The Interplay of Management Innovation and Technological Innovation:

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The Interplay of Management Innovation and Technological Innovation:

A multiple-case study on manufacturing organizations

in renewable energy sectors

By

Yun Chun Liu

Master Thesis

MSc. BA Strategic Innovation Management University of Groningen

Faculty of Economics and Business

Supervisor: Ms. Nora Balogh

Co-assessor: Ms. Isabel Estrada Vaquero Yun Chun Liu

y.c.liu.1@student.rug.nl Student number: S3334600

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2 ABSTRACT

A great attention has been drawn on management innovation in innovation research in recent years. Yet, compared to technological innovation, management innovation is far under-researched in manufacturing organizations. Besides, the relationship between management innovation and technological innovation is also under-explored. Management innovation brings changes in organizations‟ internal administrative process by introducing new managerial practices, processes, structures and new methods of organizing external networks. Consequently, it has positive effect on organizations‟ performance, productivity and competitive advantage. Aiming at filling the gap to the existing innovation research, this research explores what management innovations are introduced and how they relate to technological innovations. The findings are based on the multiple-case studies conducted in manufacturing organizations who extended their own business (or transferred) to renewable energy sectors. The results show that introducing new practices, organizational structure and involvement in external networks are common changes in organization‟s internal administrative process. Furthermore, the process model based on the findings indicates that management innovation is an antecedent of technological innovation.

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Both entrepreneurs and academic scholars have reached consensus about the importance of innovation (e.g. Pisano, 2015; Mumford & Licuanan, 2004). Damanpour & Gopalakrishnan (2001, p.47) define innovation as „the adoption of an idea or behavior pertaining to a product, service, device, system, policy or programme that is new to the adopting organization.‟ Among various types of innovation, management innovation has gained more attention in innovation research (Birkinshaw et al., 2008; Volberda et al., 2013; Nieves & Segarra-Ciprés, 2015). Birkinshaw et al. (2008, p.829) define management innovation as „The generation and implementation of a new management practice, process, structure, or technique that is new to the state of art and is intended to further organizational goals.‟ The purpose of introducing management innovation is to facilitate the effectiveness and efficiency of internal working process and thus, further organizations‟ goals (Birkinshaw et al, 2008; Walker et al, 2011). Scholars assert that organizations can gain advantages by introducing management innovation (Harder, 2011; Walker et al., 2015). This is because management innovation usually contains firm-specific nature, that is, its knowledge is tacit (i.e., it is hard to be codified) and socially complex (i.e., it involves intricate interactions among employees), which, in turn, increases the difficulty for competitors to imitate (Birkinshaw & Mol, 2006). Consequently, the implementation of management innovation enhances the productivity growth and competitiveness of organizations (Hamel, 2006; Mol & Birkinshaw, 2009; Azar & Ciabuschi, 2017).

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empirically demonstrated that how management innovation can contribute to the development of dynamic capabilities so that it helps pure manufacturing companies transfer into service providers. The above-mentioned examples indicate that manufacturing organizations also search for management innovation, that is, changing or innovating its nature of managerial way in order to outperform their competitors (Vaccaro, 2010). Yet, little has been known about what manufacturing organizations have changed in their management activities to embrace the victory. Therefore, a better understanding of management innovation in manufacturing organizations seems highly desirable.

Furthermore, scholars have proposed that the introduction of management innovation positively affects on the introduction of technological innovation (Daft, 1978; Damanpour & Evan, 1984;

Damanpour et al., 2009; Damanpour & Aravind, 2011; Hollen et al., 2013; Volberda et al., 2013;

Camison & Villar-Lopez, 2014). However, the relationship between management innovation and technological innovation is still inconclusive (Hollen et al., 2013; Volberda et al, 2013). From one perspective, some scholars argued that either management or technological innovation triggers the other type of innovation, from the other perspective, some posited that both types of innovation coevolve and coexist (Damanpour et al., 1989; Hollen et al., 2013). Thus, suggested by Volberda et al. (2013, p.7), the authors state that “future research is needed to further uncover the relationship between management innovation and technological innovation.” Previous

research has mainly explored both issues in services organizations such as public libraries

(Damanpour & Evan, 1984), local governments (Damanpour et al., 2009) and hotels (Nieves & Segarra-Cipres, 2015). In other words, the role of management innovation and how does it related to technological innovation in manufacturing organizations remains largely under-explored in

innovation research. Therefore, this results in the following research question:

How does the interplay of both types of innovation look like in manufacturing organizations?

