Integrated Innovation Between Technology

September 8, 2007 9:27 WSPC/ws-ijitm 00116
International Journal of Innovation and Technology Management

Vol. 4, No. 4 (2007) 415432
c World Scientic Publishing Company
INTEGRATED INNOVATION BETWEEN TECHNOLOGY
AND ORGANIZATION
JIANCHENG GUAN
School of Management, Fudan University
Shanghai, 200433, PR China
guanjianch@buaa.edu.cn
JIANYAN LIU
School of Economics and Management
Beijing University of Aeronautics & Astronautics
Beijing, 100083, PR China
jianyanliu@buaa.edu.cn
Received 9 January 2007
Revised 31 March 2007
Accepted 2 April 2007
A framework for technological and organizational capability audits is proposed, and the
relevance of integrating technology and organization and product competitiveness of
Chinese rms is then examined. Empirical data were acquired through a recent study
of innovative rms from Beijing, China. An organization-technology map and statistical
analyses are used to verify ve hypotheses in order to identify the relationship amongst
product competitiveness and integration of technology and organization. The results
eectively verify the positive relationship among technological innovation, organizational
innovation and product competitiveness. The ndings also reveal that integrated inno-
vation between technology and organization is critical for the improvement of product
competitiveness of Chinese rms.
Keywords: Technology; organization; integrated innovation.
1. Introduction
With the increasing sophistication of innovation process research, numerous studies
and extensive research in innovation management have descriptively linked inno-
vation with competitiveness and economic outcomes at the national level [Porter
(1990); Nelson (1993)] in past decades. It is now widely accepted that technolog-
ical innovation and its eective diusion are central and crucial to the growth of
economic output, productivity and employment. Innovation has been identied as
a key driving force of regional as well as national economies in the current phase of
economic globalization [Sternberg and Arndt (2001)]. Nowadays in China, techno-
logical innovation is also becoming widely recognized as a source of competitiveness
for manufacturing rms at the company level [Brockho and Guan (1996); Guan
(2002)].
415
416 J. Guan & J. Liu
Since the opening of China in 1980, Chinese manufacturing industries have
maintained a low-cost, labor-intensive strategy. The strategy seems to have been
sucient for sustaining the global competitive advantage of China for the past
two decades. Chinas manufacturing rms have strong manufacturing capabilities
and low-cost labor advantages. They have made full use of these capabilities and
achieved relative competitive advantages. However, they have been reluctant to
upgrade soft capabilities, i.e. organizational strategic capabilities [Guan (2002);
Guan and Ma (2003)]. With the incremental rises in labor costs, land prices, rent
and production costs, China may gradually lose its competitive edge in terms of
product innovativeness and technological sophistication when compared to its main
competitors. In order for China to sustain its global competitiveness, it is urgent to
transform Chinas manufacturing industry from a low-cost, labor-intensive manu-
facturing base to a high value-added, design-intensive manufacturing industry.
Previous surveys and empirical studies are mainly focused on industrial innova-
tive activities at the national or regional level, with hardly any related to integra-
tion capabilities at the rm level. Moreover, these previous studies have not taken
into account some important supplementary innovation capabilities, such as learn-
ing capability, organizational capability and strategy planning capability, i.e. the
soft capabilities. Chiesa et al. [1996] rst divided the innovation process into the
core process and the enabling process. Then, they developed a technical innovation
audit framework. The research has contributed to the development of research on a
rms innovation capability. However, the research was mainly based on conceptual
analysis.
A companys competitive advantage rests with the eective integration of the
whole innovation capability rather than focusing on one single dimension. Even
for core capabilities (such as R&D, marketing, and manufacturing capabilities), a
companys improvements should also be harmoniously developed. Many researchers
have found that one of the major reasons for innovation failure is that technologi-
cal innovation was not accompanied by proper organizational development [Iansiti
(1998); Tang (1998); Sun and Frick (1999); Sun (2001)]. However, our previous
research [Guan (2002)] indicates that the state-owned rms in Beijing prefer mate-
rial technology (R&D and manufacturing technology) to immaterial elements (e.g.
