Master Thesis: Virtual Communities As A Vehicle For Science-Based External Knowledge Sourcing e Sourcing and

Virtual communities as a vehicle for science-based external knowledge sourcing
Dan Herlin
070184-2901
Benedikta Hedegaard-Knudsen
231283-1778
Cand merc. (MIB) Management of Innovation and Business Development Copenhagen Business School Academic advisor: Finn Valentin, Dep. of Innovation and Organizational Economics 113 Pages + Appendix STU count: 271.249 2011-11

Abstract
Over the past decade the world has witnessed a dramatic development of information and communication technologies (ICT), and one of the most profound manifestations of online communication is that of virtual communities (VCs). VCs are proliferating across the Internet in various forms, and companies have become increasingly interested in utilizing VCs as a tool for external knowledge sourcing and innovation. In the literature, we find that most work on this topic predominantly relates to market-focused crowdsourcing through user- or challenge-driven VCs. In this light, this paper aims to investigate the benefits that a research-based VC holds for science-based R&D intensive firms in acting as a vehicle for unguided search of scientific opportunities, as to ultimately enhance their innovative capacity. Our research takes point of departure in the combinatorial view of innovation where we recognize that external sources of knowledge hold great potential for innovating firms. We take an exploratory and multidisciplinary approach where we combine literature of cognitive economics, sociology, innovation, ambidexterity and network theory. Moreover, we conduct a prospective single-case study of Novozymes (NZ) - a leading biotechnology firm in the industrial enzyme business. Here, we assess NZ R&D organisation and its current innovation model to conclude that NZ is to certain extent is trapped in sub-optimal routinized exploitative R&D strategies. While NZ current innovation model has proved highly efficient in the past, looming challenges in the enzyme market places Novozymes in a position to benefit from more explorative R&D strategies. We identify a set of enabling properties that makes virtual communities particularly conducive for overcoming a number of barriers found in real life (IRL) communities. More specifically, we highlight how VCs can overcome barriers of time and geographical proximity as well as barriers of cognitive-, disciplinary- and organizational separation. We conclude that VCs hold potential to act as a brokerage mechanism for bridging structural holes and facilitate external knowledge sourcing, and ultimately make out a keystone in the development of ambidextrous organisational capabilities. As a result, we suggest that NZ can engage in more explorative R&D strategies by means of a VC set-up, without compromising the efficient model if innovation currently in place in the organization.
Copenhagen Business School M.Sc. Innovation and Business Development
Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin
Table of Contents
List of Abbreviations ...................................................................................................................................................... 3 1. INTRODUCTION .......................................................................................................................................... 5 1.1. PROBLEM STATEMENT .............................................................................................................................................. 8 1.2. CLARIFICATION OF RESEARCH .................................................................................................................................. 8 1.3. DEMARCATION ............................................................................................................................................................ 9 1.4. MOTIVATION ............................................................................................................................................................ 10 1.5 RELEVANCE ................................................................................................................................................................ 10 1.6. DISPOSITION ............................................................................................................................................................. 11 2. METHODOLOGY ....................................................................................................................................... 12 2.1. RESEARCH STRATEGY AND DESIGN ..................................................................................................................... 12 2.2. DATA COLLECTION .................................................................................................................................................. 14 2.2.1. Qualitative research methods .................................................................................................................... 14 2.2.2. Method of verification ................................................................................................................................... 17 2.2.3. Quantitative research method ................................................................................................................... 18 2.3. CRITIQUE OF METHODOLOGY ................................................................................................................................ 18 2.3.2. Limitations ......................................................................................................................................................... 18 2.3.3. Reliability ............................................................................................................................................................ 20 2.3.4. Validity ................................................................................................................................................................. 20 2.3.5. Generalizability ................................................................................................................................................ 21 2.4 DELIMITATIONS ........................................................................................................................................................ 21 2.5. CENTRAL CONCEPTS ............................................................................................................................................... 22 3. LITERATURE REVIEW ............................................................................................................................ 24 3.1. COGNITIVE ECONOMICS .......................................................................................................................................... 25 3.2. BRIEF HISTORY OF ICT AND THE INTERNET ...................................................................................................... 26 3.3. VIRTUAL COMMUNITIES ......................................................................................................................................... 27 3.4. A TYPOLOGY OF VIRTUAL COMMUNITIES FOR EXTERNAL KNOWLEDGE SOURCING ..................................... 29 3.4.1. User-driven community ................................................................................................................................ 30 3.4.2. Challenged-Based Community ................................................................................................................... 31 3.4.3. Research-based community ........................................................................................................................ 31 3.5. RESEARCH GAP ........................................................................................................................................................ 32 4. THEORETICAL DISCUSSION .................................................................................................................. 33 4.1. COMBINATORIAL INNOVATION ............................................................................................................................. 33 4.1.1. The linear- and the chain-linked model - The role of science and innovations .................... 35 4.1.2. Exploitation and Exploration ..................................................................................................................... 39 4.1.3. The Ambidexterity Hypothesis ................................................................................................................... 40 4.1.4. Combinatorial Innovation: Models and application of theory .................................................... 41 4.2 NETWORKS, KNOWLEDGE AND STRUCTURAL HOLES ........................................................................................ 45 4.2.1. The Social Structure of Networks ............................................................................................................. 46 4.2.2. Structural Holes ............................................................................................................................................... 48 4.2.3. Structural holes and opportunities in segmented networks ........................................................ 49 4.2.4. Brokerage and Innovation .......................................................................................................................... 50 4.2.5. Cognitive Distance ........................................................................................................................................... 51 4.2.6. Social Capital and Innovation .................................................................................................................... 52 4.3. VIRTUAL COMMUNITIES AND KNOWLEDGE SOURCING .................................................................................... 54 4.3.1. Knowledge Sharing and Information Exchange in virtual worlds .......................................... 54 4.4. THEORETICAL SYNTHESIS AND APPLICATION .................................................................................................... 55 5. NOVOZYMES - CASE COMPANY PROFILE .......................................................................................... 58 5.1. NOVOZYMES R&D ORGANIZATION ....................................................................................................................... 59
5.2. LOOMING CHALLENGES .......................................................................................................................................... 61 6. ANALYSIS .................................................................................................................................................... 62 6.1. PART I - NOVOZYMES INNOVATION MODEL ....................................................................................................... 63 6.1.1. R&D in transition at Novozymes ............................................................................................................... 64 6.1.2. Novozymes innovation model ................................................................................................................... 66 6.1.3. R&D at Novozymes: basic vs. applied scientific research ............................................................... 68 6.1.4. R&D project groups at Novozymes .......................................................................................................... 69 6.1.5. Novozymes and The Long Tail of R&D ................................................................................................... 71 6.1.6. The emergence of revolutionising technologies for enzyme research ..................................... 73 6.1.7. Conclusion: analysis part I ........................................................................................................................... 75 6.2 ANALYSIS PART II VIRTUAL INNOVATION BROKER ....................................................................................... 76 6.2.1. A great place to start ..................................................................................................................................... 76 6.2.2. Structural holes and combinatorial innovation ................................................................................. 77 6.2.3. The Virtual Innovation Broker .................................................................................................................. 78 6.2.4 Enabling and inhibiting properties of virtual communities .......................................................... 80 6.2.5. Trends in community life online ................................................................................................................ 83 6.2.6. Conclusion: analysis part II ......................................................................................................................... 86 6.3 ANALYSIS PART III THE AMBIDEXTROUS INNOVATION MODEL .................................................................. 87 6.3.1. Optimal Scope Continuum ........................................................................................................................... 87 6.3.2. Overcoming obstacles to ambidexterity ................................................................................................ 90 6.3.3. Ambidextrous innovation ............................................................................................................................. 93 6.3.4. Conclusion: analysis part III ....................................................................................................................... 95 6.4. CONCLUSION: ANALYSIS PART I, II, II .................................................................................................................. 96 7. DISCUSSION OF FINDINGS AND FUTURE PERSPECTIVES ........................................................... 99 8. BIBLIOGRAPHY ..................................................................................................................................... 105 8.1. BOOKS AND ARTICLES ......................................................................................................................................... 105 8.2. ONLINE SOURCES .................................................................................................................................................. 113 9. APPENDIX ................................................................................................................................................ 114 APPENDIX 1: INTERVIEW SUMMARY ......................................................................................................................... 115 APPENDIX 2: ONLINE QUESTIONNAIRE SUMMARY ................................................................................................. 146 APPENDIX 3: NOVOZYMES SALES DATA AND GLOBAL ENZYME MARKET ............................................................ 151 APPENDIX 4: ONLINE TRENDS EMERGING SCIENTIFIC COMMUNITIES ............................................................. 153 APPENDIX 5: ENABLING AND INHIBITING PROPERTIES OF A VIRTUAL COMMUNITY ........................................ 159
List of Abbreviations B-2-B B-2-C FtF ICT IRL LM NZ Business to Business Business to Consumer Face to Face Information and Communication Technology In Real Life Linear Model of Innovation Novozymes Research and Development Virtual Community Virtual Innovation Broker
R&D VC VIB

The value of an idea lies not its origin, but in its delivery
- Ronald Burt, 2001
1. Introduction
Do you have a good idea? A sudden spark of inspiration? A memory? Where did it come from? We are often led to believe that ideas pop out of nowhere. Famous tales suggest that great ideas are the result of epiphanies, such as Archimedes who supposedly while lying comfortably in his bathtub suddenly realized that any object, wholly or partially immersed in a fluid, is buoyed up by a force equal to the weight of the fluid displaced by the object1; or of Isaac Newton who, when the apple fell from the tree, suddenly grasped that the gravitational force is proportional to the product of the two masses and inversely proportional to the square of the distance between them2. In the light of the notion of combinatorial innovation, the Eureka! moment metaphor and Edisons light bulb allegory are reduced to romanticized versions of the truth. The point is that most great ideas have a historical record, and first see the day of light after being processed iteratively by a number of actors; often as result of collective effort of connecting the dots (Burt, 2001). Similarly, innovations emerge through the recombination of the technological components and processes that lie along the contemporary technology frontier (Fleming & Sorensen, 2004). Through collaboration and connectivity, the combination of pools of knowledge in due course leads up to a moment of breakthrough. The traditional view of creative processes, is that these are the result of a genetic precondition or personal trait, but creativity is an import-export game - not a creation game (Burt, 2004). Hence, the value in an idea lies not in its origin, but in its delivery (Ibid.:1). But how can the delivery of ideas be facilitated? It becomes important to understand what circumstances that are required to facilitate the emergence of ideas? Behavioural sciences holds part of the answer. A generic notion from sociology is that information circulates more within groups of people than across groups of people (Lin et al., 2001). With the notion of combinatorial innovation in mind, many scholars suggest that multi- disciplinarity opens up for novel and more radical combinations. Nevertheless, since the composition of groups often takes a homogenous character, it has been proved challenging to reach out to actors who reside in distant networks and disciplines. What

1 Archimedes discoveries in the bath: http://www.mlahanas.de/Greeks/ArchimedesBath.htm 2 How Newton Built on Galileo Ideas: http://galileo.phys.virginia.edu/classes/109N/lectures/newtongl
could possibly incentivize people who do not naturally come together, to meet and share knowledge and experiences? Over time the mechanisms or enabling spaces for connecting and facilitating collaboration and mediation of information across people have taken many forms. In the Age of Enlightment3, enabling spaces took the form of coffee houses. According to Cowan the coffeehouse was a place for individuals to congregate, to read, as well as to learn from, and debate with each other (2005:89). Over the years more sophisticated enabling spaces have emerged, such as schools and universities, and todays counterpart of the coffeehouses during the Enlightment is indisputably the Internet. Human social interaction has changed dramatically over the past decade, much as a result of developments in communication technology and the emergence of the Internet. The central utility of the Internet is to facilitate connectivity and the notion of sharing is the substance of online interaction. The applications of the Internet found in in human life today are countless. Social and public life is increasingly mediated through Internet technology, essentially reframing our everyday experiences and changing the very fabric of society. Since the emergence of the Internet in the late 1990s, it has brought about profound impacts on the world economy, on politics, on culture and social progress, and promoted the transformation of social production and information dissemination (Xinhua, 2010). The proliferation of low cost access to the Internet has made way for new means by which inter-organizational and inter-personal interaction can take place, allowing connections to be made and networks to be built, earlier unimaginable. Essentially it has grown to become an integrated facet of life for people, organizations and businesses - a given piece of our information and communication landscape - and not the least a major source and catalyst for innovation. One of the most profound manifestations of online communication technology is that of virtual communities (VC). The mode for online communication has moved from monologue to dialogue, i.e. from one-to-many to many-to-many (Brandtzg et al., 2010). VCs have soured in numbers over the past decade, and online connections are multiplying at a phenomenal rate. Today, the multiplicity of VCs is growing from broad to narrow in scope and VCs are to be found within almost any area of interest, industry
3
Timespan: 1650-1796 (Frost, 2011)
or field of study. A VC can establish linkages and facilitate interaction between geographically dispersed actors, and act as a vehicle for information exchange and knowledge sharing (Fller et al., 2004). The interest for how online communication technologies can accommodate new knowledge creation and enhance innovation is growing among companies (Brandtzg et al., 2010). One such company is Novozymes (NZ) - a Danish biotechnology firm and world leader in industrial enzymes. The business of industrial enzymes is highly R&D-intensive, and 16% of NZ workforce is employed in R&D, and about 14% of revenue is re-invested in research (Annual Report, 2010). The constant search for new knowledge is an integral part of NZ business agenda, and the R&D organization is always seeking new leads for application areas of its enzyme technologies. Along with developments of information and communication technologies (ICT), the R&D organization at NZ has turned their interest towards opportunities that can be realized by means of external knowledge sourcing through the use of virtual community technologies. More specifically, they have asked us to investigate to what extent a virtual community can help facilitate efficient external knowledge sourcing and make R&D activities more explorative. Innovating firms are said to face two conflicting processes of organizational learning: exploration and exploitation. Exploitation deals with static efficiency and relates to refinement of existing products and procedures and incremental innovation, whereas exploration relates to dynamic efficiency and involves search for new options in distant fields and more radical innovation (March, 1991). We know that managing the scope of exploration and exploitation comprise a paradoxical challenge, and to do so successfully is said to require ambidextrous organizational capabilities (Tushman & OReilly, 1996). We draw upon the notion of ambidexterity and seek to understand the extent to which a VC can support an ambidextrous model of innovation to emerge, as we seek to uncover potential opportunities that can be realized by leveraging particular qualities of VCs to help manage exploitation and exploration simultaneously.
1.1. Problem Statement

In this thesis we explore the following research question: How can a virtual community facilitate external knowledge sourcing so as to enhance the innovative capacity of Novozymes R&D organization? In this effort, we conduct a three-pronged analysis in which the three below sub- questions are explored, respectively: Q1: To what extent is the current innovation model at Novozymes conducive for effective external knowledge sourcing? Q2: How can virtual communities support the facilitation of external knowledge sourcing for science-based firms? Q3: Can a virtual community make way for an ambidextrous innovation model?
1.2. Clarification of research

Q1: The first sub-question serves to address the extent to which the current innovation model at NZ is conducive for external knowledge sourcing. Here we analyse NZ the scope of R&D activities and its current innovation model. We investigate the characteristics of the enzyme research environment at NZ and develop arguments for why distant search is deemed a critical element in the development of novel and revolutionary applications in enzyme technology. Ultimately we conclude that NZ suffers from a local search bias and indeed hold to benefit from external knowledge sourcing. Q2: Secondly, mechanisms for external knowledge sourcing are reviewed, where we take a particular interest in the role of virtual communities for facilitating external knowledge sourcing. Here, existing literature and case-examples of virtual communities are revised, and a set of enabling properties for how virtual communities can act as a vehicle for external knowledge sourcing is identified. We further expand the second part of the analysis and take pragmatic approach. Here we highlight a number of trends in online community life as well conduct an online survey, where we find supporting arguments for VCs in research-based environments. Q3: Thirdly, we explore the notion of cognitive distance and explorative strategies to shed light on the implications of too distant sources of knowledge. We furthermore
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highlight the notion of ambidextrous innovation and address how a virtual community holds potential to reinforce a balance between exploitative and explorative R&D strategies. In summary, Q1 helps us identify a problem, Q2 proposes a solution and Q3 assesses the proposed solution in the light of scope of exploration and ambidextrous organisational capabilities. Thus, in reaching our succeeding conclusions, this paper follows two logics of reason. In exploring Q1 a practical and diagnostic approach is taken and our subsequent findings are largely based on the case analysis of Novozymes through empirical data from a set of interviews. Our case provides a context in which the phenomenon of VC can be discussed and exemplified. In Q2 and Q3, our concluding remarks are the result of inference from extant literature and application and reconstruction of prevailing theory and concepts, and thereby of a more general nature. Altogether, we hope to shed light on the emerging phenomenon VC with regards to innovation and external knowledge sourcing.
1.3. Demarcation
It is important to note that there is more to the story of building virtual communities for external knowledge sourcing than what is covered over the course of this thesis. A large number of factors must be assessed before a decision to build and employ a virtual research community can be taken. This paper merely tells the story of how a (particular) firm could potentially to benefit from an initiative like this. We thus take a specific interest in gaining a contextual understanding of Novozymes, a company that wishes to establish a virtual community, how a virtual community can facilitate external knowledge sourcing, and the implications of this. Given the scope of a Master Thesis we have chosen to omit analysis of how a possible implementation can take place, and thereby refrain from addressing how knowledge are to be transferred, internalized or absorbed into the real world setting of the organization from the virtual community. Another important note on this paper is that it should not be seen as a cost-benefit analysis of the utility of virtual communities in the given context, but rather as a benefit analysis. While we touch upon both enabling and inhibiting properties of virtual communities, we choose to delimit our thesis to unravel potential benefits encompassed by this technology as opposed to its limitations. While this might indicate an asymmetric emphasis, it seems justified by the scope and objective of the paper. Thus, we delimit our
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focus on two dimensions. We place our research in the upper left quadrant of figure 1.1 below, yet we want to highlight the there are other important dimensions that needs to be studied in order to gain a more complete comprehension of the phenomenon in question. Figure 1.1: Demarcation Contextual understanding Implementation
!
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Benefits Costs
Source: Own model
1.4. Motivation
We, the authors of this paper, are fascinated by opportunities arising from the fast developments of information and communication technology (ICT), and in particular, online tools for communication and collaboration. Furthermore, given our pronounced specialization in the field of management of innovation, we wanted to conduct a study of how online tools hold potential to enhance innovative capacity of firms. Two facets of innovation have driven our research forward. As highlighted in the introduction the combinatorial perspective of innovation provides an appealing take on understanding the emergence of ideas, and consequently how and where innovations transpire. Second, a movement emphasizing the value to be reaped by firms through exploring external sources of knowledge has emerged in the economic literature under the term open innovation. Inspired by the principle proposed by Bill Joy, cofounder of Sun Microsystems, No matter who you are, most of the smartest people work for someone else, we find models for distributed (open) innovation an intriguing aspect of innovation worth studying further.
1.5 Relevance
Given the rapid emergence of new applications of ICT for the purpose of knowledge sharing and collaboration we find the topic of our study highly relevant. Virtual communities are today increasingly being used as a tool for crowdsourcing knowledge,
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yet we find that the underlying elements for why online technologies provide such a useful tool is understudied. In particular, we find that science-based firms who aim to engage in unguided search of scientific opportunities by means of online technologies have been largely omitted from the academic discourse. It is proposed here that science- based firms to a larger extent can take advantage of online networks in their R&D efforts; hence the present paper aims to provide supportive arguments and theory for better understanding how to take an active role along the emerging trend of virtual communities in the light of innovation. Moreover, it is believed here that in studying the phenomenon of virtual communities through the lens of innovation- and network theory with point of departure in cognitive economics and sociology discourse, we wish to provide a more nuanced picture of the utility of such technologies in the management of R&D strategy and innovation. (See section 3 for literature review and research gap identification).
1.6. Disposition
Figure 1.2. Disposition of Thesis

Source: Own illustration
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2. Methodology
The aim of the methodology section is to provide the reader with an overview of the overall research approach, collection and treatment of data, limitations, delimitations and critique of chosen methods.
2.1. Research Strategy and Design

We are conducting an exploratory case study of Novozymes, and highlight the benefits of a virtual community for external knowledge sourcing in that context. Exploratory studies focus on finding new insights, to ask questions and to assess a phenomenon in a new light, and the advantage of exploratory studies is the degree of flexibility and adaptiveness that the approach provides the researcher with (Saunders et al., 2007). The exploratory researcher does not approach their project according to any set formula, hence we set out to generate hypotheses for later investigation rather than illustrating an actual occurrence of events. As such our case does not tell a story of how, but rather asks how, and this paper can thereby be seen as an initial effort to shed light on the role of virtual communities in a particular context that in turn can open up for future research. We are inspired by the abductive theory of method, which emphasizes no a priori hypotheses or presuppositions before initiating the research (Levin-Rozalis, 2000; Haig, 2005). Drawing on an exploratory approach, we sat out to uncover and establish a research hypothesis on the basis of initial project meetings with NZ (February 2011). Based on this, we identify current and novel concepts that we find to be of assistance in substantiating our hypothesis (Haig, 2005). In our particular case, we are not only dealing with a hitherto unknown and completely new initiative at Novozymes, but theory and literature on the topic is also scarce. We take this circumstance as an opportunity to further explore the research phenomena; a circumstance that the abductive logic supports by calling for a cyclical process of checking and rechecking against observations made, widening and modifying our hypothesis through the process (Levin-Rozalis, 2000). The movement between theorizing and data collection is reflected in the shift that our research topic has gone through over course of our research. We started out by looking into design attributes of an online platform to assess how such an open innovation platform should be constructed. We soon came to realize that there were other important underlying issues that would need to be addressed prior to
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assessing implementation and architectural attributes of the platform. We turned our interest to the notion of network structures- as well as types of scientific research (basic vs. applied scientific research) and its impact on different types of innovation. We thus experienced a slight shift in our focus area, and began to theorize and collect data to further assess these theoretical constructs in the light of a virtual community. Here where we found that current literature and theory inadequately address the particular intersection of the topics of network structures, innovation and virtual communities. Figure 2.1. Abductive research method
Source: Own model
As a result of scant elaborative data, literature and theory, to explain this particular topic of research, our research design was structured to encompass abductive reasoning. Data are systematically collected and analysed, and re-evaluated to allow the initial theoretical assumptions to evolve in the process of further data collection and analysis (Strauss & Corbin, 1998). We furthermore re-construct prevailing theoretical constructs and thus our identified hypotheses according to data collected a reoccurring process of movement between theorizing and conducting empirical research (Wallace, 1971). This approach is, furthermore, in line with the paradigm of social constructivism, which acknowledges that knowledge is generated in the context of social interaction between the interviewer and the interviewee (Kvale, 1996). In light of a social constructivist epistemological approach we primarily rely on heuristic reasoning as guidance throughout the thesis. As opposed to logic reasoning, heuristic reasoning cannot demonstrate the truth or falsity of a theorem; it can merely augment or diminish our confidence in a theorem (Polya, 1941). Thus, while logic reasoning is objective, heuristic reasoning is subjective. In turn, a heuristic proof is provisional rather than absolute, and it may be completely reasonable yet come to change tomorrow. Consequently, our
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conclusions are the best that can be obtained in the light of an explorative case study and given the actual state of our knowledge.
2.2. Data Collection