In order to fully answer the research question, two sequential sub-questions are listed: (1) what

are management innovations for manufacturing organizations; (2) how management innovation and technological innovation interact with each other.

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quantitative data offers limited explanations about what management innovations are adopted and how the process of interaction between both types of innovation works (Camison & Villar-López, 2014; Walker et al, 2015). Suggested by Birkinshaw et al. (2008), management innovations are normally introduced when organizations face threats or opportunities in turbulent environment. Hence, for purpose of research, manufacturing organizations who extended their own business (or transferred) to renewable energy sectors were investigated. Based on this approach, the existing theory is extended and supplemented by providing an answer to the research question.

The outcome of this study is a clearly described process model illustrating how management innovation and technological innovation are related to each other and, meanwhile, what management innovation were used to help trigger the introduction of technological innovation is also revealed. The contributions of this study are twofold. Firstly, despite the fact that research into management innovation has gained attention in recent decades, yet, the context studying in the manufacturing organizations is scarce (Hollen et al., 2013). Due to the different nature of business, prior findings in services organizations (Damanpour & Evan, 1984; Damanpour et al., 2009; Nieves & Segarra-Cipres, 2015) might not be suitable for manufacturing organizations. Thus, this study contributes to innovation research by exploring management innovation in the manufacturing organizations. Secondly, the emerging theme of the relationship between management innovation and technological innovation is also addressed in this research. This research provides a process model containing deep descriptions of how management innovation and technological innovation related to in a temporary process in the manufacturing context. The findings suggest that organizations should pay more attention on management innovation since it is an antecedent of technological innovation.

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LITERATURE REVIEW Management innovation

The terminology and definition of management innovation are still not united in innovation research (Armbruster et al., 2008). This can be attributed to the scarcity of findings on management innovation (Mol & Birkinshaw, 2009; Damanpour, 2014). In addition to this, research on management innovation is still at developing phase (Harder, 2011). The terminology has evolved as the definition was extended and conceptualized by multiple scholars (Damanpour & Aravind, 2011). For instance, the term of administrative innovation was first used to study in distinction from technological innovation, which narrowly stressed on changes in organizational structure and human resources practices (Daft, 1978; Damanpour, 1991; Damanpour & Evan, 1984; Damanpour et al., 1989; Ettlie & Reza, 1992; Camison & Villar-Lopez, 2014). The OECD‟s (2005) Oslo Manual deployed the term, organizational innovation as management innovation and considered not only the intra-organizational dimension but also the inter-organizational dimension which includes new methods of organizing external relations with other organizations or public institutions (e.g. universities, research organizations) such as alliances, partnerships, or outsourcing (Damanpour, 2014; Walker et al., 2015). As posited by Damanpour & Aravind (2011, p.429-432), the authors claim that “the definitions of administrative, organizational and management innovations overlap markedly, which emphasize on bringing changes in the organization‟s strategy, structure, administrative procedures and systems.”

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2009; Volberda et al., 2013); new structures implies that changing the way that can foster organization‟s communication and alignment (Birkinshaw et al., 2008; Vaccaro, 2010); new techniques implies that a novel tool or approach is adopted to fulfill specific task or goal (e.g. balanced scorecard) (Birkinshaw et al., 2008); and lastly, new managerial methods of organizing external networks implies that changing in the way an organization engaging in its external relations (OECD 2005; Damanpour, 2014; Walker et al., 2015). The former four managerial activities generally represent the intra-organizational dimensions of management innovation in which changes normally take place and are discernible (Birkinshaw et al., 2008; Volberda et al., 2013). Furthermore, it is worthwhile to note that it cannot be regarded as management innovation if any forms of change (e.g. practices, processes) in management does not result in the change of managerial working process (Vaccaro, 2010). For instance, downsizing may lead to changes in an organization, yet it cannot be regarded as management innovation if it does not change the working process (Vaccaro, 2010; Volberda et al., 2013).

The relationship between management innovation and technological innovation

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is often driven by innovation in its social system. In line with this, some scholars note that innovation in management system is often a prerequisite for a successful introduction of technological innovations (Van Den Bosch, & Heij, 2013). Technological progress would be drained when an organization operates without new management practices to guide and support its R&D or other function units; and this would not enable firms to profit from these investments (Nelson, 1991). Besides, in Khanagha et al. (2013)‟s paper, the authors demonstrate that how management innovation enabled the adoption of new emerging technology, and thereby, successfully overcame „the curse of organizational inertia‟. The finding suggests that management innovation is a precedence of technology adoption.

