Master Thesis
Technology Management
Supplier Involvement in Innovation: Developing
a Model of Purchasing Competences and an
Organizational Configuration for New Product
Development
By Roel Venderbosch
1399128
r.f.venderbosch@student.rug.nl
February 2010
Capgemini Consulting
Supervisor: Ir. Robbert den Braber
Supervisor: Bsc. Maikel Lieste
University of Groningen
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Preface
This report is the representation of my final research project for the Technology Management masters degree program at the University of Groningen. I conducted this academic research project at Capgemini Consulting in Utrecht, the Netherlands. During an internship of half a year, I carried out an investigation into the areas of strategic purchasing, innovation and supply chain management. During both my undergraduate and graduate studies these fields had played an important part in my studies. On top of this, a personal interest in these areas made me eager to develop my understanding of them further. In my research project I was able to combine scholarly research with more a practical study of the supply chain practices of Capgemini Consulting as well as those of a number of major Dutch companies.
Together with Robbert den Braber and Maikel Lieste of Capgemini Consulting, I explored an exciting frontier of practical and academic research. I sincerely want to thank Robbert and Maikel for the opportunity to become part of their team and research areas. Moreover, I want to express my sincere gratitude for their supportive and challenging supervision of this project. I am confident that their supervision improved my work on this project in many ways.
Another person who was closely involved in this project was Dr. Linda Zhang. As supervisor of the University of Groningen she represented the academic side of this project greatly. Her supervision and advice helped me significantly in ensuring that the empirical research had a firm theoretical basis. I greatly appreciate her contribution to this thesis. I also want to thank Dr. Ir. Michiel Hillen for reviewing my thesis as the (independent) academic co-assessor.
Furthermore, I want to give special thanks to my colleagues at Capgemini Consulting – those working in the Purchasing Transformations cluster, the Supply Chain practice, as well as the many others I worked with during my time at the company. It has been an interesting and enjoyable experience to become engaged in their business. Finally a note of thanks to my dearest friends and family who supported me throughout this project.
It has been very rewarding to merge practical business life with academic insights and I hope to continue combining the two as I start my career.
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Management Summary
In recent years many firms have enlarged their innovative resources for a number of reasons. Nearly all firms operate in a value chain (supply chain), in which suppliers are one of the most significant external sources for innovation. Both the technological input of suppliers and joint supplier-buyer development can greatly improve innovation effectiveness and efficiency. Whereas the purchasing function of an organization is the natural ‘counterpart’ of suppliers, more and more businesses have opted in recent decades to have their purchasing divisions act as an intermediary between suppliers and the focal organization. In many firms purchasing has already been further evolved into a strategic business partner that is integrated into the organization. However, it is not clear what competences a purchasing function should possess to carry out its role as an innovation generation participant. Next to this research objective, it is insufficiently investigated how a purchase function should be adapted to the more traditional innovation drivers such as R&D, marketing and manufacturing. This concerns the arrangement of the organization in order to integrate all the differentiated partners, including suppliers and purchasing, who are jointly responsible for the delivery of new products and services (referred to by the term ‘new product development’, NPD). Combining these research area’s leads to the central issue of this research. It should be explored in which way purchasing competences are related to the organizational configuration. By doing so, it can be determined whether a specific development level of purchasing competences relies upon a particular organizational configuration.
To provide insights in these research areas, a theoretical (descriptive) framework is developed that contains both purchasing competences and a related organizational configuration. It is opted to investigate competences and an organizational configuration that contribute to optimal supplier involvement in innovation. Hence, a third dependent research part addressing the innovative performance of a firm is included to measure it. Altogether this renders in a descriptive model comprised of thirteen purchasing competence sets and seven organizational configuration forces that all contribute to three major innovative performance criteria. With this descriptive framework in place, an empirical test is conducted. The case study consists of ten major Dutch firms, all leaders in innovation, from four industries: chemicals, fast moving consumer goods, high tech, and energy & utilities. A generic comparison of the company scores on the competence sets, configuration forces and performance criteria, leads to the following results and insights.
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Table of Contents
Preface ... 3 Management Summary ... 4 Table of Contents ... 6 1 Introduction ... 8 1.1 Open Innovation ... 81.2 Supplier Involvement in Innovation ... 10
1.3 Purchasing Contribution to Innovation ... 12
1.4 Problem Identification ... 13 1.5 Report Structure ... 13 2 Problem Statement ... 15 2.1 Problem Definition ... 15 2.2 Research Objective ... 16 2.3 Research Question ... 17 2.4 Research Scope ... 18 3 Research Methodology ... 19 3.1 Research Type ... 19 3.2 Research Method ... 21 4 Theoretical Background ... 26 4.1 Innovative Performance ... 26 4.2 Organizational Configuration in NPD ... 32
4.3 Purchasing Innovation Competences ... 38
5 Research Design ... 46
5.1 Theory Integration and Model Construct ... 46
5.2 Instrument Development ... 49
5.3 Data Analysis Method ... 51
6 Analysis and Results ... 53
6.1 Subset Results ... 55
6.2 Bilateral Relations Analysis ... 61
6.3 Multilateral Relations & Scenario Analysis ... 63
7 Conclusions and Recommendations ... 67
7.1 Answer to the Research Question ... 67
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7.3 Suggestions for Further Research ... 70
8 References ... 71
9 Appendices ... 77
9.1 Appendix 1 ... 77
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1
Introduction
1.1
Open Innovation
In 2003 Henry Chesbrough introduced the concept of Open Innovation. This concept entails the shift from a closed to open innovation paradigm (Chesbrough, 2003). Traditionally, companies focused on internal research and development. Subsequently they produced their products internally, after which the products were distributed to the market (Chesbrough et al., 2006). By pursuing scale and scope advantages, multinationals were able to rely on themselves for innovation. Huge investments in internal R&D and attraction of the industries’ smartest people resulted in a great number of discoveries and early product market introductions (Chesbrough, 2003).