organizing capability and strategy planning capability). They spent a great portion
of the innovation cost in the acquisition of technological equipment. The share of
state-owned rms conducting R&D or innovations in Beijing is in fact considerably
higher than the rms in Western countries. However, they fared poorly in their inno-
vation and competitive performance because of a lack of organization and strategic
management capability and the neglect of their harmonized development. On the
other hand, those wholly foreign-owned ventures in Beijing achieved a much better
innovation and competitive performance because of their emphasis on the balanced
development of R&D and marketing, as well as organizational capabilities. Even
for those civil-operated rms, their innovation performance is better than the state-
owned rms, although their R&D capability and technology equipment are much
poorer than the state-owned rms [Guan (2002)]. The more recent research results
revealed that the innovation performance in Beijings rms (such as innovation rate,
export sale ratio) is more positively related to soft innovation capabilities than to
Integrated Innovation between Technology and Organization 417
hard ones [Guan and Ma (2003)]. Therefore, there is an urgent need for balanced
development and eective integration between those dierent kinds of capabilities
[Yam et al. (2004)].
2. Study Framework
The integrated innovation between technology and organization should produce a
positive impact on a rms competitive performance. The purpose of this research
is to explore the relationship between product competitiveness and integration of
technology and organization through empirical evidence. Therefore, a study frame-
work of technological capability and organizational capability audit should rst be
proposed, and the relevance of the integration of technology and organization and
product competitiveness of Chinese rms should then be examined.
Integrating the ndings of relevant literature, we developed the content for audit-
ing innovations in technology and organizations. Studies which identied character-
istics of technically and organizationally progressive rms and factors associated
with success or failure in innovation contributed to the audit framework to be
developed. The activities, processes, or characteristics in technology and organiza-
tion aspects, which were found to be associated with innovation success and failure,
were put forward as the audit elements. These elements were then grouped under
technology and organization dimensions. The functional approach was adopted for
each dimension. In a relatively backward economy like China, where most rms
are far from the modern management frontier, practitioners would nd the asset
concept [Christensen (1995)] or process concept [Burgelman et al. (2004); Chiesa
et al. (1996)] dicult to comprehend. The functional approach, therefore, had two
advantages. Firstly, it was easily understood, and secondly, it facilitated the use of
dierent informants during the survey.
2.1. Innovation in organization
Organizational capability inuences the speed of the innovational process through
the infrastructure it creates for developing projects. Team autonomy, project inte-
gration (e.g. overlap, co-location, turf guarding, design for manufacture ability),
and process organization (e.g. testing, milestones, etc.) are all related to organi-
zational capability. In short, we can dierentiate fast innovators from their slower
counterparts using the following factors:
Decentralizing decision making.
Considering integration, concurrent or parallel development.
Designing for manufacturing ability.
Avoiding overly strong functional norms.
Avoiding physically spreading out members of a project team.
Having frequent milestones.
Spending more time on testing.
The organizational capability perspective regards the rm essentially as a bundle
of capabilities and knowledge where individual skills, organization and technology
are inextricably woven together. Organizational capability is built on the idiosyn-
cratic organizational process and routines. With these process and routines technical
and resource base of a rm are developed and integrated into the functioning of the
organization. Thus the value of current assets are enhanced through deploying new
combinations and this exploits its rent-earning potential.
A rm must make investments in organizational routines and skills that reect
the specic characteristics of this new competitive environment through its involve-
ment in the global market, and it and must be especially attuned to it and appropri-
ate for it. Superior organizational capability of a rm with respect to management
of its knowledge-based assets would be seen to yield greater rents than those with
inadequacies in the abilities to organize routines because unknown operational con-
text abroad could result in an inability to improve the rent-earning potential.
An important aspect of organizational capability relates to organizational rou-
tines, which are the essence of dynamic capabilities, for they are an organizations
basic increment of knowledge creation. Those organizational routines enable exter-
nal knowledge and internal knowledge as well as dierent functions and processes to
integrate, and hence to increase the performances of each component capability. In
a rm, organizational routines must be implemented for the relevant technological
and commercial competencies to be located in business units parallel to the cen-
ters of excellence. Thus, a superior integration of dierent phases of the innovative
process will greatly yield competitive advantage.
The organizational capability through which elements and processes are uniquely
and originally carried out is the essence of the rm-specic properties that crucially
drive a rms international competitiveness.
Therefore, the main components of innovation in an organization include strate-
gic innovation, structure innovation, enterprise culture innovation, work-ow inno-
vation and human resource innovation. Each component in turn consists of several
constructs. The details of organization innovation are found in Appendix A.
