A Resource Based View of the Effect of Knowledge Management and Cross Functional Teams on NPD Implementation

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A Resource Based View of the Effect of Knowledge Management

and Cross Functional Teams on NPD Implementation: A Study of

Dutch Manufacturing Firms.

by

Dave Noorlander

2011

MASTERS THESIS

Masters Thesis submitted in accordance with the rules of

TiasNimbas Business Schoolin partial fulfilment of the requirements for the degree of

International MSc in Business Administration

with Specialisation in Marketing Management


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ELECTRONIC THESIS PROJECT DEPOSIT AGREEMENT

TiasNimbas Business School

October 2011

STUDENT NAME

Dave Noorlander

STUDENT IDs262475

DEGREE

International MSc in Business Administration with Specialisation in Marketing

Management

THESIS PROJECT TITLE

A Resource Based View of the Effect of Knowledge Management and Cross Functional

Teams on NPD Implementation: A Study of Dutch Manufacturing Firms.

STUDENT AGREEMENTI certify that the Thesis Project submitted is my original work, and that the version

submitted is the same as the final paper version approved by the Examiners. I have

made every reasonable effort to obtain permission from the owner(s) of each third party

copyrighted material to be included in my Thesis Project.

I am aware that TiasNimbas Business School may submit this electronic version to a

programme set up to detect plagiarism.

I understand that the TiasNimbas Business School has the non-exclusive right to

electronically store, copy or translate my Thesis Project, in whole or in part, for the

purpose of future preservation and library accessibility. I understand that the Thesis

Project work will be incorporated into the TiasNimbas Business School Management

Project and Thesis Project Archive Database. In the case of Thesis Projects classified as

Confidential this will occur only after the agreed period of confidentiality has expired.


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TiasNimbas Business School reserves the right to remove any Thesis Project from the

electronic repository in the event of its content breaching any laws including

defamation, libel and copyright.

I acknowledge that the administrators of the electronic repository do not have any

obligation to take legal action on my behalf in the event of a breach of intellectual

property rights, or any other right, in the Thesis Project deposited.

Student Signature:

Date: 01.10.11


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STATEMENT OF AUTHENTICITY

I have read the University Regulations relating to

plagiarism and certify that this project is all my own work

and does not contain any unacknowledged work from any

other sources.

I confirm that the Word Count as per the University

Regulations is 22.044 words.

Student Signature:

Date: 01.10.11


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KEY WORDS AND ABSTRACT

Dave Noorlander

A Resource Based View of the Effect of Knowledge Management and Cross Functional

Teams on NPD Implementation: A Study of Dutch Manufacturing Firms.

KEYWORDS

Resource Based View, RBV, Knowledge Management, Cross Functional Teams, NPD

Implementation, Implementation Effectiveness, New Product Development, Dutch

Manufacuring Firms, Innovation Management, Phase Models of Innovation.

ABSTRACT

From a resource-based view, this study further examines the influence of knowledge

management and team characteristics on the effectiveness of product implementations

among Dutch manufacturing firms.

Subsequently, this study provides a thorough literature review. The literature

review concludes with the formulation of eleven hypotheses, forming the theoretical

framework of this study. In order to test these hypotheses, 164 questionnaires are

collected from Dutch manufacturing firms.

The findings of this study indicate that the effectiveness of product

implementation is significantly determined by the degree of centralisation and

collaboration within the firm, by the presence of employees with t-shaped skills and by

the feeling of a superordinate belonging towards an overarching group. Furthermore,

thus study reveals that reciprocity among employees strengthens the relationship

between collaboration and implementation effectiveness. In short, this implies that

managers should be cognizant of the importance of social- and emotion attributes to the

proper implementation of innovations.

In terms of future research directions, future researchers are encouraged to

replicate this study in another industry or country, possibly including several other

constructs (e.g. radicalness of the innovation, government policies and regulations, or

industry competitiveness).


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PREFACE

In your hands, you are holding a thesis on knowledge management, team characteristics

and its influence on product implementation, which is based on 300 scientific sources

published over a period of more than 60 years.

Ironically, though it is important to consider the known, it may be equally

important to consider the unknown. This interest in the unknown became the basis of

my application at TiasNimbas Business School on March 21, 2010.

At present, this thesis is the final chapter of my international masters study in

Business Administration. Apart from the intention to graduate with distinction with this

study, it is indented to further develop my personal understanding of the subject matter,

and hopefully the understanding of researchers and businessman alike. However, this

study is by no means the achievement of the author alone. Therefore, I am very grateful

to everyone involved in this study, and would like to thank the following people in

particular.

First and foremost, I express my appreciation to Michael Antioco: thank you for

being a sincerely interested and stimulating supervisor, for your adequate, helpful and

quick responses to my inquiries, and for being picky at times! Second, I would

obviously have never been able to write this study without primary data. Therefore, I

would like to thank the participants of the questionnaires for their time and effort to

objectively fill out the questionnaire. Third, I would like to thank my parents for their

love and unconditional support. Fourth, I thank my friends for their help and

understanding. Finally, I thank Anne van Arkel for being such a sweetheart in these

busy times.

Dave Noorlander

Alphen aan den Rijn, 01-10-11


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There is only one good,

knowledge, and one evil,

ignorance. (Socrates, 469 BC - 399 BC)

~


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CONDENSED TABLE OF CONTENTS

Preface .............................................................................................................................v

Condensed Table of Contents .........................................................................................vii

Table of Contents ...........................................................................................................viii

List of Appendices .............................................................................................................x

List of Tables .................................................................................................................... xi

List of Figures .................................................................................................................xii

List of Abbreviations .......................................................................................................xii

SECTION 1 INTRODUCTION ................................................................................. 1

SECTION 2 LITERATURE REVIEW ................................................................... 18

SECTION 3 METHODOLOGY .............................................................................. 53

SECTION 4 FINDINGS ............................................................................................ 62

SECTION 5 DISCUSSION AND CONCLUSION ................................................. 86

Appendices ...................................................................................................................... 98

Bibliography ................................................................................................................. 100


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TABLE OF CONTENTS

Preface .............................................................................................................................v

Condensed Table of Contents .........................................................................................vii

Table of Contents ...........................................................................................................viii

List of Appendices .............................................................................................................x

List of Tables .................................................................................................................... xi

List of Figures .................................................................................................................xii

List of Abbreviations .......................................................................................................xii

SECTION 1 - INTRODUCTION .................................................................................. 1

1.0 INTRODUCTION .................................................................................................... 2

1.1 IMPORTANCE OF INNOVATION TO BUSINESS PERFORMANCE ............................... 2

1.2 DEFINITIONS OF INNOVATION .............................................................................. 3

1.3 CLASSIFYING INNOVATION .................................................................................. 5

1.3.1 Radical versus Incremental Innovation ....................................................5

1.3.2 Technological versus Administrative Innovation ...................................... 5

1.3.3 Product versus Process Innovation ........................................................... 5

1.4 R&D AND INNOVATION IN THENETHERLANDS ................................................... 6

1.4.1 Historical Development ............................................................................ 6

1.4.2 Characteristics of R&D and Innovation in The Netherlands ....................7

1.4.3 International Comparison of Innovativenes and R&D Expenditures ....... 9

1.5 RESEARCH PROBLEM ........................................................................................... 9

1.6 RESEARCH OBJECTIVES ..................................................................................... 14

1.7 RESEARCH QUESTIONS ...................................................................................... 14

1.8 SCOPE OF THE THESIS PROJECT ......................................................................... 14

1.9 SIGNIFICANCE OF THE THESIS PROJECT ............................................................. 15

1.10 ORGANISATION OF THE THESIS PROJECT ........................................................... 15

1.11 GLOSSARY OF TERMS ........................................................................................ 16

SECTION 2 - LITERATURE REVIEW .................................................................... 18

2.0 INTRODUCTION .................................................................................................. 19

2.1

PROCESS THEORY APPROACH............................................................................ 19

2.1.1 Phase Models of Innovation .................................................................... 19


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2.1.2 Process Models of Innovation .................................................................23

