____________________________________________________________________________
THE SUCCESS OF DIFFERENT TYPES OF INNOVATION
IN CROWDSOURCING: EVIDENCE FROM THE ONLINE
USER INNOVATION COMMUNITY OF STARBUCKS
____________________________________________________________________________
University of Groningen Faculty of Economics and Business
14 August 2015 Master’s Thesis
MSc BA Strategic Innovation Management
Written by: Johnny Hu, s2241552 Supervisor: Dr. John Qi Dong Co-assessor: Dr. Hans van der Bij
Word count: 12.481
Key words:
1
ABSTRACT
2
1. INTRODUCTION
Nowadays there is a lot of competition between firms, for this reason the firms have to innovate their products, services and processes on a continuous basis. With the aid of introducing innovative products, processes and services, the organizations can achieve a competitive advantage. With this competitive advantage the firms can differentiate themselves from the competitors (de Wit, Dankbaar & Vissers, 2007). Currently open innovation plays an increasingly crucial role within firms. A frequent pursued innovation strategy by firms is an open innovation strategy. Open innovation is the goal-oriented utilization of internal and external knowledge in order to speed up the innovation process (Chesbrough, 2006). Sisodiya, Johnson & Grégoire (2013) defined open innovation as the pursue and integration of external input in a goal oriented way so that new products can be developed within the firm. With the use of online communities, firms are increasingly using crowdsourcing for open innovation initiatives (Dong & Wu, 2015).
3
With respect to the current research there are already many studies conducted about online user innovation communities and crowdsourcing. To illustrate what kinds of studies are already done till now, some examples are provided of recent studies regarding crowdsourcing. In the study conducted by Di Gangi & Wasko (2009), they examined the adoption process of new ideas at the online user community (IdeaStorm) of Dell. Di Gangi & Wasko (2009) focused on the factors that can have an impact on the adoption decision. They did not focus on what the relationship is between the type of innovation and the innovation success in crowdsourcing.
Furthermore, Chiu et al. (2014) did a research to what the role of crowdsourcing is in the managerial decision making process. Chiu et al. (2014) did also not examined what the relationship is between the type of innovation and the innovation success in online user innovation communities. In addition, Huang, Singh & Srinivasan (2014) did a research with respect to new product idea and development process. Huang et al. (2014) did also not focus on the earlier mentioned topic. Moreover, Dong & Wu (2015) examined the extent in which firms can generate business value from online user innovation communities. They used the theory regarding dynamic capabilities and the view of innovation value chain to develop a new theory how online user innovation communities can affect the firm value. Dong & Wu (2015) did also not focused on what the relationship is between the type of innovation and innovation success.
4
The online user innovation community 'MyStarbucksIdea' of Starbucks is utilized for this study. The product innovation ideas, process innovation ideas and service innovation ideas that are posted on 'MyStarbucksIdea' were collected and analyzed based on different aspects, such as whether the idea was launched or not, the number of votes and the number of comments. In total 80342 ideas on 'MyStarbucksIdea' are analyzed. Furthermore, the diverse ideas could be categorized in three types of categories. The ideas are categorized into product, process or service innovations.
Hence, the purpose of this study is to reveal what the relationship is between the innovation type and the success of the innovation. With regard to the contribution of this research it can be stated that new valuable in-depth insights about innovations in online user innovation communities are provided. Specifically, this study will contribute to the existing innovation and crowdsourcing literature with exposing how a certain type of innovation is related to the innovation success of a firm. With the findings of this study the current innovation and crowdsourcing literature can be enriched. Recent literature does not provide an answer on the research topic that is treated in this study. In this study the firm Starbucks will be examined concerning their online user innovation community, this is because of the fact that this firm is extremely active with crowdsourcing activities. With respect to the goal of this study the following research question is formulated:
1.1 Research question
‘What is the relationship between the type of innovation (initiated in crowdsourcing) and innovation success?’
5
This paper is organized as follows, it starts with a theoretical part, this is the theoretical background and the hypotheses will be presented. After this chapter it is followed by the methodology, in this part it is described how this research was conducted in a comprehensive way. Furthermore, the findings of this study are presented. This paper will end with discussing the findings and conclusions are provided. The theoretical and managerial implications based on this research are developed as well. Finally, the limitations of this study and directions for future research are presented.
2. THEORETICAL BACKGROUND AND HYPOTHESES 2.1 Innovation success
6
2.2 Open innovation
In 2003 Henry Chesbrough introduced the phenomenon 'Open innovation', Henry Chesbrough is the founder of open innovation (Chesbrough, 2012). According to Chesbrough (2003) firms have a bigger chance to be successful when the firms are applying an open innovation strategy nowadays. In this way a firm can cooperate with other firms in order to develop for instance new products. With this a firm can attain competitive advantages. Thus, open innovation is extremely crucial for the firms now. Since the introduction of this phenomenon is adopted by a lot of scholars (VandeVrande, de Jong, Vanhaverbeke & de Rochemont, 2009; Lichtenthaler, 2011; Sisodiya, et al. 2013). Open innovation is the goal-oriented utilization of internal and external knowledge in order to speed up the innovation process (Chesbrough, 2006). Furthermore, open innovation is the purposeful pursuit and integration of external inputs in order to develop new products in a company (Sisodiya et al., 2013). Additionally, open innovation is about the utilization of different types of external sources that firms can apply to their own innovation process (de Wit, Dankbaar & Vissers, 2007). Open innovation can be separated into two types, the first type is inbound open innovation and the second type is outbound open innovation. With respect to inbound open innovation, this is about that a firm is acquiring knowledge from external parties, in this way the internal innovation strategy can be accelerate the internal innovation process (Chesbrough & Crowther, 2006). Starbucks is following this type of open innovation with 'MyStarbucksIdea'. Furthermore, outbound open innovation is the reverse of inbound open innovation. Outbound open innovation is the external exploitation of the internal knowledge of a firm (Huizingh, 2011).
2.3 Crowdsourcing
7
It can be thought about looking for new ideas. The work is outsourced to a huge group of people. In general this huge group of persons is an external party, this is called the 'crowd'. This is in line with what Kosonen, Gan, Olander & Blomqvist (2013) described, they argued that crowdsourcing is used to acquire new ideas and develop ideas that are better aligned with the needs of the customers. Furthermore, Chiu et al. (2014) described that crowdsourcing can offer help by making managerial decisions, exploiting of opportunities and problem solving. Regarding the crowd, this group of persons can help to create ideas and they can also provide support for analyzing and prioritizing the projected solutions to different kinds of problems (Chiu et al., 2014). Crowdsourcing is applied in order to make use of external knowledge that firms usually do not possess and crowdsourcing can provide support for solving problems by the crowd (Bloodgood, 2013).
8
Afuah & Tucci (2012) argued that it depends on the characteristics of the problem, solutions that need to be analyzed, the crowd and the necessary knowledge that is needed for developing the solution. According to Dong & Wu (2015) social media technologies provide information that is based on the users and these kinds of technologies can provide firms new opportunities and challenges so that a firm can change the current business. It can be stated that the social media technologies are related to crowdsourcing because with the social technologies for instance new ideas for products can be acquired from the users.
2.4 Online user innovation communities
9
In addition, it can be stated that online user innovation communities also can be named as virtual customer environments (VCE), these two phenomena are basically the same. In this paper only the term 'online user innovation communities' is used rather than using both terms, this is because of preventing misunderstandings. An online user innovation community is a technology-based customer forum on the internet (Nambisan & Nambisan, 2008). At the present many firms are working with this, with the help of these environments closer relationships can be developed with the customers concerning innovation and the creation of value (Nambisan & Nambisan, 2008). Furthermore, Nambisan & Nambisan (2008) argued that the firm can gain benefits when the firm integrating the customers in their new product development, product support and other activities that are connected to this. In the study conducted by Di Gangi & Wasko (2009), they argued that the ability of the firm to understand the technical requirements of the new ideas provided by the visitors of an online community is a factor that has an impact on the decision to adopt or not adopt the idea. Dong & Wu (2015) examined whether firms can gain firm value from online user innovation communities. The findings showed that online user innovation community-enabled ideation capability does not have an impact on the firm value, however online user innovation community-enabled implementation capability has a positive impact on the firm value (Dong & Wu, 2015).
10
2.5 Hypotheses
In the existing literature there is a mechanism that is related to economic development, this mechanism is developed by Schumpeter (1934, 1942). This mechanism is used as a basis for developing the hypotheses in this study. The theory of Schumpeter (1942) describes the phenomenon ‘creative destruction’. Creative destruction is the introduction of new things by a firm, thus introducing innovations. A consequent of creative destruction is that the existing firms in the market should adopt the new standards as a result of creative destruction (Schumpeter, 1934, 1942). Otherwise the existing firms in the market should exit the market, because of the fact that they will not operate in a decent way without accepting the new standards. Thus, a firm is not able to achieve firm success and with this the firm is also not able to realize innovation success. Based on this mechanism it basically argues that innovations are necessary for firms in order to be successful in the market, this is related to the innovation success. Therefore, a lot of firms (including Starbucks) are introducing innovations nowadays. Concerning the mechanism that is discussed in this section it can be stated that this mechanism considers innovation as an endogenous process (Schumpeter, 1934). According to him the entrepreneur of a firm can be seen as an innovator, firms that are active with introducing innovations can create opportunities that will help a firm to become a successful firm in the market.
11
With respect to the current literature it can be stated that product innovation, process innovation and service innovation are the dominant innovation types that are used to categorize innovations. For this reason these three innovation types are used in this study. To illustrate that a huge amount of studies are conducted based on these innovation types some examples are provided. Wong, Lee & Der Foo (2008) conducted a research regarding the influence of product and process innovations on new business founding. Moreover, Kim, Kim & Park (2015) examined the factors that have an impact on the product innovation performance. Additionally, Skiver (2015) executed a study with respect to product and process innovation. Finally, in the study conducted by
Hidalgo & D’Alvano (2014) they examined service innovation. Therefore, the different types of selected ideas by Starbucks will be categorized into product, process or service innovation. Thus, in this study the different types of ideas are classified into the three mentioned innovation types in order to make it possible to measure it.
2.5.1 Product innovation and innovation success in crowdsourcing
12
According to Kang & Montoya (2014) a large product portfolio can support the financial performance of a firm. They argued that new products have a positive relationship with the sales and profits. Therefore, it can be stated that product innovations are helping a firm to achieve good performances on different aspects and with this innovation success can be realized. Pauwels, Silva-Risso, Srinivasan & Hanssens (2004) argued that new product introductions are crucial performance drivers. Furthermore, introducing new products this has a positive impact on the financial performance of a firm and the firm value. Implementing new products this will lead to an increase of the financial performance in a long term way (Pauwels et al., 2004). Thus, more and more firms are introducing product innovations in the sake of the financial performance and the firm value. Lau, Tang & Yam (2010) argued that with the aid of product innovation a firm could achieve superior performances. Thus, conducting product innovations this will lead to innovation success.
