Abstract

Export is an important factor to improve growth and welfare especially for industrialized small, open economies such as Belgium. Policy may be interested in key variables that can influence export. This paper finds evidence for the importance of R&D for export activities using Belgian firm-level data.

To control for reverse causality, R&D-subsidy variables are used to instrument R&D. The results show that R&D policies may indirectly help to increase the export performance of the economy. Due to the exceptionally high openness of Belgium, two subsamples of firms are considered, domestic firms and multinational firms. We observe positive effects of R&D on export for both domestic and MNEs. Once we instrument R&D because of its potential endogeneity, however, it turns out that the effect of R&D on exports is larger for domestic firms than for multinational companies.

The results of the studies are available on the website of STOIO (mainly in Dutch, but some information in English).

The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

~George Bernard Shaw, Man and Superman (1903)

(Makes me think of Steve Jobs.)

A simple and fast assessment can be performed by using the innovation audit checklist of Tidd & Bessant (2009).

The format of the tool is not so important. What is needed is the ability to use it to make a review of the factors affecting innovation success and failure, and how the management of the process might be improved.

An audit tool should give you feedback on 5 key areas:

• Do we have effective enabling mechanisms for the innovation process ?
• Do we have a clear innovation strategy and is it communicated and deployed effectively ?
• Do we have an innovative organization, one which provides a supportive climate for innovation ?
• Do we build and manage external linkages to enable ‘open innovation’ ?
• Do we capture learning to help us develop improved innovation management capability ?

(if you have examples of other checklists to audit the innovation capability of an organization, please leave a note in the comments)

Source / additional reading

Tidd, J., Bessant, J. (2009), Managing innovation, John Wiley & Sons.

Project Portfolio Management (PPM) is a term used to describe methods for analyzing and collectively managing a group of current or proposed projects based on numerous key characteristics. PPM and the prioritization of new products/services (‘innovations’) are a critical management task. Essentially they are bout optimal resource allocation in an organization. That is, which projects from the many opportunities an organization faces, will it fund. And which projects will receive priority ?

Cooper (2001) describes PPM as:

Portfolio management for new products is a dynamic decision process wherein the list of active new products and R&D projects is constantly revised. In this process, new projects are evaluated, selected , and prioritized. Existing projects may be accelerated, killed, or deprioritized and resources are allocated and reallocated to the active projects. The portfolio decision process is characterized by uncertain and changing information, dynamic opportunities, multiple goals and strategic considerations, interdependence among projects, and multiple decision makers and locations.

Reasons for PPM

Clearly this is a mouthful… PPM is however vital as it structures how your organization allocates its capital and human resources. It’s important for 3 main reasons:

1. A successful innovation is fundamental to the success of an organization and depends on the ability to select the right projects, that is decent PPM.
2. Innovations are the manifestation of your strategy and selecting the correct projects means implementing your strategy.
3. Every organization faces a limited amount of resources and therefore allocating these scarce resources to the right projects is essential.

Additionally PPM provides objectivity in project selection and helps communicating the priorities within an organization.

Goals of PPM

While the methods used for PPM vary greatly, there are some common goals:

1. Maximization of value (profitability, ROI, …).
2. Balance in terms of a number of parameters, like long term vs short term, high risk vs low risk, markets, project types (new, improvements, cost reductions, fundamental research), …
3. Strategic alignment or ensuring that the projects are reflecting business strategy.

Clearly these 3 goals are sometimes conflicting. Example: the portfolio that maximizes value may not be balanced in terms of markets or risk. It may focus too much on low risk and short term projects and lose sight of the long term future of an organization. The central idea however is that an organization should consciously consider its PPM objectives and select methods to achieve these goals (see Cooper (2001) for more info on methods).

Sources and further reading

Cooper, Robert G., Scott J. Edgett, and Elko J. Kleinschmidt (2001), Portfolio Management for New Products, Perseus Books, 2nd Revised edition edition

The secret of true service innovation is that you must shift the focus away from the service solution and back to the customer. Rather than asking, “How are we doing?” a company must ask, “How is the customer doing?” To achieve this shift in focus, companies must begin to think very differently about how customers define value based on the needs they are to satisfy. A proper understanding of these needs enables value to be understood in advance of any particular innovation being created.

Boden, M. & Miles, I. (ed.) (2000): Services and the Knowledge Based Economy.

Leading researchers in the fields of services industries research and innovation studies investigate the reasons for the growth of the service sectors and the emergent ‘knowledge economy’. Drawing on material as diverse as macroeconomic statistics and firm-level case studies, the contributors demonstrate that services are often important innovators in their own right, as well as contributing to innovation and economic performance in their user industries.

Chesbrough H. (2003): Open Innovation: The New Imperative for Creating and Profiting from Technology.

Companies can no longer afford to rely entirely on their own ideas to advance their business, nor can they restrict their innovations to a single path to market. Therefore the traditional model for innovation is becoming obsolete. This path-breaking analysis is based on extensive field research, academic study, and the author’s own long time experience working in Silicon Valley.

Edvardsson, Gustafsson, Kristersson, Magnusson and Matthing (eds.) (2006). Involving customers in new service development.

The book deals with how companies can involve customers or users in order to learn with them in the field of service-based business development. It presents a variety of customer-involvement approaches, methods for learning with customers, and the results of case studies conducted in both service and manufacturing companies focusing on value-creation through services. Based on research carried out by several research groups around the world, as well as on illustrative cases, the book creates new actionable knowledge regarding customer-involvement which will be useful for both practitioners and scholars.

Gadrey J., Gallouj F.(edit.)(2002): Productivity, Innovation and Knowledge in Services: New Economic and Socio-economic Approaches.

The book challenges some of the widespread assumptions that are commonly held about services and is particularly strong in highlighting the relationship between these assumptions and the limitations imposed by existing forms of measurement and conceptual frameworks. The collection provides an important stepping-stone in the developing service research agenda in the discipline of economics.

Gallouj F. and Djellal F. (edit.) (2010): The Handbook of Innovation and Services.

The Handbook expertly links the two major characteristics (innovation and services) in order to investigate the role of innovation in services, an issue that until now has been inadequately explored and one that poses many theoretical and operational challenges. This comprehensive volume encompasses the views of eminent scholars from a range of disciplines including economics, management, sociology and geography, and draws on a number of different analytical and methodological perspectives.

Gallouj, F.(2002): Innovation in the Service Economy: The New Wealth of Nations.

There is still considerable unwillingness to consider innovation in terms of services, a paradox rooted in an obsolete conception which regards manufacturing as the only engine of growth. The author propounds a theoretical framework which describes and evaluates the main approaches to analyzing and understanding innovation in services. He provides interesting and extensive empirical material on the nature and sources of innovation.

Harrington James W. (Editor), Daniels Peter W. (Editor) (2006): Knowledge-based Services, Internationalization and Regional Development (The Dynamics of Economic Space)

In the book, an international and interdisciplinary team of leading scholars examines the attributes of knowledge acquisition and diffusion within and across service-providing organizations. Using a variety of case examples, they pay particular attention to the processes of internationalization and the ways in which service-providing organizations affect regional economic development.

Paul P. Maglio (Editor), Cheryl A. Kieliszewski (Editor), James C. Spohrer (Editor) (2010): Handbook of Service Science (Service Science: Research and Innovations in the Service Economy)

Traditional service sectors encompass a wide variety of industries ranging from transportation, retail and healthcare to entertainment, banking, and insurance. As the service sector expands into the global economy, a new science of service is emerging, one that is dedicated to encouraging service innovation by applying scientific understanding, engineering discipline, and management practice to designing, improving, and scaling service systems. This seminal reference considers Service Science to be the study of value co-creation, and finds abundant common elements and themes, common concerns and approaches that converge on this central, real-world phenomena. Handbook of Service Science takes the first major steps to clarifying the definition, role, and future of this nascent field. Incorporating work by scholars from across the spectrum of service research, the volume presents multidisciplinary perspectives on the nature and theory of service, on current research and practice in design, operations, delivery, and innovation of service, and on future opportunities and potential of service research.

Miozzo M., Grimshaw D.(edit.) (2006): Knowledge Intensive Business Services: Organizational Forms And National Institutions.

KIBS are active agents of divergence and there is no universal pattern of the nature and the evolution of KIBS, but national varieties. The book, which is strongly oriented towards both policy and theoretical questions, is a valuable addition to a body of literature.

Rubalcaba, L. and Kox, H. (edit) (2007): Business Services in European Economic Growth.

Over the past twenty years the business services sector has contributed heavily to European economic growth in terms of employment, value added to products and innovation. However, many links between business services, their marketing function and their role in economic growth remain underexplored. This volume provides a comprehensive approach from an applied economics perspective. It has a clear focus on the contribution of business services to European economic growth, covering all the major mechanisms through which this contribution operates.

Rubalcaba, L. (2007): The new service economy: Challenges and policy implications for Europe.

In this book the author contributes greatly to a better understanding of the service economy. By exploring the key dimensions, available empirical evidence and associated policy implications, Rubalcaba comprehensively investigates the new challenges facing the global economy, including employment, productivity, innovation and competitiveness. The case of the European services is highlighted, particularly in comparison to the US.

Stauss B., Engelmann K., Anja Kremer A., Luhn A, (edit.) (2007): Services Science: Fundamentals, Challenges and Future Developments.

The book includes detailed articles and short statements on service sector and service science, written by academics and experts. They explain which challenges need to be met by research and academic training in the services community of the 21st century.

Source : Europe INNOVA and Amazon

Abstract

The proliferation of interconnectivity and interactivity through Internet-based technologies enables new forms of support for new product development. This article analyzes idea markets, which use widely distributed knowledge, the power of markets, and the Internet to support the crucial initial tasks of the new product development process, including the sourcing, filtering, and evaluation of new product ideas. Idea markets employ virtual stocks to represent new product ideas and allow participants to suggest and trade new product ideas in a virtual marketplace. This article empirically explores the performance of idea markets in a real-world field study at a large, high-tech B2B company that includes more than 500 participants from 17 countries and features various idea sourcing tasks.

The results indicate that idea markets are a feasible and promising method to support the fuzzy front end of the new product development process. Idea markets offer a platform and formal process to capture, select, and distribute ideas in an organization, which motivates employees to communicate their ideas to management. By effectively sourcing and contemporaneously filtering, idea markets help reduce the number of ideas brought to management’s attention to those that seem worthy of further consideration. Because idea markets also have the ability to source many ideas, they can increase efficiency at the fuzzy front end of the new product development process.