However, during the end of the 20th century this closed innovation model eroded. Several antecedents devalued the existing innovation model. First of all, spillovers and innovative discoveries that stayed on the shelf, not suitable to be commercialized by the company itself, ensued in dramatic innovation inefficiencies (Katz and Allen, 1985; Rosenbloom and Spencer, 1996). In addition, the increasing number and mobility of external quality workers and sources of private venture capital caused a rise in technology development outside the incumbent firms (Chesbrough et al., 2006). Nooteboom (1999), Dyer (1996) and many other scholars studied the change of traditional vertically integrated companies into a more divided structure of specialized networks, alliances and intermediate markets. Among others, these major factors contributed collectively to the adoption of the new model of Open Innovation. In essence, companies are no longer able to rely solely on themselves.
Master Thesis – Roel Venderbosch 9 Figure 1 The Open Innovation Model (Chesbrough, 2004)
Many studies have focused on potential technology sources regarding Open Innovation (Katz and Allen, 1985; Von Hippel, 1988, 2005; Cohen and Levinthal, 1990; Rosenberg, 1994; Chesbrough 2003, 2004, Chesbrough, Vanhaverbeke and West, 2006). Von Hippel (1988) classified various external opportunities for valuable ideas and knowledge, which are: suppliers, customers, universities, governments, private laboratories, competitors and all of these parties in other nations. Literature in 1979 investigated the preliminary increasing significance of external sources for new product and service development (Cooper, 1979). The research identified that already 46,7% of 152 companies in total, obtained their innovations to some extent externally (15,8% from product users, 12,5% from supplier suggestions, 10,5% from product user research and 7,9% from published information) (Cooper, 1979). A recent investigation reported that the input of external sources of technology in technology-intensive companies increased from 20% to 85% during the 90s (Roberts, 2001).
Because of this augmented external engagement in the innovation process, many researchers examined the need for renewed modes of collaboration between these parties involved (Nooteboom, 1999; Dyer, 1996, Vanhaverbeke and Cloodt, 2006; Simard and West, 2006; Maula et al., 2006). Networks of ‘co-opetitors’, cooperating and competing with each other in some sort of ecosystem, are gradually becoming more widespread. The geographical clustering of cooperative networks such as in Silicon Valley in the USA (high tech, semiconductors), on the High Tech Campus in Eindhoven, the Netherlands (high tech, nanotechnology) and Bangalore, India (information technology), has also proven valuable in terms of creating concentrated open communities.
Master Thesis – Roel Venderbosch 10 (Katz and Allen, 1985). Other than this cultural transition, sharing valuable IP and knowledge with others who might have the ability to exploit this knowledge with competitors, may decrease the competitiveness of firms. This double-edged sword is addressed by the Open Innovation literature as a problematic trade-off (Chesbrough et al., 2006). Nevertheless the benefits will, due to enlargement of the knowledge base, share of risks with co-innovators, reduction of development time (since ideas do not have to be developed from scratch), alignment with the surrounding business environment and trade of non-core business technologies, ultimately transcend the drawbacks, given the antecedents of the Open Innovation paradigm.
1.2 Supplier Involvement in Innovation
According to many studies on Open Innovation, suppliers can play a significant role in product and service development (Håkansson, 1987; Von Hippel, 1988; Schiele, 2006; Croom, 2000; Petroni, Panciroli, 2001; Monczka et al. 1998; Carr and Pearson, 2002). Their contributive role in innovation has risen to a higher level of quality during the last decades. Stones (2001) even states that suppliers these days are the most important external resource for co-operation ahead of customers and all other partners. Two of the many antecedents to the Open Innovation paradigm are key in this supplier quality improvement: broad availability of private venture capital and high quality workers ensure equal or superior quality of suppliers (Chesbrough et al., 2006). In general, it is considered that firms engaging suppliers in the new product or service development process achieve shorter development times, lower development costs and higher product quality (Bonacorssi & Lipparini, 1994; Birou, 1994; Clark and Fujimoto, 1991). In turn these advantages will lead to higher financial performance (Carr and Pearson, 2002).
In addition to this perception of single buyer-supplier co-operation, a broader view on vertical supply chains (SC) should be taken into account. Nowadays, nearly all firms have buyer-supplier relationships with numerous firms. With the decrease of vertically integrated companies, firms are regularly a buyer and a supplier at the same time (Chesbrough et al., 2006). In the 1980s emerging awareness of a firms’ participations in supply chains led to a stream of literature on this subject (Stock and Lambert, 1987; Clark and Fujimoto, 1991; Petersen et al., 2004; Chen and Paulraj, 2004; Roy et al., 2004; Wolter and Veloso, 2008). Initially the term ‘supply chain’ referred to logistic, material and information flows between and within firms. Later on, the supply chain concept definition was enlarged and included issues related to governance of chains, a chains’ organizational structures, overarching strategies and all other kind of interdependencies.
Master Thesis – Roel Venderbosch 11 contributing to a small fraction of the value chains’ overall delivery system. Competitive advantage of single firms must thus be seen in light of the entire value delivery system (Shank and Govindarajan, 1992; Womack and Jones, 1994). This value chain framework corresponds of course to the Open Innovation theory that includes suppliers, customers as well as other partners in generating innovation.
