Editorial - Organizing for innovation networks

Editorial - Organizing for innovation networks

Article Type: Editorial From: Journal of Business & Industrial Marketing, Volume 30, Issue 3/4

Introduction

This issue represents the second in response to the call for papers pertaining to Innovation Networks. While the first special issue primarily focused on the effects of actors' heterogeneity in innovation networks, the second issue is dedicated to organizational efforts to support innovation networks.

Innovation is increasingly considered a collective process that involves a multitude of business actors, sometimes with great heterogeneity among them, such as companies, universities, private research centres, governmental institutions, consumers, and many others. An increasing number of studies suggest that innovation is created through the interplay of different and committed stakeholders, where the innovation activities of one firm must take into account the complementary innovation activities of other companies in the network (Bourne, 2009; Perks and Jeffery, 2006).

Research into business-to-business relationships and exchanges demonstrates that resources - business units, relationships between the personnel of business units, production facilities and intermediate goods and services - typically develop through many-to-many interactions (Håkansson and Waluszewski, 2002; Cova and Salle, 2008). Many actors contribute to the development of resources through a complex set of user patterns as accumulations of adaptations, perhaps within a particular focal relationship, all of which emanate from or are augmented by activities elsewhere in a network (Cantù et al., 2012; Finch et al., 2012; Gadde et al., 2012).

As noted by several scholars, to manage the new innovation landscape, firms are specializing in their core competences and developing relationships to access external and complementary resources (Cheesbrough, 2003; Gann, 2005). The opening up of innovation between parties generates benefits because it can provide firms access to information, advice and influence, as well as resources held by others (Hoang and Antoncic, 2003; Freel, 2003; Hite and Hesterly, 2001; Shaw and Conway, 2000). Powell et al. (1996) outlined how the innovation process is rooted in interactions and knowledge exchanges among heterogeneous actors such as suppliers, customers, universities, research organizations, government and financial institutions, etc. (Dhanaraj and Parkhe, 2006; Von Hippel, 2007; Westerlund and Rajala, 2010).

However, the acceleration of complex technological innovation appears to be linked to the type of organizations participating in the network, the number of collaborations undertaken and the potential emergence of problems in collaboration (Rycroft, 2007). As stated by Gulati (2010), "In order to redefine innovation more broadly than before, companies must involve more voices in the innovation process". Operating from this perspective, firms will shift more activities to external partners, and this requires firms to increasingly engage such partners in the innovation process and accompanying activities, which demands attention for specific expertise in managing the complexity of innovation networks. Innovation involves collective efforts and is not a simple linear sequence of stages. Innovation does not appear to be a planned process divided into sequential phases, but it is, rather, an emergent, ongoing process where the views of different participants should be included (Rampersad et al., 2010).

Content review

The second special issue includes eight papers, which can be grouped into the following areas:

* Dynamics of an innovation network.

* Business models in innovation networks.

* Coordination in innovation networks.

* Different types of innovation networks.

Dynamics of an innovation network

With reference to the first area, the innovation network is characterized by dynamics. Dynamics is related to the network morphology (Koza and Lewin, 1999) regarding the antecedents and stimuli for the formation of the network. Dynamics also involves change focusing on environmental effects and network evolution (Zaheer and Soda, 2009). The choices made by actors in the present involve future events and, therefore, future trajectories (Araujo and Harrison, 2002).

In the article entitled "Business Networks in the Innovation Life Cycle", Anna Codini investigates how relationships among various actors affect the evolution of innovation through the steps of the technology life cycle. Although many studies focus on the general importance of networks in the competitive performance of firms, there are few studies that investigate whether the strength of ties linking the members of a network can affect innovation performance. The study is supported by a longitudinal case study of a mechanical company operating in the knitting machinery industry. The research allows readers to better understand how interactions among actors within the business networks influence the evolution of technology. As stated by the author, "The innovation is a crossing activity, crossing in relation to the company's departments and crossing in relation to the company's boundaries". The paper provides important guidelines on how the relationships among the actors involved in a network can evolve over time and can influence the evolution of technology itself.