More recently, some scholars have started to emphasize the combination of management and technological innovation. They call for longitudinal studies, suggesting that both types of innovation coexist and coevolve and then together they lead to better outcomes (Hollen et al., 2013). This is advocated by sociotechnical systems perspective. A joint optimization, the goal of sociotechnical system intervention, can only be realized when the social (i.e. management activities) and technical (i.e. operational activities) systems of the organization are designed to fit the demands of each other and the environment (Emery, 1959; Pasmore et al., 1982). In other words, the full potential and benefits of adopting new technologies cannot be realized unless they work in harmony with new organizational processes and management systems.

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METHODOLOGY Research approach

Aiming at providing descriptive and explanatory knowledge on what kinds of management innovation are adopted in manufacturing organizations and how management innovation and technological innovation are related to, a theory development approach is taken in this study. The literature review shows that prior empirical evidence mainly results from the service industry and are quantitative (Damanpour & Evan, 1984; Damanpour et al., 2009; Nieves & Segarra-Cipres, 2015). The findings merely indicate the influence of adopting one type of innovation over the other type of innovation in magnitude and hence, they lack deep descriptions about what kinds of management innovation were adopted and how management innovation and technological innovation interact with each other. Therefore, a theory development approach is suitable and necessary to extend the existing theory (Yin, 2012).

In order to offer deeper insight into this complex real-life process, a multiple-case study was performed to gather empirical evidence. The approach of a case study enables researchers to gain a holistic view of a certain phenomenon or series of events in great-depth (Gibbert et al., 2008; Noor, 2008). Based on this, multiple cases strengthen the robustness of theory-building process because they permit replication and extension among individual cases as described by Eisenhardt (1991). In other words, the use of multiple cases increase some form of replication from each single case, which assists researchers to identify patterns and make causal inferences more accurately (Yin, 1981; Eisenhardt & Graebner, 2007). Besides, different cases often provide complementary angles of a phenomenon. Hence, multiple cases can build more robust, generalizable and testable theory than single-case studies can (Eisenhardt & Graebner, 2007).

Case selection

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interplay of both types of innovation (i.e. management innovation and technological innovation) in manufacturing companies. Therefore, theoretical sampling are selected, in order to clarify and extent relationships and logic among the investigated objectives (Eisenhardt, 1989; Van Aken et al., 2012). That is, multiple cases are chosen for theoretical reasons such as replication, comparison, supplement to the emerging theory (Yin, 1994; Eisenhardt & Graebner, 2007). To aid in understanding the process, I need to identify an organizational context in which issues of management innovation and the interplay of both types of innovation were open and apparent. According to Birkinshaw et al. (2008), management innovation is normally introduced when organizations face a novel problem that existing arrangements fail to solve or foresee threats or opportunities from the external environment. Hence, medium-sized or large incumbent manufacturing organizations that extend their own business into (or even transfer to) renewable energy sectors are selected for my study. The reasons are further explained in the following paragraphs.

Firstly, due to an increasing awareness of environmental problems (e.g. climate change), academics have shown great interest in the issue of sustainability and renewable energy industry (Verbong & Geels, 2007; Pryor & Barthelmie, 2010; Panwar, 2011). Many kinds of size of firms from small to large incumbent organizations have seized the opportunity and proactively extended their own business to renewable energy sectors. Yet, little has been known in the context of how incumbent manufacturing organizations manage their both types of innovations in order to survive in the renewable energy sectors.

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management innovations are more appropriate to research in large, complex organizations (Walker et al., 2015).

This multiple-case study research examines three different case companies. An overview of the characteristics of the participating companies is displayed in table 1. The actual case selection is an iterative process. Potential candidates were first scanned by browsing companies‟ websites and annual reports. Theoretical purposeful sampling is strictly followed in this research (Corbin & Strauss, 2008) meaning that those who meets the above-mentioned requirements were enumerated in the list. Nearly twelve manufacturing organizations were contacted, yet only three companies agreed to conduct interviews. In order to limit bias, informants‟ hierarchical levels, functional areas, geographies are taking into consideration in order to gather diverse perspectives. Meanwhile, informants were expected to be at least part of either the technological or the administrative core so that analysis based on this distinction could be performed in later stage. In this way the processes could be compared and differences could be easily discovered and revealed. These persons were diverse across the cases, namely executive VP, an entry-level employee, a Technical Manager (Asian Region), an Administrator, a Marketing Manager and a Project Manager. This selection enables to retrieve information from different angles as suggested by Corbin & Strauss (2008, p.156), the authors pointed out that “variation is especially important in theory building because it increases the broadness of concepts and scope of the theory.”