To address the identified research question we have utilised both primary and secondary sources of information, and qualitative and quantitative research methods. Secondary sources of information play an important role in the forming of this thesis, and the MIB 4 curriculum has inspired us in structuring our research. We take a multidisciplinary approach to the literature that is assessed and employed, such to cover cognitive economics, sociology as well as innovation- and network theory, and literature on Information and Communication Technology and virtual communities. Across these topics we emphasise and elaborate upon a selected group of theoretical constructs that we find useful in highlighting essential elements of our research. 2.2.1. Qualitative research methods Qualitative data collected and applied in this thesis are gathered through interviews. The purpose with qualitative research interviews is to examine the perceptions of the world from the point of view of the interviewee and thus to comprehend the meaning of their experiences of a given subject (Kvale, 1996). Opponents of the qualitative method argue that research interviews may not lead to objective information (Kvale, 1996). But this can be partly explained by the ontological point of view of these researchers. They will predominantly be represented within the positivistic paradigm, and therefore claim that quantitative methods are the only viable and scientifically sound methods (Kvale, 1996). The ontological point of departure for this thesis is that of social constructivism and we thus understand that interviews will never represent the definitive truth; information of an objective nature is not possible to achieve, neither is it the aim of our research method. Interviews The objective of this section is to shed light upon the type and structure of interviews conducted. We have primarily relied on in-depth semi-structured interviews (approx. 1- 2 hours per interview), as such interviews are of value for seeking new insights to a given issue (Saunders et al., 2007). Inspired by McCurdy et al. (2005) we have commenced
4 MIB: Management of Innovation and Business Development, a M.Sc. degree program at CBS
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interviews by asking grand tour questions based on a range of topics that we sat out to identify. These allow the informant to describe a regular day at the office and gives the researcher an idea of what the informant perceives to be the most important to stress; a valuable technique that avoids imposing interviewer bias. Subsequent questions such as mini-tours- and story question methods have built upon preceding questions, to ensure that we gain the perspective of the informant (Ibid.). In exploring our research question we identified four overall focus areas that we sat out to address through out our research and interviews.
1. Open innovation in the context of Novozymes. The initial interviews conducted with key employees at NZ, took a predominant focus in understanding what is meant with open innovation at NZ and which relation it has to company core values. 2. Novozymes R&D Organization. The focus here is to gain an understanding of the current research processes at NZ R&D organization, their current model of innovation and advantages and challenges that the current structure exhibits. 3. Characteristics of enzyme research. The aim is to understand how enzyme research is carried out, how scientists interact with other scientists and what types of information is discussed or shared. 4. Online interaction and the potential of a virtual community set-up. We address the potential utility of a virtual community set up in the context of enzyme research where we discuss opportunities and disadvantages of a virtual community set up.
Interviewee group Table 2.1 provide an interview summary of all interviews conducted as well as an indication of which focus area that each interviewee has contributed to. Interviews conducted have been divided up into two categories: 1. Internal, (NZ employees) including: biotechnology engineers, enzyme researchers and employees from the innovation office, marketing, sales excellence, customer solutions, corporate branding and business development. 2. External (enzyme researchers and innovation management specialists) including: bachelor- master-, Ph.D. level engineering students, and innovation managers and professors. The column named Company indicates which company the interviewee is from, and in the case of NZ, 2C Novozymes refers to the R&D Organization, whereas 8X Novozymes refers to the HQ departments at NZ.
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Table 2.1: Interviewee List

Internal 1 2 3 4 5 6 7 8 9 Name: Thomas Lykke Srensen Thomas Rasmussen Jesper Duus Nielsen Erik Gromsen Martin Simon Borcher Carsten Lauridsen Sune Sauer Lobedanz Mads Bjrnvad Martin Barfoed Position: Front End Champion Business Development Manager Senior Department Manager Vice President Senior Department Manager Project Director Senior Department Manager Senior Manager Director Innovation Platform Manager Senior Department Manager Senior Director Senior Director Senior Department Manager Senior Scientist Senior Department Manager Protein Engineering Corporate Brand Manager Corporate Positioning, Head of Branding President, Novozymes Europe Head of Sales Excellence Global Customer Solutions Director Business Development and Marketing Director New Business Development Director Senior Director Marketing Executive Assistant to CEO Company: 2C, Novozymes 8X, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 2C, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes 8X, Novozymes Initials TLS TRMU JDUN ERG MTBO CLAU SULO MAEB MAB HDRA HLU TVB HBF TLHD SALK STKH EPF JFRE MSMS LACH ALN AOH SESQ KEBB ALUN PSTB Area of In- vestigation 1 2 3 4
10 Henriette Draborg 11 Henrik Lund 12 Torben Bochlet Henrik Bisgrd- 13 Frantzen 14 Thomas Lenhard 15 Sara Landvik 16 Steen Krogsgaard 17 Espen Friis 18 Jesper Frederiksen 19 Mads Madsen 20 Lars Christian Hansen Anett Lund-Nielsen 21 Colstrup 22 Anders Ohmann 23 Sebastian Sderberg 24 Kristian Ebbensgaard 25 Anders Lund 26 Peter Stenbak
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External Name: Position: Global Research & Innovation M.Sc Student M.Sc. Student Ph.D. Student M.Sc. Student CEO Innovation Manager Partner, Author Professor Company: Initials Area of In- vestigation 1 2 3 27 Jovita Ivanaviciute 28 Anders Bech Bruntse Jakob Skjold- 29 Jrgensen 30 Rasmus Marvig 31 Hans Genee 32 Johan Fuller 33 Peter Kragh 34 Jacob Btter 35 Lars Bo Jeppesen Vestas DTU KU DTU DTU HYVE Coloplast Wemind Universit Commerciale Luigi Bocconi JIV Bruntse Skjold Marvig Genee Fuller Kragh Btter Jeppesen 4
2.2.2. Method of verification Qualitative data comprise the majority of our data input, and our research approach is built to overcome the inherent drawbacks of qualitative methods. We recognize that it can be difficult to determine the number of interviews needed to validate findings, yet we draw upon the concept of triangulation5 in achieving consistency of inputs from informants. I.e. we investigate the extent to which information given by one informant does in fact provide a realistic picture of the situation. Thus multiple sources of data is utilised to crosscheck the information provided by informants internally at Novozymes and external to the company. Furthermore, we consult informants after interviews to check whether he/she agrees with our interpretations and if conclusions made represent his/her explanations. The objective of applying the method of triangulation is to increase both the validity, i.e. checking for causality; and reliability, i.e. checking for observer bias (Saunders et al., 2007). Through applying these methods of verification, we experienced that interviewees were content with the conclusions and interpretations that had been made. And in circumstances where a divergence was found, we were able to elaborate and discuss findings with the interviewee to reach mutual understanding of our interpretations.
5 Triangulation refers to the use of two or more independent sources of data or data collection within one
study in order to ensure that the data is telling you what you think it is telling you, i.e. ensuring validity (Saunders et al., 2007:614)
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2.2.3. Quantitative research method The aim of this thesis is to explore how a virtual community can act as brokerage function and to facilitate external knowledge sourcing. We are analysing the potential of a hypothetical virtual community, thus qualitative data pertaining to records of an actual case does not exists. Quantitative data has in this paper has been gathered through a structured online questionnaire (appendix 2 for online questionnaire). The questionnaire is formulated on the basis of what we learned during our interviews and the survey was sent out to approximately 100 people, where we have received 42 responses. As we draw on the social constructivist paradigm, our aim with the online survey has been to gain more generalizable and comparable insights with regards to utility of a virtual community in the context of science-based firms who seek to explore external sources of knowledge. The responses given through the online survey are applied in part II of the analysis where we explore how a virtual community can be understood as a platform for external knowledge sourcing.
2.3. Critique of methodology

2.3.2. Limitations The key objective in this paper is to shed light on the phenomenon of virtual communities as a tool for science based firms to expand their exploratory scope. Given the nature of our case, we are not able to analyse an actual virtual community and the results and implications of such. In that respect we are to a limited to a prospective research approach, where we by means of empirical data and theory aim to anticipate future outcomes. As such, we cannot make use of the benefits of a retrospective study that looks backwards and examines the actual outcome of a given phenomenon at work. Moreover, we seek to identify the potential utility of virtual communities in a new context where this phenomenon has not yet been studied (to our knowledge), and acknowledge that our subsequent concluding remarks are to a certain extent speculative. Yet, there are a number of methodological benefits from taking a prospective case study approach that we wish to highlight. One issue with the post hoc, or retrospective case study approach is that the awareness of the outcomes of the case gives the researcher a temptation to cherry-pick a case that supports a given hypothesis or theoretical claim and leave out propositions and factual data that does not fit with the authors plan (Bitekhtine, 2007). As mentioned, hypothesizing in this paper has taken place over the
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course of the research process and is thus less contaminated by such bias. Nonetheless, we as authors of this paper are certainly not free from bias. The leading hypothesis of this paper is that virtual communities indeed exhibit opportunities for science based firms to engage in external knowledge sourcing, hence our preconceived ideas regarding the utility of virtual communities in this context has played a role during the formation of the paper at hand. We recognize the limitations of single- case study, where a multiple case study could provide more generalizable results. Nevertheless, we believe that as the first study of its kind, it is important to promote depth over scope in order to unravel the underlying mechanisms in place. Moreover, much of the input used to delineate a set of enabling properties of VCs for acting as a vehicle for external knowledge sourcing are based on inference from existing literature and casework on the use of VCs in related contexts. In taking an exploratory approach our empiric input plays an important role in opening up for further questions to be considered. In identifying interviewees as well as respondents in our online survey, we have used a method of pyramiding. I.e. we have identified appropriate interviewee candidates in a sequential fashion based upon recommendations from our preliminary round of interviews. We recognize the risk of interviewee and respondent bias, however we wish to assert that random selection would not have been viable in this study, given that extensive knowledge of the subject matter was deemed a prerequisite to receive qualified answers. Furthermore, we understand that even with the method of random selection, fully unbiased responses are not completely achievable. Finally, Novozymes is known as the world leader of enzyme technology and as a company that has the capital to make investments in projects, as one interviewee mentioned, I dont think any top-level manager at NZ has felt that he didnt have the funds to
engage in a project of need or interest (TRMU, 2011). There is thus a great deal of prestige
from being associated with NZ, and many students from engineering universities see great opportunities in working there. Although interview contacts made with master degree and Ph.D. level students where initiated by ourselves, the informants became aware of the sponsor behind the project, namely NZ, through the course of the discussion. Consequently this can have an impact on the data gathered through the interviews and online questionnaire resulting in biased responses. For the interviews 19
conducted internally at NZ, the initial contacts for the first round of interviews was made through the project group at NZ, and thereby had an impact on the responses given. This can all have had a limiting impact on the information given, however, we have to the extent possible focused on interview verification methods and been aware of the potential bias while evaluating data for the analysis. 2.3.3. Reliability Reliability refers to whether the data collection methods yield consistent findings. Three areas are emphasised here: firstly, if measures taken will yield the same results on other occasions, secondly, if similar observations could be reached by others, and lastly, if there is transparency in how sense was made from the raw data (Saunders et al., 2007). Throughout our research we therefore pay attention to the three threats of reliability, namely time error, subject error and observer influence (Wilson, 2010). We have gathered data over the course of nine months and conducted interviews in rounds, ensuring reliability of answers of respondents, and to provide us with an awareness of the changing contexts related to the case. This inherently increases our chance to reduce threats of time error and subject error. With regards to observer influence we have focused on introducing ourselves as Master Degree students from Copenhagen Business School, and emphasized that the objective of our research has no risk of harming respondents professional standing. Nevertheless, we recognize that we cannot guarantee that we have successfully overcome the three threats of reliability. 2.3.4. Validity Validity refers to the extent that the methodological approach allows the researcher to investigate the problem at hand, and is concerned with the level of truth in the data with regards to the specific problem (Kvale, 1996). Yin (2003) emphasizes the importance of constructing validity, both in the research design itself, as well as during the data collection process. Yin points out that this may be especially important to stress in a case study research, as people often criticize case study researchers for using subjective judgments during data collection. In order to increase construct validity, he suggests three tactics: multiple sources of evidence, chain of evidence, review by key informants (Yin, 2003).
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In order to fully grasp the context that we are researching, we have tried to utilize multiple sources of evidence to help build and substantiate our findings. We draw upon qualitative both quantitative research methods where we use interviews, and online survey as well as literature and theory as sources of input. Furthermore, we take an interdisciplinary approach to provide a more nuanced assessment of the problem at hand. While we recognize that there is trade-off of depth and scope we have favoured a broad perspective over a narrow with regards to the literature that we draw upon. The research process in this paper can be characterised as an incremental chain of evidence build-up, where our hypotheses undergo modifications throughout the process. Together with key contacts at NZ (TLS & TRMU), we identified an overall assumption of a positive causal relationship between the notion of distant sources of knowledge inputs and innovative capacity for NZ. We find support for this claim by combining network- and combinatorial innovation theory that allows us to understand the importance of distant search and the potential value that lies in networks beyond the reach of the organisation. Hence, through our interviews we have aimed to focus on a variety of topics as to cover virtual communities, combinatorial nature of innovations and structural holes. Lastly, in the previous section on qualitative research method, we addressed how we have arranged for review by key informants throughout the interview process by allowing respondents comment on their input. 2.3.5. Generalizability Generalizability is the degree to which findings can be applicable to other research settings, also referred to as external validity (Saunders et al., 2007). External validity is more difficult to attain in a single-case study (Yin, 2003), however, as suggested by Stake (2003), a better understanding of a single case could lead to a better theorizing about a still larger collection of cases. The degree of generalizability of findings is elaborated upon the in the discussion and future perspectives section (section 7) following the analysis and concluding remarks.
2.4 Delimitations
Delimitations define and narrow the scope of the study in question, and here we present exclusionary and inclusionary decisions that have been made throughout the thesis.
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The case analysis is anchored in the R&D organisation at NZ, meaning that research is conducted with focus on the structure and processes that reside within R&D. We will therefore not assess or include how other functions present at Novozymes that could provide support for external knowledge sourcing or act to enhance of innovative capacity, such as marketing- and business development departments etc. The social structure of networks theory discusses both community- and individual dimensions of networks. We are particularly interested in the underlying notions of the theory and the effect networks, structural holes and bridging has on innovation. Thus we omit from distinguishing the community- vs. individual dimension level network structures. We take a particular interest in assessing the potential of a science-based virtual community for researchers that is initiated by a B-2-B firm. The analysis will therefore not encompass other forms of virtual communities often employed by B-2-C companies such as lead-user- or challenge-based communities.
Further delimitations that are of interest for the research scope will be elaborated upon in Literature Review and Research Gap (section 3).
2.5. Central Concepts

A number of concepts are employed throughout this thesis. Many concepts are adopted from prevailing theory and literature and have been outlined in the subsequent literature review and theoretical discussion sections. Nevertheless, we develop and make use of several terms and concepts that we wish to describe here in more detail. Technological vs. organisational innovation We acknowledge that is there is a distinction between technological and organisational innovation. The former relates to how firms commercialise new technological knowledge and ideas that result in new products or processes, while the latter referrers to changes to organisational structures and administrative processes (Poole & Van de Ven, 1989). We draw on both of these definitions as we address both the impact that a VC as on the organizational design of our case company, as well as capacity for producing commercial innovations in the light of exploitative- and explorative R&D strategies.
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Innovative capacity The concept of innovative capacity provides a way to understand and measure fundamental aspects of the ability of a firm to research and produce innovation. While we do not set out to measure innovative capacity, the term is used to denote the aptitude of a firm (in our case Novozymes) for producing innovation by means of its R&D efforts. In behavioural science literature we find evidence of use of the term in addressing how innovative capacity often is obtained through networks. In other words, networks can increase the innovative capacity of experimental firms by helping them secure advantages that they would not be able to obtain on their own (Suarez-Villa, 1990). This paper echoes this view of networks and innovation, and recognizes the importance of networks to ensure innovative capacity. Incremental vs. radical innovation Incremental innovation can be understood as the continuous learning and development of existing technology, whereas radical innovation can be understood as the exploration of new technology that departs from existing practices and structures (Orlikowski, 1991). The view taken on incremental and radical innovation in this thesis is not to be understood as separate categories but rather as placed on either end of a continuum representing the degree to which new knowledge (novel combinations) is embedded in an innovation (Ibid.). External knowledge sourcing We use the notion of external knowledge sourcing in defining our research question. In the literature we find that external knowledge sourcing is said to be crucial for innovation processes, and has been defined as the ability of a firm to recognize, assimilate and transform knowledge available from dispersed external sources such as customers, suppliers, other rms, universities, online communities, and industrial designers is (von Hippel, 1988; Chesbrough, 2003). We define this concept as the ability of a firm to expand and replenish its knowledge base by means of sources of knowledge residing external to the organization. Virtual Innovation Broker The virtual innovation broker (VIB) is a concept used to denote the capacity of a virtual community to act as a mechanism for bridging structural holes. This concept is introduced in more detail in the forthcoming theoretical discussion and analysis part II.
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Discipline Throughout this thesis the term discipline is thoroughly utilized. In the context of our thesis a discipline is used to denote a particular branch of scientific knowledge or field of study. Subsequently, cross-disciplinary work involves two or more disciplines. Science-based firm Throughout this thesis we use the term science-based firm to indicate a company that uses scientific research as its main input for R&D and technological innovation. Ambidextrous Innovation We use the notion of ambidextrous innovation to highlight the ability of a firm to carry out both exploitative and explorative innovation strategies concurrently.
3. Literature Review
The literature review section is aimed at identifying a research gap in the current literature in which the present paper aims to make a contribution. We have set out to investigate the notion of a virtual community as a mechanism for facilitating external knowledge sourcing for science-based firms. In this effort we review literature on the topics of Information and Communication Technology (ICT) and Virtual Communities (VCs) to determine to what extent contributions in the field have addressed our particular topic of research. On the one hand, the literature review outlined here is a summary in that we revise extant literature within the field to familiarize the reader with what has been written on the topic, and to identify a gap in which to position the present paper. On the other hand, it is just as much a synthesis by way of re-organizing previous findings and claims from extant literature, to give way for new interpretations that can shed light on the phenomenon under scrutiny. We aim to pinpoint that the phenomenon of VCs - understood as a mechanism for firms to engage in unguided search for scientific input to R&D in the external research environment - has been largely understudied, in particularly through the lens of cognitive economics and innovation and network theory. First, we position our paper in the field of cognitive economics, and thereafter move on to revise literature regarding the utility of incorporating VCs to promote organizational learning. We find that extant literature inadequately has addressed how science-based R&D-intensive firms with a strong B-2-B
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orientation can utilize VCs as a mechanism for unguided search as a means for external knowledge sourcing.
3.1. Cognitive Economics

A cognitive approach to understanding human activities in the economic arena has become a fundamental area of inquiry. The field of cognitive economics is developing into a discipline which is bearing a new theory of human behaviour in economics, strongly rooted into a cognitive approach to human action (Egidi & Rizzello, 2003). Cognitive economics can be defined as the study of reasoning operations and adaptation
processes implemented by economic agents in their interactions (Walliser, 2001:3). We adopt
the cognitive approach to economics given the notion that the ...choices people make are
determined not only by some consistent overall goal and the properties of the external world, but also by the knowledge that decision-makers do and dont have of the world, their ability or inability to evoke that knowledge when it is relevant (Simon, 2000:25). Along the lines of cognitive
economics we take a multidisciplinary approach to our study and concede that the context in which our research takes place is characterized by structural uncertainty6. In this particular paper, the notion of search for scientific knowledge in human problem solving is a central topic, and the conception of innovation lies at heart of our research. March and Levintahl (1993) point out that firms often find themselves in cognitive traps in which a strong focus on success may induce them to persist excessively in the use of procedures and actions associated with success in the past. This tends to anchor firms in exploitative sub-optimal routinized strategies to the detriment of research and innovation (Ibid.). The central area of interest in this paper is to investigate how firms can avoid, or escape, such cognitive traps. Our focus is mainly to explore the hypothesis that a virtual community can act as vehicle for exploration and external knowledge sourcing and subsequently relieve firms of such traps. We study the underlying processes of a particular firms (NZ) R&D activities and its current innovation model to find that it is to a certain degree trapped in sub-optimal exploitative strategic routines. We further draw on literature in sociology, and on the notions of combinatorial innovation and network theory, in order to establish that the external knowledge sources hold opportunities for enhancing the innovative capacity of our case company. What is of particular interest here, are mechanisms for getting access to unexplored
6 Structural uncertainty: Probability of the occurrence of an unanticipated event due to a particular
configuration of a system such as an economy, market or organization (businessdictionary.com)
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pools of knowledge, and we have chosen to pay specific attention to the role of virtual communities understood as an enabling space or bridge between a firm and its external environment. There are intense academic debates both regarding more open innovation activities, combinatorial innovation, structural holes theory and around the exploitation- exploration dichotomy, however very few scholars have combined these streams of literature (one exception is found in Danzinger & Dumbach, 2008). We suggest that an integrated approach can enrich theory and the workability of these concepts, and in particular shed new light on the phenomenon of virtual communities. We revise literature and theory on VCs to determine where in the literature our paper fits.
3.2. Brief history of ICT and the Internet

The IT era started in 1971 and transformed society mainly by spurring radical improvements in computation capacity (see Mores law7) (Jovanovic & Roussea, 2005). IT has given rise to a successive wave of new technologies including the semi-conductor, and most notably the Internet. While the semi-conductor can be thought of as computational extrapolation of IT, the Internet can be viewed as the communicational arm of IT. Since the late 1990s the notion of ICT8 (information and communication technology) is often used to denote these two facets of IT, and in this paper we predominantly take an interest in the communicational externalities of IT; henceforth we employ the term ICT. Since the early days of the Internet era, sceptics and traditionalists have ascribed a number of risks to the phenomenon of the Internet. It has been said to be potentially detrimental for the traditional sense of in-real-world (IRL) social relationships (Dreyfus, 2001). Online social relationships have been described to be less profound, valuable and durable than offline relationships, and that such communication is often less expressive and authentic than face-to-face (FtF) communication. Furthermore, online communication has been feared to water out human social life dispatching us to the realms of virtual worlds (Ibid). However, most contemporary research shows that the Internet has not alienated us from the real world. On the contrary, the Internet has been
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Moore's law describes a long-term trend in the history of computing hardware, i.e. the number of transistors that can be placed on an integrated circuit doubles approx. every two years (Moore, 1965) 8 ICTs and the Internet are used to address a broad range of computer technologies including web browsing, email, chat/instant messaging, online communities, blogs etc.
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shown to stimulate social and civic engagement and has been said to be the major catalyst for globalization and the continued progress of the human race (Song, 2008). As a matter of fact, people are found to be remarkably resourceful in waving the Internet into existing practices of everyday human life, and instead of abandoning prior social practices people engage in media multiplicity the act of using several mediums for building and maintaining social relationships (Wellman & Haythornthwaite, 2002; Howard et al. 2004). Essentially the Internet has shrunken the world, yet significantly enlarged social life, by juxtaposing remote actors online and boosting information and knowledge sharing. Yet, the literature around this field is nascent and dispersed, and theorizing- and conceptualizing processes are at work continuously. One of the most solid concepts to have emerged is that of the virtual community9. The Internet revolution has evoked an unprecedented proliferation of virtual communities across the web (Fernback, 1999; Hiltz & Wellman, 1997). The notion of VC is employed as a central concept in this paper referring to an online space where reciprocal interaction takes place between individuals and groups.
3.3. Virtual Communities

The concept of the virtual community, first introduced by Rheingold (1993), has today become the pigeonhole for describing places where social interaction takes place virtually through some sort of media, as opposed to in real life (Lavin & Guinalu, 2005). While the virtual community concept is as old as the concept of the Internet, its exponential growth began in the late 1990s due to developments in ICTs such as electronic mail (e-mail), chat rooms and instant message systems (Ibid.). The justification to this expansion is found in the advantages generated by virtual communities. Computers send and receive data across remotely located servers that, by means of a shared interface, facilitate a sense of belonging, collective action and interpersonal intimacy for humans (Andersen, 2005). Online, people can experience the benefits from communal life, while avoiding most of its burdens. An individual can participate in a public place while physically being in a private place, and share thoughts without running the risk of immediate narrow-minded judgement. And, in case conversations grow dull or relationships complicated, a virtual community is always easy to leave.
9 > 3 million hits on google.com / > 50,000 hits on scholar.google.com
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Many definitions of the concept of virtual community have appeared in the literature, but traditionally this concept has been defined from a social point of view. In Reigngolds definition, virtual communities are the social aggregations that emerge from the Net when
enough people carry on those public discussions long enough, with sufficient human feeling, to form webs of personal relationships in cyberspace (1993:5). Similarly, Ridings et al. (2002) expose
that a VC is a group of people with a common interest that interact regularly in an organized way over the Internet. Following Besser online communities are more narrowly defined as groups of people with a shared interest in a hobby, profession, or a product
who get and share ideas online. The sharing is done at the convenience of the participant and not at a specific time of the week or month, and the "meetings," as a result, tend to be ongoing
(2000:159). It can be inferred that one of the main advantages of VCs is that these communities can overcome the space, time and physical barriers to interaction that exist in traditional in-real-life (IRL) communities (Andersen, 2005). As such, virtual rendezvous in the form of online groups, networks or communities, challenge the traditional notion of a community understood as something physically embodied and dependent on geographical proximity of interacting members. Even so, virtual communities encompass many of the attributes of IRL communities. Muiz and OGuinn (2001) point out that virtual communities encompass three core components:
Consciousness of kind: Refers to the feeling that binds every individual to other community members and the community brand. Rituals and traditions: Processes carried out by community members who help to reproduce and transmit the community meaning in and out of the community.