2.2. Innovation in technology
Innovation in technology represents an important source of global competitive
advantage in todays technologically intensive competitive markets. Technology
innovation in a rm helps it respond quickly to new product oerings and shorten
product development time. As technological competition intensies, it becomes
more and more important that rms recognize, protect, and reinforce their tech-
nological capabilities as the sources of global competitive advantage. R&D is an
important innovative activity through which rms can generate sucient critical
mass that can contribute to further developments of innovations through contin-
uous internal investments. R&D capability and process] in a rm help it embrace
many novel technologies and develop new technological assets that can give it an
advantage over its competitors on a global market scale. Particularly, innovating
cooperatively to decrease innovation costs and making full use of external technolo-
gies are substantial means for rms to acquire global competitive advantage.
Innovation in technology is also closely related to manufacturing infrastructure
innovation. The design of manufacturing systems and technologies should focus on
developing competitiveness that satises customer needs in a global marketplace.
Facing the expanding global competition and rapidly changing markets and tech-
nology, a rms emphasis on manufacturing capability should be placed on the
response time, the product quality versus product cost, and economies of scope
versus economies of scale. Therefore, the constructs of manufacturing infrastructure
innovation should include overall technical capability of manufacturing equipment,
capability of manufacturing personnel, the extent to which continuous improvement
of the manufacturing system is in place, level of importance attached to overall qual-
ity control, and degree of manufacturing cost advantage.
Manufacturing technology is key to being successful in this globally competitive
environment. Firms that invest in advanced manufacturing technology and develop
mechanisms for a proper link between strategy and manufacturing operations will
have better customer satisfaction and marketing performance than rms that do
not. Advanced manufacturing technology (AMT) innovation should contain applica-
tions for advanced design methods such as reengineering; and eective applications
for state-of-the-art manufacturing methods such as CIMS, FMS, TQM, JIT and
enterprises liability management.
Therefore, the main components of technology innovation should include R&D
mechanism innovation, manufacturing infrastructure innovation, and AMT innova-
tion. Each component in turn also consists of several constructs. The details of the
technology innovation constructs are described in Appendix B.
Based on above discussions, we can outline the study framework of a technolog-
ical capability and organizational capability audit, as described in Fig. 1. Figure 1
illustrates how the contextual determinants of the two dimensions are interrelated.
2.3. Product competitiveness
Product performance is a dimension of the rms market advantage. Based on
an extensive literature review, product competitiveness is a portfolio concept
Organization
Innovation
Working Flow
Innovation
Strategic
Innovation
Ent erprise Cult ure
Innovat ion
Human Resource
Innovation
Structure
Innovation
R&D Mechanism
Innovation
Manufact uring
Infrast ruct ure
Innovat ion
AMT Innovation
Technology
Innovat ion
Fig. 1. The relationship between technology innovation and organization innovation.
encompassing various aspects such as average concept-to-launch time, program-
ming product series, quality level, cost, analyzing market competitive intensity,
market need and growth potential, technology characteristics, product manufactur-
ing process, and price/function advantage. It is widely believed that innovations
both in technology and organization can be associated with product competitive-
ness. Improving organization and technology capability can be benecial to the rm
and leads to enhanced competitiveness. Product competitiveness was measured via
evaluations of top executives on nine dierent product-related dimensions. The list
of elements together with the respective informants is shown in Appendix C.
3. Conducting an Empirical Survey
As mentioned before, the purpose of the present study is to explore the relationship
between product competitiveness and integration of technology and the organiza-
tion. The scene was set at the major industrial rms in Beijing for two reasons.
Firstly, the capacity and achievements in science and technology (S&T) in Beijing
are much stronger than other regions in China. Secondly, the Beijing Science and
Technology Committee (BSTC) rendered support to the study. The Committee is
an important government organization responsible for making policies, allocating
resources and planning for S&T development in Beijing. In 2002, the BSTC mon-
itored and provided nancial support to the R&D activities of 462 manufacturing
rms in Beijing. As the target population for this survey was dened as all inno-
vative rms in Beijing, the 462 rms formed a representative sample. The possible
problems with this list were omissions and ineligibles. Chances of omissions were
low. Firms not on the list were not our target as their engagement in technological
innovations would be minimal without funding from the government at the time
of the survey. There might be a small number of wholly or partly foreign-owned
rms which were innovative rms but not on the list. To address the issue of ineli-
gibles, BSTC was kind enough to screen out those rms that had not been active in
technological innovations in the past three years. The 375 rms nally selected were
involved in dierent stages or forms of innovative activities during the period of sur-
vey. Innovative activities, according to the OSLO manual [OECD (1997)], include a
series of activities (such as R&D, design, engineering, manufacturing, organization
change, commercialization, marketing and nance) that are part of the innovation
process.