Table 1: Characteristics of participating organizations

Case 1 (hereafter referred to as Company A)* Case 2 (hereafter referred to as Company B)* Case 3 (hereafter referred to as Company C)* Company Characteristics  Component supplier to the wind industry  Service offerings include blades, service and logistics  Approx. 10400  Ship-building manufacturing company  Service offerings include all kinds of ships and marine operations & marine warranty (for  Manufacturer of specialty chemicals  Service offerings include chemicals composite

supply (for wind turbine blade)

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employees offshore wind energy)  Approx. 3000 employees employees Location of Headquarter

Europe Asia Asia

Interviewees  An executive VP  Technical Manager (China Region)  An entry-level employee  A General Manager  Project Manager  Administrator  Marketing Manager  Sales Manager

* For confidential reasons, code names (e.g. Company A, B, C) are used throughout this study

Case collection

For the purpose of stronger substantiation and propositions (Eisenhardt, 1989), multiple data collection methods are implemented, which combined primary data from in-depth interviews with archival records.

Primary data

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how they support the current successful development of an organization. The protocol served as a guideline and is adjusted to different circumstances. Questions were adapted or added in order to retrieve clarification on certain aspects of the case. The average length of the interviews was 45 minutes, from which the shortest interview took 40 minutes and the longest interviews accounted for 60 minutes. Each interview was recorded with the participants‟ permissions and thereafter transcribed shortly. The transcripts‟ summaries were reviewed by each key informant and checked or corrected if they contained any mistake. In addition, informants could also provide further feedback and remarks. This increased the construct validity of the study, which refers to the quality of the operationalization of a concept (Van Aken et al., 2012).

Archival records

The use of archival data benefits for a case study because it help stretch the time perspective, providing a more proper angle for drawing the conclusions (Yin, 2009a; Yin, 2012). Throughout the whole period of data collection, archival records such as annual reports, corporate social responsibility reports and press releases obtained from the company websites were also reviewed (Yin, 2014) in order to acquire additional information (e.g. building up the timeline) about the cases. Besides, news articles or reports obtained via such as LexisNexis Academic served as knowledge background for engaging informants in discussions of how such business have been developed. The conducted interviews were also triangulated by these archival records so as to overcome some of the validity and reliable issues. (Stenbacka, 2001)

Case analysis

According to Eisenhardt (1989), an overlap between data collection and data analysis is acceptable and valuable so as it enables flexible data collection and better theory. The unit of analysis in this study is the organization. The adoption of both types of innovation (management and technological innovations) is therefore investigated at the organizational level. For analyzing data, the analysis process is completed by three steps.

Step 1: Creating first-order codes for temporary use. Beginning by taking memo notes,

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(Eisenhardt, 1989; Burnard, 1991), I gave the first-order codes to common statements. This process is theoretically called open coding (Locke, 2001). The first-order codes might be revised again and again throughout the whole analysis phase until they are well-fitted for further steps.

Step 2: Creating second-order codes and integrating first-order codes. This step is also

referred to axial coding (Locke, 2001; Strauss & Corbin, 1998). Before creating second-order codes, codes from each narrative were consolidated for each case. That is, all the data (both primary data and archival records) collected from three companies have been summarized into different sets of themes. In this stage of analysis, a within case analysis was performed and subsequently, a cross-case analysis was executed. The aim was to become familiar with each narrative as a stand-alone entity (Eisenhardt, 1989). The insights of the cases were compared to each other back and forth, looking for similarities, differences, and patterns (Eisenhardt, 1989). In addition, the frame that has emerged from this cross-case analysis had to be compared to each case again, in order to determine if it successfully fits with the case data (Eisenhardt, 1989). Based on this, second-order codes are consolidated which became more theoretical and more abstract.

Step 3: Congregating second-order codes into theoretical dimensions. In this step, much

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Figure 1. An overview of data structure

*All data were derived from semistructured interviews supplemented with archival data

FINDINGS

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technological innovations. Consequently, the interplay of management innovation and technological innovation is demonstrated. Pratt (2009) suggests that one should aware of the balance between theory and data when conducting qualitative research. That is, one should not only show data but also interpret it within the body of the paper. Therefore, the findings presentation is supplied with other two data displays - (1) the findings narrative itself (see Table 2. Representative narrative in appendix II) and (2) the progressive data structure (figure 1) - so it could solidify evidence of the findings.