2.2 INNOVATION IMPLEMENTATION ........................................................................ 24

2.2.1 Conceptualising Innovation Implementation .......................................... 24

2.2.2 Overview of Implementation Research ................................................... 27

2.3 DETERMINANTS OF INNOVATION IMPLEMENTATION SUCCESS........................... 29

2.4 ARESOURCE-BASED VIEW ON KNOWLEDGE MANAGEMENT ............................ 33

2.5 KNOWLEDGE MANAGEMENT CAPABILITIES ...................................................... 34

2.5.1 Technical Knowledge Management Resources .......................................35

2.5.2 Structural Knowledge Management Resources ......................................37

2.5.3 Cultural Knowledge Management Resources .........................................38

2.5.4 Human Knowledge Management Resources ...........................................40

2.6 TEAM CHARACTERISTICS................................................................................... 41

2.6.1 Functional Diversity................................................................................ 41

2.6.2 Superordinate Identity ............................................................................. 43

2.6.3 Social Cohesion .......................................................................................45

2.7 TEAM IMMEDIATE CONTEXT ............................................................................. 46

2.7.1 Team Virtuality........................................................................................46

2.7.1 Time-Urgency .......................................................................................... 47

2.7.2 Reciprocity .............................................................................................. 48

2.7.3 Self-Consumption .................................................................................... 50

2.8 THEORETICAL FRAMEWORK.............................................................................. 50

2.9 SUMMARY ......................................................................................................... 52

SECTION 3 - METHODOLOGY ............................................................................... 53

3.0 INTRODUCTION .................................................................................................. 54

3.1 PHILOSOPHICAL STANCE ................................................................................... 54

3.2 RESEARCH DESIGN ............................................................................................ 54

3.3 DATA COLLECTION METHOD ............................................................................ 56

3.4 QUESTIONNAIRE DESIGN ................................................................................... 57

3.4.1 Variables and Measures .......................................................................... 57

3.4.2 Pilot Study ............................................................................................... 58

3.5 POPULATION AND SAMPLING............................................................................. 59

3.6

CREDIBILITY OF THE RESEARCH ........................................................................ 59

3.6.1 Reliability ................................................................................................ 59


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3.6.1 Validity ....................................................................................................60

3.7 STATISTICAL TECHNIQUES ................................................................................ 61

3.8 SUMMARY ......................................................................................................... 61

SECTION 4 - FINDINGS ............................................................................................ 62

4.0 INTRODUCTION .................................................................................................. 63

4.1 DESCRIPTIVE ANALYSIS .................................................................................... 63

4.1.1 Sample Characteristics ........................................................................... 63

4.1.2 Data Screening ........................................................................................65

4.1.3 Normality and Collinearity Testing ........................................................ 65

4.2 RELIABILITY AND VALIDITY ANALYSIS ............................................................. 68

4.2.1 Reliability Analysis ..................................................................................68

4.2.2 Validity Analysis ......................................................................................69

4.3 EXTENT OF INNOVATION IMPLEMENTATION SUCCESS IN THENETHERLANDS ... 72

4.3.1 Difference in Extent of Success by Knowledge Management Profile ..... 72

4.3.2 Difference in Extent of Success by Cross-Functional Team Profile ....... 76

4.3.3 Extent of Success ..................................................................................... 78

4.4 HYPOTHESES TESTING ....................................................................................... 80

4.4.1 Knowledge Management Resources ....................................................... 80

4.4.2 Team Characteristics .............................................................................. 81

4.4.3 Moderation and Interaction Effects ........................................................81

4.5 RE-STATEMENT OF HYPOTHESES....................................................................... 83

4.6 SUMMARY OF THE FINDINGS.............................................................................. 85

SECTION 5 - DISCUSSION AND CONCLUSION .................................................. 86

5.0 INTRODUCTION .................................................................................................. 87

5.1 RECAPITULATION OF THE RESEARCH FINDINGS................................................. 87

5.2 DISCUSSION AND MANAGERIAL IMPLICATIONS ................................................. 88

5.2.1 Summary of Implications......................................................................... 92

5.3 LIMITATIONS AND SUGGESTIONS FORFURTHERRESEARCH .............................. 94

5.4 CONCLUSION ..................................................................................................... 96

APPENDIX B:QUESTIONNAIRE......................................................................................... 98

BIBLIOGRAPHY ....................................................................................................... 100


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LIST OF TABLES

TABLE 11:INNOVATION FAILURE RATES......................................................................... 2

TABLE 12:DEFINITIONS OF INNOVATION......................................................................... 4

TABLE 13:HISTORICAL DEVELOPMENT OF THE DUTCH INDUSTRY.................................. 7

TABLE 14:TYPES OF INNOVATIONS IN THENETHERLANDS.............................................. 8

TABLE 15:CHARACTERISTICS OF INNOVATION IN THENETHERLANDS ............................ 8

TABLE 16:GLOBAL INNOVATION INDEX &WORLD COMPETITIVENESS .......................... 9

TABLE 17:SUMMARY OF REASONS FORFURTHERRESEARCH ....................................... 13

TABLE 18:SIGNIFICANCE OF THE THESIS PROJECT ........................................................ 15

TABLE 19:OPERATIONAL DEFINITIONS AND RELATED LITERATURE ............................. 16

TABLE 21:PHASE MODELS OF INNOVATION .................................................................. 22

TABLE 22:THE FOURPERSPECTIVES ON IMPLEMENTATION .......................................... 25

TABLE 23:CONCEPTS OF IMPLEMENTATION .................................................................. 26

TABLE 24:DIMENSIONS OF A FIRMS TECHNICAL KMRESOURCES............................... 35

TABLE 25:SUMMARY OF HYPOTHESES.......................................................................... 52

TABLE 31:RESEARCH STAGES....................................................................................... 55

TABLE 32:MAXIMISING OF RELIABILITY....................................................................... 59

TABLE 33:STATISTICAL TECHNIQUES ........................................................................... 61

TABLE 41:YEARS OF EXPERIENCE ................................................................................ 63

TABLE 42:NUMBER OF EMPLOYEES .............................................................................. 64

TABLE 43:FUNCTIONAL AREAS..................................................................................... 64

TABLE 44:SBUCOMPLEXITY ....................................................................................... 65

TABLE 45:COLLINEARITY STATISTICS .......................................................................... 66

TABLE 46:CORRELATION MATRIX ................................................................................ 67

TABLE 47:KMO AND BARTLETTS TEST ...................................................................... 68

TABLE 48:RELIABILITY AND VALIDITY ANALYSIS ....................................................... 70

TABLE 49:PHASES OF ANALYSIS ................................................................................... 72

TABLE 410:R2VALUES KMCONSTRUCTS ................................................................... 73

TABLE 411:B-VALUES OF KMCONSTRUCTS ................................................................ 75

TABLE 412:COMPOSITION OF KMTEAMS..................................................................... 75

TABLE 413:B-VALUES FORCOMPOSED KMTEAMS ..................................................... 76

TABLE 414:R2VALUES TEAM CHARACTERISTICS CONSTRUCTS .................................. 76

TABLE 415:B-VALUES OF CROSS-FUNCTION TEAM CONSTRUCTS................................ 77TABLE 416:COMPOSITION OF CFTS............................................................................. 78


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TABLE 417:B-VALUES FORCOMPOSED TCTEAMS ...................................................... 78