The measurement instruments for the organizational, technological components
and product competitiveness were measured by means of a 7-point Likert response
scale ranging from (1) very unsatisfactory to (7) very satisfactory. Subjective mea-
sures using the Likert-type scale and ordinal scale have been widely used in organi-
zational performance research [Dess (1987); Powell and Micallef (1997); Guan and
Ma (2003); Yam et al. (2004)].
In this survey, the multiple informants approach was adopted to increase reliabil-
ity and validity. The persons involved were the president/CEO, the R&D manager,
the manufacturing manager, the nancial manager and the marketing manager.
With assistance from the BSTC, the survey received responses from 237 rms.
From those, 213 questionnaires were usable, yielding a response rate of 56.8 percent.
Table 1. Sample distributions by class of industry sectors.
Industry sector N Percent (%) Cumulative percent
Electronic communication 35 16.4 16.4
Textile, Clothing and Leather 25 11.7 28.1
Chemicals 20 9.4 37.5
Instruments, Apparatus 18 8.3 45.8
Ordinary Machine manufacturing 17 8.0 53.8
Metallurgical and Metal 15 7.0 60.8
Electronic Machine manufacturing 15 7.0 67.8
Pharmaceutical 11 5.2 73.0
Non-metal Products 10 4.7 77.7
Food nutrition 9 4.3 82.0
Specialized Equipment 9 4.3 86.3
Automobile 8 3.8 90.1
Paper and Printing 8 3.8 93.9
Construction Material 6 2.8 96.7
Others (Plastics, Rubber, Arts Products,
Articial Materials, etc) 7 3.3 100
Total 213 100% 100%
Source: Authors survey.
These were composed of 73 large rms, 79 medium-sized rms, and 61 small rms.
A great majority of respondent rms were State-owned Enterprises (SOEs). The
sample distributions by class of industry sector are depicted in Table 1. Electronic
communication (16.4%), textile, clothing and leather (11.7%) chemicals (9.4%),
instruments apparatus (8.5%), and ordinary machine manufacturing (8.0%) were
the ve highest responding sectors. It is believed that the sample included rep-
resentative rms from various sectors possessing higher innovation capability and
market force. The variety of industry types ensured that the ndings did not relate
to specic industries.
4. Hypotheses
Following Ettlie [1988] and Sun and Frick [1999], an organization-technology (O-T)
map was used as the tool to study the relationship between technology innovation
and organization innovation, and further to investigate interactions among technol-
ogy innovation, organization innovation and product competitiveness. In the O-T
map, the X-axis denotes the technology dimension and the Y-axis indicates the
organization dimension. Both static and dynamic change between technology inno-
vation and organization innovation can be clearly shown in this map. For dynamic
situations, we need to nd out the change rate. That is, we need to obtain slope
dO/dT. This paper mainly focuses on the integrative innovation performance for
dierent enterprises at the same period. So only the static situation needs to be
discussed.
Technology innovation and organization innovation are two indispensable ele-
ments in the development process of enterprises. Technology innovation, especially
the core technology innovation, needs corresponding innovation in the organiza-
tion to absorb, digest, adopt and apply the new innovative technology. Meanwhile,
if the enterprises do not reform the outdated organization structure, regulations,
procedures and cultural traditions, the enterprises would possibly face failure in
their innovation. Many researchers have found that one of the major reasons for
innovation failure is that technological innovation was not accompanied by proper
organizational development [Sun and Frick (1999)]. Some products, such as the Ford
Motor and the IBM computer, failed in the competition not because they lack the
technology, but because the organization structures of the companies are not exible
and are not good at absorbing and applying new technologies. On the contrary, the
motor industry in Japan is more competitive. Although the Japanese introduced
technology from America, they have a more vital organization innovation mech-
anism, so they can succeed. It is obvious that technological innovation within an
organization should be developed in harmony with organizational innovation. Thus,
we put forward the rst hypothesis.