Sense of moral responsibility: Reflects the feelings that create moral commitment among the community members.
While the above highlights many of the characteristics of VCs, little is said regarding the reason for why individuals choose to engage in communities online. Hagel and Armstrong (1997) point out that virtual communities can help to satisfy three types of needs:
Sharing resources: VCs enable individuals to share information on topics they may be interested in. Establishing relationships: In VCs we may find people with similar problems, interests and experiences. Trading: Some VCs also allow us to carry out economical transactions. 28
While the above list is far from exhaustive, the notion of sharing is a reoccurring theme in most definitions, and can be identified as the substance of online interaction. In determining how VCs can comprise a source of external knowledge, and potentially enhance an organizations innovation capacity, sharing of information, knowledge and ideas become key components. The proliferation of online communities and interactive places for collaboration hold the potential to extend the scope of, and access to, relevant knowledge sources available to an organization (Zhang & Ackerman, 2005). Given that VCs have enabled new dimensions of interaction and interconnection among individuals, documents and data, and have become places for people to seek and share expertise (Ibid.), they have proved to be useful tools for firms in pursuit of new expertise and knowledge. However the extant literature regarding this topic is quite scattered and we find that the above definitions and typologies are overly broad in their scope as they include almost any kind of relationship that takes place across the virtual space. While they are useful in providing a basic understanding of the concept, they fail to acknowledge the diverse nature of how and why a VC can be useful, particularly taking a business perspective. For the purpose of this thesis it becomes important to differentiate between different kinds of online communities and to consider the objective that a business may have for facilitating a VC.
3.4. A typology of virtual communities for external knowledge sourcing

The diversity of virtual communities (VC) for external knowledge sourcing is quite remarkable and VCs are today found to meet a plethora of needs unthinkable just ten years ago. The utility of VCs for knowledge sharing and idea generation has been illustrated in a large number of studies, and by means of identifying a set of VC attributes we wish to provide a comprehensive overview. In turn, this will help us to better pinpoint where in the literature we find our research gap. We identify a set of community architectures that are fundamentally different, yet all sharing the quality of acting as catalysts for external knowledge sourcing. We introduce a three-pronged typology of VCs, namely: the user-driven-, the challenge-based-, and the research-driven VC. We then pinpoint that the type of community that this paper has set out to study belongs to the third category. Finally, we highlight in which way this study is different than other studies of its kind.
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In order to develop a VC typology, inspiration has been drawn from Pisano & Verganti (2008) and their classification of modes of collaborative innovation. While this article does not specifically address virtual communities, it acts as a good guiding framework for understanding different kinds of external networks of innovating firms. Figure 3.1: Modes of external collaboration
Source: Pisano & Verganti (2008)
3.4.1. User-driven community User-, power-user- or lead-user communities have been recognized to support innovation and product development across a large number of firms. Von Hippel (2005) defined lead users as users whose needs significantly anticipate the requirements of the broader market. However lead users are found to be useless to companies unless they find a way to communicate and form relationships (Moeini et al., 2006). The phenomena of VCs have made the lead-user innovation concept more widely accepted and exploited; a number of such successful VCs have seen the light of day. As provided by the terminology, user-driven suggest that it is the users of the final products that take part in product development and the innovation process. This type of community has been found to be particularly useful for B-2-C oriented firms (Antikainen, 2011). Two successful VCs of this kind include Coloplasts Stoma-innovation and Legos Mindstorms.com. This kinds of VC resonates the characteristics of the elite circle outlined by Pisano and Verganti (2008).
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3.4.2. Challenged-Based Community The challenged-based community architecture is structured around pre-defined problem statements or challenges that might be facing a particular firm. In the lingo of Pisano and Verganti (2008) the challenged-based community would resemble that of the Innovation Mall. Examples of such communities range from one-time product design competitions to extensive expert networks solving complex puzzles. E.g. Henkel advertised an online challenge called the Henkel Adhesive Packaging Design Contest10 where solvers from all over the world submitted their proposals, and a winner was selected and rewarded. Netflix, the worlds largest online movie rental service provider, hosted a challenge for developing a logarithm to improve its video recommendation system. Teams of mathematicians, programmers and software engineers were given three years to solve the challenge with a subsequent reward of US$1 million. The most renowned challenged-based community is that of Innocentive.com: an online intermediary innovation broker who broadcasts challenges with accompanying rewards to a vast network of experts (Lankhani, 2008). We have found that both B-2-C and B-2-B oriented firms utilize this kind of VC. 3.4.3. Research-based community In our definition, the research-based VC is aimed to source knowledge and expertise from a global network of a broad mix of industry and university scientists, but also other individuals interested in the topics addressed by the community owners/moderator. The overall goal is to expand the innovation capacity of the firm who choses to establish the platform. In Pisanos & Verganti (2008) this community bears resemblance to the Innovation Community in that anyone who is interested are welcomed to join and the search is unguided, i.e. not steered by means of predefined problems or queries. The by far most famous example of a research-based community would be that of Procter and Gambles (P&G) Connect & Develop (C&D). It was estimated that for every P&G scientist there were at least 200 other scientists at least as good elsewhere in the world. Hence, in 2004 the C&D innovation model was created. C&D is an online initiative based on global R&D network of scientists and other professionals external to the organization, who by means of having a clearer sense of consumer needs, work towards identifying promising ideas and products for the world market (Huston & Sakkab, 2006). In 2010
10 http://www.packdesign-contest.com/start.php
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more than a thousand successful products had been launched with the involvement of external innovators. Over the years, research productivity has been dramatically improved at P&G through reliance on a global collaboration platform with people external to the organization (P&G Annual Report, 2010).
3.5. Research Gap

Virtual communities (VC) can be viewed as a relative new phenomenon, dating back less than two decades. The literature around VCs is embryonic with loosely connected contributions sprouting up across disciplines. Furthermore, along with new technology advancements in ICT the phenomenon of VCs is under constant development, making it a moving target thus difficult to study. By using the typology outlined in below, we can better isolate our literature gap. Figure 3.2: Virtual Community Typology We find that existing literature and case studies examining the utility of virtual communities as catalysts for external knowledge sourcing to be inadequate. Our literature gap is two-fold, practical and theoretical: Firstly, we find that one of our identified categories of VCs, namely the research-based VC as established in the above, has been largely understudied. Whether it takes the form of academic papers and case studies, we find that contemporary work addressing both user-driven- and challenge- based VCs occur frequently in the literature with a number of illustrative studies, while science-based research focused communities are close is lacking. Moreover, most studies on research-based VCs relate to initiatives taken by B-2-C oriented firms, in turn resulting in a strong end-consumer focus. We find that virtual solutions utilized by science-based firm with a B-2-B orientation to be particularly unaddressed. In this light, through investigating opportunities of a VC for our case company Novozymes (a B-2-B oriented science-based firm), we add valuable insight to a new dimension of use of VCs not yet illuminated. Secondly, we have not come across any piece of literature taking a
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User-driven VC
Lead-user innovation Innovation of use Virtual customer environment
Challenged-based VC
Broadcasting Solutions seekers and solvers Pre-defined challenges and rewards
Research-driven VC
Virtual research environment Knowledge sharing Collaboration Unguided Search
cognitive economics perspective in addressing research-based VCs, neither combining the theoretical lenses of innovation-, network- and ambidexterity theory in this effort. Finally, we believe we are first to postulate that VCs can by means of certain attributes overcome obstacles of ambidexterity and thereby ease the often difficult balance of exploitation and exploration. In other words, we find that the current literature, by using prevailing concepts and theory, does not sufficiently address how science-based B-2-B-oriented firms can facilitate a VC as part of unguided search for new scientific knowledge and expertise with the ultimate goal to ambidextrously enhance innovative capacity. Furthermore, we test the use of prevailing theory and concepts in explaining the emerging phenomenon of VC and its implication for external- search, knowledge sourcing and collaboration. It is our intention to elucidate the phenomenon of the VC in the given context.
4. Theoretical Discussion
In this paper we take an exploratory multidisciplinary approach, where we draw upon and combine literature from sociology, cognitive economics, innovation, and ICT. We integrate a range of theoretical constructs including: innovation theory, network theory, structural holes, search, social capital, ambidexterity and virtual communities. The objective of the theoretical discussion is to provide an understanding of the theoretical notions and the application of these in the analysis. We have structured the theoretical discussion into three sections: 1) Combinatorial innovation; 2) Networks, knowledge and structural holes; 3) Virtual communities and knowledge sharing. On the basis of our theoretical discussions, we wish to highlight key takeaways with the aim to place our thesis in the context of these theoretical viewpoints, and to build a conceptual foundation on which the forthcoming analysis will be conducted. Furthermore, we wish outline how theory will be applied in the subsequent analysis (section 4.4). Given the interdisciplinary nature our research and the scope of our thesis, we make reservations as to how exhaustive the below theoretical discussion is, provided that we have subjectively chosen theory and concepts.
4.1. Combinatorial Innovation

The notion of combinatorial innovation provides an underlying understating of how and where innovations emerge. It is widely recognised that innovation spurs technological
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advancements consequently leading to economic growth (Fleming and Sorensen, 2004, McDaniel, 2000, Klevorick et al. 1993, etc.). According to Schumpeter (1934), innovation can be understood as new combinations of productive means, (in Varian, 2003:1), that, among others, includes the introduction of a new good. We know that innovation involves a degree of novelty, however, what exactly is implied by novelty in this context? Since Schumpeter, the science of innovation has received the attention of numerous scholars (e.g. Henderson; Utterback; Teece; Tushman; Forster; Christensen), all of which helped define innovation (McDaniel, 2000). The novelty of innovations can be viewed upon as relative to the overall technological frontier, as well as to the previous experiences associated with the adoption of an innovation. Novelty thereby refers to the application of a known technology to a new purpose (Abernathy & Clark, 1985; Afuah, 2004; Fleming & Sorensen, 2004). Afuah (2004) further states that an innovation can be characterised as invention plus development and commercialization, ultimately opening up for the recombination of existing technological components and processes - a combinatorial approach towards innovation (Fleming & Sorensen, 2004). Re-combinations of technological components and processes can take various forms and produce different results. Freeman and Soete elaborated upon the impact innovations have, as certain innovations involve big changes and discontinuities (radical innovations)
and others involve many small improvements (incremental innovations), (1997:21-22). The
notion of combinatorial innovation not only refers to large recombinations of components but also that smaller alternations in fact can have an impact on the technological advancement that follows, as well as by spanning way for a transition of what is perceived to be possible and achievable (Ibid.). Clarifying this idea, we draw upon Fleming & Sorensens (2004) discussion of innovation as the novel reconfigurations made to a given component or process, ultimately opening up for technology, product or process advancement. In this thesis we acknowledge the combinatorial view on how innovations emerge. How can we understand the origin of combinatorial innovations? And furthermore, under which circumstances do they arise? Many scholars have sought to provide insights to this by drawing upon the processes that support the emergence of combinatorial innovations. In the following, we have identified a number of theoretical constructs that we find useful in highlighting the notion of combinatorial innovation,
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and how they apply in the context of our research. Here we take point of departure in the concepts of the linear model and the chain-linked model in highlighting the importance of science in supporting innovative activities within science-based firms. We then bring in the concepts of exploitation and exploration, and that of ambidexterity to assess the degree to which NZ is in a position to engage in and incorporate a more explorative approach in its aim to enhance innovative capacity. 4.1.1. The linear- and the chain-linked model - The role of science and innovations Within the fields of innovation management and organisational learning, the notion of a strong link between scientific progress, technological change and overall economic development has been emphasised (Bush, 1945; Furnas, 1948; Fleming & Sorensen, 2004). Technological change has furthermore been argued to have an impact on the competitive structure of many industries, where technological advancements have driven the growth of industries. As a result industry players non-responsive of technological change and the potential it holds are pushed out of the market (Ernst, 2003). Bush (1945) also emphasises that technological advancements, (i.e. new products, processes, new industries, etc.) would not come about if it were not for a deeper understanding and an extensive knowledge-base of the laws of nature and the application of such for practical purposes: We will not get ahead unless we offer new and
more attractive and cheaper productsThe answer is clear. There must be a stream of new scientific knowledge to turn the wheels (Bush, 1945: chp.3.5). The focus of Bushs (1945)
statement is on how to ensure economic development at the societal level and he emphasises the importance of scientific research that is performed without emphasis on practical or applied ends. This results in general knowledge and an underlying understanding of nature and its laws, ranging across scientific fields (Bush, 1945; Balconi et al, 2010). The findings from conducting basic science are said to substantiate, and feed into, applied scientific research, thereby supporting the search for a complete solution that results in a practical application (Ibid). The distinction between basic and applied science is of importance in understanding the contributions of each, as well as understanding the interlocked relationship between the two. Bush emphasises that applied science would eventually stagnate if basic scientific research was neglected (Ibid). In context of our thesis we find the basic- vs. applied science dichotomy is useful for understanding the importance of facilitating unguided search for scientific opportunities as part of NZ ambition to enhance its innovative capacity.
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Below, the linear model and the chain-linked model are outlined and discussed. We find it important to distinguish that the unit of analysis of the two models is quite different, where the former takes a societal level unit of analysis and the latter takes the organisation. By juxtaposing the two models we enhance our understanding of firms innovation model. In the context of NZ, we wish to understand to which degree its internal R&D organisation can be characterised according to the chain-linked model. Furthermore, through understanding the underlying thoughts behind the linear model, we wish to assess the potential to expand NZ current innovation model given insights provided by the linear model. Figure 4.1. The linear model
Source: Bush, 1949
Bush (1949) and Furnas (1948) are considered the founding fathers behind the linear model of innovation (Balconi et al., 2010). The linear model (LM) illustrates the process of innovation moving from research to marketing (Bush, 1949), or from exploratory and fundamental research to sales (Furnas, 1948) (see figure 4.1). The LM has been applied as an influential tool in a broad range of circumstances, such as academics lobbying for research funds or economists providing expert assertions for governmental policy- makers, justifying financial support for science through the application of the model (Godin, 2005). Despite the influential role the linear model of innovation has had, it has stirred much criticism over the past 50 years. Many scholars proclaim that the linear model disregards the actual reality of an innovation process. The grounds for such critique relate to numerous studies that show that the process of innovation is not smooth nor
linear, nor often well behaved, implying that the LM is an over-simplification of a rather
complex process (Kline & Rosenberg, 1986:285). Kline and Rosenberg (1986) called the
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linear model into question and introduced the chain-linked model as an alternative model for illustrating an innovation process. Figure 4.2. The chain-linked model

(Source: Kline and Rosenberg, 1986)
They state that the main concerns that the linear model presents is the lack of feedback loops and the impact on the process of innovating. The process of innovation is in many cases unforeseeable and characterised by a high degree of uncertainty, may that be technical, functional or market uncertainty. Radical innovation processes are said to thrive in environments that allow for the influence of multiple sources of information. Incremental innovation thrives best where iterative processes open up for new learning and development, thereby emphasizing the importance of such feedback loops in the either innovation process (Kline and Rosenberg, 1986). As such feedback loops and external pieces of information are important drivers for the innovation process:
innovation in this substance frequently occurs in the processes for producing them recombination of existing manufacturing steps (Fleming & Sorensen, 2004:910). Kline and
Rosenberg (1986) indicate that the linear model, where the completion of one-step ultimately leads to the initiation of the next step, has difficulty in supporting drivers of innovation. However, it becomes questionable whether the critique of the LM is in fact valid, especially if we take a historical perspective of the LM to shed light on what the actual origin and objective of the model was. The LM was originally designed to support governments in their pursuit to enhance the economic development after the Second World War (Bush, 1945). It states that basic or fundamental scientific research is the 37
main and unique source of knowledge for technical innovations hence economic growth, and the underlying idea takes point of departure in the distinction between basic and applied scientific research. Private, profit-driven organisations are said to lack motivations for engaging in basic science. Bush stated that it was the responsibility of the government to ensure that basic scientific research would flourish, and that public funding would be the driver for such (Balconi et al., 2010), hence he introduced the LM. However, by direct comparison of the two models we learn that the unit of analysis for each model is notably different. The chain-linked model emphases the innovation process within a firm, i.e. an innovation process that is characterised by an applied scientific research approach: technological-, application- and industrial oriented research. The linear model, however, does not refer to the daily processes of incremental learning and development at the firm level. It looks into the role of science in enhancing the long-term developments of the economy, with particular focus on science-based industries (Bush, 1949; Furnas, 1949). Moreover, it takes a long-term perspective as its unit of analysis; the process of innovation cannot be viewed upon as a
generalised co-occurrence of concomitant tasks (Balconi et al., 2010:8). In the light of this
thesis, we wish to highlight the importance of distinguishing between the two models given that the chain-linked model does not adequately recognize the importance of pure basic science, providing important insights that highlight the actual scope of R&D activities at Novozymes I.e. by understanding science as something that can be consulted iteratively throughout an innovation process, hence guided by the questions that arise in that very process, the inventor inherently will suffer from inculcation11 of the mind. In other words, the idea behind pure science in the discovery of new knowledge is that it is not contaminated by any other value than those relating to the
acquisition of knowledge (Raucek, 1971:306).
The process of innovation is complex, however, a distinction between basic and applied scientific research provides insights to the value that can be gained from understanding the innovation process as provided by the linear model and the chain linked model. There is furthermore an interconnectedness between basic and applied science; the success of firm-level exploitation strategies might well depend upon population-level investments in exploration strategies (Balconi et al., 2010). It first becomes valid to ask
11 To impress (something) upon the mind of another by frequent instruction and repetition or
indoctrination (The Online Dictionary, 2011)
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to which degree can a firm engage in or establish its own explorative strategies as a supplement to prevailing exploitative strategies already in place within a firm? In the forthcoming analysis we aim to elaborate upon the above, through assessing the degree to which NZ can simultaneously engage in both exploitation-level strategies and exploration-level strategies. In pursuit to gain insight to this, the following section addresses the notion of exploitation and exploration. 4.1.2. Exploitation and Exploration Whether the goal is to take advantage of internal knowledge and developments or to search for inputs from more distant sources, potentially across disciplines, the concepts of exploitation and exploration provide valuable insight to the ways in which inventors, organisations, etc. can engage in such search processes (March, 1991; Fleming and Sorensen, 2004). In the context of this thesis, the concepts will assist in shedding light upon the nature of the R&D activities at Novozymes (NZ). Through understanding the structure of the R&D activities we are able to assess the degree to which NZ is engaging in exploitation- versus exploration-oriented activities, and more importantly the affect this has on the overall innovative capacity of the firm in light of its aim to expand the overall enzyme market globally. According to March exploitation covers elements of search such as refinement, choice, production, efficiency, selection, implementation, and execution (1991:71). Fleming and Sorensen (2004) refer to this type of activity as local search. Here the emergence of input to the innovation process comes from the incremental changes that are made to one component at a time, either through reconfiguration or replacement of a given component (Ibid.). The term local indicates that developments are based upon previous research activities and developments that have taken place, thereby exhausting only the potential possibilities that lie right in front of the inventor. The benefit of local search is the possibility to take full advantage of prior research. It also provides the inventor with a higher degree of reliability in the innovation process drawing on past insights to what and what does not, act as valuable information in the process of future exploitations (Fleming & Sorensen, 2004). However, the downside of exploitation is known as cognitive bias, i.e. by focusing only on familiar components and combinations the inventor refrains from investigating more distant and potentially more valuable sources of input. The iteration of exploitation processes can result in a decrease of variability of
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outcomes, hence slowing down the advancement of innovation as local search combinations are exhausted over time (Ibid.). To overcome such cognitive bias, the concept of exploration provides valuable insights. March states that, different from exploitation, exploration covers elements of search that indicates variation, risk taking, experimentation, flexibility and discovery (1991:71). The exploration of new possibilities in an innovation process can provide insights beyond what local search can open up for. Although exploration can lead to less certain and systematic inputs as compared to exploitation it can still be of great value, as exploration leads to inputs that are more distant (March, 1991), thus providing insights to disciplines that hold potential to produce more novel combinations. 4.1.3. The Ambidexterity Hypothesis As outlined above, two broad types of qualitatively different learning activities between which firms divide attention and resources - exploration and exploitation - have been proposed in the literature (Van de Ven 1996, March 1991). Many studies have shown that exploration and exploitation require substantially different structures, processes, strategies, capabilities, and cultures to pursue and may have different impacts on firm adaptation and performance (e.g. Holmqvist, 2004; Van den Bosch et al. 1999; He & Wong, 2004). In general, exploration is said to be associated with organic structures, loosely coupled systems, improvisation, autonomy, and emerging technologies. Exploitation on the other hand has been referred to relate to mechanistic/bureaucratic structures, tightly coupled systems, path dependence, routinization, control and bureaucracy, and stable markets and technologies (Ancona et al. 2001; Brown & Eisenhardt 1998; He & Wong, 2004). To capture the capacity of managing both these activities Tushman and OReilly (1996) introduced the premise of ambidexterity, which suggest that firms needs to that firms need to achieve a balance between the two to achieve superior performance. The notion of ambidexterity signifies a firms ability to operate complex organisational designs that provide for short-tem efficiency and long- term innovation (Ibid.). Essentially, the two activates compete for firms scarce resources, resulting in the need for firms to manage the trade-offs between the two (He & Wong, 2004). As argued by Levinthal and March, The basic problem confronting an
organization is to engage in sufficient exploitation to ensure its current viability and, at the same time, to devote enough energy to exploration to ensure its future viability (1993:105). Tushman
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and OReilly (1996) use the juggler metaphor to describe an ambidextrous firm that has the capabilities to both compete in mature markets (where cost, efficiency, and incremental innovation are critical) and develop new products and services for emerging markets (where experimentation, speed, and flexibility are critical); in other words to exploit and explore simultaneously. The ambidexterity hypothesis can also be found in between the lines of Eisenhardt and Martin (2000) who propose that dynamic capabilities require a blend of both the logic of exploration and exploitation. In this paper we take a particular focus on innovation processes, and Ancona et al. argued that dynamic capabilities are rooted in different streams of innovationin
simultaneously exploiting and exploring (2001:658). The literature further highlights that
adopting only one of these methods of innovation would produce insufficient results due to the shortcomings of each. What is characterised as being good and valuable in the long-term may not be good in the short-term and vice verse (March, 1991). This is elaborated on in Tushman, Anderson & OReilly (1997) stating that firms face difficulties in extending their existing competences to develop innovations that would create new markets. In this light we infer that firms may benefit from separating activities relating to incremental- and radical innovation respectively. In this thesis, we employ the notion of ambidexterity to highlight a lacking focus on explorative R&D activities of our case company. Moreover, we seek to assess the potential of a virtual community to act as a vehicle for explorative unguided scientific search without interfering with current R&D practices. In other words, we explore to what extent a virtual community can make way for an ambidextrous innovation model. To our knowledge, this is the first study that links the construct of ambidexterity to virtual community and innovative performance. 4.1.4. Combinatorial Innovation: Models and application of theory Many parallels can be drawn between the concepts discussed up until now. The concepts of exploitation and exploration are deeply rooted in the discussion of basic versus applied scientific research, and of the linear model versus the chain-linked model. In the context of exploitation, we therefore recognize a link between the chain-linked model and applied scientific research. We furthermore see an opportunity to congregate the concepts of exploration, the linear model and the value of basic science. The notions of exploration and distant search, i.e. gaining input from basic science and cross-
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disciplinary interactions (March, 1991; Fleming & Sorensen, 2004), provides insights to how a firm can benefit from external sources of knowledge. We infer that the optimal solution is a combination of both exploitation and exploration, referred to as the dynamic organizational capability of ambidexterity. In the forthcoming analysis, we wish to apply these notions and concepts to the case of NZ. Here we emphasize three models that well capture the notion of combinatorial innovation to help analyze NZ R&D activities. 1. The Long Tail of R&D The long tail of R&D provides an indication of the scope and scale of an organizations R&D activities (see figure 4.3). Along the y-axis we find the total amount of capabilities that an organization is able to leverage relative to how cross-disciplinary the organizations activities are. I.e. the further out on the x-axis you move the higher the degree of cross-disciplinary capabilities is captured by the organization. The columns along the x-axis indicate this degree of multi-disciplinary engagement of the firm: Internal R&D: In-house R&D capabilities in targeted disciplines External Collaborations: include key customer- and university collaborations Multi-disciplinary networks: Capabilities leveraged across a broad number of previously untargeted disciplines Unusual Suspects: Unanticipated valuable input found across non-targeted disciplines Figure 4.3: The Long Tail of R&D
Source: Own Model (Inspiration: The Long Tail, Anderson 2004)