TABLE 418:COMPOSITION OF COMBINED TEAMS.......................................................... 78

TABLE 419:B-VALUES FORCOMPOSED INTEGRATED TEAMS ....................................... 80

TABLE 420:STANDARDISED REGRESSION COEFFICIENTS .............................................. 82

TABLE 421:RE-STATEMENT OF HYPOTHESES ............................................................... 83

TABLE 422:SUMMARY OF THE FINDINGS ...................................................................... 85

TABLE 51:RECAPITULATION OF RESEARCH FINDINGS .................................................. 87

TABLE 52:SUMMARY OF IMPLICATIONS ........................................................................ 92

LIST OF FIGURES

FIGURE 1-1:REPORT OVERVIEW ....................................................................................... 1

FIGURE 1-2:CLARIFICATION OF INNOVATION PHASES..................................................... 11

FIGURE 2-1:REPORT OVERVIEW ..................................................................................... 18

FIGURE 2-2:DUAL INNOVATION PROCESS ....................................................................... 20

FIGURE 2-3:UNDERLYING FRAMEWORK OF IMPLEMENTATION DETERMINANTS ............. 32

FIGURE 2-5:THEORETICAL FRAMEWORK........................................................................ 46




LIST OF ABBREVIATIONS

CFT Cross Functional Team

EU-27 The 27 member countries of the European Union

KM Knowledge Management

MRP Manufacturing Resource Planning

RBV Resource-Based View

R&D Research and Development

SBU Strategic Business Unit

TC Team Characteristics


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SECTION 1 - INTRODUCTION

The present report encompasses five consecutive sections, as visually illustrated in

figure 1-1. The first section functions as the springboard for the reader; it introduces

innovation in general and explains its importance to business performance by means of

introducing new products. Subsequently, this section classifies different types of

innovation and justifies the focus on product innovation. Furthermore, this section

provides a holistic view on the notion of research and development (henceforth R&D)

expenditures and innovativeness in the Netherlands by delineating their characteristics

from a historical and international perspective. Penultimately, this section elaborates on

the research-related issues such as the need for further research, and the scope- andsignificance of this research. Ultimately, this section provides a structure for the

organisation of this study.

Figure 1-1: Report Overview

SECTION 5 - DISCUSSION AND CONCLUSION

SECTION 4 - FINDINGS

SECTION 3 - METHODOLOGY

SECTION 2 - LITERATURE REVIEW

SECTION 1 - INTRODUCTION


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1.0 INTRODUCTIONIn bygone days, and perhaps in present days in particular, innovation emerged/emerges

as the prevailing impetus for economical development throughout the world. Hence,

back in 1985, economist Michael Porter from the Harvard Business School famously

stated that:

Innovation is the central issue in economic prosperity.

Therefore, the following section denotes the importance of innovation to business

performance, and its accumulating challenges.

1.1 IMPORTANCE OF INNOVATION TO BUSINESS PERFORMANCEInnovation is the nexus of many firms. More specifically, the ability to introduce

superior products is a necessity because product development and innovation are a

prerequisite of competitiveness in many firms, nowadays. Additionally, Afuah (2003)

notes that innovation will be to the 2000s what total quality management was to the

1970s, what time-based management was to the 1980s, and what efficiency was to the

1990s that is, a prerequisite for gaining and maintaining a competitive advantage.

Nevertheless, innovation failure rates are still uncomfortably high. In 2000, Cozijnsen et

al. scrutinised 50 innovations within Dutch firms. The results indicate that only 23 per

cent of the projects were successful and another 23 per cent achieved partial success.

The following table provides an overview of the innovation failure rates.

Table 11: Innovation Failure Rates

Year Author Failure Rate (%)

1971 Pedraglio 98

1988 Cooper 50

1997 Griffin 412000 Sivadas and Dwyer 50

2000 Cozijnsen et al. 54

2007 Rodriguez, Perez and Gutierrez 49

In 2007, Cooper noted that sales from innovations were actually in decline from: 33 per

cent in 1994 to 28 per cent in 2004 with a relatively stable spending in R&D, at 2,8 per

cent. Thus, indicating a 14 per cent decline in sales from innovations in less than a

decade. Subsequently, researchers have scrutinised factors that may influence

innovation success. The aforementioned factors include resource allocation, new idea


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generation and screening, knowledge dissemination, R&D spending, and strategic

partnering (Coughland & Wood, 1991; Rochford, 1991; Barczak & Wilemon, 1992;

Vessey, 1992; Slowenski et al., 1993; Gordon et al., 1995 and Hausman et al., 2002).

The creation of cross-functional teams (henceforth: CFTs) around key value-adding

processes is considered to be an effective vehicle for utilising the ability to innovate

within a firm (Wheelwright & Clark, 1993; Leenders et al., 2003). Innovations are

usually developed in a project-team setting. More specifically, 84 per cent of firms that

engage in innovations use CFTs (Griffin, 1997). Additionally, Roberts (1995)

scrutinised 244 firms (responsible for 80 per cent of R&D spending in Western Europe,

Japan and North America), and noted that CFTs had the greatest impact on time-to-

market for innovations. The benefit of CFTs in the innovation process is their

knowledge disseminating ability; the members of CFTs actually serve as liaisons

between the CFT and their functional field of expertise. More specifically, CFTs bring

together employees from different disciplines and functions that have pertinent

expertise about the proposed innovation (Galbraith, 1977; Kanter, 1988).

Typically, CFTs have a high absorptive capacity because CFT members have

different background and expertise. Thus, a CFT can use widespread information

sources and new knowledge (Cohen and Levinthal, 1991; Dahlin & Weingart, 1996).

Additionally, Woodman et al. (1993) noted that CFTs could also facilitate creativity.

Therefore, it is deemed appropriate to further investigate the effect of knowledge

management (henceforth: KM) and team characteristics (henceforth: TC) on innovation.

1.2 DEFINITIONS OF INNOVATIONIn the knowledge that innovation is the essence of economic (and thus business)

welfare, as explained in the previous section, it is essential to comprehend the

significance of the term innovation. For that reason, the remainder of this section will

address different definitions of innovations. The existing literature on innovation

management reveals a wide spectrum of definitions of innovation; varying from

relatively broad to relatively narrow definitions.

A relatively broad definition of innovation is proposed by Nystrom (1990), who

defines innovation as the creation of the future. More specifically, innovation is defined

as the process of implementing new ideas to be competitive, to grow, and thus to

continue existence. This definition shows much resemblance with the definitionproposed by Schumpeter (1950) one of the earliest and most significant contributors


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to the academia of innovation management (Richards, 1985). In addition to the

definition of innovation proposed by Nystrom (1990), Wood (1988) defines innovation

as everything that leads to sustained growth and future profitability.

A relatively narrow definition of innovation is proposed by Zaltman et al. (1973),

who define innovation as an idea, practice, or material artefact perceived to be new by

the relevant adoption unit. Subsequently, other researchers (such as Daft, 1982;

Damanpour and Evan, 1984; and Anon, 1991) have adopted a similar definition.

However, Freeman (1982) and Richards (1985) note that innovation is often incorrectly

interchanged with invention. More specifically, Freeman (1982) notes that an invention

is an idea, a sketch or model for a new or improved device, product, process or system

whereas an innovation in the economic sense is accomplished only with the first

commercial transaction involving the new product, process, system or device. Similarly,

the OECD (1981) defines innovation as:

All those scientific, technical, commercial and financial steps necessary for the

successful development and marketing of new or improved manufactured

products, the commercial use of new or improved processes or equipment or the

introduction of a new approach to a social service.

The following table (table 1-2) provides an overview of different definitions of

innovation.

Table 12: Definitions of Innovation

Year Author Definition

1967 Shepard Innovation is when an organisation learns to do something it

did not know how to do before.1973 Zaltman,

Duncan andHolbek

An innovation is an idea, practice, or material artefact

perceived to be new by the relevant adoption unit.

1988 Wood Everything that leads to sustained growth and futureprofitability.

1990 Nystrom The creation of the future.

1996 Nutria and

Gulati

Any policy, structure, method or process, product or market

opportunity that the manager of the innovating unit perceives

to be new.

2001 Klein, Conn

and Sorra

A technology or practice that an organisation is using for the

first time, regardless of whether other firms have previously

used the technology or practice.