Hypothesis 1: There is a positive correlative relationship between technology and
organization.
Ettlie [1988] used O-T map, a two dimensional correlation map, to describe the rela-
tionships among technology, organization and performance. Based on the demon-
stration study, he drew his conclusion that the closer to the top right corner, the
better the performance. Product performance is a dimension of the rms mar-
ket advantage. Therefore, product competitiveness is a key index to indicate rms
performance. So, we have the second hypothesis.
Hypothesis 2: The closer to the top right corner, the better the performance.
Sun and Frick [1999] studied the dynamic changing trends of technology and the
organization in two dierent companies. They found in the O-T map, the develop-
ment routes of the two companies have a lot in common. The earlier the company
was established, the more attention the manager of the company would pay to the
technology innovation rather than the organization innovation. With the develop-
ment of the company, organization innovation is more and more important. Finally,
technology innovation and organization innovation are well-integrated and reach a
balanced state [Sun and Frick (1999)]. When a company reaches the balanced state,
the organization innovation should be developed in preference to the technology
innovation in order to enhance the success rate of technology innovation. So we
have the third hypothesis:
Hypothesis 3: When a more powerful company in product competitiveness reaches
the balanced state, the organization development will be ahead of the technology
innovation.
Based on traditional manufacturing technology, Advanced Manufacture Technology
is a technology system which integrates computer, electronics information, and man-
agement into the whole process of manufacturing. For example, NC, CAD, CAM,
CAPP, GT, MRP, JIT, FMS and CIM are all very popular AMT. AMT is not
just about selecting and purchasing advanced modern technologies and facilities,
it is a manufacturing system. For some reason, not all companies can introduce
AMT successfully. If AMT is carried out eectively, it will help to increase pro-
ductivity, decrease consumption, ensure the working quality and improve product
competitiveness. So we have the fourth hypothesis:
Hypothesis 4: The more eectively people in the company use AMT, the better
the rms performance.
With the growth of a companys size, productivity improves as the new and eective
facilities are put into use; labor eciency increases as the specialization division is
clearer; the average cost decreases as the quantity of the raw material increases; the
company has a good reputation, so the product is well-known to the customer and
it is easy for the company to obtain nancing; as the ability of R&D increases, the
product can be updated quickly. All of these factors can reduce costs and promote
the products competitiveness. So we have the fth hypothesis:
Hypothesis 5: It will help to improve the product competitiveness if the company
size expands to a certain extent.
In the present study, we use technology innovation and organization innovation as
independent variables, product competitiveness as the dependent variable, and the
organization size and AMT as the intermediate variables. With the help of an O-T
map, ve hypotheses connected all the variables. Figure 2 shows the connections
(where H1 denotes hypothesis 1 and H2 denotes hypothesis 2, etc.).
5. Data Analyses
5.1. Test of data consistency
We use SPSS software package to test the consistency of the data. Cronbachs is
an eective way to test the consistency. Cronbachs test value for AMT is 0.78.
In other cases, all alpha values exceeded 0.8; therefore, all the scales were internally
consistent. This shows the surveyed data have high reliability and can be directly
used in the study.
Technology
Innovation
Organization
Innovation
Organization
Performance
H1
Company's size
Independent
Variables
Dependent
Variables
Intermediate
Variables
AMT
H5 H4
O-T map
H2
H3
H3
Fig. 2. The relationship of the ve hypotheses.
5.2. Test hypothesis 1
H1: There is a positive correlative relationship between technology and organization.
We use Canonical Correlation Analysis to demonstrate hypothesis 1. Canonical
Correlation Analysis is a statistical analysis method that is used to study the rela-
tionship between the variables of two groups. It considers all the variables in one
group as a whole. We use the subprogram of SPSS, named CANCORR program,
to do canonical correlation analysis directly. Through this macro-processor, we can
decide the largest correlation coecient of the two groups of variables. In the mean-
time, we can know how the variables combine with each other. Furthermore, the
canonical loadings for all canonical variables can be calculated.
There are three canonical coecients between the technology innovation and
organization innovation. The values are 0.892, 0.235 and 0.059 respectively. The
rst one is very large (0.892), which shows there is a positive canonical correlation
between technology innovation and organization innovation. The O-T map also
shows the same results (see Fig. 3).