Offering a similar perspective, the article "Innovation Network Trajectories: The Role of Time and History", by Olaru Doina and Purchase, Sharon, describes patterns of change in innovation networks and clarifies the roles of time and history in shaping network trajectories. The authors test seven predictor variables and their interactions to examine their influence on network performance over time. The aim of the paper is to understand how resources and the interaction of resources are associated with innovation network trajectories. The authors also analyzed the emergence of different network trajectory classes with respect to specific trajectory patterns, as various interactions between network resources and conditions play important roles in determining their trajectories. A fuzzy simulation of innovation networks and investigations of different network types, using two classes of growth modelling techniques, helps authors in understanding innovation as an interactive and developmental process. Innovation network trajectories are influenced by self-reinforcing, contradictory and damaging forces. History affects network trajectory development, particularly with regard to financial resource access. Managers in innovation business networks can use the identified variables to improve network performance by facilitating processes that inject financial capital and integrating heterogeneous skills that focus on a wider variety of skills, which generates both exploratory and exploitative knowledge development. Further research could investigate network trajectories in various contexts and how the interaction forces differentiate the classes of network trajectories.

Business models in innovation networks

Adopting a collaborative business model, the innovation value is generated by a combination of complementary resources (Andriani, 2011; Dougherty and Dunne, 2011; Jenkins and Floyd, 2001; Strömsten and Waluszewski, 2012). Firms have integrated products and services or systems (Davies et al., 2006) providing more complete solutions (Wise and Baumgartner, 1999), and solutions are also provided through servitization (Vandermerwe and Rada, 1988). Paradigm innovations involve a change of business approach and business models (Spring and Araujo, 2009, Storbacka et al., 2013) that become increasingly customer-centric (Galbraith, 2002). Removing the distance from the closed model, in which innovation is produced inside the firm, the open approach requires consideration of how a firm's creation of knowledge depends not only on what the firm realizes but also on what firms do to each other. The knowledge transfer inside the network boundaries offers opportunities for mutual learning and innovation.

The article entitled "Interorganizational Networks and Innovation: A Bibliometric Study and Proposed Research Agenda", by Giovanni Dagnino, Gabriella Levanti, Anna Minà and Pasquale Picone, aims to explore the latent structure of the literature on interorganizational networks and innovation. The authors analyze the citation patterns in management studies regarding innovation in interorganizational networks, published in ISI journals from January 1996 to October 2012, and identify the conceptual orientations in these topics. Bibliometric analysis allows for the creation of an overview of how this field of research has developed, recognizing and visualizing in a map six main clustered research themes:

1. Interorganizational networks as a framework that sustains firm innovativeness in specific contexts.

2. Interorganizational network dimensions and knowledge processes.

3. Interorganizational networks as a means to access and share resources/knowledge.

4. The interplay between firm and interorganizational network characteristics and its effects on innovative processes.

5. Empirical research on interorganizational networks in highly dynamic industries.

6. The influence of industry knowledge domains' peculiarities on interorganizational network dimensions and characteristics.

Given that performance differences between firms may be generated by asymmetries in accessing, assimilating and applying new knowledge on the ground in a firm's innovation, the authors specifically focus on the structural aspects of innovative interorganizational networks and how actors contribute in the shaping of these networks, as well as in extracting value from them. By developing a bibliometric analysis of the bulk of the extant literature on innovation in interorganizational networks, the authors develop a specific methodological contribution that complements earlier qualitative interpretations. Therefore, the results may be used to inspire further research that is based on bibliometric or other meta-analytical methods.