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1.3 CLASSIFYING INNOVATIONNotwithstanding the definitions of innovation identified in section 1.2, Cooper (1998)

classified innovation into three dimensions, namely: radical versus incremental

innovations, technological versus administrative innovations, and product versus

process innovations.

1.3.1 RADICAL VERSUS INCREMENTAL INNOVATIONThe main criteria distinguishing between radical from incremental innovation is the

degree of strategic and structural change necessary for firms to accommodate the

innovation. According to Tushman and Anderson (1986), incremental changes enhance

and extend the underlying technology and thus reinforce the established technical order.

Radical innovations, on the other hand, represent advances so significant that

revolutionary alteration of the organisation and its support networks must occur to

accommodate and implement the change (Zaltman et al., 1993; Cooper, 1998).

Hence, radical innovations cause firms to shift away from their core

competences. However, only a few firms are capable of accommodating such drastic

strategic and structural change. Thus, by definition, radical innovations imply a clear

and risky deviation from a firm's existing daily operations.

1.3.2 TECHNOLOGICAL VERSUS ADMINISTRATIVE INNOVATIONBuilding on the aforementioned strategic and structural change, the proximity of the

change in relation to a firms core competences forms the basis for the main criteria for

distinguishing between technological and administrative innovations. Technological

innovation involves the adoption of an idea that directly influences the basic output

processes, while administrative innovations includes changes that affect the policies,

allocation of resources and other factors associated with the social structure of the

organisation (Cooper, 1998).

1.3.3 PRODUCT VERSUS PROCESS INNOVATIONThe notion of product innovation involves changes in the product or service offered by

a firm (and consumed by the end-user). For example, the introduction of cameras with

memory cards instead of the more nostalgic cameras that use rolls of film. As such,

process innovation involves changes in the product and service-creating process to

decrease the supply cost (Cooper, 1998). Thus, process innovation results in a better-


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performing product or service, yet it is one that is manufactured at a reduced cost. A

classic example of a process innovation is the replacement of manually blown bulbs to

semi-automatically produced bulbs: cutting production time (and thus cost) from nearly

an hour to 20 seconds per bulb.

This study exclusively focuses on product innovation, because new product

development (henceforth: NPD) projects are still prone to failure (Cormican &

OSullivan, 2004), despite the development of sophisticated tools and techniques in this

area. This notion is further substantiated by Rodriguez et al. (2007) in the European

Journal of Marketing, as they found a 49% failure rate among 345 NPD projects.

1.4 R&D AND INNOVATION IN THE NETHERLANDSThe foregoing sections have exposed the very nucleus of the concept of innovation and

have further delimited the focus of this study. However, innovation is not an isolated

concept and it does not occur in an impenetrable vacuum. Therefore, this section

provides historical and international perspectives with regards the notion of innovation

(in the Netherlands).

1.4.1 HISTORICAL DEVELOPMENTThe structure of the modern Dutch economy can be traced back to the early 19

th

century. As a result of the French occupation during this time (1795-1813), the Dutch

economy was strongly depleted. In order to tackle extreme poverty, Dutch

governmental attention (and thus R&D spending) focused on the agricultural industry.

In 1832, the Dutch government solidified its policy by establishing the Institute of

Agriculture, which in 1876 was assimilated into the University of Wageningen.

Additionally, the Royal Academy for the education of civilian engineers, for serving

both nation and industry, and of apprentices for trade, was founded in 1842 toreinforce technical research and education. As a result of cooperating with such

institutes, the Dutch agricultural industry was able to develop technologies that

facilitated export-oriented production. In subsequent years, the Dutch industrial base

diversified and transformed itself from being agriculture-based to manufacturing-based.

Table 1-3 provides an overview of the historical development of the Dutch industry

base; accordingly, scientific attention shifted away from the agriculture industry

towards the manufacturing industry.


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Table 13: Historical Development of the Dutch Industry

Century Characteristics

18t Agricultural machinery, weapon manufacturing, glass- and gemstone-

polishing workshops, weaving mills, carts and carriages construction andshipbuilding.

19t The steam era, the rise of the factory (and child labour).20t The development of new industries, new manufacturing processes,

gasoline, diesel and electric motors, automation and computers.

In an effort to materialise the R&D output, the aforementioned university institutions

served as technological incubator programmes. As competition in todays global

economy increasingly intensifies, the ability to provide leverage from scientific and

technological innovations has become an essential prerequisite for strategic national

development.

Therefore, (among other initiatives) the Dutch government established the

Innovation Platform, chaired by the former Prime Minister Jan Peter Balkenende. The

Innovation Platforms offers entrepreneurs various initiatives, including interest-free

loans to finance their technological requirements. To accentuate the importance of

innovations, the Ministry of Economic Affairs, Agriculture and Innovation was

established in 2010 by merging the Ministries of Economic Affairs with Agriculture,

Nature and Food Quality.

1.4.2 CHARACTERISTICS OF R&D AND INNOVATION IN THE NETHERLANDSTo draw the aforementioned historical overview to a close, this section defines the

current (i.e. based on the most recent publications) perspectives of innovation in the

Netherlands.

As table 1-4 indicates, small firms commercialise more innovations that are new

to the firm or new to the market relative to medium- and large-sized firms. Additionally,

it can be concluded that firms predominantly focus on innovations regarding the

aesthetics of a product or regarding the new media or technology for the promotion of a

product. Interestingly, it seems that large firms are more likely to neglect to innovate in

terms of their pricing strategies.


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Table 14: Types of Innovations in the Netherlands

Type of Innovation Firm Size

Small Medium Large

New to Firm 1131 666 231New to Market 1103 701 205

Significant Changes to the Aesthetic Design 395 237 104

New Media or Technology for Product Promotion 419 229 97

New Method for Product Placement 257 186 76

Pricing of Goods of Services 247 176 51

(Source: Eurostat 2008)

In addition, from table 1-5 it can be postulated that predominantly it is young firms that

innovate; firms that are less than 10 years old produce 69 per cent of the innovations. In

contrast, firms established between 1980 and 1989 produce only 6 per cent of theinnovations. Interestingly, despite the fact that 31 per cent of the firms aspire to

innovate radically, only 17 per cent actually innovate radically. Additionally, the vast

majority of innovations in the Netherlands (i.e. 79 per cent) are product or service-

related.

Table 15: Characteristics of Innovation in the Netherlands

Innovation Characteristic Description

Innovation by Industry Sector The number of innovating firms in themanufacturing industry is evenly distributed,

although the food, beverages and tobacco industryis by far the largest innovating sub-industry.

Innovation by Company Sizeand Age

Size: 34 per cent (1-49 employees), 27 per cent(50-249 employees) and 39 per cent (more than

250 employees).Age: 65 per cent between 2000-2009, 19 per cent

between 1990-1999 and 6 per cent between 1980-

1989.

Types of Innovation 79 per cent incremental innovations (while 66 per

cent aspired) and 17 per cent radical innovations

(while 31 per cent aspired. Additionally, 79 per

cent are product- or service-related innovations.

(Source: Innovation Monitor, 2009/2010; View on Innovation, 2009 and 2010;

Eurostat, 2008)


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1.4.3 INTERNATIONAL COMPARISON OF INNOVATIVENES AND R&DEXPENDITURES

Table 1-6 shows that the Netherlands ranks eighth in the Global Innovation Index.

Respectively, the Netherlands is surpassed by Iceland, Sweden, Hong Kong,

Switzerland, Denmark, Finland and Singapore in terms of global innovativeness. In

2009, the R&D expenditure of Dutch firms was .88 per cent of the GDP with an EU-27

average of 1.25 per cent. This difference in R&D expenditure between the Netherlands

and the EU-27 average has increased hugely in recent years. Interestingly, the

Netherlands outperforms countries with a much higher R&D expenditure per capita

such as the Japan, Luxembourg and the United States. Additionally, despite the fact that

the Netherlands demonstrates a relatively poor performance (25th place) in terms of the

innovation environment in firms (input), the knowledge creation (output) of Dutch firmsseems to be relatively productive (6th place). Thus, indicating that the Netherlands

utilises available resources productively.