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However, due to obstacles to ambidexterity, many firms fail to leverage multidisciplinary networks and reach out to unusual suspects, to the detriment of more explorative driven innovation. The model highlights a negative relationship between depth and scope of the disciplines that a firm leverages and can be understood as the trade-off in balancing exploitation and exploration as pointed out in ambidexterity literature. By the same token, ambidextrous firms are able to manage capabilities available across the long tail hence a firm is to be understood as encompassing a range of the activities on the x-axis, as opposed to a simply point on the curve. In the subsequent analysis, we apply the Long Tail of R&D to map the scope of Novozymes exploitative vs. explorative activities. The goal is to define NZ innovation model and assess how diverse NZ is given the disciplines leveraged. 2. The external sourcing continuum An adapted version of the external sourcing continuum introduced by Nambisan & Sawhney (2007) is outlined below (figure 4.4). The model suggests that firms can shop for innovations ranging from raw ideas to market-ready products. The continuum highlights that there are both benefits as well as trade-offs at either end of the continuum: sourcing for raw ideas takes an explorative focus and provides a company with a higher degree of reach, i.e. the number of options available, however, it also implies a higher degree of risk and uncertainty. Sourcing for market-ready products takes an exploitative focus on the refinement of product solutions with a high speed to market. Figure 4.4: The External Sourcing Continuum

Source: Adapted model, Nambisan & Sawhney, 2007
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We propose that focus on applied science, incremental innovation and local search leads to shopping for market-ready products at the innovation bazaar, whereas basic science, radical innovation and distant search result in more raw ideas. In the forthcoming analysis, we would like to shed light upon this trade-off and this model helps to concretize the dynamic interplay between focus and scope that any innovation model struggles to balance. We will use this model as part of multi-pronged framework to illustrate the extent of external knowledge sourcing of our case-company and the opportunities that lie in utilizing a virtual community as tool to align exploitation and exploration. 3. The Chain-Linked vs. Linear Gamut The linear model provides insights to how basic scientific research can be of value for a science-based firm in fuelling applied research activities. We infer that there lies value in taking basic-scientific/linear model approach as complement to applied scientific/chain-linked model reasoning (figure 4.5). In the analysis, we draw upon the findings of the linear model of innovation and the chain-linked model of innovation, and assess how these provide insights for understanding the advantages and shortcomings NZ current innovation model. More specifically, we investigate the extent to which the market-orientation of the chain linked model inhibits NZ to develop novel combinations, and whether following the reasoning behind the linear model can open up for new frontloading of opportunities to the current R&D organization at NZ. Figure 4.5: The chain-linked vs. linear model gamut

Source: Own Model
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4.2 Networks, Knowledge and Structural Holes

In this section we bring in the notion of networks and structural holes to the theoretical discussion. In the above section, a number of theoretical constructs have been addressed as to shed light on the important interplay between basic and applied science, the process of innovation, and the tradeoff in scope between exploitative and explorative R&D activities. The network perspective provides important insights that help us to understand and substantiate the rationale for why Novozymes should engage in external knowledge sourcing. A thorough understanding of how the social structures of networks are organized, we are furthermore able to emphasize the value that can be gained from bridging network structures, which thus opens up for the potential to grasp novel inputs for combinatorial innovations. The concept of brokerage becomes increasingly important in this context, as we propose that the virtual community can facilitate the brokerage of different network structures, a notion that will be elaborated upon in the sequential section. In Lahkani and Panetta (2007) principles of distributed innovation is explored, suggesting that R&D labs can benefit from seizing opportunities residing across networks external to the organization. The idea is based on Benbya & Belbaly in postulating that knowledge is unevenly distributed in society, and that centralized models for
economic planning and coordination are prone to failure due to an inability to aggregate this distributed knowledge (2007:7). We expand Benbya and Belbalys notion to suggest that
due to the prerequisite of economic planning of R&D activities in profit oriented science- based firms, such firms generally fail to embrace the full range of distributed knowledge available to them. In the high-tech industry the notion of Joes law is prevalent:
No matter who you are, most of the smartest people work for someone else (Lahkani & Panetta,
2007:97). Thus, provided that potentially valuable knowledge resides across individuals and networks outside the boundaries of any organization, taking a network perspective becomes a critical element in understanding how to best get access to such pools of knowledge. Essentially, the network dimension of this paper constitute the intersection between the theoretical constructs previously outlined in the theory section and the notion of a virtual community in acting as knowledge broker and catalyst for external knowledge sourcing.
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In this section we will focus on the concept of networks, structural holes and brokerage of structural holes (Burt, 1992). To set the foundation in which the remaining discussion takes point of departure, we begin with a short discussion on the notion of networks, where the concepts of open and closed network structures is emphasized. Sequentially we introduce the notion of structural holes that leads to a discussion of the opportunities and implications to be found, and which affect this can have on innovation. The aim is to highlight the obstacles and opportunities that arise from structural holes. 4.2.1. The Social Structure of Networks The notion of social networks has attracted much attention over the past decades from both the fields of social and behavioral science (Wasserman and Faust, 1994). Building upon the sociological ideas of Simmel (1955) and Merton (1968), scholars have explored the concepts of networks, looking into the structure of ties between individuals, organisations and communities (Granovetter, 1973); the centrality of betweenness (Freeman, 1977); the power of having exclusive exchange partners (Cook and Emerson, 1978); and the structural autonomy that is created by network complexity (Burt, 1980). The social network analysis approach also has deep ties within network theory, as it assumes the importance of relationships between agents. It refers to a set of actors (also called 'nodes') who are tied to one another through social relations, and therefore takes point of departure in the relationships that arise among entities, and on the patterns and interactions of such relationships (Wellman & Berkomitz, 1988). Scholars have recognized the benefits of applying a social network perspective in leveraging new insights to standard social and behavioral questions within the fields of political, economic, or social structural environment (Wasserman & Faust, 1994). 4.2.1.1 Closed versus Open Networks Burt (1997) categorises a number of network benefits according to three main elements: firstly, a networks ability to provide an individual with access to information beyond what he/she could possess alone; secondly, it provides such information early, which can be advantageous in being the first to act upon it; finally, the network allows for referral benefits, meaning that the information received through a network is often considered more reliable as it comes from a credited source (Ibid.). However, it becomes questionable under which circumstances such information benefits are viable. As we shall see, depending upon the characteristics of the network, and the extent to which it
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is closed or open, ultimately has an impact on the information benefits to be reaped from the network (Burt, 1997). In the social network literature disputes have arisen over which network structure, closed or open, appropriates the most benefits to the network (Ahuja, 2000). Closed networks are characterized by strong mutual ties across entities, creating a homogenous community where everyone knows everyone; the greater the network closure the more interconnected the network. Coleman (1990) argues that networks with higher closure generate high trust, which in turn facilitates cooperation. From Colemans (1988) perspective, the optimal social structure of a network is thus one generated from building dense, well-connected networks. Contrary to this, Burts (1992) perspective is that constructing networks of disconnected nodes is the most optimal strategy. Following this, Burt (1992, 2001) states that there are negative affects of closure: the high degree of interconnectedness between the members in a closed network results in the creation of norms in such network structures that make groups less heterogeneous, thus constraining social behaviors. Burt (1997) goes so far as to say that the structure of homogeneous closed networks are associated with a redundancy of information benefits, i.e. no new information is infused into the network. This is echoed by Putman (2000) who postulates that closed networks are great in helping its members get by, but not ahead. Due to the homogeneity of the contacts in a closed network, knowledge revolves within the network without gaining new insights and input to further challenge the structure (Burt, 1992). Thus non-redundant contacts, i.e. unknown contacts and knowledge can provide information benefits of value to the network itself (Granovetter, 1973; Burt, 1992). A valid remark here is that if a firms R&D activities have a strong internal orientation, the organisation (network) may suffer from what Burt refers to as redundant information benefits. In the context of this paper, the effect that network structures (open vs. closed) may have on knowledge sourcing thus becomes important to consider. What is particularly interesting in the context of our thesis is the affect that the characteristics of a network (open vs. closed) have on innovation of NZ R&D organization, and the potential there lies in external sources and networks. Network structures are said to have an impact on innovation, and it has been is found that small homogenous communities more quickly introduce incremental improvements in
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technology (Lynn et al., 1994). Burt (2005) takes this point further in stating that closed networks might actually work to inhibit innovation (Burt, 2005), while networks with heterogeneous substructures will produce more radical innovations. NZ seeks to enhance its innovative capacity through external knowledge sourcing, and therefore the types of network structures that a virtual community aims to encompass is of importance. Scholars suggest that open networks hold potential to produce more radical innovations, and thus it becomes a motivating factor for the remaining discussion to grasp how heterogeneity of networks and the bridging of networks can be a driver for innovation. 4.2.2. Structural Holes A generic research finding in sociology and social psychology is that information circulates more within groups of people than in between groups of people (Lin et al., 2001). In other words, in any kind of grouping or cluster of people, such as divisions, industries and disciplines of research etc., information flows are more vigorous within than across. This does not necessarily imply that people are not aware of what takes place in other groups or networks, rather that they focus on the activities taking place in their particular group, and simply attend less to the activities of people in other groups. Information flows within groups are results of the cognitive constructs of the individuals in that group, thereby curbed to fit the cognizance of that group. By the same token, new, yet unchallenged information will circulate more across groups that within, giving rise to opportunities to emerge in between groups (Ibid.). This idea has been explored more in depth through the conceptualization of structural holes and the opportunities that lie in bridging structural holes. Supporting arguments of the theory of structural holes draws upon network-related theories emerging in the 1970s. The term structural hole can be characterised as the social gap between two groups (Parjanen et al., 2011); the weak connections between clusters of densely connected individuals (Granovetter, 1973, 2005); and as the gaps between non-redundant contacts (Burt, 1997). This element of disconnectedness, in other words holes in the structure of the networks, may result in ignorance towards the benefits that could be gained as assets and behaviours get locked in suboptimal exchanges (Burt, 1980). Thus, potential benefits lie in identifying structural holes across networks and in taking action in order to attempt to bridge them. In the forthcoming
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analysis, the research environment of our case company Novozymes (NZ) is analysed, and we draw upon the concept of structural holes to highlight the rational for why NZ stand to benefit from engaging in more cross-disciplinarily collaborations. In the following we will review whether structural holes hold opportunities vis--vis disadvantages, and which role bridging and closure plays in this respect. 4.2.3. Structural holes and opportunities in segmented networks Following Marchs (1991) idea of exploitation versus exploration, Fleming and Sorensens (2004) notion of local versus distant search, and the notion of social structures of networks, we come to understand that opportunities lie in distant and more heterogeneous social structures of networks and that benefits can be reaped through brokerage (Granovetter, 1974, Burt, 2001, Parjanen et al. 2011). However, benefits of brokerage are not without limitations and we infer that it becomes vital to ask: when are structural holes too distant for brokerage to provide fruitful results? In other words, is there an optimal cognitive distance between structural holes? Following Nooteboom we learn that outside sources of knowledge "require a "cognitive distance" which
is sufficiently small to allow for understanding but sufficiently large to yield non-redundant novel knowledge" (2000: 72). Scholars argue that network structures should optimally hold a
mixture of brokerage and closure (Narayan, 1999). Brokerage of structural holes implies the existence of brokerage function bridging relationships across heterogeneous actors. On the other hand, network closure of structural holes results in creating trust and stronger ties in between previously disconnected agents. There are strengths and limitations of both closure and brokerage, but while brokerage ... is the source of added
value, closure can be critical to realizing [that] value' (Burt 2001:52).
Individuals who are accustomed to interacting with individuals across groups possess an intuitive ability to accept alternative ways of thinking and behaving and are therefore able to foresee potential opportunities that lie in bridging activities across various groups. This notion builds upon fundamental ideas within sociology and economics and as Adam Smith noted: when the mind is employed about a variety of objects it is some how
expanded and enlarged. (Smith, 1982:539). There lies great value in opening up for
discussions between different disciplinary areas, exposing them to means of being and doing that is unfamiliar to them. Empirical studies further support this notion, as Burt (2004) noted through an in-depth study of a French chemical giant Rhne-Poulenc,
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where the CEO stated that his scientists received great value for new ideas and products from inputs provided to them from individuals of other disciplinary fields. 4.2.4. Brokerage and Innovation The above discussion sheds light upon the benefits that can be reaped from bridging structural holes, in that new opportunities arise from connecting unknown areas of interest, disciplines, etc. The impact that this has with regards to innovation is of due importance in the context of the given thesis; the objective being to highlight the impact that distant and unforeseen sources of external knowledge can have on the prevailing innovation model of a science-based company such as Novozymes. Scholars in innovation and organisational learning discourse has emphasised the linkages and the outcome of collaborative networks as being the vehicle by which organisations gain access to external information (Ahuja, 2000). The field of sociology has long studied the relationship between network structures and innovation, however, focusing more on the adaption and diffusion of innovation rather than the outcome of network structures on the generation of innovation (Ibid.). Other scholars have paid more attention in this area (Shan et al., 1994; Podolny & Stuart, 1995; Powell et al., 1996). Areas that have been studied range from external factors determining whether an innovation becomes a technological dead-end or if it serves as the basis for subsequent innovations (Podolny & Stuart, 1995). Moreover, collaborative network relationships are found positively correlated to innovation output (Shan et al., 1994). The network perspective on innovation emphasises the importance of the connectivity of heterogeneous groups of actors as well as the importance of exploring and exploiting weak ties and structural holes (Parjanen et al., 2011). Networks rich in structural holes open up for more opportunities for new combinations of knowledge and ideas, and we thus infer that brokers, or the bridging of structural holes, support innovation by connecting, recombining and transferring sources of information, knowledge or ideas that would otherwise be disconnected (Burt, 2004.). Innovation primarily happens at the boundaries between disciplines or specialisations, and it is therefore evident that working across boundaries or distances is an important driver supporting innovation (Parjanen et al., 2011). Hence, the notion of distance plays an important role whether we
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are talking about cognitive, communicative, organisational, social, cultural, functional or geographical distance. Figure 4.6: Bridging network structures across disciplines

Source: Own Model
4.2.5. Cognitive Distance The concept of cognitive distance supports the notion of structural holes in that it addresses the degree of difference across individuals or groups. Cognition is developed in the interaction of the physical and social environment and it can be identified based on prior knowledge, which confers an ability to recognize the value of new
information, assimilate it, and apply it to commercial ends (Cohen & Levinthal, 1990:128).
Following Simon (2000:33), cognitive capabilities of human agents are bounded by the
limits imposed by the frames of reference, value systems and modes of symbolic representation prevailing in the epistemic communities to which they belong. This highlights the idea that in-
group idiosyncrasies may constrain the cognitive capacity of the group. Nooteboom et al. (2005) state that the term cognitive in this sense denotes a broad range of mental activity, perception, sense making, categorization, inference, value judgments, emotions, and feelings, which all build on each other. Furthermore, as different categories of cognitive meaning are constructed through the experiences that follow individuals, it is inferred that individuals inherently interpret, understand and evaluate their surroundings differently (Nooteboom et al., 2005:3). Oberoi and Saviotti (2010) introduced the notion of cognitive distance to denote the dissimilarity in knowledge bases between firms. We thus infer that similarity of knowledge bases would imply cognitive closeness, likely to prevail within homogenous networks. The notion of cognitive distance can therefore be understood as the space in- between social structures of networks characterized by structural holes. Conclusively, 51
the diversity of distance is to be considered a source of innovation (Harmaakorpi et al., 2006). In the succeeding analysis (section 6.3.1) we elaborate upon the notion of optimal distance between structural holes where we place NZ in this context. 4.2.6. Social Capital and Innovation The notion of social capital is a relevant topic to address in the light of this thesis. Given that we take a network perspective to knowledge creation, the ways in which value is created by means of relationships becomes a central issue. Moreover, the concept of social capital can help us to better understand how, and under what premises, information is shared and knowledge is created. We find that the value of social capital for knowledge creation is not as straightforward as most authors propose; rather the value is contingent on context and the type of knowledge one intends to produce. We come to question if novel combinations (radical innovation) derive benefit from high social capital, or if in fact the lack of high social capital makes way for this type of innovation to emerge. Over the two past decades social capital is notably the most successful concept exported from sociology to other social sciences and to the public discourse (Portes, 2000). Social capital has often been used to address how interpersonal relations can improve community life and solve social problems. It is a relational asset that exists across people in a given group, community, organization or society, and that by means of fostering trust, mutual obligation and cooperation becomes the mortar of civic engagement (Nelson et al., 2003). I.e., when social capital is high, people feel empathy with one another and sense of belonging, and they take on responsibilities and motivation for solving problems (Ibid.). Social capital represents the gains to an individual, a group of people, or a community, acquired from the establishment of relations with other individuals or groups. This has been captured eloquently by Portes: whereas economic capital is in people's bank accounts
and human capital is inside their heads, social capital inheres in the structure of their relationships
(1998:7). Social capital is created when a relationship is established, and appreciates over the course of repeated interaction (Ibid.). Most scholars agree that social capital value surplus accrue to both the individual and the collective. Bourdeiue & Wacquant, define social capital as the sum of resources, actual or virtual, that accrue to an individual or
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group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition (1992:119).
Social capital: a liability or a virtue? Most literature addressing the notion of social capital seem to praise the emergence of social capital, and point out a strong positive relationship between social capital and knowledge creation (Canella & McFayden, 2004). However, high degrees of social capital have also been seen as a constraint for knowledge creation and innovation. Interpersonal networks can, over time, produce strong norms and mutual identification among network members, thus limiting openness to new information and diverse views. Burt (2001) for example, claims that when high social capital is realized by a group, norms emerge from such network structures making the group less heterogeneous, thus constraining social behavior - which from a business perspective can be understood as inhibiting the innovative capacity of the group. This is echoed by Gabbey & Leenders in proposing: When networks are too durable they may yield obstacles for novel combinations of
radical innovation (2001:203). Nooteboom (1999) recognizes that in the light of radical
innovation (exploration of novel combinations) systemic linkages are not required. In other words, with novel combination, strong social ties (i.e. high social capital) become a liability rather than a virtue. Following Lynn et al. (1994), small homogenous communities are said to more quickly introduce incremental improvements in technology while innovation communities with more heterogeneous substructures will produce more radical innovations. This suggests that the value of social capital is contingent on the circumstances in which knowledge is created, and more importantly, on the objective of the specific collaborative exertion. In other words, the value that accrues to a network aimed to produce novel combinations (radical innovation) might become depressed at expense of high social capital. Walker et al. captures these two facets of social capital: Social capital is a means of enforcing norms and behaviour of
individuals or corporate actors and thus acts as constraint as well as a resource. (1997:111).
From the above, we understand that social capital can be both a virtue and a liability for a given innovation process, and drawing on this we add depth to our understanding of network structures and its affect on the outcome of radical vs. incremental innovations.
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4.3. Virtual Communities and Knowledge Sourcing