So in line with this value chain approach, suppliers are a fruitful source of technological capabilities and expertise. Additionally, since suppliers are part of the contiguous chain, development efficiency and efficacy is improved if firms include suppliers in the process (Wynstra et al., 2001). As such, suppliers are equally part of the value creating chain or network as the focal company. This equality must be thought of as a possibility and not as a given. Relationships with suppliers can differ with regard to the stage at which the suppliers are involved (when), as well as the intensity (what level of responsibility is given to suppliers) of the co-operation with suppliers (Petersen et al., 2005). Suppliers may be involved in an early (ESI, Early Supplier Involvement) or later stage of the new product and service development process (Monczka et al., 1998; Petersen et al., 2005). Besides, transfer of knowledge or ideas from external sources (suppliers) in chains and networks can occur through minor transactions as well as major formal alliances. Various attempts at creating a ‘one size fits all’ approach has not proven successful due to the influence of a great number of additional factors such as the level of technology, the type of industry, the culture of the firm, and many others. Regardless of these variations, the mode of involving a supplier can differ too. Figure 2 illustrates a range of origins of existing and to be developed innovations that can lead to a specific arrangement of supply chains (Schiele, 2006 p. 927). It must be noted that a firm can acquire innovations from suppliers through all ‘transaction modes’ depicted in the figure. An organization should be aware of these external opportunities and acquire them optimally according to a common strategy (Hakansson and Eriksson, 1993).
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1.3
Purchasing Contribution to Innovation
Since a few decades, purchasing1 functions are of increasing importance to many firms (McIvor et al., 1997). At the end of the 1980s over 60% of a manufacturer’s total sales value was bought from suppliers by purchasing, compared to 30% in the 1930s (Burt, 1989). Clearly, with such a level of bought value, intelligent buying could increase profit margins significantly. In its pursuit to create value by smart buying, purchasing functions professionalized with a focus on strategic development and integration in the business (Chen et al., 2004). This evolvement, starting in the late 1970s, shows a similar maturing path as the emerging supply chain approach. Its traditional clerical role of being a service provider, carrying out transactions between buyer and supplier, eroded. Instead, the purchasing function shifted to a strategic business partner that is managing inter-firm information exchange and becomes responsible for selection and maintenance of supplier value chains (Spekman et al., 1994; Ellram and Carr, 1994; Cooper and Ellram, 1993; Carr and Smeltzer, 1997; McIvor et al., 1997). Carr and Smeltzer provided an all-inclusive definition on this strategic purchasing evolvement: “The process of planning, implementing, evaluation, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the firm’s capabilities to achieve its long-term goals.” (1997, p. 201).
Clearly, purchasing is more and more engaged in long-term value creation of the company. As mentioned before suppliers, purchasings’ counterpart, are important sources in contributing to long-term value creation as well. However the value creation activities of suppliers as described in section 1.2, have to do with innovation. Combining these two facets leads to the emerging area of purchasing involvement in supplier value chain innovation (Williams and Smith, 1990). When purchasing is aligned to the corporate strategy and integrated with other business functions, it can appropriately act as a bridge between the company and its suppliers in case of innovation. Many recent studies have brought attention to this participative role (Axelsson and Hakansson, 1990; Williams and Smith, 1990; Wynstra et al., 2003; Schiele, 2006; Nijssen et al., 2002; Mendez and Pearson, 1994; McIvor et al., 1997; McGinnes and Vallopra, 1999).
Considering these developments, it has been suggested that purchasing acts in a multi-disciplinary fashion with other, traditionally dominant, contributors to innovation. It is well documented how cross-functional relationships for the sake of new product and service development can influence innovation success. However, until the 1990s such multidisciplinary co-operation generally entailed marketing and R&D (Gupta et al., 1986; Song et al., 1996). The recent transition of, among others, the purchasing function towards becoming an innovation partner in the organization, induces a new range of intra-organizational relationships among business functions. Intra-organizational issues concerning who to involve in cross-functional innovation teams, what structural and behavioral configuration of the organization should be applied, and how to manage the product development process in correlation with suppliers, do greatly affect the innovative performance of firms (Lakemond et al., 2001).
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1.4
Problem Identification
It becomes clear that purchasing can have a significant role as an interface between suppliers and the focal business in the innovation process. Therefore various studies have specified tasks, activities, responsibilities, roles, processes, objectives and functions of the purchasing function (Mendez and Pearson, 1994; McGinnes and Vallopra, 1999; Wynstra et al., 2003; Van Echtelt et al., 2008). However, it remains unclear what competences must be possessed to fulfill these. In addition, the contribution of purchasing’s competences to innovation (performance) has received little attention. It would be worthwhile to identify purchasing competences regarding optimal supplier involvement in innovation and measure its performance accordingly. By determining an optimal contributing set of purchasing competences, awareness of the critical areas that have to be developed in purchasing functions is created.
In relation to these purchasing competences, it is insufficiently investigated what organizational interdependencies and arrangements are driving innovative performance (Gupta et al., 1986; Ellram and Carr, 1994; Song et al., 1998; Sheremata, 2000; Atuahene-Gima, 2003). How should organizations be configured in order to enable organizational functions, such as purchasing, optimally in their pursuit for and contribution to innovation? Is it favorable to involve many parties in innovation and are these differentiated parties only integrated by firm innovation leadership? Moreover, insights in innovative performance and its correlation with the organizational configuration are missing consistent and integrated theories. Because of this lack, a real opportunity to distinguish successful organizational configurations that lead to optimal innovative performance is missed. Obviously, these organizational configurations must be contingent with all issues affecting innovation such as the Open Innovation paradigm, the value chain approach, and increasing competitiveness.
