Master’s Thesis Small Business & Entrepreneurship
EBM712A20.2020-2021.1
How Can SMEs Develop Innovation Persistence:
A Systematic Review of the Empirical Evidence
Part of Master’s Thesis BA SB&E Author Ruben Wubbema
Student number S3724263
Supervisor Dr. Evelien Croonen
Co-assessor Dr. Erzsi Meerstra-De Haan
Academic year 2020 – 2021
University of Groningen
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How Can SMEs Develop Innovation Persistence:
A Systematic Review of the Empirical Evidence
Ruben Wubbema University of Groningen Faculty of Economics and Business
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1
Introduction
Innovation is one of the most important organizational capacities to obtain and maintain competitive advantage (Castaneda & Cuellar, 2020). Innovation is also an important tool to ensure continuity or growth (Suárez, 2014). However, a lot of organizations find it difficult to create an environment that supports innovation (Kuratko et al, 2014). Moreover, acquiring the needed capabilities and resources to start the innovation process appears to be a difficult process (Zynga et al, 2018). Osterwalder et al (2019) elaborate on the difficulties of innovation processes. The pace of change in contemporary business environments means that the process around innovation cannot be centralized. Instead the trajectory of the creation of value and decision-making has to be spread throughout the organization. Creating an organizational environment in which innovation is present and effective requires the development of capabilities for exploring new ideas, experimentation, accepting failure, and working with external partners. Moreover, Osterwalder et al (2019) suggest that the aforementioned is essential in building a sustainable growth engine; without the right conditions innovation cannot be present, let alone be effective. This paper builds on the discovery of Osterwalder et al by identifying and giving meaning to determinants of innovation persistence, the term central in this review. Innovation persistence comprises the degree of intertemporal continuity in innovative behaviour (Guarascio & Tamagni, 2019). The focus on intertemporal continuity indicates a long-term process. Therefore, the design of determinants of innovation persistence should be a repetitive activity in order to secure continuity in innovative behaviour.
Literature on important determinants of innovation is reviewed in order to compose an overview of determinants of innovation persistence of organizations. The presence of innovation persistence depends on an organization’s competencies to innovate. These competencies can be detected at two levels. These levels can be translated into two major phases of the innovation process: innovation initiation and innovation implementation (Glynn 1996; Williams & McGuire 2005). Each phase contains a different set of activities and capabilities that indicate the existence of innovation persistence. Therefore, the review pays attention to both phases. Eventually a framework is built according to the results of the review. The two phases are included in the framework. The review is concluded by answering the question “How does the empirical literature on innovation help to identify important determinants of innovation persistence (divided into two phases)?”. Answering this research question helps to better analyze the innovation persistence of organizations.
One essential step during the attempt to analyze innovation persistence is understanding what innovative organizational behaviour (or level of innovativeness) means. Calantone et al (2003) explain innovativeness as the receptivity to new ideas and innovations as an integral part of a firm’s culture. Rubera & Kirca (2012) conclude that firm innovativeness is measured by its receptivity and inclination to adopt new ideas that lead to the development and launch of new products. Moreover, Calantone et al (2003, p.93) call innovativeness “the measure of an organization’s orientation toward innovation.” Thus, the term innovation has to be clear as well. Garcia & Calantone (2002, p. 112) describe ‘innovation’ as “an iterative process initiated by the perception of a new market and/or new service opportunity for a technology-based invention which leads to development, production, and marketing tasks striving for the commercial success of the invention.” According to Garcia & Calantone the innovation is characterized by the corresponding classification1; a radical innovation asks for a different
1 The classifications of innovation as mentioned by Garcia & Calantone (2002) (radical, really-new, incremental,
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Table 1.1 Prior reviews
approach than an incremental innovation. This paper focuses on the process of creating and maintaining organizational innovative behaviour; the iterative process of innovation can be seen as the result of this innovative behaviour. Therefore, innovation on itself falls outside the scope of this review.
Author(s), year and journal Theoretical perspective Findings / Contribution
Rosenzweig, S., & Grinstein, A. (2016)
Creativity & Innovation Management How resource challenges can improve firm innovation performance
Innovation performance is influenced by resource challenges – effective use of (the amount of) resources is essential and can be managed
Wan, D., Ong, C. H., & Lee, F. (2005)
Technovation The relationship between firm innovation and six of its potential determinants
Organizations have it within themselves to improve their level of innovation – Important indicators: decentralized decision-making authority, special innovation funds, innovation supportive culture, and willingness to exchange ideas
Castaneda, D. I., & Cuellar, S. (2020)
Knowledge & Process Management Investigate ways in which innovation and knowledge sharing have been studied together
Innovation is dependent of knowledge sharing. This behavior contributes to the design of services, products, business models, processes, and new organizational schemes
Dziallas, M., & Blind, K. (2019)
Technovation Innovation indicators throughout the innovation process The study analyzed the characteristics of innovation indicators throughout the innovation process – focus on strategy, innovation culture, competence and knowledge, organizational structure, R&D Activities, and financial performance
Calabrò, A., Vecchiarini, M., Gast, J., Campopiano, G., Massis, A., & Kraus, S. (2019) International Journal of Management Reviews
An integrative picture of the state of the art of the family firm innovation literature based on 118 peer-reviewed journal articles published between 1961 and 2017
The overview of the literature helps building a bridge between mainstream innovation and innovation in family firms
Adams, R., Jeanrenaud, S., Bessant, J., Denyer, D., & Overy, P. (2016) International Journal of Management Reviews
Empirical review on
sustainability-oriented innovation Contribution to the ongoing conceptual development of sustainability-oriented innovation (SOI) and provides initial guidance on becoming sustainable
Table 1.1 provides an overview of six prior reviews in the field of innovation. The scope of those reviews is comparable or relatable to this review. This review contributes to innovation literature by zooming in on determinants of innovation persistence. The review of empirical literature on innovation in a structured, transparent, and reproducible manner helps to better understand how innovation persistence of organizations can be created. The literature will show which terms/topics have influences on innovation initiation and implementation. Once these insights are gained, it is possible to determine which aspects underpin innovation in both phases. The potential scientific relevance of this review arises from the composure of a summary of the literature. The potential practical relevance is perceivable by organizations that are trying to gain more insight in the innovation process. The review will serve as a guide for organizations to create and maintain innovative behaviour.