From the results of SPSS data analysis, we can directly obtain the canonical
loadings of the two groups of variables and the coecients of all canonical variables,
including the original coecients and the standardized ones. Tables 2 and 3 show
the details.
In Table 2, we nd that the canonical loadings of each of the indexes are com-
paratively high, which means all of the indexes are fairly important. The canonical
loading of AMT (0.903) is highest in all of the independent variables. The canon-
ical loadings of culture innovation (0.954) and structure innovation (0.951) are
fairly high in all of the dependent variables. It shows that culture innovation and
structure innovation have strong impacts on the AMT.
Fig. 3. O-T map.
Table 2. The canonical loadings of the two group of variables.
Canonical loadings
Variable Variable 1 Variable 2 Variable 3
Group X Technology Innovation
X
1
Manufacturing Infrastructure Innovation 0.818 0.396 0.417
X
2
R & D Mechanism Innovation 0.850 0.092 0.518
X
3
AMT Innovation 0.903 0.415 0.112
Group Y Organization Innovation
Y
1
Strategic Innovation 0.933 0.309 0.183
Y
2
Structure Innovation 0.951 0.122 0.280
Y
3
Working Flow Innovation 0.945 0.001 0.018
Y
4
Human Resource Innovation 0.883 0.101 0.026
Y
5
Enterprise Culture Innovation 0.954 0.216 0.061
Table 3. The linear combination of the rst canonical variable.
Variables Linear combination
Original variables V
1
= 0.379X
1
0.297X
2
0.396X
3
W
1
= 0.184Y
1
0.207Y
2
0.157Y
3
0.160Y
4
0.337Y
5
Standard variables V
1
= 0.358X
1
0.380X
2
0.426X
3
W
1
= 0.205Y
1
0.212Y
2
0.161Y
3
0.144Y
4
0.344Y
5
H2: The closer to the top-right corner, the better the performance.
We employ the O-T map to test hypothesis 2, as described in Fig. 4. Each of the
points on the map denotes scores of technology and organization for a company.
In order to make it more understandable, we describe hypothesis 2 in another way.
That is, the better the product competitiveness of the company, the closer the point
is to the top-right corner. The average score of each companys product compet-
itiveness can be found from the questionnaire survey. According to the scores of
product competitiveness, we categorize all the companies into three groups: high-
competitiveness companies with scores of greater than 6, mid-competitiveness com-
panies (46) and low-competitiveness companies (14). Based on this corresponding
relationship, we can easily nd that the closer the company is to the top-right corner,
the better the product competitiveness of the company. We use dierent symbols to
denote dierent kinds of companies. In the O-T map, it is obvious that companies
with higher product competitiveness have points closer to the top-right corner (see
Fig. 4).
H3: When a more powerful company in product competitiveness reaches a balanced
state, the organization development will be ahead of the technology innovation.
Generally speaking, it is dicult to directly assess the economic performance and
to quantify the importance of the organizations innovation, so we demonstrate
Fig. 4. O-T map according to the dierent performance.
Table 4. Organization innovation and technology innovation.
A B C D E F
Valid N 43 43 157 157 13 13
Mean 3.52 3.46 4.82 4.61 5.76 5.56
Std. Deviation 0.88 0.82 0.69 0.76 0.81 0.86
Minimum 1.05 1.00 2.44 2.52 3.93 4.07
Maximum 5.42 5.12 6.29 6.05 6.79 7.00
Remark: A: Organization Innovation in Low-competitiveness companies; B: Technology
Innovation in Low-competitiveness Companies; C: Organization Innovation in Mid-
competitiveness Companies; D: Technology Innovation in Mid-competitiveness Com-
panies; E: Organization Innovation in High-competitiveness Companies; F: Technology
Innovation in High-competitiveness Companies.
hypothesis 3 in another way. Again, we classify the companies into three groups
according to the product competitiveness scores. Then, we calculate the descriptive
statistical values respectively (see Table 4). The table indicates that the means of the
organization innovation are higher than those of the technology innovation. It means
that organization innovation is more important than technology innovation for the
surveyed innovative companies. Furthermore, the higher the technology innovation
performance, the more attention should be paid to organization innovation. From
the above, hypothesis 3 is proven.
H4: The more people in the company use AMT eectively, the better the rms
performance.