Finally, well developed insights in the arrangement of purchasing competences and the related organizational configuration, that both contribute to optimal supplier involvement in innovation, are lacking at all. Hence the most important contribution of this report is the development of a model that relates these purchasing competences to the organizational configuration. What purchasing competences correspond to what organizational dependencies? Is a company that wants to develop its level of purchasing competences dependent on a particular organizational configuration? Which patterns in these relationships lead to innovative performance?
1.5 Report Structure
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2
Problem Statement
2.1 Problem Definition
In the introduction it became clear that in the area of Open Innovation, external sources can be significantly beneficial for innovation. This is also asserted by the value chain approach in which optimal value to the customer is achieved by obtaining a joint strategy that leads to comprehensive value-to-customer objectives (Porter, 1992). Co-operative relationships may be held with suppliers, customers and other partners (Von Hippel, 1988). Moreover, relationships with the entire value chain, network or ecosystem can provide optimal innovative advantage (Dyer, 1996).
Where traditionally only the internal R&D- or manufacturing functions generated innovation, other internal- and external functions are increasingly involved in innovation (Schiele, 2006). As Stones (2001) argued, one of the most important external source for innovations are suppliers. Consequently, innovation organizations should be able to involve suppliers into their innovation processes. Since purchasing acts as an interface between the buying firm and external suppliers, involvement of purchasing in innovation is more or less granted (Chen et al., 2004). Purchasing’s recent evolvement towards becoming a strategic business partner that is integrated to the organization, predominantly has proven its advantageous role as an innovation partner.
With respect to the inclusion of purchasing in innovation, a lot of research has been conducted. Purchasing’s tasks, activities, responsibilities, structures, processes, functions, objectives as well as professional characteristics of purchasers, are well studied (Axelsson and Hakansson, 1990; Bonaccorsi, 1992; Williams and Smith, 1990; Wynstra et al., 2003; Schiele, 2006; Nijssen et al., 2002; Mendez and Pearson, 1994; McIvor et al., 1997; McGinnes and Vallopra, 1999). However, what competences must be possessed by the purchasing function in order to fulfill these requirements, is insufficiently investigated. Which competences should be owned by the purchasing function to leverage as much value to innovation? A great advantage of investigating competences instead of the opted activities and processes of purchasing, is the focus on its underlying ‘ability’ to carry out these activities and processes. Since many organization have only recently started to integrate purchasing into innovation processes, it can be unfeasible to examine the organization’s current activities and performed processes. To the contrary, currently available competences such as knowledge, skills and motivations, that enable you to fulfill these activities and processes, are already possible to examine. Besides, it provides great understanding to organizations about what they need to contain or to develop (new development path) to be able to ‘perform’. This refers to the concept of path dependencies (Tidd et al. 2005). A competence obviously cannot be bought or possessed instantly, while an activity or task seems to be achievable at once. A competence is dependent on its past and its historical development path. If an organization wants to identify ways to involve purchasing to innovation, a focus on competences instead of the mere to-be-conducted activities will thus result in a richer model.
Master Thesis – Roel Venderbosch 16 simultaneous outward and inward looking tendency seems to be a contradiction, or at least a challenge if it is badly managed. Hence, parallel to the possession of purchasing competences in innovation, their dependencies with other intra-organizational functions must be further investigated. Determining an organizational configuration that is able to adopt differentiation and integration tendencies, is essential in involving external- (suppliers) and internal partners in innovation.
Altogether, both the purchasing competences and the organizational configuration, are drivers or requisites of involving suppliers in innovation. This combinative approach leads to the key problem area of this research. How are purchasing competences related to the innovation organization. Is the level of developed purchasing competences related to a particular organizational configuration? Are purchasing competence even dependent on a specific organizational configuration? Or does a certain organizational configuration correlate with a particular sub set of purchasing competences? This research area has not been studied yet. Hence, this part of the investigation will be of exploratory nature.
Finally, it should be researched in which way these competences and configuration contribute to innovation. Therefore it has to be detailed why and how innovations with supplier involvement are generated. Moreover, evaluation methods have to be examined that appropriately measure the innovative performance. If this opted innovative performance evaluation is not included, a study on competences and configurations would not necessarily measure its actual effectiveness and efficiency enhancement in innovation.
In conclusion the basic problem definition can be formulated as follows: “With respect to supplier involvement in innovation it is unknown what competences a purchasing function must possess, how these competences are related to the organizational configuration, and in which way both contribute to innovative performance”.
2.2 Research Objective
Derived from the problem definition three research objectives can be defined. These objectives are interrelated and must therefore be considered in conjunction.
Provide a set of purchasing competences that lead to optimal innovative performance.
Provide a configuration of an innovation organization that leads to optimal innovative performance.
Provide extended academic and managerial insights on the relation between purchasing competences and the organizational configuration in order to determine the dependability of purchasing competences on the organizational configuration.
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2.3 Research Question
Based on the problem definition and the research objective, the following research question can be defined:
“ What competences that contribute to optimal supplier involvement in innovation must the purchasing function possess and how are they related to the internal innovation organization? “
In order to be able to answer this research question, the following more narrower focused sub-questions are used:
1 How are innovations with involvement of suppliers generated and measured on its performance? As indicated, many firms nowadays innovative in open networks. External suppliers, but also internal functions such as purchasing become increasingly involved in innovation. Apparently, an enlargement of innovative resources, leads to enhanced innovative performance. It remains unclear why companies require these wide-ranging inputs for the sake of innovation. How are their innovative performances improved by this adoption of additional innovation participants. Importantly, it must also be detailed what is actually improved. What is innovative performance and how can firms measure it? Does innovative performance actually lead to success and do we reflect upon product performances or market performances when referring to innovative performance? Furthermore, it must be detailed if all innovation types are suitable for improved supplier involvement in innovation. 2 How should organizations be configured for the sake of supplier involvement in innovation?