Poetz & Schreier (2012) did a research regarding crowdsourcing. They found different advantages for firms when firms follow a crowdsourcing strategy and this has a positive impact on product innovation. According to Poetz & Schreier (2012) the ideas that are generated by professionals score significantly lower than the ideas that are developed by the users. Furthermore, Poetz & Schreier (2012) argued that the customer benefit is lower when the ideas are created by professionals and when the ideas are generated by the users the customer benefit is higher. It is can be stated that crowdsourcing with customers will complement to the work of the professionals in the idea generation stage when new products need to be developed (Poetz & Schreier, 2012).
Crowdsourcing/online user innovation communities can therefore help a firm to achieve successful product innovations and with this innovation success can be obtained. Moreover, product innovations can be developed in a more effective way when firms are using crowdsourcing, the customers can share their experiences with the product so in this way they can indicate the problems when they use the product (Füller 2010). Thus, decent product innovations can be developed and this will lead to innovation success.
13
For this reason firms select the best innovation ideas that were submitted and are willing to launch the product ideas that are generated in an online user innovation community. Hence, the following hypothesis is proposed:
Hypothesis 1: Product innovation ideas are positively related to innovation success.
2.5.2 Process innovation and innovation success in crowdsourcing
Process innovation can be described as the introduction of new or enhanced supply chain, administrative, production processes (Piening & Salge, 2015). Furthermore, process innovation is extremely useful in areas when firms can lose their competitive advantages in speedy way due to the shifts of customer demands, situations of the market, frameworks concerning legal issues and technology change (Damanpour, Walker & Avellaneda, 2009; Teece, Pisano & Shuen, 1997). With the support of process innovations a firm can gain different benefits. Process innovations ensure that firms can benefit from the growth of revenue, time and cost savings, gains created by productivity, and enhancements regarding quality (Baer & Frese, 2003; He & Wong, 2004; Klomp & Van Leeuwen, 2001; Pisano, Bohmer & Edmondson, 2001). In the current literature it is argued that process innovations provoke innovations concerning products and contrariwise. Process innovations and product innovations are interrelated. These two aspects need each other to perform in a proper way. Positive effects on the performance of a firm can be achieved when process and product innovations are executed in synchronized way (Damanpour & Gopalakrishnan, 2001, Reichstein & Salter, 2006). It is argued that process innovations are transitional results that can help to realize performances on a higher level, thus process innovations are executed to gain better performances (Crossan & Apaydin, 2010).
14
According to Ettlie & Reza (1992) process innovations have positive effect on diverse financial performance indicators that firm use. It can be stated that process innovations ensure that the processes of a firm will be executed in an optimal way. According to Saxton, Oh & Kishore (2013) crowdsourcing is an intersection between the crowd, social web and outsourcing. In this way a firm can obtain external knowledge that a firm cannot access without crowdsourcing. With respect to the crowd, this group of persons can support a firm to develop ideas and also support can be provided by this group for analyzing and prioritizing the projected solutions to different kinds of problems (Chiu et al., 2014). Huang et al. (2014) conducted a case study based on the online user innovation community of Dell. The aim of this community is to obtain information about the customers regarding for instance the wishes for new products and services that they have. An online user innovation community offers a firm a possibility to filter and select the best ideas for implementation, in this way profits can be gained by the firm (Huang et al., 2014). It can be stated that different types of ideas related to diverse innovation types are submitted by the customers, thus also process innovation ideas are posted. With the support of an online user innovation community good innovations, including process innovations, can be developed and implemented with a high level of certainty that it will lead to success. This is because of that the innovations are developed with the help of the customers. With respect to the earlier mentioned benefits of process innovations, the theory of Schumpeter and based on the academic arguments from existing literature, it can be concluded that it is very plausible that process innovations have a positive impact on the performance of a firm and with this a positive relationship is expected between process innovations and the innovation success, thus it has a positive impact on the likelihood of idea launch. For this reason firms select the most excellent innovation ideas that were submitted and are willing to launch the process ideas that are generated in an online user innovation community. Thus, the following hypothesis is proposed:
15
2.5.3 Service innovation and innovation success in crowdsourcing
According to Van Ark, Broersma & Den Hertog (2003) service innovation is a new or significantly altered service concept, service delivery system, technological concept or client interaction channel that will lead to new/updated service functions in a firm.
Lusch & Nambisan (2015) argued that service innovations will appear in a rapid way in a digital world. Based on the fact that information is detached from different affairs and fast development of global communication networks, innovations will be intangible and available in a digital way (Lusch & Nambisan (2015). It can be stated that service innovations become more and more crucial for firms. With providing excellent services to the customers this will help to generate customer loyalty.
According to Rubalcaba (2015) services are becoming crucial operations worldwide, with the aid of service innovation growth and prosperity can be achieved. Nowadays, services can be seen as the most important economic sector (Rubalcaba, 2015). Thus, service innovations become extremely essential for firms and therefore more and more firms will implement service innovations. Based on the current literature it can be concluded that service innovations have a positive impact on the performance of an organization. The positive impact is generated by the benefits that are results of when service innovations are implemented. With the aid of service innovations the revenues of a firm will increase (Mansury & Love, 2008). Additionally, the costs resulting from the operations of the firm can be reduced (Panesar & Markeset, 2008) and the profitability of the firm can be enhanced (Matear, Gray & Garrett, 2004).
16
Therefore, service innovations will lead to innovation success. In this study it means that the likelihood for launching a service innovation idea will be high. Based on the discussion above and on the theory of Schumpeter, it can be argued that it is very conceivable that service innovations have a positive impact on the performance of a firm and with this a positive relationship is expected between service innovations and the innovation success, thus it has a positive impact on the likelihood of idea launch. For this reason firms select the best innovation ideas that were submitted and are willing to launch the service ideas that are created in an online user innovation community. Consequently, the following hypothesis is proposed:
Hypothesis 3: Service innovation ideas are positively related to innovation success.
In figure 1 the conceptual framework is presented that is used in this study.
Figure 1.
17
3. METHODOLOGY 3.1 Research site
Nowadays Starbucks is a well-known coffee company. Since 1971 Starbucks is operating actively in the coffee market worldwide. The firm owns 15.000 establishments divided over 50 countries. Starbucks is the largest firm that is trading in coffee specialty products. In addition, the CEO of Starbucks is Howard Schultz. One of the objectives of Starbucks was to differentiate the firm from the other coffee companies. Starbucks is not only paying a lot of attention to coffee. The firm considers the atmosphere in the coffee houses as crucial as well. Starbucks is focusing on the creation of an atmosphere related to solidarity. Thus, based on the philosophy of Starbucks it can be stated that the firm is aiming on providing an experience for the customers rather than only focusing on their coffee specialties. However, Starbucks is not solely selling coffee products. The customers can for instance order pastries, lunch products and tea as well at Starbucks. Furthermore, the mission of Starbucks is: ‘To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time’ (Starbucks.com, 2015).
Innovation becomes increasingly important for firms at the present, it can be seen that the firms are innovating on a continuous basis in order to stay competitive in the market. Moreover, the customers/users of certain products are becoming gradually an essential part in the innovation processes of the firms. Based on this fact Starbucks launched an online user innovation community in 2008. The name of this community is ‘MyStarbucksIdea’. With the aid of the online user innovation community Starbucks can implement innovative products, processes and services based on the wishes of the customers.
18
3.2 Research design
3.2.1 Data collection
Online user innovation communities are becoming increasingly crucial for firms nowadays. Starbucks is a firm that is extremely active in applying an online user innovation community (MyStarbucksIdea), thus therefore Starbucks is chosen as sample for this study. It can be argued that a proper answer can be generated for the research question based on the case study concerning Starbucks. For this study the online user innovation community of Starbucks 'MyStarbucksIdea' is critically analyzed. The data gained from 'MyStarbucksIdea' can be considered as the most crucial information that is utilized for this study, the results are based on this data. In figure 2 a screenshot of the ‘MyStarbucksIdea’ website is displayed.
Figure 2.
Screenshot 'MyStarbucksIdea' website
19
For this study the product ideas (product innovation ideas), involvement ideas (process innovation ideas) and experience ideas (service innovation ideas) categories are used that are collected from 'MyStarbucksIdea', this is because of that these categories contain ideas that are launched and unlaunched by Starbucks. In order to conduct a comprehensive analysis in this study all ideas that are submitted in the three idea categories are included in the analysis. With respect to the aim of this study it can be stated that all these categories need to be utilized. The product innovation ideas, process innovation ideas and service innovation ideas are analyzed that are submitted in the period from 2007 till 2011, in total 80342 ideas are analyzed. The ideas that can be found on ‘MyStarbucksIdea’ are divided into different categories. Below in table 2 the diverse categories per idea type are presented.
Table 1.
Idea type and categories, ‘MyStarbucksIdea’
Idea type Categories
Product ideas • Coffee & Espresso Drinks • Frappuccino Beverages • Tea & Other Drinks • Food
• Merchandise & Music • Starbucks Card • New Technology • Other Product Ideas Involvement ideas • Building Community
• Social Responsibility • Other Involvement Ideas • Outside USA
Experience ideas • Ordering, Payment & Pick-Up • Atmosphere & Locations • Other Experience Ideas
20 Product ideas
As can be seen in table 1 the idea type ‘product ideas’ is about ideas that are related to products. This idea type is very straightforward, when looking to the categories of this idea type then it can be concluded that it is all about the products that Starbucks is offering to the customers. For instance, coffee & espresso drinks and frappuccino beverages.
Thus, all the ideas that are posted related to this idea type are product innovation ideas. In this study the innovation type product innovation is used to classify these ideas. Involvement ideas
These ideas can be described as ideas that are used to contribute to the community so that everyone in the community can benefit from it. Furthermore, involvement ideas are also including ideas that are linked with social responsibility. An example is provided to illustrate this:
‘I was horrified last time I visited a Starbucks to see the employees shoving one plastsic milk jug after another into the garbage. You can do better! Set up recycling cans in your stores so everyone can see your dedication to saving the earth!! It's painful to throw away the plastic cups that I know can be recycled!’ Posted by Ksimpson on 1 April 2008 (MyStarbucksIdea (a), 2015).
Moreover, another example of an involvement idea is:
21
All these types of ideas have to do with improving processes of Starbucks. The ideas that are submitted to the involvement ideas category are related to enhancing the processes/operations of Starbucks, so that for instance the service processes in the Starbucks coffeehouses or the lead-time of ordering processes can be improved. These ideas attempt to make everything as effective, efficient and pleasant as possible for the firm and for the customers. Thus, it can be concluded that the involvement ideas are related to process innovations. For this reason the involvement ideas are classified as process innovation ideas in this study.
Experience ideas
The experience ideas on 'MyStarbucksIdea'can be described as ideas that are related to the experience that customers get when visiting a Starbucks coffeehouse. All the things that have an effect on the experience of the customers during a Starbucks visit are linked with experience ideas. In order to demonstrate what an experience idea is, the following example is provided:
‘I am sitting in the Broadway & West 72nd, NYC location and the music volume is excessively loud, which forces people to also speak at a very high volume. This seems like an extreme opposition from what I've come to understand as Howard Schultz's model of crafting a space similar to the coffee shops in Italy. This does not foster a feeling of community. Starbucks should be a reprieve from the chaos of NYC (or any city or small town) streets. Light music playing in the background is understandable, but this volume feels more like I'm in dance club. Please lower the volume.’ Posted by 3Threat on 6 May 2014 (MyStarbucksIdea (c), 2015).
In addition, another example is provided:
22
Starbucks when I travel overseas. My observations and rfecommendation: 1. Free WiFi attracts business travelers who then spend money on coffee and food. 2. Buying coffee and food does not attract WiFi customers 3. If Starbucks came out with a "WiFi is now Free and Easy at Starbucks Worldwide" marketing campaign, they could re-capture most of the international (and domestic) market. All the WiFi users would go to Starbucks because of the brand, and THEN they would buy coffee and food. Starbucks revenue would skyrocket! PLEASE make WiFi at Starbucks "instant on" for everybody inside the Starbucks store!!!’ Posted by GlobalWiFiUser on 5 January 2010 (MyStarbucksIdea (d), 2015).
All these types of ideas are linked with improving the service experiences of Starbucks. Thus, it can be concluded that the experience ideas are related to service innovations. For this reason the experience ideas are classified as service innovation ideas in this study.
3.3 Measures
In this study a theory testing research approach is conducted. According to van Aken, Berends & van der Bij (2012) the theory testing approach is used to study a certain business phenomenon that is active in different firms. With respect to the business phenomenon, this phenomenon is not completely examined in the current literature (van Aken et al., 2012). Based on the purpose of this study it can be stated that the theory testing approach is an adequate method to execute this study. For this reason, hypotheses are formulated to test existing theories. Consequently, a dependent variable, independent variables and control variables are defined. On the next pages each variable is discussed.
3.3.1 Dependent variable: Innovation success
23
In this study innovation success is defined as follows: the launch of ideas that are created by persons with the support of crowdsourcing (MyStarbucksIdea). Thus, the innovation success (likelihood of idea launch) is measured as the launch of an idea in the online user innovation community ‘MyStarbucksIdea’.
3.3.2 Independent variables: Product, process and service innovation ideas
In this study the product innovation ideas, process innovation ideas and service innovation ideas are used as independent variables. Product innovation ideas are measured by using product ideas from 'MyStarbucksIdea'. Furthermore, the process innovation ideas are measured by using involvement ideas and the service innovation ideas are measured by using the experience ideas that could be collected from 'MyStarbucksIdea'. The product ideas are linked with product innovation ideas, involvement ideas are linked with process innovation ideas and experience ideas are related to service innovation ideas. Therefore, the different types of ideas will be categorized into product, process or service innovation ideas. In total 80342 ideas were collected and analyzed for this study. The different types of ideas in the online user innovation community (MyStarbucksIdea) could be classified into the above mentioned categories.
3.3.3 Control variables: Number of votes and number of comments
24
3.4 Data analysis
In this study the data is analyzed with the analysis program STATA. First of all, some general statistical analyses are executed to provide basic statistical information about this research. The general analyses include information about the mean, standard deviation, the minimum and maximum values. Furthermore, a standard correlation analysis is conducted. Next to this, logistic regression analyses are conducted to analyze the collected data. These approaches are the main analyses that are used for this study. The following variables are utilized for the analyses: idea launched, product innovation ideas, process innovation ideas, service innovation ideas, number of votes and the number of comments. The last two mentioned variables are the control variables and the rest are independent variables. In this study two logistic regression analyses are performed in order to get proper results.
25
4. RESULTS
In this part of the paper the findings of the research are presented. At the present crowdsourcing is a phenomenon that is applied by many firms. Regarding crowdsourcing, online user innovation communities are becoming increasingly crucial for firms. Therefore Starbucks implemented in 2008 an online user innovation community, 'MyStarbucksIdea'.
In this study a theory testing approach was followed, therefore three hypotheses were developed to test the existing literature. The aim of this study is to reveal how different types of innovations, such as product, process and service innovations, are related to the innovation success. In addition, the innovation success is in this study defined as the launch of an idea that was initiated by ‘MyStarbucksIdea’. To test the hypotheses a logistic regression is conducted. The descriptive statistics of this study are presented in table 2 and in table 3 the correlations are displayed. Furthermore, in table 4 the results of the logistic regression analyses are presented.
With respect to table 2 it can be concluded that the standard deviations of number of votes (1.923659) and the number of comments (0.7883966) are rather high compared to the other standard deviations of the variables. The high standard deviations can be clarified by the fact that the number of votes and comments are fluctuating per submitted idea, therefore the standard deviations of these two variables are higher than the other variables.
26
Table 2.
Descriptive statistics (n= 80342)
27 Table 3. Correlations (n= 80342) ¹ Independent variable ² Control variable * P < 0.05. ** P < 0.01.
28
Additionally, the outcome of the Pseudo R² is 0.2948 which is good. This means that the model used in this study can explain 29,48% variation in the likelihood of the ideas that will be launched. In table 4 also the results can be found that are used to test the three hypotheses in this study. Innovation success is referred to the launch of the different innovation ideas initiated in crowdsourcing.
29
Table 4.
30
5. DISCUSSION AND CONCLUSIONS
In this part of the paper the findings of the research are analyzed and discussed. Furthermore, conclusions are provided based on the findings and the theoretical, managerial implications are presented. Finally, the limitations of this study and the directions for future research are described.
In this study a case study is conducted based on Starbucks. The online user innovation community, 'MyStarbucksIdea' is used for the research that is executed in this paper. A lot of research is done regarding crowdsourcing, online user innovation communities and other related topics. However, based on the current literature it can be stated that there is an area that is still undiscovered. At the moment no research is conducted with respect to what the relationship is between the innovation type and the innovation success in an online user innovation community. For this reason this study was conducted in order to enrich the current innovation and crowdsourcing literature with new insights. The following research question is used in this study:
‘What is the relationship between the type of innovation (initiated in crowdsourcing) and innovation success?’
The online user innovation community of Starbucks, 'MyStarbucksIdea' is pursuing an open innovation strategy. Open innovation has two types, namely inbound open innovation and outbound open innovation. Inbound open innovation is the acquisition of knowledge from external parties, in this way the internal innovation strategy can be accelerate the internal innovation process (Chesbrough & Crowther, 2006). In addition, outbound open innovation is the external exploitation of the internal knowledge of a firm (Huizingh, 2011). It can be argued that Starbucks is following an inbound open innovation strategy.
31
According to Chiu et al. (2014) crowdsourcing is the process of outsourcing work. With the help of the persons that are contributing on 'MyStarbucksIdea' Starbucks can develop for instance new products or products can be enhanced based on the feedback of the participants. Moreover, with the support of an online user innovation community it works more efficient for the firm to come up with innovative ideas (Di Gangi & Wasko, 2009). This is also applicable for Starbucks, with the different contributions of the participants of 'MyStarbucksIdea' Starbucks can develop new ideas in a more efficient way. Hence, Starbucks is basically outsourcing work concerning developing of new ideas. Based on the findings it can be concluded that customers are demanding different types of things, therefore the different ideas are related to diverse types of innovations. In this study the following innovation types are used to classify the different ideas: product innovations, process innovations and service innovations.
The aim of this study was to reveal what the relationship is between the innovation type and the innovation success. In this research innovation success is referred to the launch of the ideas generated in the online user innovation community ‘MyStarbucksIdea’. The results show that the three types of innovations (product, process and service innovation) have a positive relationship with the innovation success. With respect to product innovation ideas, these types of ideas have a positive relationship with the innovation success. This can be clarified based on the fact that a high level of product innovativeness can help a firm to perform in a better way than other firms with lower levels of innovativeness (Chapman & Hyland, 2004). Lau, Tang & Yam (2010) argued that with the support of product innovation a firm could achieve superior performances.
32
The evidence for the positive relationship between process innovations and the innovation success can confirm this. With the support of service innovations the revenues of a firm will increase (Mansury & Love, 2008), the costs resulting from the operations of the firm can be reduced (Panesar & Markeset, 2008) and the profitability of the firm can be enhanced (Matear, Gray & Garrett, 2004). Nowadays, services can be seen as the most important economic sector (Rubalcaba, 2015). Thus, service innovations become extremely essential for firms and therefore more and more firms will launch/implement service innovations. Based on the current literature it can be concluded that service innovations have a positive impact on the performance of an organization. This can be used as arguments that service innovation ideas are positive related to the innovation success (likelihood of idea launch), firms are willing to launch such as innovation ideas. The results of this study show that service innovation ideas are positively related to innovation success, this can be clarified with the support of the existing literature concerning service innovation. In the current literature it is discussed what service innovation can do for the firm, as described earlier service innovation generate different benefits for a firm that are significant. Therefore, firms are willing to invest in service innovations and launch these innovations.
33
It is concluded that the relationship between service innovation and innovation success is less strong than the relationship between product, process innovation and innovation success. This difference can be clarified based on the fact that in this study a case study is conducted with Starbucks as sample. Starbucks is a company that is offering food and beverages that is the core business of Starbucks. Thus, Starbucks is more interested in innovations regarding products and processes than service innovations. Starbucks is not a firm that is based on only providing services such as consultancy services, therefore the other two aspects have a stronger relationship with innovation success in the firm Starbucks.
5.1 Theoretical implications
34
5.2 Managerial implications
With the findings of this study it provides managers an understanding what the relationship is between types of innovations (product innovations, process innovations and service innovations) and the innovation success. In this study managers should see innovation success as the launch of an idea initiated in an online user innovation community. Based on the findings it can be stated that all three innovation types are positively related to the innovation success. However, service innovation ideas are less strong related to innovation success. A possible explanation is that firms consider service innovations as less important than product and process innovations. Therefore the managers of the firms are less willing to launch service innovation ideas, managers should understand the impact of this on the firm performance. Services are becoming crucial operations worldwide, with the support of service innovation growth and prosperity can be achieved (Rubalcaba, 2015). According to Rubalcaba (2015) services can be seen as the most important economic sector nowadays. Based on this managers should pay more attention to service innovations, in this way a firm can perform in an optimal way.
5.3 Limitations and future research
35
36
6. ACKNOWLEDGEMENTS
In this part of the paper I would like to express my gratitude to my thesis supervisor Dr. John Qi Dong (University of Groningen). I am grateful for his great support, suggestions and feedback on my thesis. Furthermore, I would like to thank Dr. Hans van der Bij (University of Groningen) for his suggestions and feedback. Finally, I would like to thank all the persons who have assisted me in a direct and indirect way for accomplishing of my thesis.
37
7. REFERENCES
Afuah, A., & Tucci, C. L. (2012). Crowdsourcing as a solution to distant search. Academy of Management Review, 37(3), 355-375.
Aken, van J.E., Berends, H., & Bij, van der H. (2012). Problem solving in organizations - A methodological handbook for business and management students.
Baer, M., & Frese, M. (2003). Innovation is not enough: Climates for initiative and
psychological safety, process innovations, and firm performance. Journal of
organizational behavior, 24(1), 45-68.
Baldwin, J. R., & Johnson, J. (1996). Business strategies in more-and less-innovative firms in Canada. Research policy, 25(5), 785-804.
Bloodgood, J. (2013). Crowdsourcing: Useful for problem solving, but what about value capture? Academy of Management Review, 38(3), 455-457.
Boudreau, K. J., Lacetera, N., & Lakhani, K. R. (2011). Incentives and problem uncertainty in innovation contests: An empirical analysis. Management Science, 57(5), 843-863.
Brabham, D. C. (2008). Crowdsourcing as a model for problem solving an introduction and cases. Convergence: the international journal of research into new media technologies, 14(1), 75-90.
Chapman, R., & Hyland, P. (2004). Complexity and learning behaviors in product innovation. Technovation, 24(7), 553-561.
Chesbrough, H. W. (2003). The era of open innovation. MIT Sloan Management Review, 127(3), 35-41.
38
Chesbrough, H., & Crowther, A.K. 2006. Beyond high tech: early adopters of open innovation in other industries. R&D Management, 36(3): 229-236.
Chesbrough, H. 2012. Open Innovation, Where We've Been and Where We're Going. Research-Technology Management, 20-27.
Chiu, C. M., Liang, T. P., & Turban, E. (2014). What Can Crowdsourcing Do for Decision Support? Decision Support Systems, 1-10.
Cooper, R. G., & Kleinschmidt, E. J. (1987). Success factors in product innovation.
Industrial marketing management, 16(3), 215-223.
Crossan, M. M., & Apaydin, M. (2010). A multi‐dimensional framework of organizational innovation: A systematic review of the literature. Journal of management
studies, 47(6), 1154-1191.
Damanpour, F., & Gopalakrishnan, S. (2001). The dynamics of the adoption of product and process innovations in organizations. Journal of Management Studies, 38(1), 45-65.
Damanpour, F., Walker, R. M., & Avellaneda, C. N. (2009). Combinative effects of innovation types and organizational performance: A longitudinal study of service organizations. Journal of Management Studies, 46(4), 650-675.
Di Gangi, P. M., & Wasko, M. (2009). Steal my idea! Organizational adoption of user innovations from a user innovation community: A case study of Dell IdeaStorm. Decision Support Systems, 48(1), 303-312.
Dong, J., & Wu, W. (2015). Business Value of Social Media Technologies: Evidence from Online User Innovation Communities. Journal of Strategic Information Systems, 24(2), 113-127.
39
Franke, N., & Shah, S. (2003). How communities support innovative activities: an
exploration of assistance and sharing among end-users. Research policy, 32(1), 157-178.
Füller, J. (2010). Refining virtual co-creation from a consumer perspective. California management review, (52), 98-122.
Girotra, K., Terwiesch, C., & Ulrich, K. T. (2010). Idea generation and the quality of the best idea. Management Science, 56(4), 591-605.
Griffin, A., & Page, A. L. (1993). An interim report on measuring product development success and failure. Journal of Product Innovation Management, 10(4), 291-308.
He, Z. L., & Wong, P. K. (2004). Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization science, 15(4), 481-494.
Hervas-Oliver, J. L., & Sempere-Ripoll, F. (2015). Disentangling the influence of
technological process and product innovations. Journal of Business Research, 68(1), 109-118.
Huang, Y., Singh, P. V., & Srinivasan, K. (2014). Crowdsourcing New Product Ideas under Consumer Learning. Management Science, 1-22.
Huizingh, E.K.R.E. 2011. Open innovation: State of the art and future perspectives. Technovation, 31: 2-9.
Hult, G. T. M., Hurley, R. F., & Knight, G. A. (2004). Innovativeness: Its antecedents and impact on business performance. Industrial marketing management, 33(5), 429-438.
Kang, W., & Montoya, M. (2014). The impact of product portfolio strategy on financial performance: The roles of product development and market entry decisions.
40
Kim, J. W., Choi, J., Qualls, W., & Han, K. (2008). It takes a marketplace community to raise brand commitment: the role of online communities. Journal of Marketing
Management, 24(3-4), 409-431.
Kleinschmidt, E. J., & Cooper, R. G. (1991). The impact of product innovativeness on performance. Journal of product innovation management, 8(4), 240-251. Klomp, L., & Van Leeuwen, G. (2001). Linking innovation and firm performance: a new
approach. International Journal of the Economics of Business, 8(3), 343-364. Kosonen, M., Gan, C., Olander, H., & Blomqvist, K. (2013). My idea is our idea! Supporting
user-driven innovation activities in crowdsourcing communities. International
Journal of Innovation Management, 17(03), 1340010.
Lau, A. K., Tang, E., & Yam, R. (2010). Effects of supplier and customer integration on product innovation and performance: empirical evidence in Hong Kong
manufacturers. Journal of Product Innovation Management, 27(5), 761-777.
Lichtenthaler, U. 2011. Open Innovation: Past Research, Current Debates, and Future Directions. Academy of Management Perspectives, 75-93.
Lusch, R. F., & Nambisan, S. (2015). Service innovation: A service-dominant logic perspective. Mis Quarterly, 39(1), 155-175.
Mansury, M. A., & Love, J. H. (2008). Innovation, productivity and growth in US business services: A firm-level analysis. Technovation, 28(1), 52-62.
Marjanovic, S., Fry, C., & Chataway, J. (2012). Crowdsourcing based business models: In search of evidence for innovation 2.0. Science and Public Policy, scs009.
Matear, S., Gray, B. J., & Garrett, T. (2004). Market orientation, brand investment, new service development, market position and performance for service organisations.
International Journal of Service Industry Management, 15(3), 284-301.
Nakata, C., Zhu, Z., & Izberk-Bilgin, E. (2011). Integrating marketing and information services functions: a complementarity and competence perspective. Journal of
41
Nambisan, S., & Nambisan, P. (2008). How to profit from a better'virtual customer environment'. MIT Sloan management review, 49(3), 53.
Ngo, L. V., & O'Cass, A. (2009). Creating value offerings via operant resource-based capabilities. Industrial Marketing Management, 38(1), 45-59.
Paladino, A. (2007). Investigating the Drivers of Innovation and New Product Success: A Comparison of Strategic Orientations. Journal of Product Innovation
Management, 24(6), 534-553.
Panesar, S., & Markeset, T. (2008). Industrial service innovation through improved contractual relationship: a case study in maintenance. Journal of Quality in
Maintenance Engineering, 14(3), 290-305.
Pauwels, K., Silva-Risso, J., Srinivasan, S., & Hanssens, D. M. (2004). New products, sales promotions, and firm value: The case of the automobile industry. Journal of
marketing, 68(4), 142-156.
Piening, E. P., & Salge, T. O. (2015). Understanding the Antecedents, Contingencies, and Performance Implications of Process Innovation: A Dynamic Capabilities Perspective. Journal of Product Innovation Management, 32(1), 80-97.
Pisano, G. P., Bohmer, R. M., & Edmondson, A. C. (2001). Organizational differences in rates of learning: Evidence from the adoption of minimally invasive cardiac surgery. Management Science, 47(6), 752-768.
Poetz, M. K., & Schreier, M. (2012). The value of crowdsourcing: can users really compete with professionals in generating new product ideas? Journal of Product
Innovation Management, 29(2), 245-256.
Reichstein, T., & Salter, A. (2006). Investigating the sources of process innovation among UK manufacturing firms. Industrial and Corporate Change, 15(4), 653-682. Rubalcaba, L. (2015). Service Innovation in Developing Economies: Policy Rationale and
42
Schlagwein, D., & Bjørn-Andersen, N. (2014). Organizational Learning with
Crowdsourcing: The Revelatory Case of LEGO. Journal of the Association for Information Systems, 15(11), 754-778.
Sheremata, W. A. (2004). Competing through innovation in network markets: Strategies for challengers. Academy of Management Review, 29(3), 359-377.
Sisodiya, S.R., Johnson, J.L., & Grégoire, Y. 2013. Inbound open innovation for enhanced performance: Enablers and opportunities. Industrial Marketing Management, 42: 836-849.
Schumpeter, J.A. (1934). The Theory of economic development. Cambridge, MA: Harvard University Press.
Schumpeter, J.A. (1942). Capitalism, socialism and democracy. New York: Harper and Row.
Sok, P., & O'Cass, A. (2015). Examining the new product innovation–performance relationship: Optimizing the role of individual-level creativity and attention-to-detail. Industrial Marketing Management, 47, 156-165.
Starbucks, 2015, Our mission
From http://www.starbucks.com/about-us/company-information/mission-statement, retrieved on 6 June 2015.
Starbucks, 2015 (a), Recycle your plastic milk jugs! From
http://mystarbucksidea.force.com/apex/idealist?cat=Social+Responsibility&lsi= 0&p=2, retrieved on 6 August 2015.
Starbucks, 2015 (b), Drive Thru Hold Ups From
http://mystarbucksidea.force.com/idealist?cat=Other+Involvement+Ideas&lsi=0 &p=4, retrieved on 6 August 2015.
Starbucks, 2015 (c), Please Lower the Volume From
43
Starbucks, 2015 (d), Free WiFi sells coffee - not the other way around! From
http://mystarbucksidea.force.com/apex/ideasearchresult?s=wifi&p=3, retrieved on 6 August 2015.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic management journal, 18(7), 509-533.
Van Ark, B., Broersma, L., & den Hertog, P. (2003). Services innovation, performance and policy: a review. Synthesis Report in the Framework of the Project on Structural Information Provision on Innovation in Services (SIID) for the Ministry of Economic Affairs of the Netherlands. Groningen: University of Groningen and
DIALOGIC.
VandeVrande, V., de Jong, J.P.J., Vanhaverbeke, W., & de Rochemont, M. 2009. Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29: 423-437.
Vega-Vázquez, M., Cossío-Silva, F. J., & Martín-Ruíz, D. (2012). Does the firm's market orientation behaviour influence innovation's success? Management Decision, 50(8), 1445-1464.
Walter, A., Parboteeah, K. P., Riesenhuber, F., & Hoegl, M. (2011). Championship behaviors and innovations success: An empirical investigation of university spin‐offs. Journal of Product Innovation Management, 28(4), 586-598.
Wit, de J., Dankbaar, B., & Vissers, G. 2007. Open Innovation: the New Way of Knowledge Transfer? Journal of Business Chemistry, 4(1): 11-19.
Wong, P. K., Lee, L., & Der Foo, M. (2008). Occupational choice: The influence of product vs. process innovation. Small Business Economics, 30(3), 267-281.
Zheng, H., Li, D., & Hou, W. (2011). Task design, motivation, and participation in