We classify the surveyed rms into three groups according to their scores for using
the AMT: the group of high-application use of AMT with average scores higher
than 6, the group of mid-application use of AMT (46), and the group of low-
application use of AMT (14). The relationship between the application of AMT
and product competitiveness is clearly shown in Fig. 5. Obviously, those who use
the AMT more eectively have better product competitiveness (see Fig. 5).
H5: It will help to improve product competitiveness if the company size expands
to a certain extent.
We classify the companies into three groups according to their size: large-scale,
mid-scale and small-scale companies. The company sizes are recognized by Beijing
Science and Technology Committee. Then we calculate the descriptive statistical
values respectively (see Table 5).
From the output results, we nd that the mean of product competitiveness in
the large-scale company is relatively high. Also, the mean of product competitive-
ness in the small-scale company is fairly high. t-tests of both of the two groups
of data tell us that there is no signicant dierence between the mean of product
Fig. 5. The relationship graph of product competitiveness and AMT.
Table 5. The comparison of product competitiveness according to company size.
Large scale company Middle scale company Small scale company
Number 73 79 61
Mean 4.88 4.71 4.76
Std. Deviation 0.88 0.95 1.06
Minimum 1.11 3.00 1.00
Maximum 7.00 6.89 7.00
Table 6. t-test of product competitiveness in large- and small-sized companies.
t-test for equality of means
t df Sig. (2-tailed) Mean dierence Std. error dierence
Equal variances assumed 0.732 132 0.466 0.1229 0.16802
Equal variances
not assumed 0.720 116.999 0.473 0.1229 0.17078
competitiveness in large-scale and small-scale companies (see Table 6, t = 0.732,
p = 0.466). Therefore, hypothesis 5 is only partly proven.
On the other hand, we compare the standard deviations (SD). The SD of the
large-scale companies is the smallest, which means the centralization trend of the
data is relatively good. The mean of the small-scale companies is not the smallest,
but the SD is the largest, which means the data of small rms are dispersive. We
can obtain the same conclusion after we carefully analyze the frequency distribu-
tion. There are only a few large-scale companies with low product competitiveness.
On the contrary, there are only a few small-scale companies with high product
competitiveness. Mid-scale companies always take the lowest position in product
competitiveness among the considered rms.
Thus, we conclude that the scores of product competitiveness, which are classi-
ed in rms sizes, are U-distributed. The company scale advantage is not embodied
in the product competitiveness.
In addition, we investigated how investment in manufacturing equipment
impacts the innovative performance of the surveyed rms. It was found that the
correlation coecients between the investment in manufacturing equipment and
innovative performances, which are indicated by success rate of technology innova-
tions (0.076), share of innovation sales (0.159), innovation rate (0.108), and share
of export sales (0.058), respectively, are in general not signicant. This shows that
a heavier investment in manufacturing equipment alone, although it may be nec-
essary for rms innovative activities, can neither lead to a higher success rate of
commercialization of innovative products nor a higher innovation rate, and it cannot
guarantee the success of technological innovation. Again, the empirical evidence of
multiple regression analysis veries that investment in manufacturing equipment
alone cannot signicantly lead to a higher product competitiveness. This supports
the importance of organizational innovation.
6. Conclusions
Recent studies have advocated integrated innovation between technology and orga-
nization and discussed its impact on a rms competitive performance. The purpose
of this research is to explore the relationship between product competitiveness and
integration of technology and organization. Therefore, a study framework of tech-
nological capability and organizational capability audit is rst proposed, and the
relevance of the integration of technology and organization and product competi-
tiveness of Chinese rms is then examined. Empirical data were acquired through a
recent study of innovative rms from Beijing, China. Five hypotheses for identify-
ing the relationship amongst product competitiveness and integration of technology
and organization are put forward. The instrument of an Organization-Technology
(O-T) map and some statistical analysis methods, such as Canonical Correlation
Analysis, are used to verify the ve hypotheses. The results eectively verify the
positive relationship among technological innovation, organizational innovation and
product competitiveness.