As the introduction described, purchasing can act as a bridge between suppliers and the focal organization. In that case, relations exist between suppliers, purchasing and probably other business functions such as R&D, marketing, manufacturing and others. It is not clear why and how these partners do contribute to innovative performance. More specifically in which way are these contributors related to each other? What are the basic variables in these interrelations, leading to innovative performance, that organizations should adopt? However, many varieties of inter-firm and intra-firm cooperation exist. For example cooperation modes between a dominant R&D function and purchasing in one company, can hardly be compared to that of marketing and purchasing functions in another. Taking these complexities into account, is there a general organizational model or configuration that leads to optimal innovation performance? How does this organizational model assure optimal acquirement of resources and contributive cooperation of all stakeholders? What specific forces are key in this organizational configuration?
3 What purchasing competences contribute to optimal supplier involvement in innovation?
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2.4 Research Scope
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3
Research Methodology
To be able to conduct an appropriate and feasible investigation, the general context of research must be indicated. First, a classification of the type and characteristics of this research is detailed. Second, the method will present a more practical approach of how to conduct this inquiry operationally.
3.1 Research Type
This area of research on purchasing competences and organizational configuration, jointly driving innovative performance, is an appealing subject for both basic theory and applied research. The validity and value of this investigation shall therefore be measured on the basis of theoretical contribution and practical, managerial, insights. First, this means that to some extent the research will strengthen and extent current basic theoretical research.2 Noticeably, nearly all existing basic theoretical research has actually an empirical underpinning. Secondly, this research functions as a basis for further applied research or a design‐focused business problem‐solving project (BPS) (Van Aken, Berends and Van der Bij, 2007). Design-focused problem-solving projects are practical projects in which the performance of a company, department or business system on several conditions is improved by the design of a solution (Van Aken, Berends and Van der Bij, 2007). So on the basis of this research specific solutions can be designed in order to improve the performance of purchasing functions or organizational co-operation concerning innovation.
Other factors that determine type and classification of this research are the availability and complexity of the objects under investigation. First, the real-life situation in which the empirical foundation of this study will take place does make it a contextual problem analysis. With the interface of business issues as Open Innovation, supplier involvement, purchasing organizations and intra-organizational dependencies with other business functions, this contextual investigation has great complexity as well. Due to the great variety and large number of (environmental) factors affecting a firms performance, causal relationships between variables are hard to determine. For these reasons, research in social and management science barely can make use of more decisive mathematical tools to determine one-on-one relations between variables. The only opportunity to establish hard cause and effect relationships between variables is by employing statistics. When a large quantity of objects (large n) is used in statistical research, causal relations are scientifically accepted to be proven. Even though, due to the desire of generating in-depth analysis and ‘reasons behind’ these complex research interfaces, statistical data sets would not be appropriate to use in this research. Moreover, constructing a statistical survey that is unambiguous and totally generic over all businesses and industries seems to be impossible. From a practical perspective it must be
2
Master Thesis – Roel Venderbosch 20 argued that such great numbers of objects are either not available for this investigation. 3 A solution to these kind of contextual and complex research areas consisting of few potential inquiry objects, is exercising a more intensive and qualitative focus on the objects. In order to do so, it is necessary to have different types of evidence for these individual objects, which is called ‘triangulation’. Triangulation increases the reliability of data by means of verifying information from complementary sources (Yin, 1994). Yin summarizes this general type of research as follows: “an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used“ (1984, p. 23). This research type summary is though a definition of the Case Study methodology. Consequentially, the appropriate method to cope with this research area is the ‘Case Study methodology’.
As elaborated, the case study method is suitable for in depth, contextual analysis on a limited number of objects. It can provide understanding of complex issues and can add strength to what is already known through previous research or extend that knowledge (Yin, 1984; Stake, 1995; Simons, 1980). This is exactly the core of this research in which an exploration of literature, further investigation of existing models and a new explorative combination of models are key objectives (see chapter 2 Problem Statement). Case studies are hence very suitable for an examination of 5 to 15 objects (firms in this research).
Although the overall case study methodology does suit these research conditions, differences in case study types do exist too. First it can be discussed whether or not a case study is of exploratory, descriptive or explanatory nature (Yin, 1984, 2003). Exploratory case studies aim at defining questions and hypothesis of subsequent studies. It also might determine the feasibility of required research procedures or function as some sort of a prelude to management science. Descriptive case studies entail a descriptive theory (framework) that has to be developed before the case study project starts. As a result a complete description or analysis of a real-life research phenomenon within its context can be carried out according to this predefined framework. When cause-effect relationships between variables, supported by data, are pursued one uses explanatory case studies (Yin, 2003). It is basically a process that starts with a theoretical statement or defined propositions that are refined and explained during the investigation (Yin, 1994).
Considering the large amounts of literature on the subjects of this report, it can be concluded that this examination is not of a mere exploring kind. The necessity of numerous objects for inquiry (large n) or availability of hard cause-effect data, which cannot be generated in this relatively complex research, makes it impossible to have an adequate foundation for explanative research. This project can thus be classified under the remaining descriptive case studies category. Nevertheless, besides the broad descriptive analysis that is based on literature, an exploration towards new literature and new combinations of existing models will be executed. Also results of this investigation that show potential causal effects will be detailed and judged accordingly (explanatory). This does not result in hard cause-and-effects relations as explanatory case studies try to pursue, but it serves as a basis for interpretation and further research.