Table 16: Global Innovation Index & World Competitiveness

Rank Country Innovation

Environment

in Firm

Knowledge

Creation

GDP per

Capita

R&D per

Capita

1 Iceland 22 19 36.798,71 603,502 Sweden 1 2 32.242,74 822,19

3 Hong Kong 52 30 34.587,12 996,11

4 Switzerland 4 1 37.789,00 831,36

5 Denmark 9 5 32.425,76 655,00

6 Finland 6 4 28.694,62 812,06

7 Singapore 7 15 27.990,66 951,68

8 The Netherlands 25 6 27.070,44 238,229 New Zealand 48 20 14.794,22 359,50

10 Norway 34 13 42.638,59 405,0711 United States 8 9 38.205,94 767,94

12 Canada 19 14 26.143,40 559,4713 Japan 3 3 40.480,84 1.092,98

14 United Kingdom 20 12 28.489,37 330,48

15 Luxembourg 14 22 54.797,63 679,49

(Source: Global Innovation Index, 2010; IMD World Competitiveness Yearbook, 2011)

1.5 RESEARCH PROBLEMDespite the notion of innovation being the nexus for achieving and maintaining a

competitive advantage, firms are increasingly unable to materialise innovation (Carr,

1996; Cozijnsen et al., 2000; Jensen & Harmsen, 2001; Tidd et al., 2001; Repenning,


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2002; also refer to table 1-2). Subsequently, a vast amount of researchers attribute the

success of innovation to the proper execution of the implementation phase (Reger et al.,

1994; Klein and Sorra, 1996; Cozijnsen et al., 2000; Yahya and Ho, 2000; Sundbo,

2001; Repenning, 2002; Yusuf et al., 2004; Klein & Knight, 2005). In this study, the

implementation phase is defined as the phase in which the use of the innovation is

becoming routinised (i.e. a daily routine), because the innovation is commercialised (i.e.

mass produced) or deployed throughout the entire firm or strategic business unit

(henceforth: SBU) as clarified in figure 1-2.


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1

Figure1-2:ClarificationofInnovationPha

ses

Example1

Sodadrink

POST-

IMPLEMENTATI

ON

IMPLEMENTATIO

N

DEVELOPMENT

INITIALISATION

Oneevaluatesthebenefits

fromtheimplemented

innovation

Onestartsusingand

routinisingtheinnovation

Onedecidestostartth

e

processofdeveloping

the

innovation

Oneidentifiesand

considerstheinnovation

Example2

IT-system

Example3

Machinery

Thegeneration,

evaluationandselection

ofideasforasodadrink

Thespecificationsand

expectationsofthe

machineryareset

Therequirementsand

internalgoalsareset

ITandapilotgroup(e

.g.

marketing)cooperateto

developtheITsystem

Theideafully

conceptualisedand

prototypesaremade

Theconstructionofth

e

machine,including

severaltestruns

Thesodadrinkisnow

mass-produced

TheITsystemis

deployedthroughout

the

entirethefirm

Themachineisused

for

fullproductionruns,

as

intendedintheoutset

Theevaluationofsa

les

targetsandcustomer

satisfaction

Theevaluationof

customersatisfactio

n

andinternalgoals

Theevaluationof

efficiencyandproduct

qualitygoals


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In essence, academics and professionals are still in the dark about innovation

implementation. In 1996, Klein and Sorra symbolically described the implementation of

innovation as:

The neglected member of the innovation family.

Additionally, Cozijnsen et al. (2000) noted that, despite being the most far-reaching

phase for firms to create a sustainable competitive advantage, the implementation phase

of innovation is by far the least scrutinised phase. Furthermore, Boer and During (2001)

noted that firms predominantly tend to focus on the development phase of innovation

and thereby neglect the implementation aspects. Along a similar vein, Dong (2001) and

Sundbo (2001) noted that, although many firms fail in implementing innovations, the

implementation phase is underexposed and sometimes even forgotten. Similarly, Klein

and Knight (2005) noted that research on the implementation of innovation is a

neglected area in the academia of innovation management.

Though the existing literature, in the academia of innovation management,

suggests a variety of success factors including knowledge dissemination and the

composition of teams it lacks a definition of factors that positively contribute to the

implementation of innovations (Cozijnsen et al., 2000).

In reference to the composition of teams, a vast amount of researchers have noted

that the implementation of CFTs is important (or even crucial) for new product

development (Cooper & Kleinschmidt, 1995; Jassawalla & Sashittal, 2000; Sethi 2000;

Keller, 2001; Sethi et al., 2001; Valle & Avella, 2003; Boyle, Uma & Vinod, 2006).

However, the question of whether CFTs also improve the firms ability to implement

innovations remains unrequited. More specifically, in the knowledge that eight out of

ten firms use a team-based approach (Cohen & Bailey, 1997; Kratzer et al., 2004), this

research aims to scrutinise the effect of KM and team characteristics on the

implementation of innovation.

In addition to the notion of CFTs being the heart of new product development,

employees are also at the heart of creating firm knowledge (Chase, 1997; Holsapple &

Joshi, 2001; Liebowitz, 2001). Furthermore, the knowledge dissemination ability of

CFTs (as mentioned earlier) is predominantly dependent on other interpersonal

relationships (Mata et al., 1995). Similarly, Choi and Lee (2002) note that firm

knowledge is often highly localised and firm specific. Thus, from a resource-basedpoint of view, KM might yield certain capabilities (resources), which are difficult to


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imitate. The notion of KM is known for creating sustainable competitive advantages for

firms (Lado and Wilson, 1994; Grant, 1996 and Johannessen and Olsen, 2003) and only

occasionally have studies scrutinised the resource-based view of KM. Additionally,

none of the studies have examined the effect of KM on innovation implementation.

To summarise the aforementioned, the Thesis Project embraces five reasons for

further research as demonstrated in table 1-7; these areas encompass the views from

academics and professionals to ensure the construction of a robust and future-oriented

research.

Table 17: Summary of Reasons for Further Research

# Explanation of Reason

1 Despite the notion of NPD implementation being the most far-reaching phase forfirms, the NPD implementation phase has received little attention. In addition to

the underexposure of the NPD implementation phase, researchers have indicated

that most NPD projects are prone to fail in the NPD implementation phase. This

notion is confirmed by a plethora of studies on innovation failure rates (Pedraglio,

1971; Cooper, 1988; Damanpour 1991; Griffin, 1997; Sivadas and Dwyer, 2000;

Rodrigues et al., 2007). Subsequently, Klein and Sorra (1996), Cozijnsen et al.(2000), Dong (2001), Sundbo (2001) and Klein and Knight (2005) suggest that

improved knowledge of the implementation phase might also improve the successrate of innovations;

2 Though a vast amount of researchers noted that CFTs are important for NPD

performance (Cooper & Kleinschmidt, 1995; Jassawalla & Sashittal, 2000; Sethi

2000; Keller, 2001; Sethi et al., 2001; Valle & Avella, 2003; Boyle, Uma & Vinod,

2006), the question whether CFTs also improve the firms ability to implement

innovation or not remains unrequited;

3 Though the notion of KM is known for creating sustainable competitive

advantages for firms (Lado and Wilson, 1994; Grant, 1996 and Johannessen and

Olsen, 2003), only occasionally have studies scrutinised the resource-based view

of KM;

4 The absence of studies scrutinising the moderating effect of: first, the degree of

virtuality in teams; second, time urgency; third, reciprocity; and, fourth, self-

consumption on the relationship between KM, CFTs and NPD implementation.The aforementioned moderating variables are strongly interlinked and arefrequently attributed to NPD performance (Landy et al., 1991; Chudoba et al.,

2004; Eggenhofer et al., 2008);5 Notwithstanding the serious attention of the Dutch government towards

innovation, the Global Innovation Index (2008 through 2010) shows little to no

improvements. Additionally, similar studies in the Netherlands are very scarce,

especially similar studies focused on manufacturing firms.