The interplay of management innovation and technological innovation

As looking at all the data from three case companies over time, a clear process model between management innovation and technological innovation became apparent. There are five main dimensions to the model, which are listed in sequence: (1) External triggers for changes in management (2) Internal triggers for changes in management (3) the importance of lubricants: organizational culture and close internal relationship (4) introduction of management innovation (5) introduction of technological innovation.

In order to better understand why each of these themes and aggregate dimensions emerged, it is necessary to first introduce the background of each company case. Each case company is involved in different fields of manufacturing sectors such as ship-manufacturing and chemicals. Therefore, each case companies possesses district core competency (i.e. technological skills). Meanwhile, due to an increasing awareness of environmental problems (e.g. climate change), engaging in new business in renewable energy sectors become an important source for organizations‟ sustainable development. That is, case companies would like to extend their own business (or even transfer) to renewable energy sectors. And this is normally when management innovations are introduced in order to further organizations‟ goals.

External triggers for changes in management: Sector Characteristics and Environmental circumstances. From our researched organizations, sector characteristics is one

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development, an organization needs to search for new business to enter. On the other hand, sector characteristics, especially in renewable energy business, also motivates an organization to come up with a more sustainable and efficient way to manage its business. Both situations are illustrated by the informants:

Currently, we had another business transformation was because we realized that we could not only concentrate on one category, especially during the recession in the merchant shipping industry, it would be extremely difficult for us to survive; therefore, we have to develop new business. (Project Manager, Company B)

Basically, materials are changed among elements in the chemical element table. It is difficult to find new elements so it is difficult to develop extremely new material. […] It is due to sector characteristics, and that is why we have to extend our business. (Sales manager, Company C) We are the first in the wind industry [and] have strong regulations like I said we have been reporting on sustainability, sustainability program and that is how basically we got there. (an entry-level employee, Company A)

Besides, organizations also took environmental circumstances into account when selecting what new business to enter. Therefore, the choice of entering renewable energy sectors is decided based on rationale such as existing organizational resources, capabilities and the future trends. According to our informants, they described:

Actually, we have been planning to have a transformation; nonetheless, not many breakthroughs happened. […] Fortunately, the new government has announced some new policies, which inspired us to transfer our focus from shipbuilding business to two key developments: a. offshore wind power and b. the Indigenous Defense Submarine Project. (Administrator, Company B)

Our company starts its business with anti-corrosion materials such as ABC Resin, which is totally different from materials made for blades. The wind power business started from 2006 since our Chairman sees the potential then put efforts on it. (Marketing manager, Company C)

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From our findings narrative shows that external triggers normally motivated a top-down process, which means that chief executive officer (CEO) or top management team (TMT) plays an important role in perceiving the importance of introducing management innovation at this phase. However, from our findings, in addition to external triggers, internal triggers, which runs a bottom-up process, also contribute to the introduction of management innovation.

Internal triggers for changes in management: bottom-up feedbacks and suggestions.

Compared to external triggers, internal triggers highlight the vital role of internal change agents of an organization. The internal change agents could be employees in various positions from different hierarchical levels. From our researched organizations, the internal change agents are managers from Sales department, Marketing department and the plant. The suggestions or feedbacks given from internal change agents are an indispensable process since those employees were in the front-line troops. They could easily found out the „shortfalls‟ on which it need to be improved and furthermore, being more sensitive and excellent in knowledge of how to work better, which, in turn, generating management innovation. Representative narratives are shown in the followings:

Since inspection largely relies on labors, each inspector has different levels of ability and thus, at organizational level, we need to correct from „the head,‟ that is, through training program. In 2016, the Group started off an Inspector Certifications (i.e. certificate program). […] And this result led to the emergence of Center of Excellence (COE). In 2017, the Group set up Center of Excellence. […] (Technical manager, Company A)

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In addition, one of the researched organizations provides an interesting insight, which looks at the role of an entry-level employee. An entry-level employee could also be relatively critical because the intention of championing management innovation comes from intrinsic motivation. And this could be moderated by sector characteristics. For instance, employees working in a renewable energy sectors or working in a company that cares so much about environment, they are more likely to have more intrinsic motivation and chances to make organization more effective, which, in turn, increases the possibility of the introduction of management innovation. According to one of informants described:

Normally, from sustainability perspective, sustainability is employee-motivator. So especially me as a young person, I want to work for a company that is not only about making profit or whatever. […] For instance, I have been in a lot of conversation with colleagues saying that why we still have disposable paper cup and dishware. Again from sustainability perspective since you have an organization that cares about sustainability and environment so you enable them (or others) to follow. (an entry-level employee, Company A)

The importance of lubricants: Organizational Culture and Internal Relationship.