Master Thesis – Roel Venderbosch 21 A second crucial remark targets the inequality in value regarding qualitative and quantitative research methods. Quantitative methods use calculable data and generic variables that are unambiguous to all research objects. These methods serve to answer simple what, when, where and how much questions. Qualitative methods on the other hand are somewhat informal, flexible and can be subjected to large variations in the application of research (Mittman, 2001). These methods rather focus on why and how things occur. Looking at this investigation with complex, contextual and real-life research objects representing purchasing competences, intra-organizational interdependencies and innovative performance, a mere quantitative method will not sustain. Simplified, unambiguous and foremost clearly measurable data sets are not possible to create. In addition it will be of great value to conduct a more in depth qualitative inquiry that leads to richer theories and models. In a review on qualitative inquiry Mittman states: “interview guides specifying general topics of interest, using broad, open-ended questions can be very effective in assessing interview subjects’ assessment of important concepts and issues and their beliefs and values, but ineffective in ensuring that comparable measures of identified variables are collected from a range of subjects” (2001, p. 4). So a qualitative approach will be able to assess underlying ideas and beliefs instead of only comparing quantitative data. In summary it will be favorable to use qualitative data in a structured way that is to some extent generic and quantifiable.
Closely related to this issue is the distinction between inductive and deductive research approaches. A descriptive case study requires pre emptive theoretical foundation. This embodies the application of deductive research. More specifically deductive research contains an explicit theoretical framework, with a priori specifications of variables and corresponding measures and data sources (Mittman, 2001). So, deductive research that targets the preferred qualitative approach in a structured way, will lead to optimal in-depth outcomes with minimal ambiguousness. This structuring also enables it to use outcomes in a more generic and quantitative manner. A secondary advantage of such deductive research is the ability to compare the cases under investigation. In fact the individual cases are an empirical underpinning of the proposed descriptive framework. But the other way around, the proposed theoretical framework also forms a foundation for comparing and evaluating the single cases too.
3.2 Research Method
Yin (1984; 2003) developed a procedure to carry out a case study. All issues concerning case studies discussed above and other critical choices are taken into account within this process construct: 1. Design of the case study protocol:
A determine the required skills B develop and review the protocol 2. Conduct the case study:
A prepare for data collection
B distribute questionnaire and conduct interviews 3. Analysis of case study evidence:
A analytic strategy
Master Thesis – Roel Venderbosch 22 1. Design of the case study protocol:
The initiation of a case study should start with a case study protocol. In this protocol general preconditions, tasks and goals of the study are identified.
A Determine the required skills
Yin argues (1994) that the researcher should have the right knowledge and skills regarding: good questioning, interpreting responses, listening, adaptive and flexible in its reaction to various situations, knowledge about the issue being studied and be unprejudiced in its judgments. This researcher has reasonable experience in conducting case study-like research.4 Good preparation and awareness of the researchers requirements though are of vital importance.
B Develop and review the protocol
Protocol development has to do with the general set-up of the case study. Four issues have to be dealt with (Yin, 1994):
An overview of the (case study) project
The overview of the problem area and the basic research objectives are naturally detailed in the Introduction and Problem Statement chapters of this report. These initial two phases, see figure 4, together with the Research Type section of this chapter (chapter 3 Methodology) have provided the general overview of this case study.
Further research details are the time path of half a year in which literature and 10 case objects will be examined. After the introduction, gaps in knowledge of competences and its relations to other intra-organizational functions are identified. A further exploration of literature should provide coverage of these identified gaps. By doing so a descriptive framework can be created (see Research Type) which is actually a proposition of the to be generated outcomes. After the construction of this theoretical description the actual case studies are the means for empirical foundation. It is anticipated that a few month will be enough to subtract contemporary data from the objects. The duration of the project is though short enough to have information not been biased in the meantime due to reorganization, improvements or other causes.
4 The researcher in this case is trained to become a good researcher by attaining many courses and studies in this research area. In addition interview and advisory skills training have ensured that the requirements are met.
Figure 4 Overview of the (case study) project
Phase 4 Empirical check of the descriptive framework Phase 2 Problem statement - Research objective Phase 1 Exploring and identifying problem area Phase 3 Construction of descriptive theoretical framework Phase 5 Drawing conclusions and recommend both theory adjustments and managerial implications
Master Thesis – Roel Venderbosch 23 Field procedures
Field procedures have to do with access to sources and data needed for this case study. Literature is easily obtained through the Library of the Economics and Business Faculty of the University of Groningen, information networks of Capgemini Consulting and freely accessible resources on the internet. The sources for the actual empirical inquiry are gained through contacts of the Purchasing Transformation and Business Innovation clusters of Capgemini Consulting, personal contacts or by ‘cold-calling’.
Case study questions
Case study questions are in this case similar to the research questions opted in the Problem Statement of this report. Only after a thorough elaboration and exploration of research areas, described in the Introduction, research questions could be defined. Moreover, close attention and iterative adjustment of these predetermined research objectives and goals have proven to be essential.
A guide for the case study report
In cooperation with the sponsors of this research a suitable content outline has been constructed. Obviously, a strict review on this outline and format is assessed since this is a masters graduation project.
