As fast-growth economies, such as China and India are dominating export markets, innovation in the manufacturing industries of slower, developed economies, such as Australia is a survival issue. Particularly small- and medium-sized manufacturing enterprises (SMMEs) with limited internal innovation resources and capabilities are suffering.
Corresponding with this development, academic interest in analysing the relationship between innovative performance of small firms and their recourse to external resources, especially through interorganisational relationships (IORs) has been growing over the last ten to fifteen years. To date the emerging literature has given limited attention to the systematic empirical assessment of the relationship and innovation inputs and outputs of cooperative product innovation. Furthermore, most of the literature focuses on cooperative innovation IORs with customer stakeholders, ignoring the potential role played by other external stakeholder groups, such as suppliers, industry partners and research/advisory organisations. To this end, this thesis investigated the following research question:
What are the relationships between IOR- and innovation-oriented antecedents and consequences of cooperative product innovation and how effective for overall firm performance is product innovation cooperation with multiple stakeholders?
A six-factor multi-stakeholder model of cooperative IORs in product innovation for Australian manufacturers was developed from a strategy-structure-performance-based model of marketing channel relationship structure. It synthesised and built upon prior models of cooperative product innovation and incorporated concepts and measures drawn from the IOR and product innovation literatures. The central, structure-based construct (measurement model) developed was stakeholder involvement in product innovation (SIPI). Two factors were used to predict SIPI: Stakeholder orientation (SO) and Product innovation orientation (PIO). A further two factors represented outcomes of SIPI: Relationship quality (RQ) and Product innovation performance (PIP). A sixth factor - Overall firm performance (OFP) - was also measured to assess the broader implications of the model. Two objective, single-item variables were also included in the model – relative Product innovation spending (associated with PIO) and Sales growth (associated with OFP).
To address the multi-stakeholder perspective, four external stakeholder groups most likely to be involved in a manufacturer’s product innovation (customers, suppliers, industry partners (competitors) and research/advisory organisations) were assessed. Eight hypotheses positing associations between the six constructs were developed.
As strategic data was required, the research method for primary data collection was a survey of CEOs/General Managers of Australian machinery and equipment manufacturers, predominately SMMEs. A questionnaire was designed to measure their opinions about the firm’s relationships with each of the four stakeholder groups in product innovation as well as their views on the firm’s product innovation orientation and performance. Following extensive pre-testing of the questionnaire, it was distributed by mail and online to the senior managers. Data obtained from 120 respondents was used in the research.
Using a two-step structural equation modelling (SEM): confirmatory factor analysis (CFA) approach, examinations of parameter estimates, fit and residuals were used to test the individual constructs for validity. Composite reliability and average variance extracted were used to test for construct reliability. An overall (multi-stakeholder) structural model, as well as four single-stakeholder models, of key relationship- and innovation-oriented antecedents and consequences of cooperative product innovation were then tested using SEM AMOS software. Meaningful modifications of the hypothesised model were undertaken to improve model fit. The four modified single-stakeholder models and the overall (multistakeholder) model were found to provide a satisfactory fit. Statistically significant standard coefficients for each of the latent constructs provided evidence of the importance of each element as an input or outcome of cooperative innovation.
The results indicated that, as posited, a firm’s Product innovation orientation (PIO) was positively associated with its Stakeholder orientation (SO). SO, in turn, was a valid antecedent of cooperative product innovation (SIPI). The hypothesised direct path from SIPI to RQ was, however, not supported. Instead, SIPI was found to partially mediate the SO-RQ association, further strengthening that positive link. Surprisingly, PIO did not appear to significantly influence cooperative innovation SIPI. Instead, PIO was found to be a strong and direct antecedent of market- and technical-oriented PIP, whereby the cooperative innovation construct SIPI did not materially impact Product innovation performance PIP. Product innovation spending directly influenced technical-oriented PIP only. RQ was a valid predictor of Sales growth, but not of Overall firm performance OFP. While market-oriented PIP was found to lead to stronger assessments of OFP, increased technical-oriented PIP negatively impacted on OFP. Consequently, seven of the eight hypotheses relating to the research model were accepted in part or full, and one hypothesis was rejected.
Overall, qualified support was found for the central proposition: Higher (sales) growth manufacturers tend to pay more attention to their relationships with the top firms in each of four stakeholders groups (customers, suppliers, industry partners and advisory/research firms), involve these firms more in product innovation activities and perceive their relationships to be of higher ‘quality’. Firms with sound overall firm performance (return on investment, net profit, market share and overall business performance) tend to be more product innovation focused (in terms of strategy and spending) and achieve product innovations, which are successful both technologically and market-wise. However, stakeholder involvement in product innovation is not as good a predictor of product innovation outcomes as is the firm’s product innovation orientation (strategy).
Copyright T von der Heidt 2008