Organizational cultural and internal relationship served as a significant lubricants in order to eliminate conflicts and contradictions among employees from different departments, and most importantly, to let each individual employee understand what the organization‟s vision and mission are and how each employee can contribute themselves to achieve its goal eventually. By doing so, it can facilitate efficiency and effectiveness in managerial work. The researched organizations have similar organizational culture and internal relationship. With regard to organizational culture, despite of the existing structural hierarchy, the overall culture is flat. Among employees, the working environment is encouraged to be respectful and supportive. As to internal relationship, it referred as the connection or closeness among employees. An intensive communication existed throughout organizations. With help of flat culture, close connection and intensive communication, conflicts and contradictions can be more likely to be observed and solved or improved. As described by informants:

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colleagues in manufacturing because we know what an important job they have. (executive VP, Company A)

So whenever we meet some problem or difficulties, we will report to the Group about what the situation we have and why we have such problem or difficulty. And the Group will support or help us by revising the instructions that is suitable for us to implement. I think there is no better way, intensive communication is necessary. (Technical manager, Company A)

Interactions between every department are not complicated. If there is any problem, just make a phone call and arrange a meeting. Those who in charged will drop by and have discussion, which is flexible and effective. At some point, there is no denying the process of the red tape. However, compared to others, we still have a flat organizational structure. (Marketing manager, Company C)

Introduction of management innovation. As described in literature review, management

innovation reflects changes in managerial practices, processes, structures, techniques and involvement in external networks (OECD, 2005; Birkinshaw et al., 2008). From our researched organizations, the common changes took place in the dimensions of practices and structure (e.g. structure reconstruction). Volberda et al. (2013, p.5) further explained that “management practices refer to what managers do as part of their jobs on a day-to-day basis and include setting objectives and associated procedures, arranging tasks and functions, developing talent and meeting various demand from stakeholders.” Whenever there is a new goal (e.g. developing new products, entering new business), high-level executives of an organization normally first change their managerial practices such as setting up new objectives so that it makes clear statement that every employee can follow and implement. As our informants described about their changes in practices:

We decided we would create a global leadership position [in this industry] […] (executive VP, Company A)

About our [technological] innovation, we set the targets at carbon reduction and energy saving, which would decrease the energy consumption. For example, we initiated the ES10, ES20, and ES30 projects […]. (Project manager, Company B)

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customers (i.e. working time is flexible and free), so we can get closer to the market and closer to our customers. (Sales manager, Company C)

Developing talent, which is part of HR practices, is also another aspect of managerial practices. Human resources are considered as an important asset for an organization because the most valuable resources such as capabilities and knowledge (both explicit and tacit ones) are retained in employees. Formal employee training program can be regarded as at the core part of HR activities, and with help of this, capabilities and explicit knowledge are fostered. As described by one of informants:

[…] we realized that the design layouts were usually for less popular vessels; hence, we started to develop our own design capabilities afterward and cultivate the construction abilities. The whole process from scratch was to verify their design information, to confirm the correctness of the software and calculation through trials and testing, and to build from the simplest model, the bulk carrier. […] In short, we developed from nothing to something and from simple to complex; gradually built our independent design abilities and reached out to innovation. (Project manager, Company B)

We have a nice training program. Take myself for example. I do not have any background in chemicals so when entering the company, I am totally like a pure paper. From the company side, they offer lots of training programs so that we can gain lots of knowledge of company‟s products. (Sales manager, Company C)

Organizational structure is also needed to be adjusted in order to achieve new goals. New managerial structure implies that changes happen not only in organizational structure but also in its managerial work (i.e. its function) (Volberda et al, 2013; Vaccaro, 2010). In other words, downsizing or upsizing could not be referred as management innovation if it only change the organizational structure rather than its functions and managerial process. In the researched organizations, two extreme examples (i.e. successful and failed ones) are found:

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In order to step into a new business, it is necessary to have the support and cooperation from our organization internally. For instance, […]. For winning the offshore wind power business, we aim to set an innovation incubation center of offshore wind power; the aim is to build a new department inside of the organization to support the required personnel and resources for the new business. (Project manager, Company B)

We used to have an innovation committee in the company. Every department will select one person to join and every department will propose a case, as long as you feel like it is an awesome one. Then the committee will revise to see whether it could be implemented or not. […] However, the innovation committee is founded under a formal way, which is quite easy to lose the core meaning as long as there are no any other new ideas. In the end, this committee was removed. (Marketing manager, Company C)