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1.6 RESEARCH OBJECTIVESThis research aims to achieve the following three research objectives:

1. To further examine how KM (structural, cultural, human and technical KMresources) affects innovation implementation;

2. To examine how CFTs (functional diversity, superordinate identity and socialcohesion) affect innovation implementation effectiveness;

3. To analyse the moderating effect of: first, the degree of virtuality in teams;second, time urgency; third, reciprocity; and, fourth, self-consumption on the

relationship between KM, CFTs and innovation implementation.

1.7 RESEARCH QUESTIONSIn achieving the above-mentioned objectives, this research addresses the following

questions:

1. To what extent do KM resources (i.e. structural, cultural, human and technical)have an influence a firms implementation effectiveness?

2. To what extent do team characteristics (i.e. functional diversity, superordinateidentity and social cohesion) influence a firms implementation effectiveness?

3. To what extent is a firms innovation implementation performance moderated by:first, the degree of virtuality in CFTs; second, time urgency; third, reciprocity;

and, fourth self-consumption?

1.8 SCOPE OF THE THESIS PROJECTThe scope of this study is limited to the implementation phase (see figure 1-2) of the

NPD process. Furthermore, its focus is to further examine the relationship between KM

and CFTs on innovation implementation from a resource-based point of view. In the

present study, KM consists of structural, cultural, human and technical KM resources.In turn, CFTs consist of functional diversity, superordinate identity and social

cohesion. In terms of moderating variables, this research is limited to: first, the degree

of virtuality in CFTs; second, time urgency; third, reciprocity; and, fourth self-

consumption. The industrial- and geographic scope is limited to product manufacturing

firms in the Netherlands.


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1.9 SIGNIFICANCE OF THE THESIS PROJECTThe contribution of this thesis is twofold as it contributes towards theoretical and

managerial issues. In general, the present study is expected to contribute towards the

academia of KM, organisational behaviour and innovation management. In terms of

theoretical significance, this study is expected to contribute to existing literature by

addressing the following five issues (see table 1-8):

Table 18: Significance of the Thesis Project

# Explanation

1 The scarcity of studies on the NPD implementation phase, despite the notion of

being the most critical phase of the NPD process;

2 The absence of studies answering the question whether or not CFTs improve the

firms ability to implement innovation;3 The scarcity of studies scrutinising the resource-based view of KM, despite thenotion that KM is known for creating sustainable competitive advantages for

firms;4 The lack of studies scrutinising the moderating effect of (1) the degree of virtuality

in teams, (2) time-urgency, (3) reciprocity and (4) self-consumption on the

relationship between KM, CFTs and NPD implementation;

5 The scarcity of similar studies in the Netherlands, especially similar studies

focused on manufacturing firms.

In terms of practical significance, this study party focuses on interest from several

reputable manufacturing firms in the Netherlands. Therefore, this thesis is expected to

provide manufacturing firms in the Netherlands with a better understanding of the

prerequisites for successful NPD implementation. Additionally, the appropriate

selection of KM resources and team members may significantly increase NPD

implementation performance for these firms. In general, this will benefit firm

performance and effectiveness (Gray, 2002; Komulainen et.al, 2007; Lin and Chen,

2007).

Furthermore, it is hoped that this study will provide an impetus for further

research on KM, organisational behaviour and innovation management and its cross-

fertilisation.

1.10 ORGANISATION OF THE THESIS PROJECTThe thesis consists of five consecutive sections. Additionally, each section commences

with a brief introduction to delineate its context and to outline the constructs and


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content of the sub-sections within each section. The remainder of the present study is

organised as follows:

Section 1 Introduction; functions as the springboard for the reader; it

introduces innovation in general and explains its importance to business performance by

means of introducing new products.

Section 2 Literature Review; delineates the theoretical context of this study,

which ultimately results in the statement of the research hypothesis.

Section 3 Methodology; serves as a passageway to the more practical aspects

of the report, it encompasses the methodological underpinning of this study.

Section 4 Findings; reveals the outcomes of the primary research. More

specifically, this section: firstly, addresses the descriptive statistics of this research;

secondly, discusses the goodness of the measures; and, thirdly, elaborates on the extent

of implementation effectiveness among Dutch manufacturing firms.

Section 5 Discussion and Conclusion; provides (as the name implies) a

thorough discussion of the research findings. Subsequently, this section presents

theoretical and managerial implications of the present study, and denotes some

limitations and suggestions for further research.

1.11 GLOSSARY OF TERMSThe essential terminology, which will be regularly used throughout this study, is briefly

defined in the following table (table 1-9).

Table 19: Operational Definitions and Related Literature

Term Definition Relevant Literature

Innovation Innovation refers to an internally

generated or purchased device, system,

policy, programme, process, product orservice that is new to the adopting

organisation.

Damanpour &

Evan, 1984;

Zaltman, Duncan& Holbek, 1973

Implementation Implementation refers to the extent to

which innovation is operationalised and

implemented in the organisationcorrectly.

Cozijnsen et al.,

2000; Vrakking,

1995; Zaltman etal., 1973

Implementation

EffectivenessImplementation effectiveness is thedegree to which the defined goals of

adopting the innovation have beenachieved.

Cozijnsen et al.,2000


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Term Definition Relevant Literature

Project Project is a temporary endeavour

undertaken to create a unique product or

service.

PMBOK Guide,

2004

Project Team Project team refers to a group of

individuals responsible for completingthe project work.

Jiang et al., 2002

Project Team

Characteristics

Project team characteristics refer to the

quality that is typical of the group ofindividuals in the project team.

Collins Cobuild

English LanguageDictionary, 1987

Functional

Diversity

Functional diversity refers to the number

of functional areas represented on the

team whose members are fully involved

in the project.

Sethi, 2000

Cross-FunctionalCooperation

Cross-functional cooperation refers to the

interpersonal relations, teamwork and

communication among project teammembers from multiple functional areas

working together to accomplish the

project goals.

Pinto & Pinto,

1990

Project Team

Skills

Project team skills refers to the skill level

of the members assigned to the project.

Barry,

Mukhopadhyay &

Slaughter, 2002Types of

Innovation

Types of innovation refers to

administrative versus technical, productversus process and radical versus

incremental.

Cooper, 1998;

Damanpour, 1991

Radical

Innovation

Radical innovation is innovation that

results in revolutionary digression from

product concepts and technological

practices.

Sciulli, 1998

Incremental

Innovation

Incremental innovation is innovation that

results in a departure, to a lesser degree,

from existing practices.

Dewar & Dutton,

1986

Administrative

Innovation

Administrative innovation refers to

changes that affect the policies, allocation

of resources and other social structure

related factors.

Daft, 1978

Technical

InnovationTechnical innovation refers to theadoption of an idea that directly

influences the basic output processes.

Daft, 1978

Product

Innovation

Product innovation refers to changes in

the end-product or service offered by the

organisation.

Utterback, 1994

Process

Innovation

Process innovation refers to changes in

the way firms produce end-products or

services.

Utterback, 1994


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SECTION 2 - LITERATURE REVIEW

The first section revealed the reason for further investigation and introduced the context

of this present study.

This second section encompasses a thorough literature review, which forms the

theoretical foundation of the present study. The literature review commences with an

elaboration of the process theory view of innovation. Subsequently, this section

provides the conceptualisation, and success factors, of innovation implementation (the

dependent variable of this study). Furthermore, this section delineates the notion of a

firms KM capabilities from a resource-based point of view. Penultimately, this section

elaborates the independent and moderating variables of the present study, namely: KMand team characteristics (independent variables); and, team virtuality, time-urgency,

reciprocity and self-consumption (moderating variables). Ultimately, this section

provides a theoretical framework contrasting the aforementioned variables.