The structure of networks provides an indication of the opportunities that lie in bridging structural holes and distant sources of knowledge. We have shown that the structure of networks is essential for the way in which knowledge can be shared. In the following we highlight structural characteristics of virtual networks, and move on to suggest that as a result of the properties of a virtual community, it holds the potential to broker structural holes and distant sources of knowledge. Drawing upon findings of combinatorial innovations, networks and structural holes, we wish to illustrate how a virtual community can act to enhance the innovative capacity of Novozymes. The distance between networks, structural holes and sources of knowledge may come in different forms such as cognitive, communicative, organisational, functional, social or cultural. Often the distances are so great that a special brokerage function is needed a means by which information exchange and translation can take place between structural holes (Burt, 2004). In the context of this thesis, we propose that such a special brokerage function can be facilitated through the means of virtual community, and we introduce the concept of a virtual innovation broker. We thus proceed to discuss the nature of information exchange and knowledge sourcing in the context of a virtual community set- up. 4.3.1. Knowledge Sharing and Information Exchange in virtual worlds To locate expertise and knowledge sources to solve problems is often a social and collaborative endeavor (Bian et al., 2008). While performing an online search (using e.g. Goolge.com) sometimes is an efficient way to answer a particular question, todays search engines are not capable of answering queries that require deep semantic understanding of the query or the document in question (Ibid). Hence, asking a person is often the only way to get a satisfying answer. One good place to start is then to review ones own professional network in hope of leads that provide a solution, but sometimes the right source of knowledge lies beyond the reach and grasp of ones own network and resources. The proliferation of online communities and interactive places for collaboration hold the potential to extend the scope and access to relevant knowledge sources available to an individual or organization. Virtual communities enable new levels of interactions and interconnections among individuals, documents and data, and have become places for people to seek and share expertise (Zhang & Ackerman, 2005).
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In order to understand how a VC can act as vehicle for external knowledge sourcing, information exchange and knowledge sharing become important elements to consider. Researchers have recently positioned social capital as a key factor for understanding knowledge creation (Nahapiet & Ghoshal, 1998). Here, one important question to consider is: Why does someone choose to share information or knowledge with somebody else? Two main rationales or logics come to mind, positioned at two extremes of a spectrum. First, take the barter economy logic: a pragmatic view of exchange where an information package is shared in between two individuals just as any other good on a market, but it is not paid for with money but with the exchange of another good (piece of information). In the case that interaction repeats itself, a social relationship might emerge allowing for a social logic to guide the forthcoming exchange. Here, principles of trust, mutual reciprocity and norms of action allow for information and knowledge to be exchanged based on principles of social life, as opposed to principles of market exchange (Bullen, 2007). The two logics of information exchange suggest that information and knowledge can be shared in both the presence and absence of social capital, but the characteristics of the exchange is inherently different. The previous point made regarding the liability of high social capital also bears relevance when addressing information exchange. We infer that in the absence of social capital, information exchange follows a more mechanistic/market logic whereas high social capital results in a more spontaneous exchange following a social logic. Yet, we have learned that high social capital may run the risk of hampering novel combination to emerge from the exchange due to the formation of norms and constraints in social behaviour as a result of group dynamics (Burt, 2001). Thus, there seems to be a trade-off between high vs. low social capital, where the optimal level seems to be balanced level, i.e. neither too high nor too low, as it fosters an exchange of information that supports the emergence of both incremental and radical innovations.
4.4. Theoretical synthesis and application

In the above discussion a broad number of concepts and theoretical constructs are introduced and revised, each representing particular dimensions of our topic of research. Across these concepts we have identified subtle analogies that suggest a relationship in the context of networks and innovation. We find that many of these, given their dichotomous nature, can be bifurcated onto a continuum (figure 4.7).
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Figure 4.7: Conceptual dichotomy continuum

Exploitation Local Search Low Cognitive Distance Closed Networks Closure / Bonding High Social Capital Incremental Innovation Exploration Distant Search High Cognitive Distance Open Networks Brokerage / Bridging Low Social Capital Radical Innovation
We find support in Binz-Scharf for our claim that exploration and exploitation can be placed on a continuum and that certain network structures are better suited for each of the two: exploration and exploitationmove along a continuumgiven by the configuration of
ties in the networks employed. The network is sparse in the exploration phase and dense in the exploitation phase, corresponding to weak ties during exploration and strong ties during exploitation (2003:8). We also infer that the above spectrum falls under the umbrella of
ambidexterity theory, where the balance of each dimension comprises an essential element for a firm to be ambidextrous. It is at the intersection of the concepts outlined in figure 4.7, combined with the phenomenon of virtual communities, that the concept of the virtual innovation broker emerges. Thus, one important contribution of this thesis is to highlight the utility of virtual communities for science-based firm for external knowledge sourcing, in the light of the relationship between the aforementioned theoretical constructs. In addition, we find that the models we employ in the subsequent analysis share a similar pattern. Below we introduce three models that guide us in our analysis. Drawing on literature, we understand that firms often find themselves in cognitive traps in which strong profit-orientation may induce firms to persist excessively in the use of procedures and actions associated with success in the past (March & Levinthal, 1993). This often leads firms into sub-optimal exploitative strategies that impede the emergence of innovation of a radical nature. One objective of the first part of the analysis is to analyse to which extent our case company, NZ, is trapped in such sub-optimal exploitative strategies. In doing so, we employ the Long Tail of R&D where we analyse the external scope of NZ current innovation model (see point 1, figure 4.8). Moreover, although we postulate that firms should be explorative in their R&D strategies, we also find evidence in the literature suggesting that there is a limit to the value of distant sources (e.g. Nooteboom et al., 2005).
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Figure 4.8 Elements of External Knowledge Sourcing 1. The Long Tail of R&D
2. Optimal Scope Continuum
3. Ambidexterity trough a virtual innovation broker
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This leads us to hypothesize that there is an inverted U-shaped relationship between cognitive-, disciplinary- and organisational distance and the degree of valuable input for radical innovation (see point 2, figure 4.8). Moreover, from the ambidexterity literature we know that activities relating to the extremes of the continuum (figure 4.7) are often difficult to combine. In other words, firms often lack the organisational capabilities enabling a simultaneous focus on exploitative and explorative strategies. It is in this light that we in the second part of the analysis introduce and apply the concept of the virtual innovation broker and propose that it can act as a bridge between NZ R&D organisation and more distant sources in the external environment (see point 3, figure 4.8). In sum, the first illustration places our case company NZ in the context of external knowledge; the second illustration highlights that resource heterogeneity is valuable, but only to a certain degree; the third shows that it is not only a matter of scope but also of balancing exploitation and exploration, and that this can potentially be achieved by means of a virtual innovation broker. Given that the second and third part of the forthcoming analysis is of a conceptual nature, with point of departure in theory and literature, additional theoretical constructs and how they are applied will be introduced there and then as we see fit.
5. Novozymes - Case Company Profile

Novozymes (NZ) is a biotechnology-based company headquartered in Copenhagen, Denmark. The company was founded in 2000 as a result of a de-merger12 with Novo Nordisk, a world leading pharmaceutical company. NZ core business areas are industrial enzymes (94%), microorganisms (4%) and biopharmaceuticals (2%) (Annual Report 2010). NZ products are used in a broad range of process industries including agriculture, bioenergy, food & beverages, household care, leather, pulp & paper, textiles and wastewater solutions (NZ Corporate Website, 2011). In large tanks inside the laboratories of NZ, tiny enzymes are produced using microbiological processes and fermentation technology. Sustainability lies at the heart of NZ business agenda, and since sustainable solutions have become acknowledged to make sound business sense by other businesses, NZ profits from delivering green solutions ultimately reducing energy consumption and climate impact of its customers. NZ is well recognized, both by
12 The split was aimed to bring about a stronger focus on the emerging business of industrial enzymes.
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the general public due to its green profile, as well as by its customers. In 2010 NZ helped customers reduce CO2 emission by 40 million tons. Furthermore, the company has received a number of acknowledgements and rewards: Dow Jones named NZ the sustainability sector leader in the biotech area and Procter & Gamble appointed NZ its Supplier of the Year for the third year in a row out of more than 80,000 suppliers (Annual Report 2010). NZ heavily relies on R&D and invests 14% of its turnover in R&D, and out of its 5400 employees across 30 countries 16% work in R&D (Annual Report 2010). Correspondingly, a strong IPR and patenting strategy is exemplified by an extensive patent portfolio of more than 6500 granted or pending patents (Annual Report 2010). After the split with Novo Nordisk and becoming a separate company in 2000, Novozymes (NZ) has experienced steady growth rates. By 2010 NZ had a 47% market share, compared with 43% in 2000. This makes NZ the worlds leading producer of industrial enzymes, with generated sales of DKK 9,724 million and EBIT of DKK 2,117 million in 2010 (Annual Report 2010). Given the global economic slowdown, these results are quite remarkable. What is an Enzyme?
An enzyme is a protein that works as a catalyst in naturally occurring processes. Catalysis is defined as the acceleration of a chemical reaction by some substance, which itself undergoes no permanent chemical change. This means that once the biological process is complete, the enzymes are neither used up in the reaction nor do they appear as byproducts. Enzymes are mostly found in microorganisms such as fungi and bacteria. These are then further developed to improve desired characteristics of the enzyme and prepare it for mass production. There are a plethora of different enzymes, with highly varying characteristics. Some are good at chopping up dirt and fats, suitable for detergents, others prolong life of food, while yet others are specialized at chopping starch, helping the fermentation process in ethanol production. When used for industrial applications, enzymes can usually speed up production processes at a lower cost than chemicals due to reduced raw material and utility use.
Source: Novozymes Talent Search, 2011
5.1. Novozymes R&D organization

The R&D organization at NZ is structured around two functional areas: Applied Discovery Unit (ADUs) and Molecular Biotechnology (MBs). The ADUs are structured in divisions along each industrial application area such as textiles, food & beverage,
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bioenergy, etc. (figure 5.1). The MBs on the other hand are expected to carry out, what NZ characterizes as basic scientific research and act as a support function the ADUs in the development of enzymes for each given application area. Figure 5.1 Overview of R&D activities at Novozymes

The MBs set up project groups that work within each application area, and based on inquiry from the ADUs, the MBs return to the labs to improve or change characteristics of the enzyme in question. Most work is centered on optimization and customization of current products. Such activities include improving enzyme performance and stability (e.g. to make enzymes in detergents work just as well in low temperatures); improve process compatibility, i.e. how should the enzymes be applied; and reduce enzyme production costs (SULO; TRMU, 2011). A large share of product developments at NZ take place within the four walls of the organization inside closed labs and protected by a strong IPR policy. Nevertheless, the R&D organization at NZ has been recognized for its strong focus on external collaborations (e.g. in Knudsen & Nielsen, 2008). NZ takes an active role in trying to be more open, as stated on the company website: One important means of staying ahead is
through mutually beneficial collaborations with universities and other partners around the world.13. The collaborative scope of NZ R&D efforts can be structured around the
following three activities:

universities/Pages/default.aspx
13 http://www.novozymes.com/en/careers/students/how-we-work-with-
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Internal R&D: A number of in-house R&D resources are leveraged. In 2009 the Innovation Office was set up to manage the front-end pipeline across the companys businesses, and a number of interactive forums have been created. An intra- organizational communication and connection tool has been set up to make way for bringing together the companys employees. Furthermore, a number of group collaborations have been set up including: NZ' Radical Innovation Catalysts (RIC) and cross-functional group collaboration for idea qualification. Strategic partnerships and key customer collaborations: NZ relies on development projects carried out in close collaboration with external strategic partners as a part of its growth strategy. Allying with partners in the research process is no longer only an R&D related decision it is just as much a corporate strategic objective (Knudsen & Nielsen, 2008). University Collaboration: Over the past decade a number of University collaborations have been initiated by NZ in e.g. the United States, China, Brazil and Denmark. On the company website it is stated that By working so closely with universities we get fresh ideas
and talent that help us look into tomorrow to prepare industries for whats coming4.
5.2. Looming Challenges

The long-term targets are set to an annual organic sales growth of 10%, an EBIT margin of 20% and ROC of 22%, and future projections show that Novozymes (NZ) will hold 50% of the market in couple of years (Annual Report, 2010). Given the current market situation these targets are to be considered ambitious. While NZ demonstrates an impressive record, the future holds a new set of challenges that must be dealt with. After studying the financial numbers more carefully we found that NZ has been outgrowing the market over the past decade - by a rate of 29%14 (appendix 3). In the long run this implies that unless total market expansion accelerates, NZ has to grow at the expense of current market assets, making it increasingly difficult to reach growth targets. Furthermore, industry concentration is relatively low, with the presence of only a few manufacturers able to cater to the needs of clients (Frost & Sullivan, 2009). In addition, the industrial enzyme business is characterised by strong barriers of entry due to expensive technology and the complex nature of enzyme producing technologies (Ibid.). Competition is thereby moderate across most enzyme application areas; expect the
14 Novozymes growth divided by total market growth
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pharmaceutical enzyme market that is highly competitive. Competition is known to grow markets, and in low concentration industries market growth is highly dependent on the actions of a small set of competitors (Ibid.). Hence, measures taken by NZ to ensure market growth are deemed vital for NZ in the future. In this light, innovation and development of new industrial application areas for enzyme technologies becomes very important strategic objectives for NZ. Technological change has been argued to have a great impact on the competitive structure of many industries, where technological advancements drive the growth of industries (Ernst, 2003). For NZ this calls for constant development of new applications to meet growth targets, and it is deemed vital to move beyond existing industries and application areas. NZ has been recognized for its strong innovative capacity, yet, with future challenges comes greater pressure for pioneering and radical innovation. As a response, NZ is investigating opportunities to increase its scope of external knowledge sourcing in order to broaden its horizon in search for new knowledge. In 2011, a new corporate value pillar was introduced: Connect to create
because the world is full of ideas 15. Furthermore, a we-know-it-all corporate culture is
being called into question, which indicates a new direction in which the organization is moving. NZ is progressively looking for ways in which it can ensure to explore external sources of knowledge potentially valuable to the organization and the future of enzyme business.
6. Analysis
We conduct a three-pronged analysis that combines valuable insights to assist us in exploring the identified problem statement: How can a virtual community facilitate external knowledge sourcing so as to enhance the innovative capacity of Novozymes R&D organization? We draw upon empirical evidence, as well as concepts, theory and literature, as outlined in previous sections of the paper, to support our subsequent claims and findings. For each part of the analysis a brief part-conclusion is outlined, to be followed by our overall concluding remarks at the end of the analysis. In the first part of the analysis we aim to gain an understanding of Novozymes current innovation model and identify the extent and scope of its current R&D activities. Here, we draw upon empirical findings from our in-depth interviews. We conclude that
15 http://www.novozymes.com/en/about-us/vision-and-values/touch-the-world/Pages/Our-values.aspx
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Novozymes innovation model is focused on the exploitation of known sources of knowledge to the detriment of radical innovation. Ultimately we provide arguments for why external knowledge sourcing hold potential to benefit the organization. For the second part of the analysis, emphasis is placed on the concept of a virtual community, where we develop a rationale behind establishing a research-based virtual community for external knowledge sourcing. We highlight some enabling and inhibiting properties of virtual communities for acting as a mechanism for unguided distant search for scientific opportunities. Moreover, we develop the concept of a virtual innovation broker to highlight that a virtual community holds potential to bridge structural holes. Here we primarily make inference based on prevailing theory and literature, and also include findings from an online survey. We conclude that a virtual innovation broker theoretically holds potential to facilitate an explorative arm of NZ innovation model. In the final part of the analysis we address the notion of scope in unguided search for scientific opportunities. We bring in the notion of upper limits of ambidexterity and place emphasis on implications of balancing exploitation vs. exploration-oriented R&D activities in the light of the virtual community set-up. Here we suggest that the virtual innovation broker holds potential to overcome a number of obstacles to ambidexterity found in the literature. Here we predominantly employ prevailing theoretical constructs highlighted in the theory section. We conclude that a VC can be viewed as an add-on to NZ innovation model with the potential to expand innovation activities to become more explorative, without harming current exploitative capabilities.
6.1. Part I - Novozymes innovation model

The objective of the first part of the analysis is to answer the first sub-question (Q1) of the problem statement, namely: To what extent is the current innovation model at Novozymes conducive for effective external knowledge sourcing? We take point of departure in the R&D organisation at NZ and aim to identify how R&D activities are structured with regards to research and new product development. A mapping of the process of innovation at NZ is conducted, where we draw upon the notion of combinatorial innovation, concepts of basic vs. applied scientific research and as well as exploitation vs. exploration. We find that the R&D activities at NZ has a strong in-house focus but also covers a number of external collaborations with key customers and
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universities. A mapping of these provides insights to the scope of NZ current innovation activities transcending organizational boundaries of the firm. Drawing upon the notions of market-pull and technology-push and its affect on innovation, the objective is to address the balance of exploitative and explorative activities in the current process of innovation. A mapping of NZ innovation model covers three main focus areas assessed throughout this section. We begin by looking into the transition that NZ R&D organization has gone through over the past 20 years. This is done in order to illustrate how Novozymes has moved from carrying out more explorative R&D activities to becoming more exploitative over recent years. Before concluding on the model of innovation we assess how R&D project groups are organised at Novozymes to shed light on the degree of cross- disciplinary interactions in R&D projects. 6.1.1. R&D in transition at Novozymes Innovation is an important driver for economic development for corporations, industries and society in general (Ernst, 2003). Like most firms, NZ is dependent on innovation for performance. An innovation model illustrates the mechanisms that act to support the innovation process, whether it is a result of technology push, market pull or a combination of the two. In our study of NZ we find that its model of innovation is currently characterised by the mechanisms of market-pull, however, this has not always been the case. Traditionally, NZ model for innovation was characterised by a technology-push orientation where the organisation focused on new inputs emerging from research (SULO, 2011). This is illustrated by the following assertion: when we
found an enzyme and understood why and how it worked, we would then ask if there was a market that could use it. (SULO, 2011). R&D activities thus revolved around exploration of
enzyme technologies to discover new enzymes, through working with unknown components to understand how they worked together (Ibid). The role of marketing and business development was a secondary activity that followed sequentially after findings were made in R&D, in order to assess the market opportunities and to commercialise the product. The innovation process characterised by technology-push did not face much change until NZ product portfolio began to encompass a broad number of product categories
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and application areas. Soon the role of market-pull became more crucial, and optimisation of the current product portfolio was prioritized. Marketing and business development began to take an active role in determining which industries and markets were of particular interest for NZ to target, and consequently also where the R&D organisation was to place its focus (SULO, 2011.). According to employees and managers at NZ, the shift in this direction has taken place over the last five year, and it characterises the way in which NZ engages in R&D at present (TLS; TRMU; SULO; MTBO; SALK, 2010). It is Business Development, Marketing and Customer Solutions that dictate the direction of the enzyme technology that R&D is researching. This has been further indicated through our interviews with employees at NZ it is business development and
marketing that indicate that there is a particular market with a high potential for enzyme products, and then we [MBs and ADUs in R&D] alter a current enzyme product to meet these needs (SULO, 2011). Where R&D activities previously revolved around exploring new
enzymes and solutions, the current model is deemed to be of a more exploitative nature. R&D today takes point of departure in known enzymes and exploits capabilities built up internally to deliver optimised products. Innovation at NZ can thus be characterised as incremental in nature, as most innovations emerge by combining known knowledge and components to alter current products and build new solutions. Hence we find evidence that NZ innovation model used to be more radically oriented in its approach to R&D using input from basic scientific research to create new solutions. It seems that over time the growth of NZ product portfolio has influenced a shift in focus of R&D activities, as indicated through an interview we [NZ] have such a large palette of products to offer, to
alter, and development further such as to meet the needs of our customers (SULO, 2011). This is
not to say that the current model of innovation is insufficient16, however it brings to mind some of limitations in being able to meet future growth projections as discussed in the company profile above (section 5). Through an assessment of NZ innovation model, we will shed light upon the extent to which current innovative activities are conducive for optimally supporting the innovative capacity of NZ in the face of looming challenges in the future of enzyme business.
16 NZ is clearly able to meet profit targets year after year.
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6.1.2. Novozymes innovation model Taking point of departure in Novozymes (NZ) current R&D focus addressed above, we assess the degree to which NZ innovation model can be characterised in the light of the chain-linked model. We model the process of internal product development given the frame of the chain-linked model to better understand its advantages and drawbacks. Finally we wish to shed light upon the implications that arise as a result of the chain- linked model in a firms pursuit to expand its innovative capacity. On NZ corporate website it is emphasized how the organizations innovation model supports incremental and radical innovative processes with the aim to ensure a solid pipeline of products for current market needs as well as to ensure long-term growth (NZ Corporate17, 2011). We find reason to call this position into question by means of our assessment of the actual scope of NZ R&D activities. We uncover insights that indicate that NZ model of innovation is overly geared for exploitation and incremental innovation with a strong reliance on applied science as the main input. The combinatorial perspective of innovation highlights that a broad range of inputs from external sources, feedback on current processes, and organizational learning by iteration, together act as drivers for innovation. The combinatorial approach is characterised by re-combination of given components, technologies and processes that in turn accelerate the innovative process (Kline and Rosenberg, 1986). The structure of the chain-linked model supports the combinatorial approach to innovation as it opens up for both feedback loops and moving back and forth in the process if innovation (Ibid.). The feedback loops in turn make way for multiple sources of information to influence a given innovation process something Kline and Rosenberg argue is beneficial and supportive of radical innovation (1986). Furthermore, the iteration of processes supports incremental innovation (Ibid.). Another important characteristic of the chain- linked model is that it supports the design of the innovation process. Initiating a technological innovation process calls for an overview of what is needed or expected from the process, and the sequential redesigns that are essential in reaching a successful outcome (Kline and Rosenberg, 1986). 17 http://www.novozymes.com/en/investor/sustainability-investment-facts/Pages/rd-and- innovation.aspx
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Figure 6.1: NZ innovation along the Chain-linked model