Involvement in external networks is quite prevalent especially for manufacturing organizations. Strategic alliance in forms of such as R&D agreements, equity joint venture and cooperating with educational institutions represents a critical means when an organization faced fast-paced and knowledge-intensive environment. In all the researched organizations, strategic alliances were formed in order to overcome some shortages (e.g. resources limitations and cracking new market). Manufacturing organizations usually cooperate with educational institutions (i.e. universities) for refining existing technologies while especially for developing new technologies for entering new business, a form of joint venture is at the top of choice. As described by our informants:

We also work closely with university partners (pioneer research) to find out what materials are effective, stronger and flexible […] (executive VP, Company A )

The parts our company participates are maritime engineering and the construction underneath the sea (abbreviated as PP: Foundation pile). The sales representatives without relevant experience would need to work with those experienced ones. For instance, we have set a subsidiary named „AAA‟ to joint venture with the world largest marine engineering company […] (a general manager, Company B)

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In addition, there are some dimensions that cannot be fitted into present dimensions of management innovation research. For instance, a mechanism that also help stimulate the nurturing process such as providing advanced equipment and employing job rotation.

We also have the reason that catch the best engineers is that we have the best kits in the world to play with. … high-end facility and machine make them excited to find out a „new secret‟ to make our products better. (executive VP, Company A)

We encourage the job rotation system that requires supervisors with higher seniority to work in different divisions for new attempts and learn new things and techniques. (Administrator, Company B)

The pros of job rotation are equipping employees with multiple abilities, providing them with comprehensive viewpoints, and eliminating their parochialism. (Project manager, Company B)

Introduction of technological innovation: furthering organizations’ goals. Not only

external triggers such as sector characteristics and environmental circumstances but also internal triggers from the internal change agents drive changes in the way managerial work is done. Based on the interviews, the research has found that technological innovation is triggered by the introduction of management innovation.

And since then we just been growing and growing, […] that sort of led up to what we are now – [zero emission] pledge. (an entry-level employee, Company A)

Our company cares about innovation. For example, in order to cope with eco-friendly issues (energy saving, fuel saving, and the new trends of decreasing pollution), we promoted the ES10 (Energy Saving 10%) to decrease 10% energy on our merchant marine. Because the project went successfully, we further conducted ES20 and ES30 projects. (a general manager, Company B)

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more likely to be solved under flat organizational culture and a respectful and supporting working environment. The findings show that most of employees from administrative core agreed that they play a role in guiding and supporting technical core where technological innovations emerged. Therefore, the introduction of management innovation such as new structures, new practices and involvement in external networks are coordinated with opinions from different departments and are thus, customized it beforehand in order to trigger and accelerate technological innovations. Due to the limited resources, one of our researched organizations also stated that administrative core usually play a leading role, yet, they also cooperated and coordinated with technical core to fulfill the common goal. As our informants described:

We will not attract them to work [in the company] if it is too tough, so the [company] culture is very much to support each other. Collaborating is not about fighting between the partners or empires. (executive VP, Company A)

Normally, there will be quite intensive communication among different departments when different innovations are proposed. By doing so, it ensures that all departments and employees understand why such innovations were introduced, what impacts they will result in in order to eliminate conflicts and misunderstandings. It cannot be denied that most of product innovations were proposed by R&D while management team represents a supporting role, sometimes, a guiding role. We [also] want to help them (R&D) increase their technological innovation. (Administrator, Company B)

Basically, due to the limited resources, the overall development will follow the goals and instructions from management system. (Marketing manager, Company C)

DISCUSSION

Management innovation has begun to gain great attention by scholars and enterprises. Yet, compared to the aspect of technological innovation, the topic of management innovation in manufacturing organizations is far under-explored in innovation research (Hollen et al., 2013; Camison & Villar-Lopez, 2014). The purpose of this study is to answer the main research question „How does the interplay of both types of innovation look like in manufacturing

organizations? In order to fully answer the research question, two sequential sub-questions are

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management innovation and technological innovation interact with each other. This section

demonstrates a discussion about the outcome of this study in comparison to the innovation (adoption) literature.

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more experiments and lead to more „surprises‟ in the laboratory. The other mechanism is with regard to job rotation system. With the help of job rotation system, employees can be trained to have more diverse angles in looking at different situations. In sum, management innovation such as changes in managerial practices, organizational structure and involvement in external networks were introduced in manufacturing organizations in order to further organizations‟ goals.