In summary, it is easy to nd that technology development and organization
change are not independent in the innovation process. The integrative innovation of
technology and organization is a key to improve the core competency and achieve
the competitiveness advantage. When the technology and organization develop to
a certain stage, say some competing point, it is better to place organizational inno-
vation in a priority position. In the mean time, technology innovation must keep
up with the organization innovation. When a company develops to a certain stage,
it will be helpful to improve its product competitiveness if the company properly
enlarges the company size and appropriately introduces AMT. The application of
AMT has signicant and positive impacts on the product competitiveness of the
surveyed rms. However, heavier investment in manufacturing equipment alone can
neither lead to higher innovative performance nor stronger product competitive-
ness. The ndings also reveal that integrated innovation between technology and
organization is substantial for improving the product competitiveness of Chinese
rms.
Acknowledgments
The work described in this paper was supported by grants from the National Natural
Science Foundation of China (No. 70372012) and Aeronautical S&T Foundation
(No. 05E51008).
Appendix A. List of Auditing Elements of Organization Innovation
Strategic innovation
1. Relevance of the R&D plan to the corporate plan.
2. High-level integration and control of the major functions within the company.
3. Advanced decision-making method.
Structure innovation
1. Mechanisms to encourage and reward inventiveness and creativity.
2. Presence of cross-functional teamwork.
3. Level of integration between dierent functional groups in the innovation process.
4. Eectiveness of the marketing intelligence system.
5. Flexibility in adjusting the organization structure.
6. Ability to handle multiple innovation projects in parallel.
7. Coordination and cooperation of R&D, marketing and manufacturing.
Appendix A. (Continued )
Work-ow innovation
1. Range of functions (departments) involved in concept development and screening.
2. Centralized and fast pace technology innovation
3. Mechanisms to track progress of innovation projects.
4. Communication between suppliers, the company and its major customers.
Human resource innovation
1. Quality and availability of product champions
2. Mechanism of motivation or rewards and punishment.
3. Autonomy of sub-units.
4. Eectiveness of the internal technological expert collecting and diusing the
marketing information.
5. Attaching importance to human resources.
6. Programming human resources in phases.
7. Selecting key personnel in each functional department.
8. The proportion of mid- or high-level managers with a technology background.
9. The proportion of mid- or high-level managers engaged in the technology
business.
Enterprise culture innovation
1. Eciency of R&D personnel communication.
2. Maintenance of brand image and corporate image.
3. Adaptation to changes in the external environment.
4. Availability of a clear plan a road map with measurable milestones.
Appendix B. List of Auditing Elements of Technology Innovation
Research and development mechanism innovation
1. Cooperative innovation to decrease innovation costs.
2. Making full use of external technologies.
Manufacturing infrastructure innovation
1. Overall technical capability of manufacturing equipment.
2. Capability of manufacturing personnel.
3. Extent to which continuous improvement of the manufacturing system is in place.
4. Level of importance attached to overall quality control.
5. Degree of manufacturing cost advantage.
Advanced manufacture technology innovation
1. Application of advanced design methods, such as reengineering.
2. Eectiveness of applications of the state-of-the-art manufacturing methods, such
as CIMS, FMS, and TQM.
3. Eectiveness of applications of JIT.
4. Eectiveness of applications of enterprises liability management.
Appendix C. List of Auditing Elements of Product
Competitiveness and Informants
1. Average concept-to-launch time R&D manager
2. Product mix appropriateness President
3. Quality level R&D manager
4. Cost advantage Financial manager
5. Market competitiveness Marketing manager
6. Market need and growth potential Marketing manager
7. Unique technology characteristics R&D manager
8. Special product manufacturing process Manufacturing manager
9. Price/function advantage Financial manager
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Biography
Jiancheng Guan is a Professor at School of Management, Fudan University,
China. His teaching and research areas include Technological Innovation Manage-
ment and Scientometrics. His research work has been published in international jour-
nals such as (alphabetically ordered) European Journal of Operational Research;
Fuzzy Sets and Systems; IEEE Transactions on Reliability; Information Processing
and Management; International Journal of Technology Management; International
Journal of Uncertainty, Fuzziness and Knowledge-based Systems, Journal of the
American Society for Information Science and Technology; Journal of Knowledge
Management; Production and Inventory Management Journal; R&D Management;
Research Policy; Research-Technology Management; Scientometrics; Technological
Analysis and Strategic Management; Technological Forecasting and Social Change;
Technovation.
Jianyan Liu was a graduate student of School of Management, Beijing University
of Aeronautics & Astronautics, China. Her research interest is in Technological
Innovation Management.

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