2. Conduct the case study: A Prepare for data collection
Yin (1994) addresses the importance of complementary types of evidence. Column 1 of table 1, depicts all potential sources for evidence. The reliability of the study will depend on the use of multiple sources of evidence. Even though, it is not obligatory to include all types of evidence (Yin, 1994). Depending on the objectives of the examination itself and availability of data, these six types of evidence are unequally worthwhile. For example, direct observation will minimally lead to a better understanding of purchasing functions and organization procedures and structures. On the other hand passive records on reorganizations of the company are a key data source for this enquiry.
As a result of an extensive search for research objects, 10 Dutch firms all producing physical products have agreed to be an object in this project. The associated types of evidence from this multiple-case investigation are internet sources, annual reports, and other written resources as well as interviews with a purchasing and innovation responsible. In some cases a second interview with an innovation responsible was not required or otherwise not possible to conduct.
Master Thesis – Roel Venderbosch 24 predetermined interview structure, quantifiable and objectify-able measures ambiguity is roughly avoided.
Table 1 Types of Evidence (Yin, 1994, p. 80) (the sources of evidence used in this research are colored blue) With respect to the interviews a strict questionnaire format is used. This questionnaire contains the descriptive framework that is been developed during the theoretical exploration (Chapter 4 Theoretical Background and 5 Research design). The questionnaire is tested and adjusted extensively by having the tool reviewed by several Purchasing Transformation consultants of Capgemini Consulting and the academic supervisor.
B Distribute questionnaire and conduct interviews
In order to employ the in-depth interviews a questionnaire is utilized. Further details of the content of these questionnaire are discussed in the Research Design chapter (chapter 5). As mentioned the interviews were held face-to-face with 16 representatives of 10 companies. There was no need for preparation by the person being interviewed. The interviews lasted 1,5 hour which suffices for the stream of information and level of concentration of both actors in the interview.
Next to the use of multiple sources Yin (1984) recommend two other principles of data collection. One is the deployment of a case study database. This can be a physical and digital information base
Source of Evidence Strengths Weaknesses
Documentation stable - repeated review
unobtrusive - exist prior to case study
exact - names etc.
broad coverage - extended time span
retrieveability - difficult biased selectivity
reporting bias - reflects author bias
access - may be blocked
Archival Records same as above
precise and quantitative
same as above
privacy might inhibit access Interviews targeted - focuses on case study
topic
insightful - provides perceived causal inferences
bias due to poor questions
response bias
incomplete recollection
reflexivity - interviewee expresses what interviewer wants to hear
Direct Observation reality - covers events in real time
contextual - covers event context
time-consuming
selectivity - might miss facts
reflexivity - observer's presence might cause change
cost - observers need time Participant
Observation
same as above
insightful into interpersonal behavior
same as above
bias due to investigator's actions
Physical Artifacts insightful into cultural features
insightful into technical operations
selectivity
Master Thesis – Roel Venderbosch 25 in which all data is collected. In this research all information collected from a firm is stored digitally and physically. A second principle that was also used in this research is the maintenance of a chain of evidence (Yin, 1984). In essence a chain of evidence includes a composition of all evidence from start to finish of the project that can be followed by another observer. During this project the researcher unquestionably provided a chain of evidence simply because this is requested by both parties of supervisors.5
3. Analysis of case study evidence:
A Analytic strategy
The data analysis of this research should cover initial problem statements and research objectives. In the first chapters and point 1. ‘Design the case study protocol’ of this section, preconditions of the case studies are detailed. These preconditions set the basis for a twofold analytical strategy. First an evaluation phase follows directly upon the creation of the theoretical descriptive framework. By conducting literature exploration, evaluation takes place that leads to the construct of a proposed framework. After this primary evaluation round the case studies are executed and evaluated empirically. This subsequent evaluation of case study data consequently resembles the proposed descriptive framework. Additionally, iterative revision of the suitability of these evaluations will assure consistency with the initial problem statements and research objects.
Yin (1994) addresses some potential analytical techniques for both evaluation rounds: pattern-matching, explanation-building, and time-series analysis. The time-series technique is not appropriate for this kind of contemporary descriptive research of multiple cases. Also explanation-building is difficult to perform. This technique focuses on an iterative process that continuously refines and revises the propositions in order to provide explanatory answers (Yin, 1994). However, it is more appropriate to match the acquired data with the propositions of the descriptive framework and identify correlating and opposing patterns (pattern-matching). This method does make use of the interpretive skills of the researcher that uses qualitative data to interpret these occurring patterns. It has to be addressed that an unbiased and discrete position of the research is a necessity to assure objectivity.
4. Development of conclusions, recommendations, and implications based on the evidence
On the basis of the initial research introduction and problem statement, research methodology, set-up of case study, case study protocol, preparation of the literature and case study research, process of the investigation and analysis of results, generated theories and conclusions have to be communicated to the users. The users of this report will be predominantly academics. As such, managerial or practical business opportunities will only be provided within the academic conditions of this report.
5
Master Thesis – Roel Venderbosch 26
4
Theoretical Background
4.1 Innovative Performance
In order to survive, companies need to adapt themselves to changing circumstances (Tidd et al. 2005). In 1912 Schumpeter already described the need for innovation to renew the organization for the sake of the altering external conditions (Schumpeter, 1912). Innovation includes, according to him, new products, new production methods and new markets or sources to supply (Schumpeter, 1912). In later years the concept of innovation was often interchangeably used with invention. However, if companies want to create valuable innovations new knowledge and ideas have to be translated into marketable products and services. Drucker (1995) therefore defined innovation as being composed out of invention and commercialization of that invention. As such innovation comprehends the creation of new products, processes and services and the delivery of those offerings to the market (Tidd et al., 2005). The underlying objective of all such innovations is to create competitive advantage. If a company is able to create value to its buyers that exceeds costs of creating it and provides more value to the buyer than competitors, competitive advantage is gained (Porter, 1985).