The article "Understanding Solutions as Technology-Driven Business Innovations", by Charlotta Windahl, aims at providing a better understanding of the innovation challenges firms face when developing and commercializing solutions in the capital goods sector. The article analyzes the challenges related to the interdependencies between the supplier/innovator and the customers, as well as the solution's impact on their competencies and activities. The authors investigate how solutions can be conceptualized as an innovation, and how a solution can affect the competencies of the actors involved. Focusing on the supplier-customer dyad, the paper demonstrates how solutions add to the complexity of the innovation process through increasing the extent of business and technological interdependencies between firms. According to the authors, with regard to solutions, "The suppliers need to manage ambiguity". Suppliers need to establish close cooperation, trust and long-term relationships with customers. Additionally, suppliers need to create repeatable solutions. Windhal draws upon the literature on solutions and frameworks within innovation management literature. The paper explores a real-time, longitudinal case study of "Alpha" (an international specialist in centrifugal separation, heat exchange and fluid handling), including an R&D project, the project's transformation into an internal corporate venture, and the history of the venture up until its integration into the corporate structure. This research characterizes solutions as involving product and business innovation. By clarifying the differences between how a solution affects customers and suppliers, the article supports a deeper understanding of the obstacles and difficulties involved in solution innovation. This paper provides a framework for deconstructing solution innovation, enabling detailed comparisons between the innovation's impact on both suppliers' and customers' competencies. Such a tool is helpful to an increased understanding of how to facilitate internal and external acceptance of a disruptive and radical business innovation. The merging of the two discussions on co-creation and the role of users in innovation provides new areas of research. Understanding solutions as technology-driven business innovations generates a multifaceted and complex perspective on solutions and contributes to a better understanding of radical business innovations.

Coordination in innovation networks

Since innovation is no longer considered a firm-level phenomenon, but, rather, a process which involves a collection of actors, the issue of how these actors coordinate their activities has emerged as relevant. According to the evolution of innovation networks, specific mechanisms of coordination must be addressed. As an example of this, Ritala et al. (2012) analyze how innovation-generating business networks and their coordination evolve over time.

Coordination is required because when heterogeneous actors meet, the space allowed for extensive information retrieval and analytical cognitive elaboration is limited, and managers act on incomplete information. One way to support coordination in innovation networks is through the use of heuristics, defined as "rules on the shelves" or "cognitive shortcuts", which emerge and guide judgments and choices in the presence of limited information, time and/or processing capacity.

According to the "adaptive behaviour and cognition program" (Gigerenzer and Brighton, 2009), heuristics are the result of adaptive behaviour, through which humans can make effective choices from a few stimuli. Research into this program has shown that the application of heuristics amounts to "strategies that ignore information to make decisions faster, more frugally, and/or more accurately than more complex methods" (Gigerenzer and Gaissmaier, 2011, p. 453). Research also reveals that in the real world, the ecological rationality of "homo heuristicus" can be more effective than the rational logic of "homo economicus" (Gigerenzer and Brighton, 2009).

In the paper entitled "Heuristics-in-Use in Industrial Interfirm-Collaborating Clusters", Wen-Hsiang Lai and Arch Woodside collocate in this stream of research and discuss the problem of establishing new collaborations inside business networks. The paper explores interfirm decision-making heuristics related to industrial interfirm collaboration clusters (ICCs) using rules of thumb for decision-making such as "fast-and-frugal decision trees" (FFDTs) and "take-the-best" in processing possibly influential decision-making cues. The authors develop an FFDT for six decision-making modules to quickly identify potential collaboration partners and also construct a decision systems analysis flowchart to provide a qualitative measurement of the six factors. The study, focused on the central areas of Taiwan's machinery firms, reveals important implications for managerial practice by defining a decision-making solution for minimizing the time and processes required in seeking new business collaboration partners in an ICC.

However, coordination in innovation networks can also be obtained through more objectified artefacts, such as manifestations of agreements, contracts, industry standards and regulations, all of which affect business relationships in networks. Legally binding contracts comprise mandatory rules that are created through dyadic interaction between business partners.

The contracts constitute an activity, ordering the initial givens of resources and actors and the manner in which they are to be coordinated, anticipating and regulating future activities. The activity of writing the contracts promotes contracts as a harmonizing device, creating a joint perception of the project's environment, the technological potential and the desired outcome.

The starting point of the study entitled "Contracts, Relationships and Innovation in Business-to-Business Exchanges", by John Finch and Monika Moehring, is that actors encounter and mobilize contracts regularly in innovation processes in industrial markets. Even though there is a widespread diffusion of contracts to regulate innovation networks, they have been less prominent in empirical research and are therefore less conceptualized.