Source: Kline & Rosenberg (1996)
At Novozymes, a market-pull approach to innovation takes point of departure in the needs and opportunities in the market. Our interviews with employees in the MB- and ADU departments indicate that a large majority of projects are characterised as product- oriented, where the aim is to either work towards finding a solution or to understand a given solution better; ultimately to produce a better product (SULO, MTBO 2011). When further asked whether the organisation was involved in other types of projects that were not pre-defined by the market, interviewees from both MB and ADU departments re-emphasised that a vast majority of R&D projects revolved around tailoring a solution for the market (SULO, SALK, MTBO, 2011). We infer that processes of development are initiated on the basis of what the potential market holds of opportunities for a given product, much along the lines of the chain- linked model. Based on a given requirements of the project, the MB project groups work closely with the ADU division in each given industrial application area in carrying out continuous re-adjustments and refinements until predefined requirements are met (MTBO, 2011). We draw a parallel between the R&D organisational structure and the chain-linked model, and infer that NZ internal innovation model resembles the underlying notions of the chain-linked model. The process of product development follows along the path of the chain-linked model (Figure 6.1). It takes point of departure in the potential market, thereby maintaining a strong focus on producing and providing application and industrial oriented solutions. NZ core competences lie within researching and producing enzymes for industrial purposes, and consequently it heavily relies on a thorough scientific understanding within the field of biotechnology in being
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able to meet the demands of the market. As outlined in the theory section, the chain- linked model assumes science to be a knowledge domain open for consultation iteratively over a given innovation process. This implies that science is aimed to answer questions that arise during the innovation process, which in turn uses identified market potentials as point of departure. However, developing arguments for why Novozymes should engage in more explorative R&D, the linear model becomes a useful frame of reference (see theory section, figure 4.1). The linear model takes a long-term perspective on science in enhancing the lasting developments of the economy with particular focus on science-based industries. The key contributions of this model can provide valuable insights for NZ in its quest for becoming more explorative. In pursuing an innovation model that resembles the fundamentals of the chain-linked model, we infer that NZ does not adequately recognize the importance of pure basic science. By developing mechanisms that invite more basic scientific input, NZ can faster incorporate emerging developments taking place out in the broader scientific community (figure 6.2). In the following section we assess the role of basic vs. applied science at NZ R&D organization in more depth. Figure 6.2: Linear Model vs. Chain-linked model

Source: Own Model
6.1.3. R&D at Novozymes: basic vs. applied scientific research In the theoretical discussion we established that both basic and applied scientific research are of great value for an innovation process. Basic science revolves around generating a general understanding of a phenomenon, and applied scientific research looks into providing solutions to technological and industrial problems or issues (Balconi et al., 2010). Through our interviews with scientists at NZ we discovered that the way in which NZ utilizes these concepts is rather different from the above definition. 68
NZ indicates that its two main R&D departments, MBs and ADUs, focus on basic research and applied research respectively. Yet, taking a theoretical viewpoint a different story emerges. Novozymes, being a profit-driven organization, aims to strategically focus all R&D and product development activities on delivering market- ready products. It is therefore strategically focused on applied research where all departments in fact take an application-oriented approach to support the necessary activities throughout the entire pipeline; from early discovery to market launch. This is a strategic approach that is common for science-based profit-driven firms, who are often reluctant to allocate large investments in basic research without a clear future market value (Balconi et al., 2010). By taking a more thorough look into the activities that these two departments are engaged in, it becomes clear that the classical definition of basic- and applied research does not apply at Novozymes. As indicated by a Senior Department Manager for MB Bio-Diversity, Martin Borchert, all research is in fact application oriented,
the differentiation between MBs and ADUs merely lies in how early stage we are (MTBO, 2011).
The relationship between MBs and ADUs is of importance in that both departments work closely to provide the most efficient products for the industry. Sune Lobedanz, Senior Department Manager for MB at NZ stated that the aim of the MB department is not
to investigate a fundamental scientific problem in that sense; a biological problem. We act to support the ADUs and to bring new insights to the product portfolio (SULO, 2011). Novozymes
R&D organisation is structured such that it holds the scientific competences necessary to substantiate and support the business of the company, and holds the competences to develop product applications accordingly (SULO, 2011). We therefore call into question whether the MB department can in fact be characterised to works with basic research, and therefore also whether the firm is in a position to grasp the value that stems from more basic oriented scientific research. 6.1.4. R&D project groups at Novozymes A mapping of R&D activities with regards to project formation and the competences that are utilised indicates a high degree of cross-disciplinarily interaction between particular members of a project group. As illustrated in figure 6.3 the MB department is made up of a set of sub-divisions18, and when projects are initiated, a cross-disciplinary group from 18 The MB department is comprised of the following sub-divisions: bioinformatics, bioprocess technology,
cloning, metabolic engineering, protein chemistry, protein optimization, recombinant expression and screening (NZ Corporate Website, 2011).
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MB is formed to work with the particular ADU division19. The level of cross-disciplinary interaction that takes place internally at NZ is therefore confined to the MB department; ADU researchers only work within their given industrial application area and not across (SULO, 2011). Despite this organisational structure, the majority of interviewees indicated that it would be beneficial for the ADUs to be more cross-disciplinary in their approach, working together in groups across industrial applications (STKH, TLHD 2011). E.g. people engaged in detergents research could potentially benefit from sharing experiences and knowledge with people in other application areas such as food or biofuels. Figure 6.3: Project groups at Novozymes

When project teams encounter difficulties in finding a solution to a given task, project groups primarily draw on two means by which they can gain input. They exploit the internal competences through consulting colleagues and previous research on the area. Or in the case that the project is in collaboration with an external key customer, the group has the possibility to consult the collaborating partner for additional input or guidance (SULO, 2010). NZ collaborative partnerships therefore also play a crucial role in providing insights to the demands in the market as well as providing guidance with alternative inputs and suggestions for potential solutions. However, an important implication is that although the MB department takes point of departure in more early 19 The ADU department covers the following industrial applications: Agriculture, bioenergy, biopharma,
food & beverages, household care, leather, pulp & paper, textile, wastewater solutions (NZ Corporate Website, 2011).
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stage research, all activities are nonetheless centered on industrial applications (MTBO, 2011). And the same holds true for projects that involve the collaboration with key customers. Thus, we find support for our argument that the entire process of innovation is pre-defined to meet a given industrial application outcome, thus limiting the degree of radical innovations that emerge. Innovation literature tells us that innovation primarily happens at the boundaries between disciplines or specialisations, and that working across boundaries or distances is an important driver in supporting innovation (Parjanen et al., 2011). Following the notions of combinatorial innovation and structural holes, we have learnt that novel combinations often emerge across disciplines (from bridging structural holes) and that there is an incentive to spur interdisciplinary research. In this light we reason that NZ suffers from a degree of cognitive bias by primarily relying on local search and exploitation of internal competences in finding input to a given project. Keeping the above in mind, we infer that there is a continuous flow of knowledge sharing within the organisation, as well as with collaborative partners in the case that projects involve their expertise. Along the lines of the chain-linked model, R&D at Novozymes supports feedback loops and iterative processes that enable NZ to effectively make use if its internal competences, while exploring more distant solutions is limited to pre-defined collaborations with external partners. However, before concluding on Novozymes innovation model another important point must be emphasised, which refers to the explorative activities characterised by the above- mentioned collaborative partnerships with key customers and universities. In the following we draw upon the Long Tail of R&D model to assess the external scope of NZ current innovation model. 6.1.5. Novozymes and The Long Tail of R&D Based on numerous interviews with employees and managers at NZ, and by drawing upon the Long Tail of R&D introduced in the theoretical section, we have developed an adapted model to illustrate the scope and diversity in NZ R&D activities (see figure 6.4). We use the model to highlight possible limitations of NZ current innovation model.
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Figure 6.4: Novozymes and The Long-Tail of R&D

Source: Adapted model, inspiration Anderson 2004
The Long Tail of R&D provides an overview of how cross-disciplinary R&D activities of a firm are. The further out the x-axis you move the more diverse becomes the set of disciplines that you leverage. NZ is considered to efficiently exhaust a large degree of its capabilities along defined and specific lines of enzyme business. While work indeed is of a cross-disciplinary nature, it resides within strategically targeted disciplines as to fulfil NZ objective of supplying products that meet the demands of the market. We have mapped NZ internal R&D as the first pillar along the x-axis. External collaborative agreements with key customers and universities come next. Here, work takes place across a variety of disciplines some of which are new to NZ, hence these activities are categorised further out along the x-axis. Considering the market circumstances and the growth projections set for NZ, innovation and the development of new industrial application areas for enzyme technology are two crucial strategic objectives for the firm. However, although NZ external collaborations indicate a higher degree of diversity of the disciplines accessed, collaborations are nonetheless close to targeted disciplines relative to NZ business (TLS, TRMU, 2011). For example, external collaborations with key customers are conducted within current industrial areas such as collaborative partnerships with P&G20 on optimizing detergents, or with Schulstad21 on optimizing
20 http://www.pg.com/
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enzymes for baking (Ibid.). University collaborations may indicate that NZ gets access to more basic oriented scientific research. However, given NZ current focus aimed towards industrial applications, university collaborations too are found to predominately take place within known industrial application areas (TLS; TRMU, 2011.). It becomes questionable whether the current innovation model, characterised by high reliance on internal competences and external collaborations limited to analogous disciplines, can in fact support NZ in its goal to expand the market through opening up for more and new industrial applications. Explorative and distant search relates not only to acquiring knowledge and ideas outside a companys four walls, but more importantly it invites knowledge and ideas from distant, unique and often unanticipated sources or connections. We infer that there is a lack of diversity in the input NZ receives and incorporates in its innovation process. In other words, a vast majority of activities lies within the comfort-zone of known application areas. Furthermore, a strong R&D organisation revolving around the methods of the chain-linked model acts to reinforce NZ position in this comfort-zone. As an internal driver for innovation, the model is currently sufficient in fulfilling NZ objectives as it supports the development of products for the market. However, the model is deemed inadequate for enhancing innovative capacity beyond current activities. We suggest that Novozymes finds itself in a cognitive trap of suboptimal routinized exploitative strategies. Moreover, we claim that there lies an opportunity in moving further out along the long tail of R&D to seek and appropriate distant and more diverse sources of knowledge. 6.1.6. The emergence of revolutionising technologies for enzyme research To further assess why Novozymes is to benefit from explorative and more distant sources of knowledge and ideas, it is of interest to understand where revolutionary technological advancements utilized by Novozymes has come from in the past. Advancements within research can be said to fall into two categories: advancements within basic science and advancements within applied science. We have found that a number of revolutionary technologies that have radically impacted the way, in which research is conducted across a broad range of fields, also have had a significant impact on the way enzyme research is conducted today. One such example is that of human 21 http://www.schulstad.dk/ 73
genome sequencing technology, which was initially developed to understand genetic codes in humans. Following the notion presented by Bush (1945) this type of research can be classified as basic scientific research for two reasons. Firstly, government funds where the supporting backbone of the research initiative - an investment that very few profit-motivated companies would be willing to bear due to the uncertainty of outcomes. And secondly, the aim of human genome project was to gain an understanding of a particular scientific phenomenon. The result of this research project starting in the 1960s turned out to revolutionise the scientific field of medicine through gaining a better understanding of diseases and cures for human beings (SULO, 2011). In the beginning 21st century the technology became more accessible and a wider range of scientific fields started to incorporate the method for the sequencing of other biological organisms. Since the year 2000 genome sequencing has played a vital role within the field of enzymes and biotechnology (SULO, 2011). Sequencing is a commonly applied technological process at NZ, which has dramatically eased the process of finding upcoming enzyme candidates, and opened up for the ability to sequence microorganisms, fungi and bacteria. One response from our interviews stated, it has
changed the way we work with micro biotechnology the most (Ibid.). This technological ability
is of great value to both the way in which NZ works and the external enzyme environment; it is said that we only know a small share of microorganism what can actually do. However with the sequencing technology researchers have the potential to grasp the full potential of these organisms (SALK, 2011). Another important revolutionising technological change that NZ has encountered is that of the polymerase chain reaction method (PCR). Originally developed to detect the mutation causing sickle cell anemia in whole genomic DNA (History of PCR, 2011). The PCR method replaced an unreliable and inconsistent method that had been developed internally at NZ, ultimately opening up for more efficient and reliable processes for cloning microorganisms with consistent outcomes (SALK, 2011). The above examples shed light on the close relationship between findings in basic science and its ultimate impact on application-oriented research. From interviews conducted we have found that significant advancements within the field of enzymes have come from unanticipated sources within basic scientific research (SULO; TRMU; SALK, 2011).
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Furthermore, in the theory section we introduced the linear model to highlight that the emergence of new scientific knowledge, originating from basic scientific research, is a driver for initiating application-oriented research (Balconi et al., 2010). We find that this notion holds true in the case of NZ as incorporation of basic scientific inputs as a tool in application oriented scientific research has been shown to comprise an essential element in enhancing NZ innovative capacity to date. Thus, it seems important that an innovation model can exploit both internal capabilities as well as tap into the external scientific environment. 6.1.7. Conclusion: analysis part I The objective of the first part of the analysis has been to assess the extent to which the current innovation model at Novozymes is conducive for effective external knowledge sourcing. The following concluding remarks are based on what we have learned about the processes and procedures of R&D at NZ. While NZ claims to be engaged in both incremental and radical innovation processes, our findings indicate that NZ today is in fact rather limited to an incremental scope of innovation, and less explorative than seen in the past. Moreover we find that NZ predominantly relies on market-pull logic with regards to new product development. As a result we find that both MBs and ADUs are engaged in market captive R&D with a strong application orientation. Nevertheless, some of our findings also support the presence of exploration activities, such as the way in which project groups are formed with emphasis on cross-disciplinary teams, and by means of the external collaborations that NZ in fact engages in. Yet, the majority of research and collaboration with external sources reside within targeted disciplines and known industrial applications areas. With the challenges confronting NZ, the current model of innovation plays havoc with the development of more radical innovation with regards to enzyme technology. We thus infer that NZ is trapped in an exploitative model of innovation geared for incremental innovation. By drawing upon the notions of the linear model, we propose that Novozymes is to benefit from unguided search of scientific opportunities, thereby front-loading the R&D organisation through expanding the current innovation model to leverage basic science and become more explorative. However, it is deemed a complex challenge to engage in more exploration and basic- science oriented research without compromising the present, very efficient yet exploitative model of innovation.
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6.2 Analysis Part II Virtual Innovation Broker

In Part II of the analysis we explore the second sub-question of our research (Q2) to understand how a virtual community (VC) set-up can support the facilitation of external knowledge sourcing. The aim is to determine the extent to which a VC can extend NZ innovation model to take on a more explorative quality. We develop a set of theory- based arguments for how a number of VC properties can help facilitate an enabling space for exploration. In the first part of the analysis we reached an empirical and evidence-based conclusion with point of departure in the case of NZ; in the second part of the analysis we mainly deduce our findings from theory and secondary case- observations. First, by combining theoretical constructs from sociology, network theory with the perspective of combinatorial innovation we provide an underlying rationale for why it is valuable to tap into knowledge pools and opportunities that lie external to the organization. Secondly, by combining our understanding of social structures and its impact on combinatorial innovations in the light of the idiosyncratic environment of VCs, we arrive at a set of enabling and inhibiting properties of VCs for acting as a vehicle for external knowledge sourcing. The guiding hypothesis in this paper is that a VC can act as a brokerage function between a firm and its external environment. Based on this notion we introduce our exposition of a VC in this context by developing the concept of the virtual innovation broker. Ultimately, we conclude that VCs hold potential for acting as a virtual innovation broker. 6.2.1. A great place to start Novozymes (NZ) is renowned for its strong innovative capacity, yet as outlined in the first section of the analysis we find evidence suggesting that NZ finds itself in a cognitive trap of sub-optimal exploitative R&D strategies. Given its current model of innovation, NZ becomes increasingly less likely to produce innovations on the radical side of the innovation continuum22. Two broad conceptualizations of innovation are considered important in the light of this paper: open innovation and combinatorial innovation. Through our interviews at NZ we have come across two statements that illustrate these two notions well. Per Falholt, CSO23 at NZ said that Only 1% of enzyme people work at
Novozymes (HDRA, 2011). Understanding that most smart people work for someone else
is somehow the essence of open innovation. Thus, just as Procter & Gamble (P&G) in
22 The innovation spectrum refers to the continuum that spans from incremental to radical innovation. 23 CSO: Chief Scientific Officer
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developing the Connect & Develop platform established an understanding that for every scientist employed at P&G there were at least 200 equally competent scientists elsewhere (Huston & Sakkab, 2006), NZ have reached a similar conclusion. Second, Anders Ohmann, Director of Global Customer Solutions at NZ illustrated a way to understand the notion of discontinuous (radical) innovation: "the next generation of cars
will likely be developed with the help of the car industry or similar and related industries, however, if the horse carriage industry had been responsible for the development of the next mode of transportation, the car would never have been invented (AOH, 2011). A famous Henry Ford
quote similarly goes If I'd asked my customers what they wanted, they'd have said a faster
horse." In other words, distant and often unanticipated knowledge pools often contribute
to deliver profound innovations. By the same token, Anders Ohmann pointed out that while NZ needs radically new industrial application areas for its enzyme technology, these are not likely to emerge from the innovation model that NZ currently pursues. From the above we can understand that NZ is aware of two important notions: first that external sources are plenty and important, and secondly, that agents from distant disciplines and fields will most likely be those who can provide the most radical inputs for innovations. Nevertheless, while it is a great start, few rewards will come from simply knowing that valuable competences reside external to ones organization and that distant sources often hold unforeseen inputs. The true value lies in knowing how to attract and explore such resources. A first step in this direction is to understand the underlying reasons manifested in the emergence of social structures, and the nature of how ideas come about. Secondly, a mediating mechanism of some sort must be developed; where in this paper we have decided to investigate the potential opportunities that lie in using a virtual community set-up as a medium for realizing external knowledge sourcing. 6.2.2. Structural holes and combinatorial innovation In the theory section we established that the flow of information is more vibrant within than across groups of people, such that people develop similar views of their history, of behaviors today, and of how to move into the future. Over time information within groups group often becomes sticky (von Hippel, 1994), which makes structural holes appear in the social fabric of communication. These holes are missing relations that inhibit information to flow between groups. The logic behind structural holes is that
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holes emerge as a result of weaker connections between groups. Moreover, such holes separate non-redundant sources of information, i.e. on either side of a structural hole different flows of information circulate (Burt, 2001). From understanding this, it becomes clear that disconnected people are more likely than connected people to operate with different ideas and practices. Furthermore, the more disconnected the contacts are the more likely it is that a structural hole exists in between. Nevertheless, it is in the act of bridging structural holes that things turn complicated, but also where the value of the hole shows itself. In the book Ten Faces of Innovation, authored by IDEOs General Manager Tom Kelley (2005), he introduces the notion of cross-pollinators, who are human agents who draw associations and connections between seemingly unrelated ideas
or concepts to break new ground. Cross-pollination reverberates the notion of
combinatorial innovation in that it draws upon the principle of combining or reconfiguring distributed ideas and turning them into innovations. Thus, novel combinations can be understood to potentially emerge through bridging structural holes. The bridge relation that spans structural holes is however not to be understood as a guarantee, it is a probability; given the right contextual circumstances a connection can bear fruits. I.e. connecting across structural holes can increase the propensity of a productive accident; or of encountering a new opinion or practice not yet familiar to e.g. colleagues; or of envisioning a new synthesis of existing opinion or practice (Burt, 2011). Furthermore, to bridge is not a forthright endeavor and the literature often point out that a certain brokerage function is key for bridging the holes - a function that will be elaborated upon in the following section in the context of a virtual communities. 6.2.3. The Virtual Innovation Broker In the context of structural holes, the notion of brokers or brokerage functions have been introduced to address that certain agents, connected to multiple and distributed networks, are able to act as intermediaries and potentially broker information and aggregate ideas arising across dierent/distant networks (Kleinberg et al., 2008). In other words, the bridging of structural holes is often understood to occur by means of brokerage (Burt, 2000). In the literature brokerage functions have traditionally been anthropomorphized, i.e. taken the shape of human agents. Given that most people require nudging before realizing the value of, or even discussing ideas from, outside their regular work group, a few people do (Burt, 2001). Such individuals are often better connected across networks and can act as natural brokers of information. To our 78
knowledge the idea of a virtual brokerage function has not yet been proposed in extant literature. In this part of the analysis we would like to explore the notion of what we refer to as the virtual innovation broker (VIB) - a virtual community that intrinsically acts as a broker of information and innovation across remote actors or networks. While the term virtual suggest that any digital communication device or platform for interacting virtually is captured by this concept, we have delimited the scope of our case study to investigate the role of a VC in this context. After all, the notion VC has been identified as the most profound manifestation of communication taking place across the Internet. In using the term VIB we wish to emphasize the intermediary role that a VC can play in acting as a bridge between NZ current innovation model and the external, more distant research environment not currently covered. Should virtual worlds be seen as a completely new context in which familiar social processes take place, or merely as an odd context in which social processes play out in a way not generalizable to the real world? Following Burt (2011), we see no obvious reason for why networks should operate very differently in VC than across a variety of in-real-life (IRL) networks, in which their effects have been reported. In Bakshy, Arrer & Adamic (2009) (on network contagion effects, gesture diffusion, social trends, fashion in online vs. offline networks) many attributes of social networks are found to be similar in both virtual- as well as IRL communities. Moreover, Burt (2011) shows in a study of two virtual communities that the underlying mechanisms for structural holes and network closure are the same in both online communities and in offline communities. Thus for the purpose of this paper we assume similarity between how structural holes are bridged and combinatorial innovations emerge in IRL communities and in virtual communities, i.e. understood as familiar social processes that take place in a new context. In developing the concept of the virtual innovation broker we study the phenomenon of virtual communities and some of its properties that support more radical oriented innovative processes. These findings are essential for the case of NZ, where we propose that a VC holds the potential to facilitate a brokerage function thus opening up for more radical innovations to emerge. The following subsections highlight different dimensions and properties of virtual communities that are of particular interest for our research.
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Virtual communities: structural holes vs. social capital It has been found that recent developments in ICT and the Internet have rapidly changed the effect of space and time on social capital networks (Social Capital Research, 2011). A plethora of virtual communities has over recent decades emerged, essentially compressing the space-time continuum by offering cheap and fast connectivity across remote actors. It has be disputed to what extent an online community actually promotes or facilitates a place for social capital to grow. Following Wellman (1999) and Cummings et al. (2002), online communities are not considered to be intimate groups due to geographical dispersion of participants, and such dispersal of social networks should come to decrease social capital (Putman, 2001). Moreover, the structural holes argument claims that highly clustered networks are bad for innovative performance while the social capital position argues the opposite. By extension, the structural holes argument states that un-clustered, or more open networks can enhance innovative capacity. To explain this discrepancy, one must understand that it takes dramatically different processes and network structures for producing mature (incremental) as opposed to young (radical) innovation. For continuous mature innovation, a dense group of agents addressing similar issues are required to create the critical mass for further innovation along the chosen path (Pyka, 2009). However for a young innovation to emerge redundant ties are less valuable and it is important to have rapid access to distant information (geographically, technologically and cognitively) (Ibid.). Conclusively, structural holes are more important and high social capital less important, for exploration/radical innovation than for exploitation/incremental innovation, and vice verse. Thus, what a VC may lack in capacity to ensure intimacy across its members (i.e. high social capital), it holds in scope and distance across its members (structural holes). In the light of the virtual innovation broker and opportunities to facilitate unguided search, exploration and radical innovation, the above discussion further supports the use of a VIB for this purpose. 6.2.4 Enabling and inhibiting properties of virtual communities It is argued in this paper that VCs hold a number of enabling as well as inhibiting properties for supporting external knowledge sourcing. In the literature we find examples of both skeptics and enthusiasts with regards to how virtual communities influence social life, knowledge sharing and innovation. The utility of a VC is commonly assessed by juxtaposing occasions in virtual communities to analogous occasions in real-
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life (IRL) communities. First of all, in real-life communities geographical dispersion is often seen an obstacle, however in virtual communities it is rather understood as an opportunity, where diverging ideas and viewpoints of remote actors can convene and synergize (Leary & Fontahina, 2007). Furthermore, in case that the mutual topic of interest is narrow, a large scope is often required as local reach would not be enough for a community to take form. Take for example Savvyauntie.com that gathers thousands of aunties from across to world online to share experiences, and offers tools such as an Auntiepedia. It has been described as a modern approach to share and celebrate aunt- hood (Savvyauntie.com, 2011). Such a community is quite unlikely to prosper in a real life setting. Secondly, virtual communities hold potential to overcome some of the asocial effects of social interaction. E.g. prejudice is less likely to limit formation of relationships, as interactions are of a more anonymous nature online. Thirdly, in virtual communities the impact of differing demographic attributes across members (such as gender, class, ethnicity, age etc.) is less likely to inflict relationships and ultimately also information and knowledge sharing, as sometimes seen in traditional in real life communities (Leary & Fontahina, 2007). Fourthly, from the literature we know that physical communities more often than not suffer from cognitive, disciplinary and organizational separation. I.e. people tend to group with likeminded people, from within those disciplines and organizations (workplace, school, etc.) to which they belong. Given the nature of social interaction in virtual communities, such barriers are to a certain extent evaded. Finally, according to Rheingold (1993), the main advantage of online communities is that they hold potential to bring social, intellectual, professional, and not the least political, leverage to ordinary citizens at low cost. As we see, virtual communities hold a number of positive attributes for overcoming challenges that often arise in real-life communities. Nevertheless, while much of the literature address the many positive externalities of virtual communities, not all literature portrays virtual communities (VCs) in such a positive light. Fernback wittily argues "the term virtual community is more indicative of an
assemblage of people being 'virtually' a community than being a real community in the nostalgic sense" (1999:217). A number of barriers have been identified that VCs have a hard time
to overcome. First, in certain fields, such as the sciences, cutting edge knowledge may be difficult to disseminate to large groups since it may require specialised expertise and
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may be difficult to aggregate or represent (Olson & Olson, 2000; Bos et al, 2007). As highlighted by Nooteboom, new distant-shrinking technologies [i.e. ICT] are unlikely to
undermine the value of proximity, because the diffusion of codified knowledge amplifies rather than devalues the significance of local tacit knowledge (1999:136). Due to the complex
nature of tacit knowledge, direct and close face-to-face interaction is essential for new technological development (Ibid.). A second barrier is the unpredictable shifts in memberships of a VC. Wenger et al. (2002) pointed out that membership is fluid in its composition, thus hard work is required for the community to develop and grow - to maintain energy and a high degree of participation. Thirdly, all large-scale, multi-user communities and online social networks that rely on users to contribute content or build services have been found to share one universal property: a tiny minority of users usually accounts for a disproportionately large amount of the content and participation, while a large majority lurk in the background. This phenomenon of online participation inequality was first studied by Hill et al. (1992) and has been confirmed in a number of more recent studies (e.g. McConnell & Huba, 2006). Findings from such studies have resulted in the 90-9-1 rule: 1% of people create content (creators), 9% edit or modify that content (contributors), and 90% view the content without contributing (lurkers). Figure 6.5: Online Participation Inequality
We recognize that virtual communities comprise a set of both enabling and inhibiting properties for creating and implementing a successful virtual community (appendix 5 for an exhaustive list). Nonetheless, as highlighted in the delimitation of our research, we take a particular interest in the enabling properties for facilitation of external knowledge sourcing. We wish to highlight that VC are found to have the capacity to overcome three fundamental barriers that are of particular interest in the light of our research:
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1. Temporal barriers 2. Spatial barriers 3. Barriers of cognitive-, disciplinary- and organizational separation By overcoming obstacles of time and space, connections and interactions amongst members can to a larger extent take place at the convenience of the individual member. While, IRL communities are constrained by the prerequisite that members must physically meet at a particular time and place (Burt, 2011), a VC can span geographical distance and bridge distant networks. This supports the function of potential brokerage of previously inconceivable structural holes, as these connections in the network would not naturally have emerged. Furthermore, as we are exploring the potential to grasp more distant sources of knowledge to spur the emergence of radical innovations, the dimension of cognitive-, disciplinary-, and organizational separation are of importance. In the theoretical section we established that network structures characterized by a higher degree of heterogeneity might in fact open up for more radical innovations (Lynn et al., 1994; Burt, 2005). This is because more heterogeneous communities are not to such a large extent confined by mutual ties, established norms or redundancy of information benefits, otherwise characterized as being supporting factors for the emergence of incremental innovations (Burt, 1997). In the case of a VC, we see the opportunity overcoming barriers of cognitive, disciplinary and organizational separation, potentially stimulating the emergence of more radical innovation. We follow up on this discussion in part II of the analysis in the light of obstacles of ambidexterity. 6.2.5. Trends in community life online Thus far, we have introduced theoretical arguments for why a virtual innovation broker can act to facilitate the brokerage of structural holes and thereby open up for new inputs for combinatorial innovations. However, it is also important to assess whether the notion of a VC fits into the context of a firm that resides in a science-based industry. In doing so we have identified a number of generic trends regarding the use of VCs as well as gained insights through an online survey where we asked a group of researchers and biotech students about their habits and preferences for interacting online. Our data suggests that online interactions are not just a frivolous social endeavor but that it is becoming a professional act, as researchers increasingly seek to share knowledge and collaborative partners online.
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Based on the ever-increasing number of members of large VCs we sat out to investigate if the adoption rate is also increasing on a generic level. This would point out that VC life on a macro level is becoming a more integrated part of peoples lives. By comparing the time it took for the four largest virtual communities today, we found intriguing evidence of a dramatic increase in the rate of adoption. Calculating the days it took from when these communities were founded until they reached 20 million users, we identify an exponential development in rate of adoption (see figure 6.5). LinkedIn founded in 2003 took nearly 2000 days to reach 20 million users, whereas Google+ launched in 2011 only took 24 days. While there certainly are many variables in play for this development, it hard to neglect that user adoption rates most positively have increased over the years. Figure 6.5: Time to reach 20 million users