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which lots of experiments and reflective feedbacks are involved in. However, the findings of this research indicate that conflicts and contradictions among employees are more likely to be eliminated under a flat organizational culture and a close internal relationship (e.g. remaining high connection with employees) since different opinions and various perspectives are widely exchanged via an intensive communication throughout the organization. Since each employee clearly understand what vision and mission of an organization, the introduction of management innovation is customized in a way that can help the introduction of technological innovation. Therefore, when introducing management innovation, it has of a firm-specific nature that foster the introduction of technological innovation.

Figure 2: The process model between both types of innovation

Theoretical contributions

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& Mol, 2009; Crossan & Apaydin, 2010; Nieves & Segarra-Cipres, 2015). Since the definitions of management innovation in prior research are either conceptual or empirical (Birkinshaw et al., 2008; Hollen et al., 2013), this research empirically demonstrated what management innovations were utilized in manufacturing organizations in order to facilitate the effectiveness and efficiency of the internal administrative process. The findings indicate that due to different nature of business, manufacturing and services organizations require different dimensions of management innovation in order to pursue the goals. For instance, especially in manufacturing organizations, involvement in external networks is vital for either redefining existing technologies or inventing new technologies. Secondly, as recommended by Volberda et al. (2013), this research also went deeper into exploring the relationship between management innovation and technological innovation in a temporary process. Since the relationship between both types of innovation is currently under debate (Hollen et al., 2013; Volberda, 2013), this process model contributes to the literature by providing a potential model to be evaluated and accepted. It revealed that manufacturing organizations react to change by first introducing management innovation and thereafter, it triggered the introduction of technological innovation. The findings of this research could be a starting point for future research with longitudinal approach in order to gain comprehensive understanding of how management innovation is related to technological innovation in the long term.

Managerial implications

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channel (both horizontally and vertically) throughout the organization so that the established management innovation could be customized and thereafter, help trigger the introduction of technological innovation. This is especially helpful for large incumbent firms. Large incumbent firms often require management innovations for improving performance outcomes and productivity growth, yet, their existing complex internal system may become obstacles for feedbacks reversion.

Limitations and Future Research

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CONCLUSION

Innovation is conceived as an engine to drive organization's productivity growth. In addition to technological innovation, scholars have called for more research to develop knowledge of management innovation, especially in the manufacturing organizations (Hollen et al., 2013; Camison & Villar-Lopez, 2014). In response to this, this research touched on the most fascinating topic about management innovation and addressed the under-explored phenomenon of how management innovation and technological innovation interact with each other at organizational level. Through changes in several dimensions of management such as management practices, processes, structures, techniques and involvement in external networks, it can trigger the introduction of technological innovation. In other words, management innovation is an antecedent of technological innovation. The findings of this research pointed out that management innovation reflects an important managerial capacity in managing its internal and external administrative processes. Thus, management innovation seems to be a sustainable development rather than a fashion. For instance, from the findings, it shows that the internal change agents also play important role in generating management innovation in addition to implementing it. Solving questions such as how organizations can stimulate their employees to find improvements in their administrative process and how feedback loop can be shortened to communicate effectively could become one of sources for an organization‟s competitive advantage. Consequently, based on this research, future research can explore this topic and the interaction of both types of innovation in long term to help academics and managers gain better and comprehensive understanding on managing innovation.

ACKNOWLEDGEMENTS

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38 APPENDIX Appendix I. Interview protocol

Introduction of my research

My master thesis is regarding to organizational innovation including both management innovation and technological innovation. Management innovation focuses on changes in an organization‟s management work that differ from traditional management principles and practices. The establishment of management innovation can help firms obtain their sustainable competitive advantages and enable them to achieve organizational renewal and goals. The main purpose of my thesis is to conduct interviews that explore (1) what are management innovations in manufacturing organizations and (2) how management innovation is related to technological innovation.

Background of the informant:

 Can you tell me about your position/function and what are your responsibilities in general?

 How long have you been in this organization? Have you ever changed your position during the period? And why?

 Can you describe how organizational culture and working environment are in the organization?

Background of company (This part is adjusted with the position of the informant)

 Could you briefly describe the historical development of the organization?

 From your perspective, how would you describe this successful business development? (If it failed, how would you describe this failure)

 (In the case of success) Could you explain more or specify what kind of management that support this successful business development?

 (In the case of failure) Could you explain more or specify what kind of management that is be overlooked or what managerial model can be improved? What would you suggest?

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 Innovation has been stressed by the organization, could you tell me more about how does innovation be managed by the organization?

 What are the innovation programs/ activities in your company?

 How does the organization deal with the problem when there a conflict existed between technological innovation and management innovation?

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The Interplay of Management Innovation and Technological Innovation: