Bring in the Dutch: Configuring a network in
or-der to exploit innovative water solutions
abroad.
Vincent Remmelts - s2340704MSc BA Strategic Innovation Management MASTER THESIS
June 2014
ABSTRACT. Why could some networks be regarded as a success while others not? Are there any differences in the success factors for networks who operate in stable and fragmented sectors compared to networks that operate in inte-grated and high velocity sectors? This research will provide an answer on these questions. By doing research on the network that was specifically initiated by the Top sector Water (core-team Export & Promotion), in order for the Dutch water sector to profit from the biggest trade mission (in Indonesia) that The Netherlands would have ever done, I was able to identify four success factors for the configuration of a network in a stable and fragmented industry. These factors have to do with (1) the level of absorptive capacity, (2) the position in the network, (3) the strength of ties, and (4) the level of external openness, of the firms that are part of the network. The results of this research indicate that there are no significant differences in the configuration of successful networks for these different types of sectors.
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Bring in the Dutch: Configuring a network in
order to exploit innovative water solutions
abroad.
Vincent Remmelts - s2340704MSc BA Strategic Innovation Management
Faculty of Economics & Business, University of Groningen, Nettelbosje 2, 9747 AE Groningen, The Netherlands
MASTER THESIS
Supervisor: R. A. van der Eijk Co-assessor: dr. J. D. van der Bij
Word count: 26.206
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PREFACE
The Master thesis that is in your hands is the final proof of the competences that I have obtained during my study and is the last assignment before I will obtain my Master of Science degree in Business Administration (BA). Though I did this research on my own, some people helped me with the process of writing it, for these people I would like to take this moment to show my gratefulness. First, I want to thank Ivo van der Linden as being my contact person at the Neth-erlands Water Partnership. Because of him I was being able to obtain all kind of reports, notes and information about the network, and he brought me in contact with the network members. Secondly, I want to thank all the participants of the research for the effort they took to fill in the survey and/or participated in the interview and for all the information that they shared with me. Finally, I would to give a special thank you to my first supervisor Rene van der Eijk, for his support, comments and always fast replies that I got from him. Without his constructive help, I would not be able to do a full-scale research in the short time period (9 weeks) that I had.
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MANAGEMENT SUMMARY
Networks do not always work out like the way that they were planned to do. It is common that some networks have more benefits for firms than others. But why is this so? The case that will be researched in this rapport is the ‘Jakarta network’ that has been facilitated by the Netherlands Water Partnership. This network was organized after it became public that Prime Minister Mark Rutte would be traveling to Indonesia for the biggest trade-mission (in Indonesia) that The Netherlands would have ever done. Since the ‘Top sector Water’ (core-team Export & Promotion) was of the opin-ion that they could profit from this, they decided to come up with a plan. The plan was to organize a network in order to develop a joint vision of the Dutch water sector, which than would be presented in Jakarta at the trade-mission.
Now, one year later, we know the results of the network and can conclude that, although many of the firms that par-ticipated in the network were of opinion that the network had contributed to their individual goals, did not reach its original (collective) goal. The network did not achieve what it should have achieved. In order to understand how this could be possible and how a same kind of network can become a success in the future, this research will give answer on the following question:
How does the configuration of an export network influence the ability of an individual firm to successfully exploit innovative water solutions abroad?
By getting to know what the success factors of a network are and how such a network therefore should be organized, it is possible to anticipate on this and to increase the chances of success for future networks.
In order to provide an answer on the research question, first a questionnaire was filled in by all members (n=15) of the Jakarta network. From this data it became possible to make a network analysis and to identify the most successful and the least successful members of the network. To better understand the underlying reasons for their under/over-performance, semi-structured interview were held with two successful firms, two less successful firms and the initiator of the network (the Ministry of Infrastructure and Environment.). From this data it became possible to identify the suc-cess factors.
The success factors that are identified for firms to increase their own performance, which ultimately will have a posi-tive effect on the overall network performance, are: (1) using (and combining) external knowledge for your own use, (2) obtaining a central position in the network while still using the connections with externally located partners, (3) having strong and weak connections with firms in and out the network, and (4) being open for collaboration by sharing your own knowledge.
Based on these results we could indicate different actions that a process facilitator could exercise for making future networks a success. First of all, a network facilitator should position the firms in such a way in the network that the likelihood of the formation of (new) ties will increase. Secondly, a network should be designed in such a way that busi-nesses that are related do not face any boundaries for co-operating with each other. In the case there are boundaries (like a low level of trust), the importance to co-operate with each other should be strongly emphasized. Thirdly, besides designing ‘clusters’ from related firms in a network, connections between these clusters should be facilitated in order to let the more distant knowledge flow though the network. Lastly, in order to support the connections between all the firms in the network and therefore to increase the (potential) sharing of knowledge, frequent (informal) communication between the firms in the network should be stimulated.
Besides the above described actions, also some specific implications for the NWP were found. They NWP for example needs to, position itself in a more (pro-active) advisor role instead of operating mainly like a discussion board, focus more on the central triangle of network members, take different positions in the different stages of a network, operate from a more neutral position and focus on the long term (collective) goals of the network members.
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TABLE OF CONTENT
1. INTRODUCTION ... 6
1.1 The goal of the research
... 6
1.2 The relevance of the research
... 7
1.3 Research question
... 7
1.4 Scope and domain
... 7
1.5 Structure of the report
... 8
2. LITERATURE REVIEW ... 8
2.1 Definition of a network
... 8
2.2 Theoretical framework of networks
... 8
2.3 Absorptive capacity
... 9
2.4 Embeddedness
... 10
2.5 External openness
... 12
2.6 Other firm factors
... 13
2.7 Summary literature
... 13
3. CONCEPTUAL MODEL ... 14 3.1 Propositions... 14
3.2 Conceptual model... 14
4. METHODOLOGY ... 15 4.1 Research design... 15
4.2 The selection of a case
... 15
4.3 Data collection
... 16
4.4 Data measures... 17
4.5 Data analysis... 19
4.6 Measurements of quality... 19
5. RESULTS ... 19 5.1 Network structure... 20
5.2 Export performance... 20
5.3 Absorptive capacity... 23
5.4 Embeddedness... 24
5.5 External openness... 25
5.6 Other results... 26
5.7 Qualitative data matrix
... 26
6. DISCUSSION ... 28
5
7.1 Conclusion
... 30
7.2 Implications for theory and practice
... 30
7.3 Limitations and further research
... 30
8. IMPLICATIONS FOR THE NWP ... 31
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1. INTRODUCTION
The Netherlands, a country that is situated next to the ocean, has about 59% of its total land area below sea-level (Planbureau voor de Leefomgeving, 2009). To pro-tect itself against the potential threat of flooding, it has been taken considerable measures of the years. A famous example of such a measure is the Netherlands North Sea Protection Works which are chosen as one of the seven wonders of the modern world by the American Society of Civil Engineers (ASCE, 1994). Having developed world-wide recognition as being water experts over the years, Dutch firms operating in the water sector are asked for their expertise on all kinds of water projects worldwide. It is therefore no surprise that the Dutch water sector (consisting out of 3.000 firms with a total export value of € 18 billion spread over 73 countries) is classified by the Dutch government as one of the nine ‘Top sectors’ that are responsible for supporting the Dutch export (Righton, 2013; Rijksoverheid, 2014). To facilitate the top sector water to reach their goal of doubling their added value between 2010 en 2020 (Top sector water, 2014), the Netherlands Water Partnership (NWP) is frequently asked to act as a process facilitator in order to increase the collaboration between these firms. NWP’s main objective is namely to unite the Dutch water exper-tise in order to increase their impact abroad. One of its recent projects is related to the Jakarta network that they facilitated around the trade mission of Minister Mark Rutte to Indonesia in November, 2013 (NWP, 2014). This network will also act as the context in which this re-search is done (see ‘§4.2 The selection of a case’).
The question however is how collective action and cooperation may support these firms in keeping their world-wide recognition as leaders in this sector. This because not all the networks have the same level of suc-cess: some networks that the NWP facilitates have a higher rate of success, measured in export performance, than others. So what are the success factors and how should the NWP act as a facilitator for cooperation abroad in order to increase the chances of success of future collaborations between firms that operate in the Dutch water sector?
1.1 The goal of the research
The differences in firms conduct and profitability can be explained by the traditional view. This view sees firms as autonomous entities who want individually to obtain their competitive advantage. Dyer & Singh (1998) state that this view can be explained by the Industry Structure View (ISV) of Porter (1980) and the Resource-based
View (RBV) of Barney (1991). The ISV view states that a firm’s profitability is the result of the different industry forces, while the RBV states that a firm’s profitability is the result of its internal inimitable and non-readily sub-stitutable resources. However, the strong globalization of the world economy increases the competition between firms. This increase in competition has the result that a firm’s network is getting more recognition regarding its strategic importance and therefore the traditional view becomes outdated. Moreover, these views overlook the important fact that the (dis)advantages of an individual firm are often linked with the (dis)advantages of the network that a firm is embedded in. So contrary to the traditional view, the Relational View of Dyer & Singh (1998) explains that a firm's critical resources may span firm boundaries and that these resources may be em-bedded in interfirm resources and routines. The theory that lies on the basis of this view is the Social Network Theory (SNT) of Granovetter (1985). The theory states that the social and structural conditions of a firm’s net-work influence its performance. Besides to obtain re-sources, a firm needs to cooperate in order to learn new capabilities. Previous research of Powel, Koput & Smith-Doerr (1996: 118) state that ‘inter-organizational
learn-ing is critical to competitive success’ meanlearn-ing that ‘firms learn by collaborating with other firms as well as by ob-serving and importing their practices’. Other researches
(Inkpen & Tsang, 2005; Perry-Smith & Shalley, 2003) support these findings. Although Eisenhardt (2000) states that the traditional as well as the more recent viewpoints are involved in successful cooperation, this research will particularly focus on the more recent view-points since the main focus of this paper is how individu-al firms are able to profit from their relations with other firms in a network.
In order to achieve a competitive advantage and in-crease its performance, a firm needs to look at the re-sources that it could obtain and the capabilities that it could learn from its partners. The ability to exploit re-sources that are outside a firm’s boundaries is a result of a firm’s level of absorptive capacity which is defined by Cohen & Levinthal as ‘the ability of a firm to recognize the
value of new, external information, assimilate it, and apply it to commercial ends’ (1990: 128). Moreover,
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which are the relational dimension and the structural dimension. The second dimension is about the im-portance of the danger of getting your valuable knowledge stolen by other firms, which is related to the external openness of a firm (Dyer & Singh, 1998).The need for resources in order to build a competitive advantage, has resulted in the fact that some firms are able to be competitive while other are not. The ability to obtain these resources has resulted in differences levels of success; some collaborations could be classified as successful while others will be classified as unsuccessful. In order to understand this difference, the goal of this study is to do research on the success factors for collabo-ration in an export network operating in a fragmented market. Understanding the success factors will make it possible to advice the NWP on how they should act in their role as process facilitator in order to make future collaborations a success.
1.2 The relevance of the research
Previous research that focused on the influence of ties (to transfer resources and capabilities) have mainly looked at the more integrated and high velocity sectors like biotechnology (Powel et al., 1996), universities (Per-ry-Smith & Shalley, 2003) and information technology, pharmaceuticals & electronics (Zhou & Li, 2012). The result is that research on stable and more fragmented industries (industries in which the top-four-firm concen-tration ratio is ≥40% (Porter, 1980), is less developed. Swart & Kinnie (2003) state that the reason for this is that for firms who operate in high velocity sectors, who are characterized by unstable and unpredictable market environments (Brown & Eisenhardt, 1997), the ‘sharing
of knowledge becomes even more fundamental to organi-zational success’. The outcome for stable and more
frag-mented industries may have therefore a different come (Zaheer & Soda, 2009). But what would this out-come be? Looking at the reason of Swart & Kinnie (2003), we would expect that for example the amount and strength of ties of a firm, that operates in a more stable and fragmented industries will not have an influ-ence on its performance. This would mean that the firms, who operate more form the periphery, achieve the same performance as the firms that are more centrally located in the network. But is this the case, or do the successful firms in these networks have the same characteristics as the successful firms in the more integrated and high velocity sectors?
In order to fill the research gap of the influence of ties on the performance of firms in stable and fragmented sectors, this research will focus on a network that is
lo-cated in the relatively stable and fragmented Dutch wa-ter sector (see ‘§4.2 The selection of a case’).
1.3 Research question
To identify the factors that influence the number and strength of ties and therefore the success of a network, this research will give answer on the following research question:
How does the configuration of an export network Influences the ability of an individual firm to successfully exploit innovative water solutions abroad?
The ability to exploit innovative water solutions abroad will be measured by a firm’s export performance. Moreover, in order to give an answer on the main re-search question, this question will be divided into four sub-questions that each elaborates on the theories that underlie the subject:
1. How does the absorptive capacity of an individ-ual firm influence its own export performance? 2. How does the strength of the relationships with
other firms in the network influences its own export performance?
3. How does the location of a firm in the network influence its own export performance?
4. How does the external openness of a firm influ-ence its own export performance?
1.4 Scope and domain
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increase the strong position of Dutch water sector firms abroad, which is (as identified by interviewee 4) also measured more accurately by the increase in (potential) long term relations than with single executed projects (for an overview of the interviewees see ‘Appendix – Overview network members’).1.5 Structure of the report
This report will start in chapter 2 with a review of the existing literature that is available on the subject of re-search, to provide a clear overview of the foundations of this research area. From this review, propositions and a conceptual model will be developed which will be dis-cussed in chapter 3. Chapter 4 explains how the collec-tion of the data took place and what the context of the research was. The results of the research will be shown in chapter 5 and the discussion of them will be done in chapter 6. The answer on the main research question, together with the limitations of the study and future research directions, will be given in chapter 7. The report will finish with chapter 8 in which the specific implica-tions for the NWP will be discussed.
2. LITERATURE REVIEW
Before a firm that is operating in the Dutch water sec-tor is able to exploit its innovative water solutions, the first logical step to do is to initially come up with these innovative solutions. To come up with these solutions a firm needs to obtain the necessarily resources and capa-bilities to do so. However, since the increased rate of globalization and the constant need to be innovative in order to stay ahead of competitors, there are only few firms who have all the recourses in-house.
The ability to make use of resources that are outside a firm’s boundaries is a function of a firm’s absorptive capacity (Cohen & Levinthal, 1990). Resources that a firm wants to obtain that are outside its firm boundaries can be divided into two dimensions. With the first di-mension, which is called embeddedness, we look at the firms to which a focal firm is connected in the network as well has to the firms outside the network (Granovetter, 1985). With the second dimension, which is called
exter-nal openness, we look at the ways that a firm is
cooperat-ing with other firms and how it protects it valuable as-sets against unwanted spillovers (Dyer & Singh, 1998). Before discussing the underlying characteristics of these dimensions, I will first elaborate on what networks actu-ally are and the theories behind them.
2.1 Definition of a network
Marsden (1981) describes a network in his research as a set of organizations that are linked with each other by some kind of relationship in order to not only achieve a common goal, but also their individual goals. Provan & Kennis (2008), state that such a set should exist of three or more firms. For a firm that wants to exploit its innova-tions abroad, two networks are of importance which are the social and the knowledge networks (Granovetter, 1985). A social network can be defined as 'a set of nodes
(e.g., persons, organizations) linked by a set of social rela-tionships (e.g., friendship, transfer of funds, overlapping membership) of a specified type' (Laumann, Galaskiewicz,
& Marsden, 1978: 458). While knowledge networks can be described as ‘collections of individuals and teams who
come together across organizational, spatial and discipli-nary boundaries to invent and share a body of knowledge’
(Pugh & Prusak, 2013: 1). Two theories that elaborate on the reasons for forming networks will be discussed in the next paragraph.
2.2 Theoretical framework of networks
As a result of the constant increase in competition, firms are increasingly looking for the resource outside its firm’s boundaries. The Relational View of Dyer & Sings (1998) and the Social Network Theory of Granovetter (1995) explain this concept.
Social Network Theory. The Social Network Theory states that ‘the argument that the behavior and
institu-tions to be analyzed are so constrained by ongoing social relations that to construe them as independent is a griev-ous misunderstanding’ (Granovetter, 1985: 481). This
means that ‘economic action-like any other form of social
action-does not take place in a barren social context but, rather, is embedded in social networks of relationships’
(Gulati, 1998; 295). The effect of this is that the ability of firms to obtain resources is a result of the network in which it operates. A network has therefore an influence on the economic action of a firm (the embeddedness). Therefore, a firm should have a strong focus on the rela-tionships that it has with other firms in its focal country as well as in the countries to which it wants to export.
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resources (Barney, 1991). To obtain the more specialized resources, a firm needs to look within the boundaries of other firms. However, in order to obtain such resources, firms generally need to make relation specific invest-ments. Ones this is done, firms have the potential to cre-ate idiosyncratic interfirm linkages for the sharing of resources, which could lead to the potential unique com-bination of resources (the external openness). This unique combination of resources could provide a com-petitive advantage for a firm (Dyer & Singh, 1998) which on its turn would provide the ability for a firm to exploit its activities across borders.2.3 Absorptive capacity
The result of the increase in globalization is that the competitive landscape for firms is becoming more in-tense. In order for firms to keep up with their competi-tors, new products and processes need to be developed in shorter time periods then before, this because product life cycles are getting shorter (McGrath, 2011). In order for firms to stay innovative under this external pressure, it is not always possible for firms to solely rely on their own internal knowledge. Staying innovative therefore means that in many cases firms need to look more often to external knowledge (knowledge owned by other firms), in order to increase their own level of innovation and enhance their own performance (Ireland, Hitt, & Vaidyanath, 2002). In order for a firm to be able to use this external knowledge for its own purpose, it needs to have a certain level of absorptive capacity.
The concept of absorptive capacity is positively linked by Cohen & Levinthal (1990) to a firm’s innovative per-formance by arguing that ‘the ability to exploit external
knowledge is a critical component of innovative capabili-ties’ (1990: 128). Though the definition (which is based
on three dimension) of Cohen & Levinthal (1990) is con-sidered one of the most well know definitions of absorp-tive capacity, Zahra and George (2002) state that there are four different dimensions/capabilities that compose a firm’s level of absorptive capacity. Their definition is supported by Daspit & D’Souza (2013) who state that these four dimensional specifications are most suited to conceptualize the concept of absorptive capacity. The four dimension of absorptive capacity are: acquisition & assimilation (the potential absorptive capacity) and transformation & exploitation (the realized absorptive capacity).
Acquisition. The acquisition dimension is concerned with
a firm’s ability to identify and acquire knowledge that is located externally of the firm (Zahra & George, 2002). Moreover, in the research of Kim (1998), the importance
of importing new knowledge in order to be able to ex-pand a firm’s own knowledge base is stressed out. The ability to acquire knowledge on its turn is a result of the prior learning and the set of learning skills that the firm has obtained by its previous learning experiences (Hitt, Dacin, Levitas, Arregle & Borza, 2000). However, Delios & Beamisch (1998) state that the knowledge that a firm acquires is developed in a certain context, with the result that some knowledge can be beneficial in one context but is not in others. Ones the firm has acquired new external knowledge, it needs to assimilate it internally in order to be able to benefit from it.
Assimilation. The assimilation dimension has to do with
the ability to absorb the new knowledge that the firm is able to acquire. In order to absorb this new knowledge a firm needs to be able to understand the new knowledge, before it is able to analyze and process it (Jansen, Van den Bosch, & Volberda, 2005). A firm’s existing routines and processes will contribute to the understanding of the new knowledge (Kim, 1997). Ones the firm has assimi-lated the new knowledge it needs to transform this knowledge into knowledge of their own, this in order to make it functional for their own use.
Transformation. The transformation dimension is about a
firm’s ability to internalize and convert the newly ac-quired external knowledge and combine it with its exist-ing knowledge (Zahra & George, 2002). This new knowledge needs to be combined with already existing knowledge in order for a firm to be useful, since there may be differences in the new and existing knowledge structures (Lane, Koka & Pathak, 2006). Ones the firm master’s the new knowledge it will be able to exploit it.
Exploitation. The exploitation dimension relates to the
routines and process that a firm uses to expand and lev-erages existing competences or by creating and develop-ing new routines by usdevelop-ing the assimilated and trans-formed knowledge into its existing structure (Benner & Tushman, 2003). The new routines and processes that a firm is able to exploit, as the result of the newly acquired external knowledge, can contribute to the creation of new products or processes which on their turn can result in a new competitive advantage for the firm from which they can increase their (innovative) performance (Cohen and Levinthal, 1990).
posi-10
tion in the network (Tsai, 2001) and the level of envi-ronmental turbulence (Lichtenahler, 2009). In order to obtain a high level of absorptive capacity, a firm needs to take both dimensions into account.From these factors, a firm is not able to instantly de-velop a high level of absorptive capacity. This because absorptive capacity develops in a cumulative way (Cohen & Levinthal, 1990; Lane & Lubatkin, 1998). When a firm has already a certain level of expertise in one area, it will be easier for them to understand and acquire new knowledge in the same area. This means that the more knowledge a firm has in a field, the faster a firm is able to accumulate extra knowledge in that field. This process works as a vicious circle and makes absorptive capacity therefore path dependent (Cohen & Levinthal, 1990; Lane & Lubatkin, 1998; Lavie & Rosenkopf, 2006).
Ones a firm has developed a certain level of absorp-tive capacity it needs to search for other firms that have novel knowledge in order to learn. This means that firms need to have a certain level of diversity in its knowledge. Sampson (2007) states in his research that in order for a focal firm to learn, the firms needs to have some degree of similarity regarding their resources. The most effec-tive level of diversity would therefore be a moderate level of diversity. Having a very low level of diversity, when the firms would be fairly similar, firms would only be able to learn from a few novel resources, which would result in low gains for the firms. Contrary, having a very high level of diversity, when the firms would be each other’s opposites regarding the knowledge that they own, it is difficult for them to understand each other which likely is to increase the risk of opportunistic be-havior of the party with the strongest bargaining power.
By increasing their absorptive capacity (see table 1 for the underlying characteristics), firms will become better at exploiting external knowledge for their own use. This knowledge on its turn could be used by firms in order to increase their success abroad by using it for exploiting their business across the border.
2.4 Embeddedness
Transactions take place on different ways that can be
ranked on a spectrum, ranging from low (arm’s length ties) to high (embedded ties) levels of coordination and power asymmetry (Gereffi, Humphrey & Sturgeon, 2005). In the ideal market situation, transactions are done by arm’s length ties. These arm’s length tie transac-tions are characterized by low switching costs, specifica-tions and prices are set by the seller and the transacspecifica-tions are non-specific. Moreover, there are many sellers which make it possible to avoid small-numbers bargaining posi-tions and becoming trapped in such relaposi-tionships (Uzzi, 1997; Gereffi, et al., 2005). However, looking at the other side of the spectrum, we see embedded relationships (also called hierarchies). These relationships are on their turn characterized by a believe that the embedded ties create advantages (for example the possibility of the creation of complementary resources), that firms are not able to achieve on their own and are difficult to replicate through markets, contracts or by vertical integration (Uzzi, 1997). The result of this is that markets that exist out of many arm’s-length ties will have low levels of commitment between firms, while markets that are strongly embedded will have high levels of commitment between firms.
The embedded ties that a firm has, have an effect on the actions that such an individual firms is planning to take, which means that a firm’s individual actions are constraint by their level of embeddedness (Marsden, 1981). In his research, Granovetter (1985: 481) elabo-rates on the subject of embeddedness in which he states that ‘the argument that the behavior and institutions to be
analyzed are so constrained by ongoing social relations that to construe them as independent is a grievous misunderstanding’. A clearer definition of embeddedness
is given by Giuliani (2013: 1137) in which he describes it by the fact that ‘embeddedness typically means the
over-whelming presence of social linkages within the economic space of industry clusters’. Granovetter (1992) further
elaborates on embeddedness by that there are two dif-ferent perspectives to look to embeddedness, which are relational and structural embeddedness (see table 2 for the underlying characteristics).
Characteristics Sources Positive influence on firm performance
R&D expenditure Vega-urado, et al., 2008 High level of R&D expenditure
Level of knowledge diffusion Ettlie, 2000; Tu, et al., 2006 High level of knowledge diffusion
Ratio of explicit/tacit knowledge
Cohen & Levinthal, 1990; Lane & Lubatkin, 1998; Sampson, 2007
Moderate level of diversity (tacit knowledge most important)
Position in the network Tsai, 2001 Central position in the network
Level of environmental turbu-lence
Lichtenahler, 2009 High level of turbulence
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Relational embeddedness. The relational
embeddedness is focused on the quality, strength and content of the interfirm relationship. To create a compet-itive advantage with a relationship, one of the pre-conditions that firms need to achieve is a high level of trust. Trust emerges out of the ongoing social interac-tions between partners and is defined by Dyer & Chu (2000: 260) as ‘one party’s confidence that the other party
in the exchange relationship will not exploit its vulnerabili-ties’. Trust is therefore able to make or break a
relation-ship based on the level that is present (Eisenhardt & Schoonhoven, 1996). It is an important condition be-cause trust (1) is able to lower transactions costs, (2) increases the investment in relation-specific assets, and (3) will lead to superior information sharing (Dyer & Chu, 2000). Moreover, when the social interactions and the transactions between partners increase, the ability to block opportunistic behavior will also increase (Gereffi, et al., 2005). A high level of trust will therefore increase the quality of the relationship. The strength of the ties also influences a firm’s performance on different ways. Weak ties (ties with firms who are not closely linked) are for example good for identifying new knowledge and transferring easily understandable knowledge (Granovetter, 1973). Strong ties on their turn are good for transferring more complex and difficult to under-stand information and are therefore the most useful to transfer innovative ideas between firms (Dyer, 2000). Moreover, Gulati (1998) states that strong ties will facili-tate a shared understanding of each other’s needs, be-cause it makes extensive communication and discussion between partners possible. However, weak ties will still be needed to obtain novel information and therefore, in his research of 23 woman’s better-dress firms, Uzzi (1997) states that a mix of strong and weak ties would be the most appropriate for obtaining external knowledge.
Structural embeddedness. The structural
embeddedness on the other hand, looks at the quantity and configuration of the interfirm relationships and ig-nores the firm characteristics and the tie attributes. It is related to the position that a firm occupies in the
net-work (Gulati, 1998) and to what extent a firm’s direct contacts are connected to each other (Giuliani, 2013). The position of a firm in its network influences the extent to which it has access to other firms, which on its turn will affect its performance. Ties are known to influence the performance of individual firms on multiple ways. Having a high diversity or number of ties will allow firms to capture a variety of information which will increase the chances of obtaining information that a firm is able to use (Powel, et al., 1996). Moreover, having a central posi-tion in a network will increase the ease of informaposi-tion exchange because firms that are central in the network are closer to (the more important) other firms. The abil-ity to be able to easily obtain information also lessens the information (and therefore power) asymmetry between the firms and will decrease the level of opportunistic behavior since both partners are better able to value the other firm’s resources (Ozcan & Eisenhardt, 2009). Though having a high level of embeddedness in the net-work is not always a positive thing. This because the level of embeddedness also has a turning point, since when this level becomes too high it will have a negative effect on the firms involved; the paradox of embeddedness (Uzzi, 1997; Burt, 1992). This paradox comes to exist when firms are too much focusing on the relations with the firms in the network and will therefore only be focused on the knowledge that these firms have. When doing this, the amount of effort these firms invest towards the relationships and knowledge outside the network will be limited. The result of this isomorphism is that the diversity of the knowledge in the network will decrease which will lead to a reduction of non-redundant knowledge as well as a reduction in the access to new opportunities. Since there is a decrease in novel knowledge solutions, it will become harder for firms who operate in the network to adapt to the changes in the environment which are happening outside the cluster. This miss in opportunities will eventually lead to a de-cline in the performance of the individual firms operat-ing in the network and the network as a whole (Burt, 1992). The non-embedded ties that a firm has are there-fore an excellent opportunity for a firm to obtain
Characteristics Sources Positive influence on firm performance
Level of trust Dyner & Chu, 2000; Eisenhardt & Schoonhoven,
1996; Gereffi, et al., 2005)
High level of trust
Kind of ties Burt, 1992; Uzzi, 1997 Ties with firms in the network as well as with
firms outside the network
Strength of ties Dyer, 2000; Gulati, 1998; Granovetter, 1973; Uzzi,
1997
Mix of strong and weak ties
Position in a network Gulati, 1998; Ozcan & Eisenhardt, 2009; Powel, et
al., 1996; Tsai, 2005
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knowledge that the firms in the cluster do not posses. 2.5 External opennessIn order to be innovative a firm needs to be embed-ded in relations to a certain extent in order to facilitate the transfer of innovative ideas. This level of embeddedness has to do with the search depth, which is defined by Laursen & Salter (2006: 134) as ‘the extent to
what a firm uses its different search channels to come up with their innovative ideas’. However, to overcome the
problem of isomorphism (the paradox of embeddedness), a firm should also use a variety of dif-ferent search channels in order to come up with difdif-ferent sources of knowledge. This external openness has to do with the search breath, which is defined by Laursen & Salter (2006: 134) as ‘the number of different search
channels that a firm uses to come up with their innovative ideas’. External openness could therefore best be
de-scribed as the extent that a firm uses different relation-ships with other firms. Open innovation is a useful con-cept that indicates what external openness is all about. Chesbrough (2006: 2) describes open innovation as ‘the
use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’.
So in order for a firm to be able to increase their knowledge, it should look outside the boundaries of their firm and to the more loosely-coupled firms that it has relations with. However, if a firm wants to cooperate with other firms in order to increase their own knowledge, a firm may face the paradox of openness. The paradox of openness is described by Laursen & Salter (2013: 1) as ‘the creation of innovations often requires
openness, but the commercialization of innovations re-quires protections’. This paradox elaborates on the fact
that in order to commercialize an innovation and to be able to profit from it, a firm needs to be able to appropri-ate value from it while keeping competitors away. This because it is often the case that the innovating firms fail to obtain economic returns from their innovations when launching the product on the market, while their compet-itors or the customers can. Many times, other parties are able to profit more from the innovation than the
innovat-ing firms itself (Teece, 1986). When besides the innova-tive firm other parties are able to appropriate value from the innovation, than such a firm faces the problem of involuntary outgoing spillovers (Cassiman and Veugelers, 2002). Spillovers are defined by Han, Chang & Hahn (2011: 117) as ‘when the benefits from an
invest-ment are not fully appropriated by the investors but are spread to other non-investing parties’. In order to be able
to appropriate value from an innovation, Teece (1986) proposes three building blocks which are appropriability regime, dominant design and complementary assets (see table 3 for the underlying characteristics).
Appropriability regime. The appropriability regime is described as ‘the degree to which a firm captures the
value created when it introduces innovations’ (Ceccagnoli,
2009: 82). This ability depends on two factors, which are the nature of the innovation and the strength of the intel-lectual property regime (Teece, 1986). The nature of the innovation (if it is mainly based on explicit or tacit knowledge) has great influence on what for appropriability mechanisms a firm should use (James, Leiblein & Lu, 2013; Teece, 1986; Schilling, 2010; Hurmelinna-Laukkanen, Sainio & Jauhiainen, 2008). When an innovation is build on a lot of explicit knowledge, which is public and is easy to understand for other parties, a firm should use formal appropriability mechanisms like patents, copyright or trademarks. How-ever, when an innovation is mainly based out of tacit knowledge and firms do not want to make this knowledge publicly available, more informal appropriability mechanisms like, secrecy, lead times and complementary assets are more useful. The strength of the appropriability regimes used indicates how strong the intellectual property rights are in a country. In coun-tries where there is a strong legal appropriability envi-ronment (for example The Netherlands), firms are able to protect their innovations by the use of formal mecha-nisms like patents. Contrary countries who have a weak legal appropriability environment (for example China), firms would profit more from using informal mecha-nisms like secrecy (James, et al., 2013).
Characteristics Sources Positive influence on firm performance
Kind of knowledge James, et al., 2013; Schilling, 2010; Teece, 1986 Tacit knowledge
Appropriability regime Hurmelinna-Laukkanen, et al., 2008; James, et al.,
2013
Strong appropriability regime
Dominant design Teece, 1986 Paradigmatic stage
Complementary assets Rothaermel, 2001; Teece, 1986 Generic assets (when they need to be bought)
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Dominant design. A dominant design ‘signalsscien-tific maturity and the acceptance of agree upon ‘stand-ards’ (Teece, 1986: 287). The process of an invention to
become a dominant design can be split into two stages: the pre-paradigmatic phase and the paradigmatic stage (Teece, 1986). In the pre-paradigmatic phase firms try to identify which design of a new product will become the dominant design. In this stage firms are unable to profit from complementary assets or scale economies. Contra-ry, in the paradigmatic stage a dominant design has emerged and the price becomes a competitive factor since economies of scale come to exists.
Complementary assets. Complementary assets are necessary for the successful commercialization of new products (Rothaermel, 2001), since firms may need oth-er parties like distributors, marketoth-ers or media-outlets to deliver their products to the customer. Teece (1986) splits these assets into three categories, which are gener-ic assets, specialized assets, and co-specialized assets. When a firm only needs to use generic assets in order to successfully commercialize its innovation than a firm will face low risks, since generic assets are widely available on the market. The risk for the innovator that the party who offers the assets will also capture some of the value of the innovation is therefore rather low, which means that the firm will have the potential to appropriate a high amount of value from its innovation. However, when a firms need to have specialized assets which it does not own by themselves but in order to obtain them needs to cooperate with a partner (which could be a regular sup-plier but also a competitor), than the potential to appro-priate value from the innovation is much lower. This because these other parties know that they are in a fa-vorable position because without them the firm would be unable to profit from the innovation in the same way as the do with them. In such cases, these parties will ask for higher prices which will ultimately weaken the innova-tors ability to capture a large share of value from the
innovation. So in the case of specialized assets, it could be beneficial for firms to integrate these assets into the firm by forming alliances with them.
2.6 Other firm factors
Besides the above described variables, other factors can play a role in a firm’s level of export performance. To be able to categorize the different cases of the data sam-ple into more than one category (besides the level of export performance), this research will make use of three objective firm aspects that have shown in previous research to have an influence on a firm’s performance. Although these three aspects are commonly used as con-trol variables, while this research is mainly based on qualitative research, we use these firm aspects to look for possible other ways to categorize the different cases.
The first aspect that will be used to potentially cate-gorize the data is firm size. This since larger firms have on average a bigger R&D department that makes it is easier for them to come up with new products/process, which will enhance their performance (Cavusgil, 1994; Christensen, Rocha & Gertner, 1987; Tsai, 2001). The second aspect is firm age since it is known that the long-er a firm is in oplong-eration, the more knowledge it has been able to accumulate and the higher its potential perfor-mance will be (Withers, Drnevich & Marino, 2011). Last-ly, we are going to have a look on what kind of businesses are part of the network. This since some sectors are more competitive and/or turbulence than others and therefore the level of performance differs among busi-nesses (Wu, Lin & Chen, 2013).
2.7 Summary literature
Networks and the strength of ties are extensive re-searched subjects. From the developed theories about these subjects, three important dimensions come to no-tice which have an influences on a firm’s performance. The theoretical concepts which are discussed in this chapter will function as input for the empirical research Theoretical concept Description
Network (§2.1) A set of organizations that are linked with each other by some kind of relationship in order to not only achieve a
common goal, but also their individual goals. Theories regarding
networks (§2.2)
Relational views: firms need to look at the resources that are available outside its firm’s boundaries.
Social network theory: describes that a firm’s ability to obtain resources is a result of the network in which it operates
Dimension regarding obtaining resources
Absorptive capacity (§2.3) Knowledge diffusion, sort and kind of knowledge, position in the network, level of
environmental turbulence.
Embeddedness (§2.4) Trust, kind of ties, strength of ties, position in the network.
External openness (§2.5) Kind of knowledge, appropriability regime, dominant design, complementary
assets.
Other firm factors (§2.6) Firm size, firm age, business
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(see table 4). Chapter 3 will elaborate more on these dimensions by formulating propositions around them. The way how these dimensions are applied in the re-search is discussed in Chapter 4.3. CONCEPTUAL MODEL
After defining the theories (together with the three underlying dimension) that explain why some firms are better than others in exploiting its business activities abroad, it is possible to develop propositions. These propositions, together with the conceptual model, will be discussed in this chapter.
3.1 Propositions
Absorptive capacity. Globalization makes it for firms necessarily to increase their knowledge in order to stay innovative and keep up with its competitors. Using ex-ternal knowledge will increase the possibilities of a firm to create new knowledge. This could be done by simple copying it or by assimilating it with their own knowledge in order to make complementary resources (Zahra & George, 2002). These complementary resources then can be used to increase their (international) competitive position (Ireland, et al., 2002). Therefore, I would expect that an increase in the absorptive capacity will lead to an increase in the innovation performance of a firm, which on its turn will result in being better able to exploit inno-vative water solutions abroad.
Proposition 1: The higher the absorptive capacity of a firm, the higher its export performance will be.
Embeddedness. Firms are constrained in their eco-nomic actions by the network that they are part of. This embeddedness can be split into two dimensions: rela-tional and structural.
Relational embeddedness is about the quality and
strength of the relationships in the network. Previous research states that weak ties are useful for transferring novel knowledge (Granovetter, 1973), while strong ties are used for transferring the more complex ideas be-tween firms (Dyer, 2000). In order for a firm to be able to obtain novel (but also the more complex) knowledge that is available in a network and to use it in order to exploit its innovative ideas, a firm needs to have both weak and strong ties. Therefore, I would expect that firms who have a mix of strong and weak ties are more likely to be able to create a competitive advantage and increase its export performance.
Proposition 2a. Firms that have both strong and weak ties will have a higher export performance than firms who only have strong or weak ties. Structural embeddedness is about the quantity and
configuration of the ties in a network (Gulati, 1998; Giu-liani, 2013). Powel, et al. (1996) states that a firm should try to obtain a central position in a network since it will allow a firm to access a high diversity of ties. However, the benefits will turn negative ones the firm becomes too much focused on the ties in the network. This is called the paradox of embeddedness (Uzzi, 1997; Burt, 1992), which means that when firms do not give attention any-more to the knowledge that is located outside the net-work, the knowledge diversity in the network will drop. Therefore, I would expect that a greater variety of ties (partially accomplished by a central network position) with firms in- and outside the network, provides a great-er variety of available knowledge and would increase a firm’s ability to exploit its innovative ideas.
Proposition 2b. Firms that have both ties with firms in the network as well as outside the network will have a higher export performance than firms who
only have ties with firms in the network.
External openness. When a firm has chosen the right appropriability regime as the result of the nature of the innovation and the intellectual property regime (Teece, 1986), knows in what phase it is of the dominant design (Teece, 1986), and has decided what complementary assets it needs to use (Rothaermel, 2001), it could ap-propriate the highest amount of value from its innova-tion. The ability of firms to block other parties from ap-propriating value from their innovation will increase their own ability to appropriate value from it. Therefore, I would expect that the when a firm is able to openly share its knowledge (thanks to the right appropriate regime) it will positively influence the ability to exploit its innovations.
Proposition 3: The higher the external openness of a firm, the higher the firm’s export performance will be. 3.2 Conceptual model
ulti-15
mately commercialize their innovations. These relations are displayed in the conceptual model of figure 1.
Figure 1 Conceptual model
4. METHODOLOGY
This section will be about how they research was de-signed by discussing the network that was selected for the research, how the collection of the data took place, how the different variables were operationalized and how the reliability and validity of the research are guar-anteed.
4.1 Research design
The research is done in the form of a case study. A case study ‘focuses on understanding the dynamics
pre-sent within single settings’ (Eisenhardt, 1989: 534) and is
generally associated with qualitative research. With a case study design it is possible to focus on just one or multiple cases and to answer a ‘how’ or ‘why’ question (Yin, 2003). By focusing on multiple firms within one case, as the case with this research, it is possible to make a selection between the successful and the less successful firms (polar cases) and to compare them (Brown & Eisenhardt, 1997). Moreover, case studies make it possi-ble to use different types of data like interviews, ques-tionnaires and archives (Eisenhardt, 1989). Since the aim of this research is to investigate how a network should be configurated in order for the participating firms to exploits its innovative solutions abroad, and the research therefore involves a ‘how’ question, a case study is the most relevant research method.
In order to come up with the polar cases, a network analysis is done by sending a questionnaire to all the participants (N= 15) of the network (see ‘Appendix I – Overview network members’). From the analysis of these questionnaires, two successful and two less successful firms were selected. Since the sample was very small, further research on these firms was done by the use of (semi-structured) interviews. This in order to increase the construct validity (see ‘§4.3 Data collection’). From
this data individual cases were constructed and a quali-tative data matrix was build. This made it made possible to compare the cases (Miles, Huberman & Saldaña, 2013).
Though it is not possible to support/reject existing theories by case studies (Blumberg, Cooper & Schindler, 2005), it still is a useful methodology to increase the knowledge of a subject that has been under-investigated in past literature.
4.2 The selection of a case
In order to be able to give an answer on the research question, the network that is chosen for the case study needed to meet the following requirements:
The network need to operate in a stable and fragmented industry;
It needs to be a network that is focused on the export of innovative ideas; and,
The network members need to have benefit-ed differently from the network.
In order to choose a suitable network to use as a case study, first an oriented conversation with a director (in-terviewee 9) of the NWP took place. Following up this conversation, were interviews that were done with two other employees of the NWP (interviewee 10 & 11), in which a suitable network was identified in which the NWP acted as a process facilitator.
The network that was chosen finds its origin in the relationship between the Dutch and the Indonesian gov-ernment regarding their water management agreements that dates back to 2007. At that time Jakarta suffered from a disastrous flooding which caused many deaths and high economical costs. In order to not experience such a disaster again, the Indonesian government asked the Dutch government for help (as a result of the already established Memorandum of Understanding and the high level of expertise of the Dutch water sector), who on his turn was happy to increase their relation with Indonesia (interviewee, 11). This led to a series of projects, which are shown in table 5.
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into a central vision. This vision would show what the Dutch water sector could mean for the Indonesian gov-ernment for the coming 20 to 30 years and would be presented at the trade mission. By making use of this central vision the companies were not only being able to promote the Dutch water sector in general, but also able to benefit from it individually by improving their existing ties with Dutch and Indonesian companies and by estab-lishing new ones. However, now the network has been in operation for a year it becomes clear that ‘the presentedvision had not become as clear as it should have become’
[interviewee 8].
Since the above described network meets all the three requirements of a network for this research, this network will be used in order to give an answer on the research question. The period that is selected for this research will be the six month period leading up to the trade mission, till five months after this trade mission (June 2013 – May 2014). This period is chosen because it starts with the first CEO meeting were they different CEO’s agreed to work together, till a few months after the trade mission to include the relations that were created as the result of this mission. In this period several meet-ings and extensive collaborations between the 15 firms took place (the Jakarta network).
Since the Dutch water sector could be classified as a fragmented industry and the NWP helped with the coor-dination of the Jakarta network, this is an excellent case to look at the influence of ties in a network on a firm’s performance and on how a process facilitator could in-fluence this.
4.3 Data collection
The research started with interviews (interviewees 10 & 11) to identify the most suitable network for the researched subject. Ones the network was defined, desk research was done on the strength of ties in networks (SNT) and resource sharing (RV) in order to construct the theoretical framework. The further collection of the data took place in two stages: by a quantitative and a qualitative analysis.
Quantitative analysis. To be able to construct a full-scale network analysis, an online questionnaire was used (see ‘Appendix VI – Online questionnaire). Before this questionnaire was sent to all the participants (n=15) of the Jakarta network, the construct validity of the ques-tions were first tested by two employees of the NWP (interviewees 10 & 11). The questionnaire made it pos-sible to visually construct the network (see figure 2). Moreover, though the sample of the research is very small (n=15) and it will not be possible to draw statisti-cally significant results from it, it is possible to use the results as an indication for specific patterns, which will strengthen the data that will be collected by the inter-views.
The selection of the respondents were based on in-ternal reports regarding the CEO and workgroup meet-ings that were held in the six month period before the trade mission and were controlled and confirmed by two interviewees (interviewees 10 & 11). Moreover, the questionnaire was done in Dutch in order to bypass po-tential misinterpretations caused by the English lan-guage. Ones all the firms completed the questionnaire, the data was analyzed. From this analysis, based on the (average) export performance, two successful and two less successful firms were selected for doing an inter-view.
Qualitative analysis. In order to be able to under-stand the underlying thoughts of the firms regarding the network, five respondents were asked to participate in an interview. With four firms and the Ministry of Infra-structure and Environment, semi-Infra-structured interviews of 30-45 minutes were held (see ‘Appendix VII – Inter-view protocol’). With these interInter-views open questions (‘how’ and ‘why’ questions (Yin, 2003) were used that were based on the questions from the questionnaire in order to go more depth and obtain more detailed in-formation from these firms to better understand the collected data from the questionnaires. This data was than summarized into coherent categories and analyzed by using a qualitative data matrix, from which it became possible to test the propositions (see ‘§4.5 Data analy-sis’). To increase the validity of the case study, the data
Period Project What was it about
2007 – 2008 Jakarta flood management
projects
Three projects were started to help against the flooding problems which were the result of (1) the poor drainage systems, (2) the high population density (water is not able to drain trough tarmac), and (3) the poor state of the dikes of the rivers.
2011 – 2012 Jakarta Coastal
Develop-ment Strategy
The biggest threat of flooding came from the sinking of the Jakarta city by 7 – 14 cm on a yearly basis and the rising sea level. A solution for this problem was developed.
2013 – 2014 National Capital Integrated
Coastal Development
With this project, the operationalisation of the JCDS project came to alive and resulted in a master plan that was finalized in April 2014.
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from the interviews is compared with academic litera-ture (pattern matching) (Yin, 2014).In order to bypass the location problems of the par-ticipants that were abroad at the time of the interview (interviewee 2) and the schedule problems as the result of the busy agendas of the interviewees (interviewees 4, 8, 13 & 16), all the interviews were done by phone.
Again, since it is not possible to generate statistically significant outcomes from the questionnaire due the small sample size, the data that is collected from the interviews will function as the main data in order to answer the research question. The data from the ques-tionnaires will be used to identify patterns and to strengthen the information from the interviews.
4.4 Data measures
In order to be able to do a network analysis and to answer the research question, different variables were taken into account when collecting the data (see table 6, ‘Appendix VI – Online questionnaire’ and ‘Appendix VII – Interview protocol’).
Dependent variable. The dependent variable of this research is export performance. As already stated (see ‘§1.4 Scope and domain’), export performance will be measured by the extent to which a firm is able to im-prove its existing relations and the developments of new relations with other firms. This since the increase in relations will eventually lead to a (potential) increase in business what will have a positive effect on the export performance. The improvement of existing relations and the development of new relations will be measured for the domestic as well as the Indonesian relations of the firms by using four survey questions (based on a 7-point Likert scale) and three open interview questions. Moreo-ver, the achievement of their own specific individual goal(s) is measured by one questionnaire question (also measured on a 7-point Likert scale) and three open in-terview questions (Sousa, 2004).
Independent variables. This research will use three independent variables that have shown in previous re-search to have an influence on export performance. The first independent variable is absorptive capacity. Absorp-tive capacity has to do with the ability of a firm to recog-nize new and valuable knowledge that is outside its firm boundaries and uses it to profit from it and increase its performance (Jansen, et al., 2005). This is measured in the research by six questions in the questionnaire (on a 7-point Likert scale) and three open questions in the
interview (Daspit & D’Souza, 2013; Podolny & Baron, 1997; Rodan & Galunic, 2004). The second independent variable is embeddedness. The level of embeddedness indicates how strongly a firm is connected in a network, which is the result of the amount and strength of ties that the firm has with other firms. More specifically, the amount of ties indicates the in-degree centrality of the firm (how central the firm is located in the network), while the strength of ties indicates how strong the rela-tions are that a firm has. Having many (strong) relarela-tions will increase the likelihood of profitable connection that positively influences a firm’s performance. The level of embeddedness is measured by six questionnaire ques-tions that are answered on a 7-point Liker scale and three open questions in the interview (Bear, 2010; Glaeser, Laibson, Scheinkman & Soutter, 2000). The last independent variable is external openness. A firm’s level of external openness has to do with its ability to appro-priate value from its innovations by sharing their knowledge with parties outside their firm boundaries which will allow firms (by the use of the right appropriability regime) to eventually profit more from their knowledge which will increase its performance. The ability of the firms in the network to do this is meas-ured by five questions in the questionnaire and three open interview questions (James, et al., 2013; Wu, Lin & Chen, 2013).
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Variable Type Definition Operationalisation Q. Type Scale Source
Absorptive capacity
Independent variable
‘The ability of a firm to recognize the value of new, external information, assimi-lates it, and applies it to commercial ends’. (Jansen, et al., 2005: 999)
Measured as the extent to which compa-nies are able to use external knowledge to increase their own performance.
18 / 19 20 / 21 22 / 23 7-point Likert scale
Ordinal Daspit & D’Souza
(2013); Rodan & Galunic (2004) Embeddedness Independent
variable
‘The process by which social relations shape economic action’. (Uzzi, 1996: 674)
Measured as the amount (the level of in-degree centrality) and strength of ties that a firm has with other firms.
12 / 13 14 / 15 16 / 17 7-point Likert scale Ordinal Bear (2010); Glaeser, Laibson, Scheinkman & Soutter (2000) External openness Independent variable
‘The broad set of activities that firms can conduct to acquire knowledge from, vol-untarily disclose knowledge to and ex-change knowledge with the external world’. (Wu, et al., 2013: 705)
Measured as the extent that a firm is able to appropriate value from its innova-tions. 24 / 25 26 / 27 28 7-point Likert scale
Ordinal James, et al.
(2013); Wu, Lin & Chen (2013)
Export performance
Dependent variable
‘The success or failure of a firm to sell products/services that are made domesti-cally, in foreign countries’. (Boso, et al., 2013: 64)
Measured as the extent to which a firm is able to improve existing and/or creating new relations with firms.
29 / 30 31 / 32 7-point Likert scale Ordinal Sousa (2004)
Age Categorization ‘The number of years the firm has been in
operation’. (Withers, et al., 2011: 521)
Measured as the number of years since its establishment.
6 Multiple
choice (5)
Interval Ayan & Percin
(2005); Dithers,
Drnevich & Mar-ino (2011) Size Categorization ‘The number of employees’. (Imbriani, et
al., 2013: 64)
Measured as the number of employees. 7 Multiple
choice (5)
Interval Ayan & Percin
(2005); Cavusgil & Zou (1994) Sector Categorization ‘An area of the economy in which
busi-nesses share the same or a related product or service’. (Investopedia, 2014)
Measured as one of the six kinds of busi-nesses that are identified by the NWP.
5 Multiple
choice (6)
Nominal Wu, Lin & Chen