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Table 2.1 Guide for building the review (based on: Wolfswinkel et al (2013)
2
Methodology
The systematic literature review was built according to five stages that helped structure the summary of the literature. Wolfswinkel et al (2013) present five stages that helped structure and complete the review (table 2.1). The stages were used as a guide for the implementation of the review. The first stage was finished before starting the search and review; this was needed to ensure a useful study. The second stage strengthened the relevance of the review. The previous stage was revisited in order to better align the search terms with the intended review; the literature may use different terms and/or indicate other important terms within the scope of the review. For the third stage the inclusion and exclusion criteria were used to select articles. In order to guarantee reliability and reproducibility it is essential to strictly follow the methods for data collection. During the fourth stage all selected articles were read and analyzed. The final stage comprised the presentation of the review.
Progress Description
1st stage: define stage Narrow down the review by selecting the scope of the review and search terms
2nd stage: search stage Search through identified literature and adjust search terms (if needed) – involves adding search terms and eliminating search terms
3rd stage: select stage Select the actual sample of articles (see table 2.2) – strictly adhering to data collection rules is required
4th stage: analyze stage Conduct the literature review – read and analyze articles (keep up table with theoretical perspectives, methods, conclusions, and highlights)
5th stage: present stage Present the review – operationalisation of the table and conclusions
Data collection
As advised by Clarke & Oxman (2001) there was an iterative process of definition, clarification, and refinement of the detected antecedents of innovation persistence throughout the process of data collection. The selection and collection of articles started with a thoughtful exploration and identification of keywords and search terms (Tranfield et al, 2003).
Inclusion criteria
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Box 2.1 Journals selected for inclusion
The search terms must have a proven relationship with innovation and must, especially, indicate innovation persistence (both in the initiation phase and in the implementation phase of innovation). The review was made systematic and structured by, among other restrictions, these search terms. Therefore, search terms that did not qualify were eliminated from the search, even in the later stages of the review composure. The search terms are given in box 2.2. Studies focusing on at least one of these search terms were included in the literature selection. An important side note has to be made: Wolfswinkel et al (2013) and many more researchers share a strategy that helps to find all relevant articles. By entering innovat* as search term all relevant articles about innovation can be found. The search engine will look for all words containing innovat*. So, also terms such as innovating, innovators, innovative, et cetera, will be found during the collection. Innovation, however, can also be denoted with other terms, such as renewal, entrepreneurial activities, new product development, et cetera. Therefore, journals were also checked on these ‘synonyms’ for innovation. Furthermore, the ‘planned’ search terms are separated from the ‘realized’ search terms. The left column of box 2.2 shows the initial search terms based on the first stage of table 2.1. The right column shows the search terms that were actually used for the review. These terms were searched in combination with innovation; articles/studies focusing solely on the search term and not on its link with innovation are irrelevant.
Small Business & Entrepreneurship
• Strategic Entrepreneurship Journal • Journal of Business Venturing • Entrepreneurship Theory and Practice • Journal of Small Business Management • Small Business Economics
• Entrepreneurship and Regional Development • International Small Business Journal • Entrepreneurship Research Journal
• International Entrepreneurship and Management Journal
Innovation
• Research Policy
• Journal of Product Innovation Management • Technovation
• Creativity and Innovation Management
Strategy and Management
• Strategic Management Journal • Academy of Management Journal • Academy of Management Review • Academy of Management Perspectives • Management Science
• Knowledge & Process Management • Journal of International Marketing • Marketing Science
• Organization Science • Organization Studies • Journal of Management • Journal of Management Studies
• International Journal of Management Reviews
Added during review
• IEEE Transaction on Engineering Management • Long Range Planning
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Box 2.2 Categories/search terms
Moreover, to ensure the relevance of the studies a certain search coverage period was apprehended. The research/study had to be published somewhere in the last 25 years. Organizations witness many changes and the attributes that shape innovation change as well (e.g. terms such as ‘intrapreneurship’ are emerging). Therefore, the review was demarcated through a search coverage period. Only articles published between 1995 and 2020 were included. Even after this restriction it is important to ensure the relevance of the focus of the study. More on this criterion is discussed in the display of the exclusion criteria. Furthermore, articles focusing on a specific type/classification of innovation (such as: radical, incremental, really-new, discontinuous) were not excluded; the classification of the innovation had no direct influence on the design of this review. Therefore, all articles with relevant information for this review (potential link with innovation persistence determinants) were included. Lastly, only peer-reviewed articles qualified for the review; books, chapters, websites, et cetera were not used for the review.
Search strategy
To ensure that this research could be replicated, even after ten years or more, the search strategy is described in detail. The search strategy was built around the importance of structure, transparency, and reproducibility (Tranfield et al, 2013). Boxes 2.1 and 2.2 show the conditions for the search. Their existence was considered during every step of the review. Furthermore, the search strategy was adjusted based on the search options provided by respectively Web of Science and Business Source Premier. Before starting the search there were several settings that needed adjustment. When using Web of Science (core collection) the ‘custom year range’ for the timespan of the articles had to be adjusted to 1995-2020. At ‘advanced search’ the document type was adjusted to ‘article’. When using Business Source Premier there were four settings that needed adjustment. Firstly, the search mode should be ‘Find all my search terms’, which means no search terms could be removed and the articles popping up are more relevant. This helped to find articles with a scope on innovation (persistence); the search term was filled in for the search together with innovation (or synonyms). Secondly, the box ‘apply equivalent subjects’ was checked. Then, the ‘limit your results’ section was adjusted a little. The published date should start at the first of January in 1995 and had no limit (2020 is the present); the search was covered by studies published in the period of 25 years. Furthermore, the PDF Full Text had to be available, so this box was checked as well.