Source: www.mashable.com
A second finding from browsing a number of blogs and other social media news websites is that social media is increasingly becoming a popular instrument among scientists. Niche communities are sprouting up all over the web (Appendix 4 for exhaustive list of identified of niche science and related VCs). We can thus infer that the scientific community24 is becoming more responsive towards interaction across VCs. A plethora of communities is emerging with devoted interests in particular fields of research. Many of these are also of a rather cross-disciplinary nature where scientists meet from across broad array of fields.

24 The scientific community consists of the total body of scientists, its relationships and interactions
(http://en.wikipedia.org/wiki/Scientific_community)
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In summary, two supporting arguments are put forward in the above: 1) Virtual community rate of adoption is increasing dramatically on a macro level and 2) the scientific community is becoming more prone to engage in online community life, substantiated by the emergence of more niche-online communities within the field of scientific research. Online survey A historical and well-documented notion is that a scientists motivation for doing research to a large extent is intrinsic, i.e. it cannot be enforcedit must come as product of
enthusiasm that an individual feel towards his work (Glaser, 1965:1). Findings from our
online survey provide indications that substantiate the above statement by Glaser. Here we found that a large majority of our online survey respondents showed a high sense of professional pride in their line of work (i.e. researching). More than 80% indicated that they enjoy being able to help others, that they took pride in assisting others with problem solving and idea development. More than 70% indicated that being able to discuss and elaborate on research findings and contemplations with other researchers drives them. Responses related to the scientist motivation for engaging in research further reflect the findings of Glaser. 35% replied that it was their passion for the field and 27% stated that it was their interest in expanding the pool of knowledge that motivated them (appendix 2). Our online survey provides indications that scientists aspire to interact with likeminded people who share their enthusiasm, and that they also value such activities in an online context. Furthermore, amongst the respondent group from our online survey we were able to spot similar trends as highlighted in above. Our results point out that researchers and biotech students increasingly use the Internet as a source for networking, collaboration and knowledge (Appendix 2). Furthermore, with regards to the online behavior of the respondents, more than 70% saw value in contributing on online platforms, and more than 60% indicated that they could see themselves actively partake in discussions and problem-solving activities online. Findings from our online survey indicate that researchers see value in being able to collaborate with other like-minded people, and furthermore, to do so through a virtual community. In the light of this thesis these arguments are important as they indicate that virtual communities are increasingly adopted as a knowledge sharing and collaboration tool, also used by researchers. We thus infer that this behavior on part of
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the researchers further supports our hypothesis that a virtual community hold potential to act as vehicle for external knowledge sourcing. 6.2.6. Conclusion: analysis part II In the second part of the analysis the objective has been to explore the phenomenon of virtual communities in the context of innovation and external knowledge sourcing. By drawing upon notions of social capital, structural holes and brokerage in combination with a number of virtual community attributes we point out that VCs hold the potential to bring together remote actors, that would not otherwise naturally meet. In this light, we develop the concept of the virtual innovation broker to highlight the enabling properties of a VC in acting as a mechanism for bridging structural holes across dispersed networks. In this effort we highlight the social context and point out that VCs can overcome temporal and spatial barriers as well as barriers of cognitive, disciplinary and organizational separation, all commonplace in in-real-life communities. We find supporting evidence of general trends in online community life further suggesting that virtual communities are becoming a more integrated part of peoples life. Moreover, niche communities centred on particular areas of interest is yet another emerging trend. Here we find that researcher-oriented communities are finding the Internet increasingly useful as tool for carrying out research, to collaborate, share and receive knowledge input. In an effort to quantify these trends we conducted an online survey, where respondents to a large extent confirmed our claims. Thus, by combing theory, literature and illustrative cases we find support for our hypothesis, i.e. that the utility of a virtual innovation broker in the given context is potentially high. In light of taking an explorative research approach, we find reason to be optimistic with regards to the potential of a virtual community in acting as a virtual innovation broker and opening up for more distant and explorative inputs to the current innovation model at Novozymes. Nevertheless, we recognize that our arguments are inadequate in order for us to conclude with certainty that a VC can become an explorative arm of Novozymes innovation model. To provide a more comprehensive view of VCs and explorative R&D, in the third and final part of the analysis we address the VIB in the light of the notion of optimal scope in external knowledge sourcing and obstacles of ambidexterity.
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6.3 Analysis Part III The Ambidextrous Innovation Model

Through the first and second part of the analysis we confirm that the current innovation model at Novozymes is limited in its explorative scope, and that literature and theory support our notion of the virtual innovation broker as possible tool to expand the scope of NZ innovation model through facilitation of an enabling space for external knowledge sourcing. With support from literature and theory we argue that the propensity to produce more radical innovation increases with distance or separation of actors. However too much distance may render information irrelevant and incomprehensible (Parjanen, 2011). Thus there seems to be a limit to the scope of explorative R&D activities. We raise two issues to be addressed in the third and final part of the analysis: how can the notion of optimal scope be understood, and how can the virtual innovation broker (VIB) be illustrated as tool for ambidextrous innovation? We confine our argumentation in this section to a conceptual level, i.e. we do not aim to address specific functional- and design attributes of a potential VC-platform, but rather by utilizing prevailing concepts in network- and innovation theory highlight the notion of scope in unguided distant search for science-based firms, such as NZ. Here we seek to illustrate the notion optimal scope in the presence of virtual communities and unguided search. In the light of the exploitation-exploration dichotomy, literature on ambidexterity provides evidence of how balancing exploitative and explorative strategies often are found difficult for firms to achieve. Given the set of properties identified in the second part of the analysis, here we assess the degree to which a virtual community can be understood as a tool that can make way for an ambidextrous innovation model. 6.3.1. Optimal Scope Continuum In the theoretical discussion section we highlighted that diversity of distance, cognitive, disciplinary and organisational, is seen as a source of innovation (Harmaakorpi et al., 2006) and often emphasised as a precondition for novel combinations to emerge (Parjanen, 2011). Similarly, too high proximity is said to induce a lack of openness and flexibility towards new or unknown sources of knowledge (Boschma, 2005; Parjanen, 2011). By the same token, too much distance may render information irrelevant or incomprehensible. Nonetheless, while high distance holds the merit of novelty (greater variety), it also holds a problem of communicability from a lack of common ground of
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experience, skills and norms. It is thus important to understand that cognitive distance must be sufficiently small to allow understanding, but sufficiently large to generate non- redundant novel knowledge. The implication of this in the context of the virtual innovation broker implies that there is a given limit to the degree of resource heterogeneity - a limit to the value of the information sourced. We infer that there is an inverted U-shaped relationship between resource heterogeneity and input for radical innovation. In the Optimal Scope Continuum (figure 6.6) below, we have show that as cognitive distance increases it has a positive effect on learning by interaction because it yields opportunities for novel combinations of knowledge and information. Diverse sets of known and unknown information (i.e. semi-redundant information) are necessary for the potential of novel combinations to emerge in such settings. However, at a certain Figure 6.6: The Optimal Scope Continuum

Source: Own model
point the cognitive distance becomes so large, inherently rendering the mutual understanding needed to utilize such opportunities obsolete, in other words, resulting in redundancy of information. A similar logic can be applied to the notion of exploitation and exploration. Innovation processes that are characterized by a lower degree of cognitive distance, i.e. similar to those of NZ innovation model, are prone to be more geared towards exploitation. On the other hand, innovation processes that are characterized by more distant sources (high cognitive distance) of information by means of explorative activities open up for more radical innovations.
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Drawing on our findings from part I of the analysis, we understand that the information and knowledge that NZ has access to, both internally through the R&D organization and externally through its collaborative partnerships, although cross-disciplinary in its nature, nonetheless lie within already targeted disciplines. We therefore infer that NZ mainly leverages sources characterized by a relatively low degree of cognitive-, disciplinary- and organizational distance, and we map NZ at the far left end of the optimal scope continuum (see figure 6.6). The information here is of a non-redundant character, which places NZ in a position to conduct primarily market captive R&D. We infer that information and knowledge that resides further out along NZ long tail of R&D (see analysis part I, figure 6.4) in the external environment provides information that is of a semi-redundant and redundant character. Such information is of value to an organization in producing novel input for innovation. In the past where NZ model of innovation was more driven by a technology-push and explorative approach, NZ gained access to more basic scientific oriented input. One example highlighted was the DNA sequencing technology, which ultimately had an important impact on the processes of innovation at NZ. The technology was originally developed to sequence human genomes in 1960s, and at the time it could be categorized as redundant relative to NZ. When the technology was adapted to fit other fields of research information, became semi- redundant and later non-redundant, so that NZ in 2000 was in a position to assimilate the technology into its R&D processes. We know from theory and from the analysis part I of NZ, that basic scientific inputs are of value to application oriented R&D, however, such information must reside within the optimal cognitive-, disciplinary- and organizational distance, i.e. of a non-redundant, or preferably and semi-redundant nature to be of value for a firm such as NZ. It is argued here, that by being more explorative, a science-based firm can gain realize the value from developments in basic science at a faster rate. What the precise optimal scope of distance is can be very difficult to assess. However, the optimal scope can be defined according to when information moves from being semi-redundant to being completely redundant, i.e. when the mutual understanding needed to assimilate new information is no longer apparent, and therefore not of value for the given innovation process. Hence, the optimal scope continuum recognises that both exploitation and exploration are of value for a given innovation process, and that
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once distant and more explorative information becomes redundant in the given context, it provides an indication of where outer limits of exploration resides, hence also where the optimal scope is be identified. We thus conclude that although it holds great potential to draw in more explorative and distant sources of knowledge, there is essentially a limit to the value of exploration. Bearing this finding in mind, in the following section we on to address how an organisation can balance the two activities of exploitation and exploration and the role a VIB can play in this context. 6.3.2. Overcoming obstacles to ambidexterity Ambidexterity can be understood as the interplay between exploitation (stability/incremental innovation) and exploration (flexibility/radical innovation). According to March, exploitation includes such things as refinement, choice, production, efficiency, selection, implementation, and execution. Exploration on the other hand includes things captured by terms such as search, variation, risk taking, experimentation, play, discovery, and discontinuous innovation (1991:71). Levinthal and March state that,
an organization that engages exclusively in exploration will ordinarily suffer from the fact that it never gains the returns of its knowledge (1993:105). In contrast, firms mainly in pursuit of
exploitation usually achieve returns that are proximate and predictable, but not necessarily sustainable. March (1991) proposes that exploitation and exploration are two fundamentally different learning activities between which firms divide their attention and resources. Furthermore, given the profit-seeking nature of firms, exploitation is often chosen over exploration, much as seen in the case of NZ. Similarly, a one-sided focus on exploitation is said to enhance short-term performance, but may result in ending up in competency trap (Ahuja & Lampert, 2001). Exploitation and exploration are also said to require fundamentally different organizational structures and contexts in which different types if innovation can be expected to emerge (Raisch & Birkinshaw, 2008). Tushman & Smith (2002) describe incremental innovations (designed to meet existing customers needs) as exploitative, and radical innovations (designed to meet the needs of emergent customers) as explorative. Levinthal and March conclude that long-term survival and success depend on an organizations ability to engage in enough exploitation to ensure the organizations
current viability and to engage in enough exploration to ensure future viability (1993:105).
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The above notions are important to understand when assessing a virtual community as a mechanism to balance exploration and exploitation of R&D activities. In the literature we find primarily two suggestions of how organizations can balance and synchronize exploitative and explorative strategies. The first proposes that firms should externalize either exploitative or explorative activities (Lavie & Rosenkopf, 2006; Rothaermel & Deeds, 2004). The second argue that it is crucial to carry out the two activities at a different time and place so they do not plow into one another (Venkatraman, Lee, & Iyer, 2007). Nevertheless, Marchs (1991) position is that exploitation and exploration are two facets of organizational learning that are inseparable, and some scholars argue in favor of creating loosely coupled organizations in which the explorative units are strongly buffered against the exploitative units (Levinthal, 1997; Weick, 1976). Echoing this, other scholars propose that maintaining exploration and exploitation as parallel activities is not enough to bring value to the firm (Jansen et al., 2009). Furthermore, it has been stated that it is necessary to integrate these two activities in order to achieve
"unity of effort among the various subsystems in the accomplishment of the organization's task"
(Lawrence and Lorsch, 1967:123). On the contrary Christensen et al. (1998) postulate that exploratory activities need to be completely separated from exploitative units to be able to pursue disruptive innovation. This notion is further supported by Raisch et al. who emphasize the importance of
"subdivision of tasks into distinct units that tend to develop appropriatecontexts for exploitation and exploration" (2009: 686). I.e. if boundaries are too permeable between explorative
and exploitative units, constraints imposed by exploitation may stifle exploration and
reduce its radius (Ibid.) Conversely, variations and changes involved by exploration may
destabilize exploitative processes (Raisch et al, 2009). It seems as though it can be argued whether the two activities should be integrated or not. We believe that both arguments hold merit in their own right. Separation of activities is crucial to avoid interference, yet in order to realize the value of novel combination that emerges in explorative structures, information and knowledge must somehow be internalized into a process of market captive R&D where commercialization can take place. As pointed out, we have delimited our paper not to address how knowledge is to be internalized, appropriated or absorbed and we thereby pay particular attention to how activities can be separated.
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Obstacles to ambidexterity has been well documented in extant literature, but he essential challenge resides in dealing with both exploration and exploitation in amore balanced way, without interference between the two. In Raisch & Birkinshaw (2009) we learn about two solutions for overcoming obstacles to ambidexterity. The first is a balance-type solution assuming the development of a hybrid of strategies that can accommodate for both activities simultaneously. The second lies in achieving spatial and temporal separation of activities through formation of parallel structures. The latter is often addressed by the theory of punctuated equilibrium that states that organizations can oscillate between exploitation and exploration in an iterative fashion to avoid interference by parallel activities, yet allow for both to take place recursively. This, however, requires an unusual capacity for swift organizational shifts, which is not very commonplace among larger organizations (Raisch & Birkinshaw (2009). Nevertheless, the above is of high interest in the light of this thesis, as we infer that a VC set up can be viewed upon as an explorative arm (add-on to the current innovation model at NZ) thus opening up for such parallel structures of innovative activity. If we recall part II of the analysis where a set properties of virtual communities was outlined, we emphasized three key enabling factors of virtual communities for acting as a vehicle for external knowledge sourcing and search: virtual communities overcome temporal and spatial barriers, as well as barriers of cognitive-, disciplinary- and organizational separation. Basically, this thesis is exploring the utility of a virtual innovation broker to overcome obstacles to ambidexterity, and based on the above we suggest that on a conceptual level there seems to be room for a fit. The solution called for in the literature can be interpreted as a mechanism for carrying out explorative activities without disturbing exploitative actives and routines. As such, we find that VIB to be particularly well suited for the task. In a sense, the VC can be thought of as a second order function that safeguards the dynamics of the organization by overcoming the contradictory challenge of stability (exploitation) vs. flexibility (exploration). In the light of our case company, by means of having access to a network that exists virtually the idea is that NZ can be more able to balance the countervailing processes of exploitation and exploration and thus able to capitalize on a more ambidextrous innovation model. Moreover, through a VIB NZ can potentially rely on virtual and sparse networks during exploration and utilize in- real-life teams or tightly bounded groups during exploitation. In addition, the virtual innovation broker can be hibernated if activities on the virtual platform interfere with
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(steal attention from) the exploitative strategies carried out by the in-house R&D organization, providing a means to oscillate as proposed by Raisch & Birkinshaw (2009). March (1991) points out that whereas hierarchical structures are more efficient in exploitation, one should rely on external networks during exploration. We echo March (1991) in that external networks are key in exploration and move on to suggest that such networks can be successfully leveraged by means of a virtual innovation broker. In this respect, given the choice of architectural attributes, a virtual community can function as a considerably flat network. Similarly, following Tushman & O'Reilly (1996), we learn that while exploitation is better served by bureaucratic structures, exploration is better supported by organic structures. In this light, the notion of NZ utilizing a virtual community for exploration receives further support, assuming that structure and development of a virtual researcher community is more organic than the structure found at NZ R&D organization. In support of our claim, along the lines of Danzinger & Dumbach (2008), we propose that ambidextrous organizational attributes indicate that a possible way to create discontinuous innovation lies in what is referred to as open innovation instruments. A plethora of open innovation instruments exists (e.g. virtual communities), and such instruments are said to be suitable for supporting ambidextrous organizational capabilities (Ibid.). In sum, we infer that a VC indeed holds potential to can act as a tool to overcome obstacles of ambidexterity. 6.3.3. Ambidextrous innovation A virtual innovation broker (VIB) is a complex socio-technical structure, and its underlying architecture relies on a fundamental understanding of the interaction between people and technology. In this paper, we go beyond addressing interface- and communication tools design, and turn to the question of scope. In the case of Novozymes the VIB is by definition earmarked to act as tool for integrating human agents who are to some extent cognitively distant from one another, as to produce broader inputs to NZ R&D organization. In the light of structural holes and ambidexterity theory, we hypothesize that the scope of distance is a fine balance between being either being too close to current R&D activities or too distant rendering knowledge inputs redundant. Thus, the socio-technical infrastructure must accommodate for the complex task of balancing the exploitative and explorative capacity of the platform.
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Below we introduce a model that was outlined in the previous theory section (figure 6.7). In the model, the virtual innovation broker (VIB) is illustrated as a mechanism to ease the process of concurrent engagement in the two activities of exploration and exploitation, i.e. widen the scope of engagement along the exploitation-exploration continuum (x-axis). The idea is that an organization is unlikely to be able to switch into forms of full flexibility, and we thereby propose given previously identified enabling properties of VCs, that a more explorative facet of R&D activities can take place by means of a VIB. Figure 6.7: Ambidextrous innovation through a VIB