Figure 2-1: Report Overview

SECTION 5: DISCUSSION AND CONCLUSION

SECTION 4: FINDINGS

SECTION 3: METHODOLOGY

SECTION 2: LITERATURE REVIEW

SECTION 1: INTRODUCTION


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2.0 INTRODUCTIONIn succession of the introduction to innovation in the previous chapter, this chapter

delineates the theoretical backbone of this study.

2.1 PROCESS THEORY APPROACHThe process theory approach encompasses the initialisation, development,

implementation and evaluation of innovations in organisations. In this approach, two

different perspectives have emerged, namely: the phase models and the process models

of innovation. Hence, the remainder of this chapter discusses the fundamentals the

background and recent developments of phase-models of innovations leading towards

the development of process-models of innovation as described in section 2.1.2.

2.1.1 PHASE MODELS OF INNOVATIONIn essence, the NPD process can theoretically be reduced to a sequence of demarcated

phases that are expected to unfold. Additionally, phase models of innovation are

distinguished on the basis of whether the innovation is internally (source-based) or

externally developed (user-based), in relation to the adopting organisation

(Vaidyanathan, 2004).

The source-based phase models of innovation focus on internally emerged,

developed and implemented innovations. Subsequently, an innovation is defined as a

new product, service, or technology that a firm develops and seeks to either disseminate

internally or externally (the marketplace). Thus, source-based phase models of

innovation view the innovation process from the developers point of view.

In turn, the user-based phase models of innovation focus on externally developed

innovations. Subsequently, an innovation is defined as any idea, technology, or practice

being used for the first time by members of an organisation, irrespective of whetherother organisations has used them previously (Nord & Tucker, 1987). Typically, user-

based phase models of innovation view the innovation process from the initial

awareness phase until the implementation or post-implementation phase (Zaltman,

Duncan & Holbek 1973; Beyer & Trice, 1978; Daft, 1978; Rogers, 1983; Tornatzky et

al., 1983; Nord & Tucker, 1987; Tornatzky & Fleisher, 1990).

More recently, the source- and user-based phase models of innovation have been

merged into one dual-process phase model (Tornatzky et al., 1983; Meyer & Goes,

1988; Cooper & Zmud, 1990), as illustrated in figure 2-2.


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Figure 2-2: Dual Innovation Process

(Adapted from National Science Foundation, 1983)

Basic Research

Applied Research

Marketing/Dissemination

Development

Manufacturing

Testing/Evaluation

Awareness

Adoption

Matching/Selection

Implementation

Routinisation

User Model

Source Model


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Thus, this unitary phase model connects the developer and adopter points of view.

Additionally, the dual-process model locates implementation in the innovation process

(in both internally developed and externally developed innovations) as beginning after

an innovation has actually been adopted, and continuing until the innovation is

assimilated into the firms operations. However, it may be questioned whether such

linear and sequential phase models adequately represent the innovation process (Cheng

& Van de Ven, 1996; King, 1992). More specifically, innovation (especially radical

innovations) unfolds in a recurrent, disruptive and thus non-linear manner rather than as

a sequence of phases (Anderson et al., 2004; Farr et al., 2003). Accordingly, Cheng &

Van de Ven (1996) note that within a single innovation project, the pattern of actions

and occurrences can frequently be chaotic, while at subsequent times they might allow a

periodic or orderly pattern. However, neither an inflexible modus operandi that

follows a static phase-by-phase model (thus, disregarding the uncertainty accompanied

with innovation), nor a course of action where structure does not emerge out of chaos is

likely to prevail. In other words, as important as the development of detailed

implementation plans for innovation may be (Frese et al., 2007), it is equally eminent to

remain flexible and responsive to unforeseen events by altering existing plans, or

making fundamental changes to the current way of working. Eventually, this debate

induced the development of a second generation of process models, as further discussed

in section 2.1.2.

Notwithstanding the distinction of internally- or externally-oriented phase models

of innovations, the existing literature on phase models of innovation reveals different

theories and perspectives, along with numerous of phases.

A relatively simplistic phase model was proposed by Sundbo (2001). According

to Sundbo (2001), the NPD process consists of three sequential phases, namely: the

initialisation phase, the development phase and the implementation phase. Respectively,

the product is conceptualised and support is sought from different stakeholders, the

product is physically developed (including test-runs) and subsequently, the product is

mass-produced and used by the relevant adoption unit. Thus, firms materialise

innovation at the implementation phase.

A relatively elaborate phase model was also proposed by Rogers (1983). In

contrast to the phase model proposed by Sundbo (2001), Rogers phase model (1983)

views the NPD process from an adoption point of view (instead of an internaldevelopment point of view). However, the existing literature on phase models of


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innovation uses the terms implementation and adoption interchangeably. According to

Rogers (1983), the NPD process is has the equivalent of five sequentially adoption

phases, divided into two distinct sections. The first section is the initiation section,

which consists of two phases. The first phase is the agenda-setting phase. In this phase,

one notices the innovation and recognises the functionalities. Secondly, one reaches the

matching phase. In this phase, one forms a favourable (or unfavourable) attitude

towards the innovation. Subsequently, one commences the second section:

implementation. In the third phase (the first of the implementation section), one

redefines or modifies the innovation to ensure a proper organisational fit. The fourth

phase is the clarification phase. This is the phase where innovation is materialised and

put into use by the relevant adoption unit. The fifth phase is the routinisation phase. In

this last phase, one evaluates the decision to adopt (or reject) the innovation based on

the perceived benefits.

By recapitulating the aforementioned theories on phase models of innovation, it

can be postulated that the NPD process (in general) consists of four phases, namely: the

pre-adoption phase, the adoption phase, the implementation phase and the post-

implementation phase. Respectively, it is important to: identity and consider the

adoption in the pre-adoptions phase; consciously decide to start the process of adoption

in the adoption phase; begin using the adopted innovation; and, finally it is important to

evaluate the process to realise the benefits from the implementation of the innovation in

the post-implementation phase. Additionally, the implementation phase consists of

training and other support programmes for the relevant adoption unit. The following

table provides an overview of phase models of innovation.

Table 21: Phase Models of Innovation

Year Author Pre-Adoption

Adoption Implementation Post-Implementation

1980 Ettlie Awareness

Evaluation

Trial

Adoption Implementation -

1980 Pelz and

Munson

Diagnosis Design Implementation Stabilisation

1983 Rogers Knowledge

Persuasion

Decision Implementation Confirmation

1988 Meyer and

Goes

Awareness

Evaluation

Choice

Adoption

Implementation -

1990 Cooper

and Zmud

Initiation Adoption Adaptation

Acceptance

Infusion


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Year Author Pre-

Adoption

Adoption Implementation Post-

Implementation

Routinisation

1996 Klein and

Sorra

Awareness Selection

Adoption

Implementation

Routinisation

Evaluation

2000 Cozijnsen etal.

Adoption - Implementation Strategic

2001 Sundbo Initialisation Development Implementation -

Along a different vein, Cozijnsen et al. (2000) propose a perspectives view of the

NPD process instead of phases as proposed by Sundbo (2001) and Rogers (1983).

Subsequently, Cozijnsen et al. propose five different perspectives, namely: an adoption

and diffusion perspective, a change process perspective, an organisational perspective,

an implementation perspective and a strategic perspective. The first three perspectivescorrespond with the initialisation phase as proposed by Sundbo (2001). The

implementation perspective emphasises team configurations, organisational behaviour

and immediate team factors. Lastly, the strategic perspective refers to factors such as

R&D spending and KM.

The existing literature on phase models of innovation have predominantly

scrutinised the pre-adoption and adoption phases wherein adoption is limited to the

dichotomous option: adoption or no adoption. This notion is further substantiated by

Noble (1999) in the Journal of Business Research, by stating that researchers (and

professionals) often regard implementation as a strategic afterthought; implementation

is not romantic; rather more, it is nuts and bolts, details and mundane problems (Sproull

& Hofmeister, 1986). Similarly, De Kluyver and Pearce (2009) note that many scholars

acknowledge that strategy formulation is substantially easier than strategy

implementation.

