Technological Innovation Capabilities and Firm Performance

Authors: Richard C.M. Yam, William Lo, Esther P.Y. Tang, Antonio, K.W. Lau

Abstract:

Technological innovation capability (TIC) is defined as a comprehensive set of characteristics of a firm that facilities and supports its technological innovation strategies. An audit to evaluate the TICs of a firm may trigger improvement in its future practices. Such an audit can be used by the firm for self assessment or third-party independent assessment to identify problems of its capability status. This paper attempts to develop such an auditing framework that can help to determine the subtle links between innovation capabilities and business performance; and to enable the auditor to determine whether good practice is in place. The seven TICs in this study include learning, R&D, resources allocation, manufacturing, marketing, organization and strategic planning capabilities. Empirical data was acquired through a survey study of 200 manufacturing firms in the Hong Kong/Pearl River Delta (HK/PRD) region. Structural equation modelling was employed to examine the relationships among TICs and various performance indicators: sales performance, innovation performance, product performance, and sales growth. The results revealed that different TICs have different impacts on different performance measures. Organization capability was found to have the most influential impact. Hong Kong manufacturers are now facing the challenge of high-mix-low-volume customer orders. In order to cope with this change, good capability in organizing different activities among various departments is critical to the success of a company.

Keywords: Hong Kong/Pearl River Delta, Innovationaudit, Manufacturing, Technological innovation capability

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1077239

References:

[1] Lawless, M.J. and Fisher, R.J. (1990). Sources of Durable Competitive Advantages in New Products, Journal of Product Innovation Management, Vol. 7, No. 1, pp35-43.
[2] Guan, J.(2002), Comparison Study of Industrial Innovation between China and Some European Countries, Production and Inventory Management Journal, Vol. 43, No.3
[3] Lall, S., (1992), Technological Capabilities and Industrialization, World Development, Vol. 20, No. 2, pp165 - 168
[4] Burgelman, R., Maidique, M. A. and Wheelwright, S.C. (2004). Strategic Management of Technology and Innovation, McGraw Hill, New York
[5] Guan, J. and Ma, N. (2003), Innovative Capability and Export Performance of Chinese Firms, Technovation, Vol. 23, pp737-747.
[6] Christensen, J.F. (1995). Asset Profiles for Technological Innovation, Research Policy, Vol. 24, pp727-745
[7] Chiesa, V., Coughlan, P. and Voss, C.A.(1996). Development of a Technical Innovation Audit, Journal of Product Innovation Management, Vol. 13, pp105-136
[8] Yam, C.M, Guan, J.C, Pun, K.F. and Tam, P.Y. (2004). An Audit of Technological Innovation Capabilities in Chinese Firms: Some Empirical Findings in Beijing, China, Research Policy, Vol. 33, No. 8, pp1123-1250
[9] Bougrain, F. and Haudeville, B. (2002). Innovation, Collaboration and SMEs Internal Research Capacities, Research Policy, Vol. 31, pp735- 747
[10] Danneels, E. (2002). The Dynamic of Product Innovation and Firm Competences, Strategic Management Journal, Vol. 23, pp1095-1121
[11] Galende, J. and Fuente, J.M. (2003). Internal Factors Determining a Firm-s Innovative Behavior, Research Policy, Vol. 32, pp715-736
[12] Teece, D.J. (1996). Firm Organization, Industrial Structure, and Technological Innovation, Journal of Economic Behavior & Organization, Vol. 31, pp193-224
[13] Evangelista, R. Perani, G., Raptit, F. and Archibugi, D. (1997). Nature and Impact of Innovation in Manufacturing: Some Evidence from the Italian Innovation Survey, Research Policy, Vol. 26, pp521-536
[14] Yam, C.M. R., Lo, W., Tang, P.Y. and Sun, H.Y. (2003), Enhancement of Global Competitiveness for Hong Kong/China Manufacturing Industries through i-Agile Virtual Enterprising, International Journal of Technology Management, Vol. 26, No. 1, pp88-95
[15] Lo, W.L., Naidu, G.M. and Yam, C.M. (2001). Dynamic and Responsive Firm Strategy : A Case Study of Hong Kong and China Collaborations in Pearl River Delta, Journal of Global Marketing, Vol. 14, No.4 .
[16] Fu, J and Shi, P (1995). Technological accumulation versus technology innovation a new approach of Chinese firms; technological innovation form technological accumulation dimension, Sun-Yat-Sen Management Review, Vol. 3 No 4 pp112-121
[17] Evangelista, R. Iammarino, S. Mastrostefano V. and Silvani A.(2001), Measuring the Regional Dimension of Innovation: Lessons from the Italian Innovation Survey, Technovation, Vol. 21 No 11, pp733-745.
[18] Wu, G. (2001). Technological Innovation Management, Tsinghua University Press, Beijing (in Chinese)
[19] Wan, D., Ong, C.H. and Lee, F. (2003). Determinants of Firm Innovation in Singapore, Technovation, Vol. 25, No. 3, pp261-273
[20] Rothwell, R. (1983), Innovation and Firm Size: A Case of Dynamic Complementarity; or, Is Small Really so Beautiful?, Journal of General Management, Vol. 8 No.3, pp.5-25
[21] Pavitt, K., Robson, M. and Townsend, J. (1987). The Size Distribution of Innovating Firms in the UK 1945-1983, Journal of Industrial Economics, Vol. 35, pp279-315
[22] Tsai, Wenpin (2001). Knowledge transfer in intraorganizational networks: Effects of network position and absorptive capacity on business unit innovation and performance, Academy of Management Journal, Vol. 44, No. 5, pp996-1004
[23] Caloghirou, Y., Kastelli, I. and Tsakanika, A. (2004). Internal Capabilities and External Knowledge Sources: Complements or Substitutes for Innovative Performance?, Technovation, Vol. 24, pp29- 39
[24] Hong Kong Trade Development Council, HKTDC (2000). Challenges and Opportunities for Hong Kong-s Electronics Industries: Current Status and Future Prospects, Hong Kong Trade Development Council, Hong Kong
[25] SQW (Asia) Ltd, Rapra International Limited, Hong Kong Plastics Technology Centre (2001). Techno-economic and market research study on Hong Kong-s Plastics Industry, 1999/2000, Hong Kong Trade Development Council, Hong Kong
[26] Armstrong, J. and Overton, T. (1977). Estimating Nonresponse Bias in Mail Surveys. Journal of Marketing Research, Vol. 14, No. 3, pp396- 402
[27] Churchill, G.A. (1979). A Paradigm for Developing Better Measures of Marketing Constructs, Journal of Marketing Research, Vol. 16, No. 2, pp64-73
[28] Kline, R.B. (1998), Principles and Practice of Structural Equation Modeling, The Guilford Press, New York
[29] Bentler, P.M. (1990). Comparative Fit Indexes in Structural Models, Psychological Bulletin, Vol. 107, No. 2, pp238-246
[30] Byrne, B.M. (2002). Structural Equation Modeling with AMOS: Basic Concepts, Applications and Programming, Lawrence Erlbaum Associates, London
[31] Cohen, W.M. and Levinthal, F.A. (1990). Absorptive capacity a new perspective on learning and innovation, Administrative Science Quarterly, Vol. 35 No. 1, pp128-152
[32] Carmen, C.O, María de la Luz, F.A and Salustiano, M.F. (2006). Influence of top management team vision and work team characteristics on innovation: The Spanish case, European Journal of Innovation Management, Vol. 9, No. 2; pp179-202
[33] Dosi, G., Faillo, M., and Marengo, L. (2008). Organizational Capabilities, Patterns of Knowledge Accumulation and Governance Structures in Business Firms: An Introduction, Organization Studies, Vol. 29, No. 8/9, pp1165-1211