Planned Realized
Innovation Innovation (+ its synonyms)
Innovation practises:
exploration, exploitation, and open innovation Innovation strategy
Knowledge processes (retention & transfer) Customer interaction
Intrapreneurship
Growth strategy Corporate entrepreneurship
Knowledge retention Innovation strategy
Customer interaction/testing Innovation culture
Resources Management (in innovation processes)
In-/outside focus Leadership (in innovation processes) Experimentation
Intrapreneurship/Corporate entrepreneurship (Organizational) Culture
Management & Leadership
Core competencies/VRIN-framework
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Table 2.2 Procedure for systematic literature review
The literature was divided in specific groups. These groups were determined by the realized search terms; the article was placed in the group of the determinant it refers to. The main focus was on innovation (persistence). Therefore, all search terms were tested on their influences on and relationship with innovation (part of analysis). Articles that did not test or describe this relationship were eliminated from the review sample. The search was given meaning to through four steps. The reviews of Calabrò et al (2019), Adams et al (2016), and Dada (2018) were used to shape the review. Firstly, all search terms were inserted in combination with innovation (or synonyms). This led to the first, untouched review sample. Second, a title and abstract analysis helped eliminating articles that show no potential for the goal of this review: analysing determinants/antecedents of innovation persistence. Therefore, this analysis had a focus on the basic criteria of relevance (determinants of innovation persistence) (Rashman et al, 2009); all articles that show mismatches or a deviating focus/scope did not qualify for the review. Then, the full text was consulted to check the relevance of the study and the scope of the conclusions; studies that do not contribute to the analysis of innovation persistence were eliminated. Moreover, interesting citations of selected studies were checked and this led to the addition of some ‘bonus’ studies. Lastly, hand searching and citation tracking led to the addition of relevant studies (Adams et al, 2016); Rashman et al, 2009). This was particularly important for the identification of additional determinants of innovation persistence. Table 2.2 provides an overview of the steps that were followed. The search took place in December, 2020.
Filter Description Side notes Number of Articles
Step 1 Articles with selected keywords (database search and hand search)
Broad search with few restrictions (innovation already taken into account)
1.865 (13.628 without adjustments)
Step 2 Title and abstract analysis (also: checking link with innovation (or synonyms)
The analysis focuses on the basic criteria of relevance (Rashman et al, 2009); all articles that show mismatches or a deviating focus/scope do not qualify for the review
103
Step 3 Full text analysis Scanning for relevant information and checking the relevance of the study and the scope of the conclusions; studies that do not contribute to the analysis of innovation are eliminated
28
Step 4 Bonus articles based on full text analysis (linked authors/articles marked as interesting/beneficial) and hand searching and citation tracking
Articles used in selected articles (but not found during initial search), and hand search and citation tracking important for addition of relevant studies (Adams et al, (2016); Rashman et al, (2009). This is particularly important for the identification of other antecedents of innovation persistence
9
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Exclusion criteria
In order to achieve a higher level of usability and quality criteria for exclusion were taken into account during the search for literature. Since there is a main subject and a specific focus/desired outcome, articles with a deviating title and focus were excluded. Furthermore, only empirical articles were used; all other articles were excluded. Also, articles titled according to one or more of the search terms but with no direct focus on the terms were excluded as well. This involves articles in which the search terms are used for other purposes or in which they indicate other research purposes. Moreover, articles published in a language other than English were left out of the review. There were no exclusion measures for the study design; all research methods and scopes were accepted.
Data analysis
The data analysis, in the form of a review, was built up by a summary (in the form of a table (Appendix A)) and, after that, an analysis. The structure was explained through an introducing text. Because of first stage of the review (table 2.1) the structure was partially known in advance through search terms. The planned search terms were evaluated and, thereafter, analysed. In box 2.2 these terms were given. The structure of the review was designed around these terms. This helped to identify the ‘fields of interest’ of the review (determinants of innovation persistence); innovation on itself is too broad to review in this context. Box 2.2 also shows the realized search terms. These are the search terms that were actually used for the review and can, thus, be seen as the key terms for the review. Eventually the systematic review led to the composure of an integrated framework in which all determinants and their characteristics/conditions were included.
Analysis of the data was partially based on the guide for reviewing literature by Wolfswinkel et al (2013). One of the first important activities during the review and analysis was the writing of process reports and logbooks; in a document findings, feelings, and process (also development) was monitored and tracked. These documents helped to better analyse the data through memos and reasoning behind choices. Quality of decision-making and explanation/analysis of the findings benefited from this structured way of analysing and reviewing. Furthermore, a summary of the articles selected for the review was kept up in the form of a table in order to maintain a valuable overview of the review.
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3
A systematic review of empirical literature on
determinants of innovation persistence
The outcome of the systematic review of the empirical evidence is presented in this chapter. A summary of all articles selected for the review can be found in Appendix A. Based on this overview of highlights of all articles a clear view on the determinants of innovation persistence occurred. This review presents an explanation and an operationalization of all determinants. The explanation and operationalization combined are the valuable input for the goal of this review: identifying determinants of innovation persistence in order to help organizations develop innovation persistence. These determinants are presented in an integrated framework.
3.1 Concept of innovation persistence within this review
Innovation persistence is measured during two phases of the innovation process, namely the initiation phase and the implementation phase (Glynn 1996; Williams & McGuire 2005). The initiation phase comprises activities that indicate a preparation of the innovation process; the activity/design helps setting up the innovation process. The implementation phase comprises activities that indicate the presence of an innovation process; the activity/design contributes to the implementation of the innovation process. Distinguishing the differences between initiating innovation and implementing innovation is important during the analysis of an organization’s innovation persistence; through a structured framework it is easier to detect points of improvement/attention.
In order to judge the presence of innovation persistence, it is of great importance to understand the meaning of innovation persistence in the context of this review. For this review the explanation of Guarascio & Tamagni (2019) is used. In their paper on “persistence of innovation and patterns of firm growth” they describe innovation persistence as the degree of intertemporal continuity in innovative behaviour. Within this definition ‘intertemporal’ indicates a long-term process; considering the existence of innovative behaviour is a repetitive activity. Therefore, the determinants of innovation persistence should be described in a way in which they can be used to operationalize innovation persistence of organizations. Each determinant is an individual link in the process of evaluating and creating/improving innovation persistence.
3.2 Determinants of innovation persistence
Table 3.1 provides an overview of a part of the research on determinants of innovation persistence. The division between qualitative (n=21) and quantitative (n=16) is almost equal. The majority of studies (n=27) make no use of a specific industry to apply their theoretical perspective to2. The data sample includes studies from 13 different countries.
Most studies are from the United States (n=11). However, Europe (n=18) is the most used continent. Some of the studies (n=7) specifically focus on innovation and one or more of its antecedents. Innovation performance (n=3) is also recurring variable in the literature. Culture and innovation are also studied together often (n=7). Furthermore, resource challenges (n=4), dynamic capabilities (n=4), knowledge processes (n=3), and the stage-gate (n=3) are often mentioned in the literature. After careful analysis of the full text of the articles it is possible to apply the theoretical perspectives and conclusions of all articles to one or more determinants of innovation persistence.
2 Apparently there are only few studies with a focus on a specific industry. Therefore, context in the sense of
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Table 3.1 Characteristics of articles (n=37)
Number of studies Number of studies Number of Articles Total sample 37 Methodology Qualitative Quantitative Industries Education Engineering Finance High-tech Manufacturing Retail Not specified Countries Australia Canada Colombia Denmark Estonia France Germany Italy Israel South Africa The Netherlands United Kingdom United States 21 16 1 2 1 3 2 1 27 1 2 1 1 1 2 7 2 1 1 5 2 11 Theoretical perspective Knowledge processes Customer interaction Resource challenges Dynamic capabilities Innovative performance Competitive advantage Innovation Stage-Gate Innovation strategy Culture (org. + inn.) Management theory Determinants (innovation persistence) Knowledge processes Customer interaction Resources Innovation strategy Innovation culture Management & leadership
Phase
Initiation Implementation No attention for phases
3 2 4 4 3 1 7 3 2 7 1 4 3 8 7 10 3 4 1 32
The summary of the review helps to identify six determinants of innovation persistence (also visible in table 3.1): • Knowledge processes • Customer interaction • Resources • Innovation strategy • Innovation culture
• Management & leadership
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Table 3.2 Studies specified per determinant
Table 3.3 Orientation of the determinants Variable Studied by Knowledge processes Customer interaction Resources Innovation strategy Innovation culture
Management & leadership Multiple variables of innovation
Marsh & Stock (2006); Zollo & Winter (2002); Kraaijenbrink (2012); Argote et al (2003); Castaneda & Cuellar (2020); Wan et al (2005).
Foss et al (2011); Laursen & Salter (2006); Lichtenthaler (2008).
Rosenzweig & Grinstein (2016); Steenkamp & Fang (2011); Filippetti & Archibugi (2011); Amabile & Conti (1999)*; Nohria & Gulati (1996)*; Baker et al (2003)*; Futterer et al (2018); Van Oorschot et al (2010); De Jong & Marsili (2006); Wan et al (2005).
Dziallas & Blind (2019); Marsh & Stock (2006); Astebro & Michaela (2005); Jayaram et al (2014); Markham (2013); Cooper (2008); Van Oorschot et al (2010); De Jong & Marsili (2006).
Bullinger et al (2007); Dziallas & Blind (2019); Kumar (2014); Salvato (2009); Büschens et al (2013); Patel & Patel (2008); Menzel et al (2007); Wan et al (2005); Westwood & Low (2003); Kaasa & Vadi (2010); Martins & Terblanche (2003).
Menon & Pfeffer (2003); Rosenzweig & Grinstein (2016); Francis & Bessant (2005); Wan et al (2005); Dziallas & Blind (2019).
Wan et al (2005); De Jong & Marsili (2006); Dziallas & Blind (2019).
In order to compose a framework for the determinants of innovation persistence, different dimensions and sources of the determinants are investigated. Table 3.3 provides an overview of the different orientations of the studies (internal or external). However, based on the absence of obvious differences or relevant context, the determinants are not subject to grouping. E.g. table 3.3 shows that almost all studies chose an internal focus. Therefore, innovation persistence is classified as a variable over which the organization has full control; no external sources of influences are needed to develop innovation persistence. Of course, also focusing on external sources could be beneficial, but this review solely focuses on the internal organization because of the context used by the studies of this review.
Variable Internal orientation (# of studies) External orientation (# of studies) Knowledge processes
Customer interaction Resources
Innovation strategy Innovation culture Management & leadership
6 1 9 7 11 5 0 2 1 1 0 0
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Innovation Strategy
Strategy to stimulate innovation (+) Attention for front-end (+) Contingency measures (+)
Stage-gate for innovation projects (+)
Innovation Culture
Innovation and creativity as cultural norms (+) Intrapreneurship, creativity, and freedom (+) Hierarchical culture (-)
Organizational control (+)
Management & Leadership
Effective allocation of resources (+) Make use of skills and capabilities (+) Valuing external knowledge more (-) Employ a front-end process (+) Create appropriate culture (+)
Knowledge Processes
Retain and transfer knowledge (+) Reuse knowledge of prior NPD-projects (+) Retaining knowledge as a routine (+) (dynamic capability)
Organizational knowledge base (+) Social relationships (+)
Create ability, motivation or opportunity to retain and share knowledge (+) (management task)
Resources
Portfolio management (+) Allocate according to firm characteristics (+)
For SMEs: effective allocation of (scarce) resources (+)
Outline projects and resources (+)
Customer Interaction
Decentralized structure (+) Openness to external sources (+)
Intensive vertical and lateral communication (+) Delegation of decision rights (+)
Hierarchical structures (-)
Figure 3.1 Framework on determinants of innovation persistence
3.2.1 Knowledge Processes
Explanation
Knowledge processes are essential for (future) innovation projects (Kraaijenbrink, 2012). The initiation of innovation is largely dependent on the integration of knowledge. Kraaijenbrink (2012) looks at four knowledge processes: knowledge creation, application, integration, and retention.
Retain and transfer knowledge (+): The study of Kraaijenbrink (2012) shows that not only retaining knowledge is important, but (especially) transferring/integrating knowledge is of interest when it comes to innovation projects. The combination of retaining and transferring knowledge helps to use knowledge to find and pursue innovation possibilities. Knowledge retention is explained as the process of storage, protection, organizational memory, and maintenance of knowledge (Kraaijenbrink, 2012). However, making sure that knowledge flows through the organization is just as essential, if not more. Knowledge transfer corresponds to the interaction between human actors with knowledge as raw material (Helmstadter, 2003; Castaneda & Cuellar, 2002). Experience, skills, and tacit and explicit knowledge are the key factors within these interactions (Hogel et al, 2003).
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possible through knowledge processes. Organizations encouraging knowledge retention and sharing facilitate innovation capabilities (Castaneda & Cuellar, 2020).
Operationalization
Reuse knowledge of prior NPF-projects (+): In a study among 921 members of the Product Development & Management Association, Marsh & Stock (2006) found that formal audits and dissemination of knowledge through memos and presentation are especially beneficial for transferring knowledge. These activities help to reach a point of effective retention and application of knowledge developed in prior new product development projects. Zollo & Winter (2002) mention the potential to capture additional benefits through increased awareness and knowledge of causal relationships. The retained knowledge could be used in future projects.
Retaining knowledge as a routine (+): When this becomes a routine, the organization develops dynamic capabilities. These dynamic capabilities exist because of the tacit accumulation of past experience, knowledge articulation, and knowledge codification processes. To achieve the aforementioned it is essential to develop organizational patterns that keep knowledge stable and useful over time. Retained knowledge should not be defined as the sum of information technology-based storage alone; knowledge in other retention media such as individuals, culture, transformations, structure, and organizational ecology should be taken into account as well (Kraaijenbrink, 2012).
Organizational knowledge base (+): Kraaijenbrink (2012) adds to this by suggesting that it is beneficial for organizations to put effort in integrating knowledge into an organizational knowledge base and in using this base extensively. Only then knowledge processes turn into dynamic capabilities of an organization.
Create ability, motivation and opportunity to retain and transfer (+): Argote et al (2015) describe the link between contextual properties (such as units, relationships, and knowledge) and knowledge management outcomes (creation, retention, and transfer) through a framework. The link is influenced by three key causal mechanisms: ability, motivation, and opportunity. These mechanisms explain how contextual properties affect knowledge management outcomes. Through the framework it becomes clear that the ability, motivation, and opportunity to share knowledge should be central in the knowledge processes. Moreover, successful knowledge retention and transfer depends on the abilities, motivation, and opportunities witnessed by the employees of an organization.
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3.2.2 Customer Interaction Explanation
One of the crucial antecedents to innovation is interaction with customers (and users who may not be customers directly) (Rosenberg, 19823). Recent innovation studies also focus on
customer interaction. Foss et al (2011, p. 980) mention that “the notion that firms can improve their innovativeness by tapping users and customers for knowledge has become prominent in innovation studies”. In their study they concluded that interaction with customers on innovation performance is mediated by organizational practices; these practises need to be in place in order to successfully benefit form customer interaction. Involving customers in the innovation process is an important condition for innovation performance (Foss et al, 2011).
Operationalization
Openness to external sources (+): In a study among 2.620 U.K. firms testing the relationship between openness of firms’ external search strategies and their innovative performance, Laursen & Salter (2006) found that firms who are more open to external sources of search channels are more likely to have a higher level of innovative performance. Added value can be achieved through customer interaction.
Intensive vertical and lateral communication (+); Delegation of decision rights (+): A study by Foss et al (2011) among 169 Danish firms linked customer interaction to innovation. They found that firms that attempt to leverage user and customer knowledge (in the context of innovation) must design an internal organization appropriate to support it. In order to benefit from customer interaction it is important to tactically design the organization; the internal organization should support the attempt to leverage user and customer knowledge in the context of innovation/new product development. According to Foss et al (2011) this is done through the use of new organizational practices, notably, intensive vertical and lateral communication, rewarding employees for sharing and acquiring knowledge, and high levels of delegation of decision rights. This design in combination with making use of users and customers helps to improve innovativeness.
Hierarchical structures (-); Decentralized structures (+): The paper of Foss et al (2011) can also be used to motivate the importance of organizational practices when it comes to customer interaction. The most common terms of variables to describe internal organization are related to structure (e.g., specialization, departmentalization, liaison groups, hierarchical layers, etc.), communication channels, and reward systems. According to the paper organizational practices may hinder or facilitate interaction with customers. A helpful explanation is given: in the case of traditional hierarchical structures that imply little delegation of decision rights to employees, it may be difficult to build close relations with customers and therefore will make it difficult for the firm to identify and get access to the knowledge held by these customers. Decentralized structures facilitate customer interaction. Moreover, Lichtenthaler (2008) argues that firms improve their innovation performance by working closely with users and customers. In addition to the advice of Foss et al (2011) Lichtenthaler suggests that an increasing number of companies are starting to change their internal systems/design toward greater delegation of authority and better communication within the firm. One of the effects of these organizational changes may be that firms are becoming better at accessing, exploiting, and leveraging customer knowledge in the context of innovation.
3 The article of Rosenberg (1982) does not qualify for the review since it is not published between 1995 and
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3.2.3 Resources Explanation
Rosenzweig & Grinstein (2016) distinguish three important categories of resources that affect innovation: financial, time, and human resources. These resources (and corresponding challenges) are most frequently discussed in the literature. Their review of this literature helps to better understand the role of resources in innovation (persistence).
Financial resources
Financial resources (or the lack of it) determine whether a firm is able to invest or not; e.g. a challenge occurs when funding does not meet resource demands. A financial challenge could arise from an internal issue (e.g. failure to meet a financial performance target) or an external issue (e.g. economic recession (Steenkamp & Fang, 2011)). It is also a common research finding that members of an organization blame their inferior performance on the lack of funding (or withholding necessary resources). This phenomenon could also lead to a change in the member’s motivation and commitment to the firm, which could eventually influence the firm’s innovation performance. However, Rosenzweig & Grinstein (2016) also argue that innovation could be achieved in spite of financial constraints given strong innovative capabilities. An important addition is given by Nohria and Gulati (1996): too much capital slack detracts from a firm’s discipline and may cause a firm to pursue a bad innovation project.
Time
Time is an important resource as well. However, the interpretation of time as a resource seems to be a complex one. Tight deadlines and time challenge could both positively and negatively influence innovation-related performance (e.g. organization members respond differently depending on a situation with or without time pressure). Rosenzweig & Grinstein (2016) build on previous research and state that time challenges (if not extreme) could positively affect organization members and project teams. The example they provide: tight deadlines can increase the speed of decision making and responsiveness because they require managers and workers to increase the use of real-time information, carry out several operations simultaneously while simplifying them, and seek advice only from the best available sources rather than from all available sources. Besides, individuals might respond more creatively to a task that has to be performed in a shorter timeframe.
Human resources
Human resources are subject to many possible challenges. Rosenzweig & Grinstein (2016) define such a challenge as the event that leads to the reduction in the number of team members (or individuals) working on a project compared to the team size at an earlier stage in the project or during similar projects. The link with a firm’s innovation performance occurs through the tarnishing of the firm’s learning ability through human resource challenges. However, also for this type of resource the opposite effect (positive link with innovation performance) exists. Rosenzweig & Grinstein (2016) quote from the paper of Amabile & Conti (1999). It is stated that human resource downsizing might, in the long-run, lead to an increase of creativity levels.
Operationalization
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firms and small firms. The most important differences are based on firm size; smaller firms need different business practices and strategies to exploit innovative behaviour. Moreover, De Jong & Marsili (2005) emphasize the importance of human inputs like ideas, attitudes, leadership, and management planning for innovation. Effective allocation of human inputs and other resources helps to overcome challenges of innovation.
Literature suggests that even resource challenges might positively influence innovation performance (Rosenzweig & Grinstein, 2016; Filippetti & Archibugi, 2011; Amabile & Conti, 1999; Nohria & Gulati, 1996). In a study among 5.238 enterprises across Europe, Filippetti & Archibugi (2011) found that resource challenges have a positive impact on innovation and innovation-related performance. Therefore, it is especially important to make the right choices when dealing with resources (constraints) (Baker et al, 2003; Futterer et al, 2018). Portfolio management is a useful tool for making the right choices.
Effecive allocation of (scarce) resources (+); Outline projects and resources (+): Van Oorschot et al (2010) dedicated a literature review to the Stage-Gate. Their main goal was to discover whether organizations might have avoided some “right” projects that could have become successful. They found that, among other reasons, team size and workload are underlying factors for not pursuing projects (e.g. when the team size is too small, more time is needed to fulfil tasks, and when the workload is too high, more resources are needed to finish tasks). However, making the right choices in allocating resources might help organizations not to jettison the “right” projects. V
Portfolio management (+): Van Oorschot et al (2010) propose portfolio management to make the right choices in allocation scarce resources (people, tools, and budget) to the right projects at the right time. Portfolio management comprises a set of strategic processes aimed at the optimal distribution of activities/projects and the use of (scarce) resources. 3.2.4 Innovation Strategy
Explanation
Wan et al (2005) consider innovation as a process of generating, adopting, and
implementing new ideas or practices. This process needs a proper strategy (Marsh & Stock, 2006). Moreover, if an organization wants to design an innovation-enhancing organizational structure, there should be specific strategies concerning innovation and innovativeness. A strategy is the operationalization of long-term company goals (Dziallas & Blind, 2019). The strategies of an organization form the baseline for organizational innovation goals (Astebro & Michaela, 2005; Dziallas & Blind, 2019).
Operationalization
Strategy to stimulate innovation (+): Linking a firm’s strategy to new product development activities is an important objective for organizations (Marsh & Stock, 2006). Aligning the strategy with the innovation process is, therefore, an important determinant of innovation persistence.
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Attention for front-end (+): Moreover, Markham (2013) conducted data from 272 companies to measure the impact of front-end innovation on product performance. Although it is not possible to analyze innovation objectives in the front-end, the higher the level of innovation in the front-end, the higher the success rates of innovative performance. Initiating innovation is possible through well-formulated strategies. Furthermore, strategies need to be translated into organizational activities; tasks and appropriate skills have to be matches throughout the complete duration of the project (Markham, 2013). The absence of innovation related strategies results in the loss of the ability to initiate innovation and to select ideas that are likely to positively influence innovation performance.
Stage-Gate for innovation projects (+): The Stage-Gate is a product innovation process that helps portfolio management of new product development projects (Markham, 2013). The Stage-Gate is a process that helps minimizing uncertainty through identifying “wrong” projects before too many resources are invested.
Stage-Gate for innovation projects (+): Stage-Gate is a widely used product innovation process for managing portfolios of new product development projects. The process enables companies to minimize uncertainty by helping them identify—at various stages or gates—the ‘‘wrong’’ projects before too many resources are invested (Markham, 2013). Through the Stage-Gate a project is moved from idea to launch and beyond. During each stage work is done, information is collected, and data is analysed. At the end of each stage there is a so-called “go/kill” decision which determines whether the project is continued or not (Cooper, 2008). Carefully following the principles of the Stage-Gate is an effective strategy to reduce uncertainty and to prevent the allocation of too many resources (Van Oorschot et al, 2010). 3.2.5 Innovation Culture
Explanation
Organization culture is considered to be an important antecedent of innovation (Ulijn & Weggeman 2001; Westwood & Low 2003). Culture can both unify people’s behaviour, and create barriers between people. Innovation faces consequences of culture for various reasons; people’s beliefs and behaviour influence the capability of initiating innovation. Therefore, culture can both contribute to the process of developing and implementing new ideas, and block this process (Kaasa & Vadi, 2010).
Innovation and creativity as cultural norms (+): The link with innovation is provided by Martins & Terblanche (2003): when innovation and creativity are underlying aspects of the corporate culture, then organizations own an institutional environment in which creativity and innovation are cultural norms.
Operationalization
It is of great importance to integrate innovation into the organizational culture; successful integration helps to foster innovation capabilities (Bullinger et al, 2007). Moreover, the beliefs and values of an organization influence risk tolerance, personal development, and innovation activities of employees and their motivation to develop and implement new ideas (Dziallas & Blind, 2019; Menzel et al, 2007). Dziallas & Blind (2019) identified innovation culture as the most important indicator of innovation within organizations. Kumar (2014) found that an organizational culture built around the cornerstones of innovation is beneficial for an organization’s success. People, leadership, and creativity are important underlying factors.
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between management’s goals and the organization’s social system (culture). The beliefs and values of an organization will often be applied in development teams and innovation teams. A culture with innovative characteristics such as creativity, entrepreneurship, and freedom helps to increase the changes of innovation success (e.g. successful innovation implementation). Moreover, people might leave the organization and project teams will cease to exist. However, the organization will form the steady frame of an innovation enhancing environment when the culture is designed to do so. That is what makes an appropriate culture important. (Büschens et al, 2013). Menzel et al (2007) mention intrapreneurship as an important aspect of a culture that benefits innovation processes. Barriers to be intrapreneurial exist when there is no motivation or when the culture does not support it. It is the task of managers to motivate employees to behave in a way that is consistent with the organization’s goals (Büschens et al, 2013).
Hierarchical cultures (-): Organizations with innovation cultures are typically known for their ability to create and commercialize new technologies. Furthermore, hierarchical cultures are unusual for innovative organizations; hierarchical cultures emphasize control and internal orientation (Büschens et al, 2013).
Organizational control (+): Moreover, organizational control is an activity of managers/leaders aimed at the motivation of employees to act in a way that is consistent with the goals of an organization (e.g. Google celebrates its employees’ individuality and freedom (Büschens et al, 2013)) (Salvato, 2009; Büschens et al, 2013). Salvato (2009) builds on the importance of coordination of the alignment of organizational goals and values and beliefs: activities of individuals play a fundamental role in shaping innovation processes (Salvato, 2009).
3.2.6 Management & Leadership Explanation
Management and leadership in and throughout the innovation process is important; it
partially determines the capability of innovating. Francis & Bessant (2005) classify innovation as a critical imperative for survival and growth of firms. These firm goals are often main goals/points of interest for managers; well-thought management throughout innovation processes is essential.
Operationalization
Correct allocation resources (+): Management is responsible for guidance of the innovation objectives. Resource challenges are an important aspect of innovation projects (Rosenzweig & Grinstein, 2016). Allocation of resources (financial, time, human, competences, etc.) is a crucial part of building an innovation enhancing environment.
Make use of skills and capabilities (+): Managers’ past experiences and social backgrounds are key to understanding their decisions and actions (Rosenzweig & Grinstein, 2016). How managers respond to challenges depends, among other factors, on the firm’s coping assets. Coping assets are the skills and capabilities possessed by the organization. These skills and capabilities need to be assigned to the right projects. Moreover, these skills and capabilities can be used to strategically overcome resource challenges.
Valuing external knowledge more (-): Menon & Pfeffer (2003, p. 509) find evidence that external knowledge is valued more by managers than internal knowledge, with harmful consequences that include ‘‘missed opportunities and wasted knowledge’’ that ‘‘can negatively affect an organization’s ability to innovate, implement knowledge, and maintain employee morale.” Therefore, in order to develop innovation persistence, managers and leaders have to utilize the internal knowledge processes.
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Figure 3.2 Proposed integrated framework to develop innovation persistence
Moreover, the front-end process is expected to be a stronger predictor of innovation performance than new product development processes (Markham, 2013). Therefore, managers should build more structure into the frond-ends.
Create appropriate culture (+): Salvato (2009) and Büschens et al (2013) mention organizational control as an activity of managers/leaders aimed at the motivation of employees to act in a way that is consistent with the goals of an organization. This is an important aspect of the innovation culture. However, it is the task of managers/leaders to create an appropriate culture for innovation.
3.3 Proposed integrated framework
Based on the literature review a completely integrated framework is proposed. This framework builds on the literature and can be used as a tool for organizations to develop innovation persistence. Innovation strategies and management and leadership influence the success and efficiency of the other determinants of innovation persistence (knowledge processes, customer interaction, innovation culture (on organizational level), and resources). In order to develop innovation persistence for the long-term, all variables need to be
designed according to the results of the literature review. Figure 3.2 serves as an overview of the results and is the proposed framework to use for the development of innovation persistence (a larger version can be found in Appendix B). All variables that influence innovation persistence show positive links. However, correct design of those variables is a condition for achieving innovation persistence. The underlying factors of each determinant of innovation persistence (figure 3.1) determine an organization’s ability to develop innovation persistence.
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4
Discussion
This review presents determinants of innovation persistence and helps organizations to develop innovation persistence. Through a search for the underlying factors and
corresponding links with innovation (persistence) of each determinant it was possible to generate a framework that helps organizations to develop innovation persistence. The framework can be used by organizations to design an internal organization appropriate for innovation. Frequently revisiting all factors of the framework leads to the development and maintenance of intertemporal continuity in innovative behaviour of organizations.
Research implications Study more variables
The academic literature exhibits many tools and conditions to create and improve innovation (processes). There is only little consensus about the crucial variables in the field of
innovation practices for organizations. Especially qualitative studies show many differences. These differences often occur because of the specific scope of those studies (i.e. studies trying to discover the benefits of customer interaction often find those benefits). The danger of these studies is that some other variables might be overlooked. This literature review combined findings of many studies (n=37) and through those findings it was possible to create an integrated framework for the development of innovation persistence. However, there is a chance that there are other important variables hidden in the empirical literature. This is an interesting challenge for further research. More on this point of attention can be read under ‘directions for further research’.
Implication of missing context
The summary of the articles clearly shows the flaws in the empirical literature. First, there is almost no attention for context in the literature. Innovation is often researched as a term without specific context; differences between industries, countries, and characteristics of organizations are often ignored. Context is important to understand the applicability and scope of findings and conclusions.
Moreover, from the total data sample (n=37) only 10 studies focused on a specific industry. Based on this observation it is pointless to dedicate the framework to a specific industry. One may wonder if context is crucial to understand innovation for organizations. Perhaps innovation is a topic unique for each organization. This may be the case because innovation persistence is dependent on the unique characteristics of each organization and its choices on how to design and allocate the organization and resources.
Furthermore, although literature suggests that innovation persistence is detected at two levels, namely the innovation initiation phase and the innovation implementation phase (Glynn 1996; Williams & McGuire 2005), empirical literature on innovation (processes) and its antecedents pay little to no attention to different phases; only 5 studies paid attention to different phases in the innovation process. The proposed framework distinguishes the two phases because there is a clear relationship between the sort of strategy and characteristics of management and the creation of a culture, attention for customer interaction, knowledge processes, and resource allocation. The choices have to be made first and afterwards the remainder of the determinants can be designed.
Understanding the framework
In some cases following general theory (e.g. The Stage-Gate) could help improve innovation capabilities of an organization. However, empirical descriptions are needed to understand the conditions to develop innovation persistence. There are a lot of drivers of innovation
persistence. Therefore, organizations should be able to detect the drivers that are important for their unique situation. Besides, the organization should be able to interpreted the
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Table 4.1 Distribution of studies
interaction might be irrelevant (e.g. organizations that do not deal with customers).
Furthermore, for some organizations the allocation of resources is no point of interest (e.g. organizations with unlimited financial possibilities). However, this study particularly focused on SMEs. SMEs are often subject to resources challenges. Therefore, the produced
framework is relevant for SMEs. Future research and the discovery of more
determinants/variables will be beneficial for the applicability and usability of the framework. Practitioner implications
General managers, innovation managers, and people responsible for innovation within organizations, might benefit from the results of this review. The framework can be used as a tool to design an internal organization appropriate for innovation. However, the
interpretation of the framework should differ because of the unique characteristics of each organization and because of the differences in resource possibilities. In principle the framework can be used to identify the factors that help an organization to develop
innovation persistence. However, correct design of the factors is an important condition to develop innovation persistence. When the organization does not have the knowledge or experience to operationalize the framework, it is recommended to enlist the help of external bureaus or innovation specialists. Moreover, research on the field of innovation persistence is not comprehended. Therefore, additional research will help to better understand the steps that have to be taken in order to develop and maintain innovation persistence.
Limitations and directions for further research Limitations
Although the study is made up of a systematic empirical review, it is expected that a number of interesting studies are missing in this review. Innovation persistence is no common term in the literature and for that particular reason the search has been creative at some points in order to find valuable studies. Moreover, there are no studies that particularly focus on the determinants of innovation persistence. For those reasons it is not unlikely that there are more interesting studies hidden in the literature. This is a challenge for future research. Although it is most likely that there are more determinants of innovation persistence, this study made a beginning on the research on this field by diving into six often recurring determinants. To avoid missing too much studies a systematic search is applied. This search is treated in the methodology section.
Moreover, the distribution of studies is not equally divided (table 4.1). Customer interaction (n=3), for example, is not covered as much as innovation culture (n=11). However, during the review it appeared that some determinants needed additional background in order to understand them in the context of innovation persistence. Future research might help to reflect on the choices made in this review. It is important to understand the factors in terms of innovation persistence. This understanding helps to operationalize and apply the
framework. The absence of context in the reviewed articles is another limitation that asks for further research. Eventually the framework has to cover all influences on innovation
persistence. Due to little consensus in the literature and the existence of many terms for innovation there is still a challenge ahead.
Determinants of innovation persistence
Knowledge processes Customer interaction Resources
Innovation strategy Innovation culture Management & leadership
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Further research on variables
Empirical literature does not frequently address innovation persistence. Most studies focus on innovation, innovation/NPD processes, and innovation projects. The concept of innovation persistence is treated in this review and builds on the definition of Guarascio & Tamagni (2019). According to Guarascio & Tamagni (2019) innovation persistence comprises the degree of intertemporal continuity in innovative behaviour. This review contributes to the empirical literature by proposing important determinants of the development of innovation persistence. However, undoubtedly there are more variables that influence the development of innovation persistence. Future research should identify new variables influencing
innovation persistence. Organizations could benefit from an extensive range of possibilities and tools to design the internal organization to make it positively influence innovation persistence.
Further research on the role of management
The proposed integrated framework shows that there is an important role for managers. The front-end of the framework shows the importance of management and strategy
development. These variables determine the success of the variables that are in the second phase. The decision to make a distinction between two phases within the framework is partially based on the clear overlap between management and strategy and the remaining determinants (e.g. a certain strategy determines whether customer interaction is interesting and management helps create a certain culture and decides on resource allocation). Another reason to distinguish two phases within the framework comes from Glynn (1996) and
Williams & McGuire (2005). They suggest that the competencies of an organization to innovate determine the presence of innovation persistence. Moreover, these competencies can be detected at two levels or phases: innovation initiation and innovation implementation. As discussed in the implications section, the reviewed literature barely pays attention to these phases. Although, distinguishing these two phases helps create structure and signs of a process; following a process to develop innovation persistence could be helpful for
organizations. Future research could help to further operationalize these phases and their characteristics. Moreover, further research could help to develop the understanding of the role of management and the way strategies should be drawn up.
Testing the framework
The practical and theoretical value of the framework will increase if further research puts effort in testing the framework and in improving/adjusting it based on the findings. For example, quantitative studies could test the determinants in organizations in order to verify the variables and corresponding links in the framework. Moreover, qualitative studies could verify the framework through an investigation of experiences or a measurement within organizations before and after applying the framework. Qualitative studies in the form of literature reviews could help improve the results of this review by building on the findings and supplementing them with additional variables/determinants.
Exploring the external influences
Moreover, future research could help to discover external influences on an organization’s innovation persistence. The internal design might need to be reconsidered after
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Responding to developments
This review included literature published between 1995 and 2020, reasoning behind this is explicated in the methodology part. It might be interesting to repeat this review after the identification of new variables and after the expiration of five or ten years. A repeat of the review helps to test the relevance of the findings after some years. The detected
determinants central in this review might be subject to changes and developments.
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5
Conclusion
A lot of organizations find it difficult to create an environment that supports innovation (Kuratko et al, 2014). Besides, acquiring capabilities and resources to start the innovation process is considered to be a difficult process as well (Zynga et al, 2018; Osterwalder et al, 2019). Therefore, the aim of this paper was to facilitate the process of initiating and
implementing innovation in organizations. Innovation persistence was the term central in this review. Based on the review it should be possible to answer the question “How does the empirical literature on innovation help to identify important determinants of innovation persistence (divided into two phases)?” in order to help organizations to analyze and develop innovation persistence.
The systematic review of 37 studies from the empirical literature on innovation and its antecedents showed that the internal organization needs to be appropriate for innovation practices. Moreover, the internal design determines whether innovation processes can be successful. Without attention for this design, it remains difficult to create an environment that supports innovation. Innovation persistence (continuity in innovative behaviour) can be developed through thoughtful design of internal factors. To develop intertemporal continuity in innovative behaviour it is crucial to often reconsider the internal design.
Through the findings of the literature review it was possible to come up with an integrated framework. This framework builds on the findings and conclusions of previous studies and helps organizations to develop innovation persistence. The variables that are included in the framework serve as handles for organizations to develop and improve innovation persistence. The underlying factors and their corresponding link with innovation persistence help to design an appropriate internal organization. Moreover, during the initiation phase there is an important role for management in the preparation of an
innovation enhancing organization. The management is responsible for effective allocation of resources, creation of an appropriate culture, and the identification and placement of skills and capabilities. Furthermore, the strategies need to be aligned with innovation. Appropriate deployment of knowledge processes, customer interaction, resources, and an innovation culture eventually helps to develop innovation persistence.
However, the research on the field of innovation persistence is not yet comprehensive enough to suggest that the framework covers all important aspects of an organization’s ability to develop innovation persistence. Further research is required to validate and expand the framework. It is a challenge to discover all determinants of innovation persistence. In the end it is possible to conclude that most of the internal factors influence innovation