Source: Own model
By the same token, a VIB can act as a virtual search medium for unguided scientific discovery, and in our case enable NZ to engage in basic science while keeping its current applied science-based and exploitative oriented innovation model. As pointed out in part I of the analysis, NZ current innovation model has been proved very successful in the past. It is therefore important that introducing a more explorative scope does not interfere too much with current activities. Moreover, it is further believed that the current innovation model provides an important element in realizing the value that potentially can come to transpire from a successful VC set-up. It is believed here, that such interference will be reduced, given that the nature of interactions in the virtual world takes place in another dimension (i.e. both temporally and spatially), and can thus be said to occur separated from present activities of NZ. Finally, we recognize that our claim is limited to what we know from literature about obstacles to ambidexterity and our interpretation of the above-mentioned VC properties in overcoming those obstacles.
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6.3.4. Conclusion: analysis part III In part III of the analysis we address the question of whether a virtual community can make way for a more ambidextrous innovation model. Here we address two important issues relating to the underlying understanding of external knowledge sourcing: the notion of optimal scope with regards to cognitive, disciplinary and organizational distance/separation, and the notion of obstacles to ambidexterity. In this light we suggest that a virtual innovation broker (VIB), given a set of properties identified in part II of the analysis, constitute a particularly compelling alternative to facilitate a bridge between a science-based R&D organization such as Novozymes and its external research environment. As such, the VIB can act as a parallel structure in which explorative activities can take occur without directly interfering with in-house R&D activities. The optimal scope continuum allows us to understand that while distant sources of knowledge are of value to an innovation process, there is nonetheless a limit to how distant and redundant such sources of knowledge can become without rendering the value obsolete. With the optimal scope continuum we infer that an innovation process that balances both exploitation and exploration activities holds the potential to provide inputs of a semi-redundant nature, thus opening up for novel combinations to emerge. Moreover, many scholars have contributed to the discussion of difficulties in balancing exploitation and exploration. While there are opportunities at either end of the exploration-exploitation continuum, literature and theory highlights that engaging in both ends of the continuum often renders opportunities at one end superfluous. In this context we highlight that if formation of groups and interaction across human agents takes place virtually, barriers of time and space, and barriers of cognitive-, disciplinary- and organizational separation can be surmounted. This implies that, in theory, the explorative domain of R&D can be run as a parallel structure to the exploitative domain, thereby mitigating issues of that often arise when combining exploitation and exploration in the same domain (dimension). Ultimately this may lead to more ambidextrous innovation, assuming that a successful implementation of a virtual innovation broker can be achieved.
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6.4. Conclusion: Analysis part I, II, II

The overall research objective of this thesis has been to explore how a virtual community can facilitate external knowledge sourcing so as to enhance the innovative capacity of Novozymes R&D organization? In this effort we delimited our paper to take a particular interest in: (Q1) the current R&D activities at Novozymes; (Q2) a set of enabling properties of virtual communities for external knowledge sourcing; and (Q3) the implications of scope with regards to distant search of scientific opportunities and resource heterogeneity, and ultimately highlighted ways in which a virtual community platform can overcome obstacles of ambidexterity. Before reaching our final concluding remarks, we will outline the main contributions from the three parts of the analysis. Q1: To what extent is the current innovation model at Novozymes conducive for effective external knowledge sourcing? We can conclude that Novozymes R&D organization is geared towards producing market ready products by leveraging strong internal competences centred on application-oriented research. In this light we found that the chain-linked model presents a useful illustration of the current innovation model at NZ. Moreover, we pointed out that NZ model of innovation can be understood as a product of strong ties across the R&D organization and involves a limited set of external collaborations. In other words, NZ current innovation model is successfully exhausting benefits of localness, high social capital, network closure, exploitation; but is limited in its scope of explorative activities involving more uncertainty, basic scientific input, distant search across open networks and raw ideas. While we find evidence that project groups at NZ are of a cross-disciplinary nature, we can conclude that NZ to a certain degree is trapped in sub-optimal routinized exploitative R&D strategies. All R&D activities, ranging from MBs to ADUs as well as external collaborations are limited to cover already targeted disciplines and industries. The degree of basic scientific research is not adequately prioritised, despite past examples indicating its vital impact on innovative processes within R&D of enzyme technology. This is further reflected in the transition of the R&D organisation, moving from an explorative focus drawing on basic research in the past towards an exploitative focus, driven by market captive R&D. We conclude that NZ innovation model is not particularly conducive for effective external knowledge sourcing, and suggest that opportunities for frontloading the R&D organisation lie in
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increasing the scope of external networks leveraged with focus on resource heterogeneity by moving further out along the long tail of R&D. Q2: How can virtual communities support the facilitation of external knowledge sourcing for science-based firms? In part II of the analysis we introduced the central phenomenon under investigation in our thesis, the virtual community (VC). Here we draw on theory and literature to highlight the rationale for why external knowledge sourcing is of importance so as to enhance innovative capacity. Following the notion, that bridging structural holes can result in more novel combinations (radical innovation), we highlight that a special brokerage mechanism often is needed to create valuable connections across structural holes. In the context of a virtual community, we expose the concept of the virtual innovation broker as such a mechanism to support the facilitation of external knowledge sourcing for science-based firms. In view of the context of social interaction in a virtual world, we understand that virtual communities hold a set of enabling properties, that are of particular value in the light of our research objective. More specifically, we highlight the capacity of VCs to overcome barriers of time and space, as well as cognitive-, disciplinary- and organisational separation. Evidence from general trends of online community life, and results from our online survey, suggest that VCs hold potential to facilitate an enabling space conducive for external knowledge sourcing. Virtual communities are becoming an integrated medium for communication and interaction within the scientific community, and researchers strongly indicate openness towards the utility of a virtual community for knowledge sharing and collaboration. In sum, our arguments draw on theory, literature and empirical input, and support our claim of how a virtual community can facilitate external knowledge sourcing by the means of a virtual innovation broker. Nevertheless, given the explorative nature as well as the scope of our paper, we note that in order to confirm with certainly that the value of a VC is high in the given context, additional success criteria not addressed in this particular study are necessary to include. Q3: Can a virtual community make way for an ambidextrous innovation model? In part III of the analysis the above notion of the virtual innovation broker is taken one step further and placed under the light of optimal scope of distance and ambidextrous
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innovation. While exploitation and exploration activities are important for an innovation process, there is a limit to the extent to which exploration is of value. Through the optimal scope continuum we propose that as information moves from being semi- redundant to redundant provided an indication of the outer bounds of the optimal scope. Obstacles to ambidexterity are addressed through recognizing that exploitation- and exploration activities require different organisational structures. Where exploitation is supported through bureaucratic and hierarchical organisational structures; exploration is supported through organic and flat structures. We infer that by facilitating a VC as a parallel structure in concurrence with a more exploitation oriented innovation model, can open up for several benefits. We highlight these by means of our case company, where we postulate that such an initiative hold potential to enhance the innovative capacity of NZ, without hampering the internal organisational structure. I.e. in theory, and provided a number of assumptions regarding opportunities to absorb novel combinations emerging on the VC platform, a virtual innovation broker can make way for NZ to surmount obstacles of ambidexterity. Here we point out that due to a set of enabling properties, VCs can overcome barriers of time and space, and cognitive, disciplinary and organisational separation - thereby making way for an ambidextrous innovation model. In exploring our identified research question we draw upon findings from part I, II and III of the analysis. We find that, in the context of NZ, a virtual community holds potential to act as a brokerage function and vehicle for external knowledge sourcing. Specifically, it can bridge dispersed actors along five dimensions: temporal-, geographical-, cognitive-, disciplinary- and organisational, in a more effective way than what can be achieved through an IRL community setting. Not only does it provide NZ with the access to distant sources of information across previously untargeted disciplines, it also supports opportunities to gain input from valuable basic oriented research, thereby opening up for exploration activities transcending the reach of NZ current innovation model. In the light of obstacles to ambidexterity, we have reason to believe that a VIB can play an important role for balancing more explorative R&D activities along with Novozymes current exploitative, however remarkably efficient, innovation model. As a result, a VC holds potential to comprise a cornerstone in developing ambidextrous organizational capabilities at Novozymes. These are deemed vital given the looming challenges facing Novozymes in the future of industrial enzyme business.
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Nevertheless, the actual result of VC set-up with regards to enhancing NZ innovative capacity remains to be seen after a successful implementation has been carried out. As of now, we are bound to merely hypothesize that facilitating a VC can indeed enhance innovative capacity at Novozymes, yet our research provides an optimistic outlook for why Novozymes should take on an initiative as the one presented in this paper.
7. Discussion of findings and future perspectives

Efficient diffusion of knowledge and information is considered the hallmark of a healthy modern economy (Pyka, 2009). By means of our research we wish to highlight the utility of ICT in general, and VCs in particular, for making the knowledge economy more efficient, ultimately resulting in different forms of innovation. The overall message in this paper is that there is reason to be optimistic about the potential that VCs holds in facilitating external knowledge sourcing for science-based firms. Nevertheless, it becomes relevant to discuss the implications of our findings, as well as future perspectives that our research opens up for. Moreover, it is pertinent to ask to what extent we have contributed to the identified research gap, we initially sat out to address. Given the embryonic stage of research relating to VCs in the context of innovation, and the absence of literature regarding research-based virtual communities of the kind that we address in this paper, our case is of a prospective and explorative nature. This has had both limiting and advantageous bearing on our subsequent findings. We have been limited to study a hypothetical virtual community set-up, thus not been able to provide empirical evidence with regards to the precise nature and effects of a virtual community to promote exploration and radical innovation. We are confined to infer only on the potential opportunities that the phenomenon of VCs holds in the given context, in which we predominantly rely on inference from theory and literature to reach our concluding remarks. On the other hand, our approach has allowed us to freely hypothesize and theorize regarding the use of VCs as to enhance innovation capacity. Moreover, by combining a pragmatic and theoretical approach, we were able to take a take broad perspective to our research and use theory and literature in order to shed light on the phenomenon in question. In this effort we have successfully addressed our pre-defined research gap. Given the lack of studies promoting virtual communities as a tool to be used by science-based firms to broaden their scope and R&D activities, our paper can be
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seen as a preliminary exertion towards highlighting the potential of virtual communities to facilitate external knowledge sourcing and to overcome obstacles of ambidexterity. Subsequently, our findings are generalizable on two levels, a pragmatic and a theoretical level. First, through our case study of Novozymes we find evidence of a predominant exploitative focus of R&D activities suggesting a lack of exploration. In this light, and provided that NZ is a firm celebrated for its innovative capacity, our analysis of NZ innovation model indicates that (conceivably) other science-based R&D intensive firms may suffer from similar biases. Secondly, our findings are to a certain extent theoretically generalizable. At the intersection of network-, ambidexterity- and innovation theory and the phenomenon of virtual communities, we present a number of theoretical claims for why virtual communities hold potential to contribute to exploration and ambidextrous innovation. An integrated approach of this kind has not been found in extant literature, and we hold that it provides a nuanced and comprehensive overview of the mechanisms and dynamics in play regarding the utility of VCs in the given context. As such, our paper has a positive bearing on the usefulness of prevailing theoretical constructs in a new setting. Nonetheless, our paper holds a number of apparent limitations. We only address one dimension out of many, for understanding how to make use of VCs in the given context. In order to provide a more comprehensive picture of the utility of VCs for knowledge sourcing, we envision a number of future research areas that has bearing on our particular study. We find it important to note, that we recognize that along the line of most literature regarding opportunities of ICT and virtual communities for knowledge sourcing and innovation, we too are guided by optimistic suppositions. Thus, in order to ensure a more nuanced and symmetric debate, more critical perspectives could favour discourse on the topic of virtual communities in science-based innovation. Furthermore, we are limited to rely on theory on which we base our inferences, thus concrete case studies presenting the actual effects of VCs should more precisely be able confirm or reject our claims. Additionally, in our paper we highlighted that there are strengths and limitations of both closure and brokerage, but while brokerage ... is the source of added value, closure can be
critical to realizing [that] value' (Burt 2001:52). In this light, our paper can be understood
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as an effort to highlight the role of brokerage, i.e. the source of added value that can come from utilizing virtual communities as a brokerage function en route for remote and distant actors and knowledge pools. Yet, our study merely touches upon the first dimension of a two-fold inquiry. Correspondingly to Burts statement above, following brokerage comes closure. In that respect it becomes relevant to address how to capture the value that may transpire. Ensuing research should therefore assess how external knowledge, captured on the VC, can be effectively internalized as well as commercialized. It would be of interest to take an intra-organizational perspective and analyze how firms effectively can appropriate, absorb and make use of knowledge emerging from a successful VC set-up. Such research endeavors is favorably carried out in the light of a retrospective case study, allowing for empirical analysis of knowledge transfer processes. Exploitation of external knowledge sources is an essential element of a firms innovative capacity, and the notion of absorptive capacity provides a useful concept in this context with regards to how external knowledge is internalized. Cohen and Levinthal (1990) state that the absorptive capacity of a firm is the ability to recognize the value of new information, to integrate it, and to apply it in a commercial context. Here, current knowledge bases in a firm play an essential role in appropriating external knowledge; basic skills, experience and the understanding of a particular field provides a solid foundation by which to evaluate new knowledge. Moreover, absorptive capacity is said to enhance the ability of a firm to realize the value of the new scientific knowledge (Cohen and Levinthal, 1990). It is the prior possession of knowledge that supports creativity through opening up for new associations and linkages between pieces of knowledge that may not have been obvious before. Thus, the diversity of knowledge bases internally in the organization is also a crucial role with regards to the assimilation of novel combinations, i.e. the integration of more radical external knowledge. Drawing upon the above, future research can be also extended to include development of strategic recommendations required to successfully implement a VC set-up. Our paper can be considered to provide the underlying rational for undertaking the initiative, opening up for a more precise plan to be outlined. Here, it would be of interest to take an operational perspective on the case, where relevant areas to assess would include e.g.:
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platform design- and architecture attributes, platform ownership 25 strategies, cost structures and procedures to ensure user attraction and retention. Sir Ken Robinson, a well known education researcher, said during a talk at TED26: Human resources are much like natural resources, they are buried deep and you have to go
looking for them, they are not just lying around on the surface. And you have to create the circumstances in which they can show them selves. By the same token, the architecture of a
VC will to a certain degree define its members and delimit activities that take place. People tend to cluster into groups as result of interaction opportunities defined by the places people meet (Pyka, 2009); e.g. the neighborhoods in which they live, the projects in which they are involved, their workplace as well as the online forums in which they participate. We infer that just as the architecture of a certain neighborhood is part of defining the type of people who choose to live there, the architecture of a virtual community will come to define its members as well as the type of interaction that may take place in between those members. Through an interview with Peter Kragh, Director of Front End Innovation at Coloplast27 (founder of innovaiotnbyyou.com), he stated that a primary recommendation for VC building was to ensure that a learning-by-doing principle is employed. He said that one can control the interface design, the communicative tools and the scope of the focus areas one wish to address etc., but one cannot control the members. Who is to join only time will tell, and what members will talk about is very hard to anticipate. Nonetheless, actions can be taken to influence what kind of community one is seeking to build. Research drawing upon the above notions would be highly relevant to take our study one step further. The phenomenon of virtual communities is becoming an increasingly fascinating target for social and behavioral science as well as cognitive economics and innovation literature. One reason for this is, that as a result of advancement of the underlying computer- and Internet technology supporting the proliferation of virtual communities, VCs are becoming easier to measure (Burt, 2011). Thus, VCs are to be seen as networks rich in data available for analysis, which furthermore can come to help improve our
25 Ownership can range from either no ownership where external moderators manage the platform (as
seen in the case of Coloplasts ww.stomainnovation.com) to sponsorship where the firm is a sponsor of the initiative but allow the milieu to grow organically, to full ownership where the firm takes full control and responsibility of implementation, design and content. 26 TED is a nonprofit devoted to Ideas Worth Spreading. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design. (ted.com) 27 Coloplast is a Danish healthcare firm with focus on products in the ostomy care sector
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understanding of networks in the real world. We echo Burt who urges the entire academic discourse to explore virtual worlds as a research site and make virtual
communities legitimate research laboratories to better understand network mechanisms of innovationthe potential is enormous (2011:3). In such efforts it becomes important to
establish a clearer link for translating research results between real worlds and virtual worlds (Ibid.). This further highlights the importance of future research to make use of retrospective case studies to better concretize and quantify research findings. Ultimately, we hope that our paper can encourage scholars to take a deeper interest in virtual communities in the context of innovation.
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Thanks to the Internet companies that move now can leverage a global pool of talent, ideas, and innovations that vastly exceeds what they could ever hope to marshal internally - USA Todays editor, Kevin Maney
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8. Bibliography
8.1. Books and Articles
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8.2. Online sources

Biotimes [online] Available at: <http://www.biotimes.com/en/Articles/2011/march/Documents/March_2011_%2020yearswithno vozymesnovamyl_EN.pdf > [Accessed 27 September 2011] Bullen, P. (2007) Social Capital Factors: Plausible theory about causal relationships [online] Available at: <http://www.mapl.com.au/pdf/SocialCapitalFactors_PlausibleTheoryAboutCausalRelationshipsDraf t2a.pdf> [Accessed 30 September 2011] Frost, M. (2008) "The age of Enlightenment" [online] Available at: <http://www.martinfrost.ws/htmlfiles/enlightenment_age.html> [Accessed 7 October 2011] Frost & Sullivan (2009), The U.S. Industrial Enzyme Market, N2C1-39, [online] Available at:<http://www.frost.com> [Accessed 8 October 2011] Haskens, T., (2011) Tom Haskens Blog [online] Available at: <http://growchangelearn.blogspot.com/2007/04/vertical-and-horizontal-networks.html> [Accessed 5 October 2011] History of PCR method (1993) A (short) history of PCR [online] Available at: <http://www.scienceisart.com/A_PCR/PCRhistory_2.html> [Accessed 14 October 2011] IOE, Institute of Enzymology [online] Available at: < http://www.enzim.hu/index.php> [Accessed 18 October 2011] Leary P, and Fontahina E. (2007) Communities of Practice and virtual learning communities: benefits, barriers and success factors, eLearning Papers [online] Available at: <http://www.elearningeuropa.info/files/media/media13563.pdf> [Accessed 11 October 2011] McConnell, B., Huba, J. (2006) The 1% Rule: Charting citizen participation [online] Available at: <http://www.churchofthecustomer.com/blog/2006/05/charting_wiki_p.html> [Accessed 7 October 2011] Novozymes Talent Search (2011) Commercial Graduate Program China [online] Available at: <http://www.novozymes.com/en/careers/students/graduate- programs/graduate%20program%20china/Pages/default.aspx> [Accessed 30 September 2011] Panetta, J.A. (2008) Distributed Innovation [online] Available at: <http://www.climate-tech- policy.org/wp/wp-content/uploads/2008/Panetta_May08.pdf> [Accessed 13 October 2011] Savvy Auntie (2011) Welcome to Savvy Auntie [online] Available at: <http://www.savvyauntie.com> [Accessed 19 September 2011] Social Capital Research (2011) [online] Available at: <http://www.socialcapitalresearch.com/> [Accessed 21 September 2011] Xinhua H., (2010), The Internet in China [online] Available at: <www.gov.ch: http://www.gov.cn/english/2010-06/08/content_1622956_2.htm> [Accessed 21 September 2011]
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9. Appendix
The appendix consists of documents, graphs and tables that contain supplementing information, as well as compilation of interview summaries and meeting notes from our empirical data.
Appendix: Table of Contents

9. APPENDIX ................................................................................................................................................ 114 APPENDIX 1: INTERVIEW SUMMARY ......................................................................................................................... 115 APPENDIX 2: ONLINE QUESTIONNAIRE SUMMARY ................................................................................................. 146 APPENDIX 3: NOVOZYMES SALES DATA AND GLOBAL ENZYME MARKET ............................................................ 151 APPENDIX 4: ONLINE TRENDS EMERGING SCIENTIFIC COMMUNITIES ............................................................. 153 APPENDIX 5: ENABLING AND INHIBITING PROPERTIES OF A VIRTUAL COMMUNITY ........................................ 159
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Virtual communities as a vehicle for science-based external knowledge sourcing

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Timespan: 1650-1796 (Frost, 2011)

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

1.1. Problem Statement

1.2. Clarification of research

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

2.1. Research Strategy and Design

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Source: Own model

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

2.2. Data Collection

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Table 2.1: Interviewee List

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

2.3. Critique of methodology

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

2.5. Central Concepts

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

Copenhagen Business School M.Sc. Innovation and Business Development

Master Thesis, Fall 2011 Benedikta Hedegaard-Knudsen & Dan Herlin

3.1. Cognitive Economics

configuration of a system such as an economy, market or organization (businessdictionary.com)

Copenhagen Business School M.Sc. Innovation and Business Development