
L6***
L7***
L8***
Median ± SD of the learning construct items by innovation performance (* p < 0.05, **

p < 0.01, *** p < 0.001)

Fig. 5. Learning by innovation performance. Median ± SD of the learning construct items by innovation performance (*p b 0.05, **p b 0.01, ***p b 0.001).

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Low Innovation Performance Medium Innovation Performance High Innovation Performance 8.00 7.00 6.00 5.00 4.00 3.00
Low Innovation Performance
Medium Innovation Performance
High Innovation Performance
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
N1***
N2***
N3***
N4***
N5***
N6***
N7***
N8***
Median ± SD of the networking construct items by innovation performance (* p < 0.05,
** p < 0.01, *** p < 0.001)

Fig. 6. Networking by innovation performance. Median ± SD of the networking construct items by innovation performance (*p b 0.05, **p b 0.01, ***p b 0.001).

commitment to innovation and the link between rm strategy and inno- vation are not signicant enough to differentiate between rms. This nd- ing indicates that although all rms show concern for innovation-related issues (high average response rate), some rms fail to establish the pro- cesses necessary for innovation. Results reveal signicant differences between rms with high inno- vation performance and rms with low and medium innovation perfor- mance for the eight items composing the process construct. Amabile et al. (1996) , and Chen and Guan (2011) posit that rms with the greatest innovation potential implement management processes to search for new product ideas, offer support to manage new ideas, and in- volve all departments in management processes (i.e., exibly controlling deadlines, budgets, and innovative projects). However, these processes also require external orientation and support mechanisms to succeed. Results reveal signicant differences between rms with high inno- vation performance and rms with low innovation performance for the eight items composing the organization construct. Organizational cul- ture proves a fundamental innovation driver (Hult et al., 2004; Hurley & Hult, 1998; Keskin, 2006; Lee & Tsai, 2005; Ussahawanitchakit, 2008). Teamwork, ease of horizontal and vertical communication, inno- vation incentives and reward systems, and an innovation-friendly envi- ronment constitute the organizational culture factors fundamental to attaining high innovation performance. Despite signicant differences in all variables, the most signicant differences are between medium- innovation rms and rms with low and high innovation in developing ideas and suggestions for innovation. This result indicates that, because of organizational shortcomings, rms with low innovation levels do not gather employees' innovation-related suggestions and ideas. High- innovation rms, in contrast, may have specialist groups dedicated to idea generation and may therefore have no need to collect employees' ideas. On average, medium-innovation rms score more highly on items measuring structures that enable rapid decision-making than rms with low and high innovation performance do. This nding calls for analysis within organizations to ascertain whether a correlation be- tween these two factors exists. Small rms may have atter hierarchies, which enable communication. Conversely, large rms deploy highly de- veloped, highly institutionalized communication systems. Scholars report learning process as fundamental in all innovation- related activities ( Brown & Eisenhard, 1995; Jiménez & Sanz-Valle, 2011; Miles & Snow, 1978; Weerd-Nederhof et al., 2002). Results partial- ly conrm this importance. Results show signicant differences between

rms with different innovation performance in all variables measuring organizational learning. In some cases, however, rms reporting low in- novation performance report the highest overall scores. Hence, rms with high innovation performance engage in several activities to boost innovation. These rms train staff, dedicate time to reviewing projects to achieve future improvements, share experiences with other rms, re- cord knowledge, and apply measures to identify improvement opportu- nities. These ndings are consistent with those of earlier studies (Keskin, 2006; Lee & Tsai, 2005; Salavou & Lioukas, 2003) that report a positive correlation between organizational learning and innovation. However, rms with low innovation levels are the rms that most commonly work with universities and research centers, systematically compare processes and products with competitors, and learn from other organiza- tions. These results would seem contradictory because such rms strug- gle to develop internal innovations and may thus seek external solutions. Finally, results for the networking construct corroborate those of previous studies that highlight networking as fundamental for innovation (Rampersad et al., 2010). Networking enables rms to raise resource levels (Wernerfelt, 1984) and boost capacities (Barney, 1991). The excep- tion to these results is item N4 (the rm works closely with its consumers to develop new concepts). For this item, rms with the lowest innovation performance return average response rates that are slightly higher than those of rms with medium and high innovation performance. These scores suggest that all rms, irrespective of their innovation performance, maintain close relationships with consumers to grasp consumer needs, even when this practice does not result in innovations.

6. Conclusions

This study uses a sample of rms from different economic sectors to identify determinants of innovation management processes and exam- ine these determinants' implications for rm innovation performance. The study bases its analysis on the Tidd and Bessant (2009) model. Re- sults show that the T&B model proves appropriate in explaining rms' innovative capacity. However, some model variables return contradic- tory results and therefore need further validation. This study adds to existing research by characterizing rms and iden- tifying factors that drive innovation. Nevertheless, this study presents re- sults of an application of the model in only one country. Future studies should test the T&B model further by observing which resource and ca- pacity types rms deploy for innovation and how these rms do so

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(i.e., the extent of specialization or complexity resources) (Wernerfelt, 2013). Another promising area concerns studying innovation strategies' longitudinal dynamics, which may have a long-term effect on innovative capacity.

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