The paper draws on case study research into three projects in which actors in business units developed industrial services to optimize the maintenance of large-scale processing and manufacturing plants. The authors determine that forming a contract is a business activity and part of a structured and possibly intense interaction between business organizations that can either initiate new business relationships or allow actors to step back from past relationships. Contracts can thus be reconfigured for a new project in anticipation of a new instance of interaction. Managers should be aware of the multiple roles of contracts and the complementary beneficial effect the relational norms may have following the initiation of a project or other means of business exchange. Even after the signing of a contract collaborations develop, as specific relational norms set in, this attitudinal trait is not rigid, and the negotiations as to relational norms do not have an imposed end such as a signature. As a consequence, innovation strategists should realize that it is by flexibility and the mutual preservation in the set of relational norms that partners support a development.

Different types of innovation networks

In the paper entitled "Drivers of Institutional Innovation in Networks: Unleashing the Innovation Potential of Domesticated Markets", Wouter Van Bockhaven, Paul Matthyssens and Koen Vandenbempt investigate how a network-level agency can innovate business fields. The authors emphasize that traditional open innovation literature lacks a systematic treatment of how to organize for open innovation. The paper begins with innovation networks as loci for open innovation and introduces the institutional innovation network (IIN) concept to extend innovation network research toward the achievement of innovations that radically impact field-level outcomes, such as industry setting. Examining three differentially successful IINs, the study extends innovation network theory toward their capacity to transform the business field in which they are embedded, thereby enabling innovative ways of creating end-customer value. Based on an embedded case study in the Dutch steel industry, the authors suggest a framework offering qualifying characteristics and success factors for the effectiveness of IINs.

The findings suggest that collaborating to collectively redesign an institutionalized business field implies explicit attention to interdependencies within that field. It also requires configurations that subtly violate the small-world characteristics of innovation networks to incorporate critical mass, goal alignment efforts and a focus on common resource creation. There is the need for an institutional fit of the network configuration with the full extent of the challenges faced, and a multidimensional framework is proposed to evaluate this fit. Managers involved in the creation of IINs might use these dimensions for guidance on trade-offs in their design. The paper offers a framework to guide managers engaged in the development of a network to strategically innovate their business field.

Graciela Corral de Zubielqui, Jane Jones, Pi-Shen Seet and Noel Lindsay, in their paper entitled "Knowledge Transfer Between Actors in the Innovation System: A Study of Higher Education Institutions (HEIs) and Small-to-Medium Enterprises (SMEs) in Studying Higher Education Institutions (HEIs)", emphasize how most studies focus on internal relationships and interactions among actors within the HEI or higher education system. Less attention is given to interactions among HEIs and other actors in the innovation system, especially the smaller ones that have less resources and power. The research aims to fill this gap through an empirical study of knowledge access processes among small to medium enterprises (SMEs) in the context of Australia. The authors analyze how and why SMEs access knowledge from external actors in general and from HEIs in particular, and the extent to which these knowledge access pathways affect SME innovativeness. The study involved both quantitative and qualitative approaches, including a survey of 1,226 SMEs and a mini case study to follow up on issues arising from the survey analysis. The evidence suggests that generally, SMEs use "generic" university-industry knowledge transfer pathways rather than university-industry links, with high "relational" involvement. More significantly, the results indicate that SMEs are more likely to rely on organizations other than universities and related R&D enterprises for knowledge acquisition, such as clients/customers or suppliers. While collaboration is most likely to occur within the same state/territory, or in Australia, many SMEs also collaborate internationally, usually as part of normal supplier-customer relationships, reinforcing knowledge acquisition from organizationally proximate partners. The research contributes to an understanding of the heterogeneous roles that different actors play in facilitating knowledge access for improving innovative SME outcomes. In terms of policy, as depicted by Corral de Zubielqui et al., developing additional links with HEIs could provide managers with best practice knowledge applicable to their organizations and new ideas or technology to be implemented in their firms. HEIs must also be self-aware and work diligently to improve SME links.

Chiara Cantù, Daniela Corsaro and Annalisa Tunisini - Cattolica University, Milan, Italy

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