2.1.2 PROCESS MODELS OF INNOVATIONThe process models of innovation can be considered to be the second generation of the

process theory approach. In contrast to the demarcated, sequential phases, of the phase-

models described in the previous section, process models of innovation focus on

describing the conditions that facilitate the innovation process. Subsequently, process

models of innovation describe the dynamics and volatility of the innovation process

over time and in more depth (Rogers, 1983; Van de Ven & Rogers, 1988; and Van de

Ven & Angle, 1989). A classic example of a study into the process models of


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innovation is the inductive and longitudinal study performed by Van de Ven et al.

(1989) over a period of 17 years (this includes 14 longitudinal studies in different

innovation process settings).

2.2 INNOVATION IMPLEMENTATIONIn the knowledge that the innovation process (in general) consists of four phases (as

learned in section 1.2.2.), this forthcoming section places focus on one essential, albeit

underexposed and challenging, innovation phase: the implementation phase. Moreover,

it is of paramount importance to have a reliable and valid conceptualisation of

implementation, because the lack of such a construct makes it difficult to assess the

degree to which the innovation has been implemented.

Interestingly, however, Real and Poole (2005) note that it is actually fairly

common for similar studies to disregard the assessment of the degree to which the

innovation is implemented. In the authors point of view, some reasons for the

exclusion of measures of implementations may be as a result of: firstly, the perceived

complexity of the implementation phase; and, secondly, the lack of a widely accepted

conceptualisation of implementation as a point of reference. This debate about the

difficulty to define the start- and endpoint of the implementation phase is acknowledged

by Klein and Ralls (1995) in the Academy of Management Review. Additionally, Klein

and Ralls (1995) note the issue of demarcating the implementation phase is not just

difficult, but it is also a critically important element for research. Therefore, the

remainder of this section will address the conceptualisation of innovation

implementation.

2.2.1 CONCEPTUALISING INNOVATION IMPLEMENTATIONThe existing literature does not reveal an exhaustive list of definitions. In fact,definitions of innovation implementation are actually relatively scarce. From a broad

perspective, the implementation of innovations can be defined as the process arising

from the decision to adopt the innovation.

A relatively narrow and refined definition of implementation was proposed by

Klein and Sorra (1996), they defined implementation as the transition period wherein

the adoption unit ideally become increasingly skilful, consistent and committed in the

use of the innovation. Similarly, Nord and Tucker (1987) define innovation

implementation as the payoff phase: the innovation is put into place and the process of


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embedding it, in the organisation, becomes the central activity (Pelz and Munson,

1980). Thus, indicating that the implementation phase is the period in which the

innovation proves itself either a success that becomes the status quo or a practice that

disappears in some shift of organisational priorities.

Along a different vein, Real and Poole (2005) note that the existing literature on

innovation implementation does not only reveal little common understanding, but it also

reveals different perspectives on implementation. More specifically, four perspectives

on implementation were identified they can be broadly divided into two dichotomies.

Inasmuch as the first dichotomy can be distinguished between variance- and process

perspectives on the implementation process (Mohr, 1982; Poole et al., 2000), the second

dichotomy can be distinguished between perspectives that view the implementation

process as fixed or adaptable this is concisely displayed in table 2-2.

Table 22: The Four Perspectives on Implementation

# Perspective Explanation

1 The Variance

Perspective

The variance perspective views implementation as a

performance that varies in terms of degree and success.

Additionally, the variance perspective usually tends to

identify success factors for implementation performance. In

1977, Zaltman and Duncan proposed a classic example of a

variance perspective on implementation, by defining fiveimplementation strategies to constitute change (or adoption).

In addition to the fiveimplementation strategies, the study

also proposed several team and change agent characteristics

and team immediate and organisational context factors that

determine the degree of acceptance and use.

1 The Process

Perspective

In turn, the process perspective aims to understand the

events and interventions that unfold the implementationprocess in productive or destructive directions. Thus, a rather

longitudinal research approach is deemed necessary. Anexample of a process perspective is the five-phase model of

implementation planning as proposed by Van de Ven (1980).The five-phase model of implementation planning consists

of: planning prerequisites, problem analysis, knowledge

exploration, programme design and programme

implementation/evaluation/operation.

2 The Fixed

Perspective

The fixed perspective on implementation assumes that the

innovation is complete or mature when the implementation

process commences (Real and Poole, 2005). Additionally,

the fixed perspective tends to view implementation as a

process of inducing the adoption unit to commit to the use of

the innovation; assuming innovation is a stable entity, whichneeds to be effectuated.


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# Perspective Explanation

2 The Adaptive

Perspective

In contrast to the fixed perspective, the adaptive perspective

views the innovation as incomplete when the

implementation process commences. Therefore, the

innovation is often amended, reworked or reinvented during

the (fluid) implementation process. Thus, the innovation(and its implementation process) is the result of continuousinteraction between the designer and the adoption unit.

The contrasting of the aforementioned perspectives yields four concepts of

implementation, as shown in table 2-3. The selection of such a concept is far-reaching

as it implies a particular definition of implementation, along with an appropriate type of

research design and measurement scale.

Table 23: Concepts of Implementation

Fixed Adaptive

Variance Roll-out Modification

Process Programmed Transformation

(Adopted from Real and Poole, 2005)

The existing literature on the implementation of innovations suggests a natural affinity

of the fixed-variance (or roll-out) concept (Real and Poole, 2005). Additionally,

implementation performance is dependent on the effectiveness of the roll out

throughout the firm. In turn, this depends on creating the proper conditions to

institutionalise change. In terms of research design (and construct measurement),

implementation performance may be measured as the degree to which the product is

implemented in terms of time, budget, and in terms of what was intended from the

outset, or as the degree to which the product has changed during the implementation

process. Typically, research adopting the roll-out concept of implementation scrutinises

critical success factors that contribute to implementation performance (Kimberley &

Evanisko, 1981; Saraph et al., 1989; Damanpour, 1991; Mann & Kehoe, 1995; Ahire et

al., 1996; Black & Porter, 1996). By recapitulating the aforementioned, it becomes clear

that this study is based on the fixed-variance (or roll-out) concept of innovation

implementation including the methodological implications. Subsequently, the

following section scrutinises the road to conceptualisation by addressing the

significance of some landmark studies on innovation implementation.


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2.2.2 OVERVIEW OF IMPLEMENTATION RESEARCHInasmuch as the previous section provided an initial discussion on the conceptualisation

of innovation implementation, this section deepens the understanding of innovation

implementation by delineating an overview of some prominent landmark studies on

innovation implementation. (including: Rogers, 1983; Nutt, 1986; Meyers and Goes,

1988, Yin, 1979; Klein and Sorra, 1996. These studies may be regarded as the bedrock

for the present study, in terms of conception, development of hypotheses and

operationalisation of the implementation construct.

The absolute foundation of innovation implementation theory is Rogers book

Diffusion of Innovations. In 1983, Rogers proposed a five-phase model of innovation

implementation (as described in section 2.1). This phase model is particularly

appropriate for innovations, which are developed externally (Eveland et al., 1977;

Rogers, 1995). Additionally, Rogers (1983) noted that the inadequate clarification of

required resources, or an inadequate strategic organisational fit, of an innovation could

lead to implementation failure of the adopting unit.

Though Rogers Diffusion of Innovations theory (1983) served as the basis for

scrutinising the effective use of an innovation; however, a more in-depth (process-

oriented) approach was later adopted by Nutt (1986; 1992; 1993). More specifically,

Nutt scrutinised the formulation and implementation of strategic decisions.

Interestingly, despite Nutts process-oriented approach also yielding a framework

Documents

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