As the introduction indicated, traditional means for innovation have eroded during the last decades (Chesbrough, 2003). The successfulness of the conventional innovation paradigm, focused on enlargement of scale and scope advantages, declined with the evolvement of external conditions. Primary antecedents that caused these changing conditions hold with increasing mobility and quality of workers, rise in private venture capital, and a diminishing role of vertically integrated firms due to the development of quality external networks, suppliers and intermediate markets (Chesbrough, 2006; Dyer, 1996). Among others, these factors lead to quickly evolving technologies, fierce competition and shifting markets (Cooper, 1994). With respect to these emerging high levels of competition, D’Aveni (1995) identifies four levels (i.e. phases) of competition in an industry (table 2). Where firms of the Competition Avoidance (second) level segment their market, use market entry barriers and take position around each other, firms in the Hypercompetition (third) level of nowadays are not able to retain those competitive advantages (D’Aveni, 1995).
Competition Type
No Competition Competition Avoidance
Hyper competition Perfect Competition Competition Extensiveness Low Intensity Competition Moderate Competition High Intensity Competition Extreme Competition
Market Monopoly Oligopoly Dynamic Competition Perfect Competition
Profits Excessive Profits Sustainable Profits Intermittent or Low Profits No Abnormal Profits Time Trend
Table 2 Levels of Competition in an Industry (based on D’Aveni, 1995)
Master Thesis – Roel Venderbosch 27 advantage, he should introduce innovative products and services to the market quickly in order to stay ahead of the competition (Tidd et al., 2005). The inability to be competitive with former advantages of size and assets in hyper competition markets is quoted by D’Aveni (1995) as follows:
“The traditional sources of advantages no longer provide long-term security. Both GM and IBM still have economies of scale, massive advertising budgets, the best distribution systems in their industries, cutting-edge R&D, deep pockets, and many other features that give them power over buyers and suppliers and that raise barriers to entry that seem impregnable. But these are not enough anymore.” (p. 45).
The strive to gain largeness does not automatically lead to the best quality or low-prices products anymore. In addition, competitiveness is not merely based any longer on a price-quality dimension as it once dominantly was (D’Aveni, 1995). The new conditions call for innovativeness in creation of know-how and ascertained first-mover advantage, protecting or occupying current or new (geographical) markets and maintenance of deep pockets or the deepening of these pockets by engaging alliances with other firms (D’Aveni, 1995). Important factors stemming from these novel dimensions of competition are thus know-how and ways to expand sources of this know-how and its markets. Besides, a harsh pressure on development times of innovation is crucial since companies have not the time anymore to sell their deliveries. This is confirmed by a study of McKinsey & Company showing products that were half year late to market missed one-third of potential product’s lifetime profits (Mendez and Pearson, 1994). In summary, companies should aim for the highest quality-price combination by acquiring as much knowledge and technology from as many sources as possible, while generating these innovations rapidly to gain as much current or new markets. This confirms Chesbrough’s Open Innovation paradigm in which firms should focus to enlarge their resource basis for innovation. Both internal (purchasing) and external parties (suppliers) may participate in the exploration for innovative ideas and new ways to approach the market (Von Hippel, 1988).
In line with Schumpeter’s definition of innovation regarding products, production methods and markets, Tidd et al. (2005) categorizes 4 areas of innovation. These four areas (four P’s) are: Product-, Process-Product-, Position- andProduct-, additional to the Schumpeterian modelProduct-, Paradigm Innovation6. This classification of innovation types is depicted in table 3.
Product Innovation Innovation of products and services an organization offers
Process Innovation Innovation in methods by which those products and services are created and delivered
Position Innovation Innovation in market or context in which products and services are offered
Paradigm Innovation Innovation in basic mental models by which the organization operates
6 Position- and paradigm innovation are occasionally referred to as ‘business model innovation’. This qualification is used in ‘The McKinsey Quarterly, Assessing innovation metrics: McKinsey Global Survey Results’, November 2008, next to Product-, Service- and Process Innovation.
Master Thesis – Roel Venderbosch 28 With the mentioned potentials of involving suppliers in innovation, all studies aim at new product development (NPD)7. McGinnes and Vallopra (1999) even argue that manufacturers of physical goods are even more likely to include suppliers into NPD than service providers. Table 3 shows that innovation of both products and services is actually covered by the NPD investigations. Even though, Tidd et al. (2005) recognize some difficulties with dividing product- (NPD) and process innovation. This has to do with the fact that for NPD innovation of underlying process streams is required fairly often too (e.g. a NPD of a new car probably needs new manufacturing processes). In other words, it happens regularly that a new product is developed by totally new processes concerning logistics, use of ICT streams, manufacturing flows, and so on. To avoid this definition problem it would be more consistent to used the term technical innovations of Daft (1978), containing product, service and process development. However, since technical innovations might also overlap non-technical innovations (e.g. managerial, marketing) definition problems continue to exists. This is confirmed by Tidd et al. (2005). A second blurred interfaces arises with a technical innovation that is also introduced into a new market or environmental context. For example, if an electronic engine used in cars is adjusted and further sophisticated to be used in motorcycles, both a NPD and a re-positioning innovation have been generated. Overall when taking the involvement of suppliers and hence purchasing into account Chang et al. (2006) identified, on the basis of many studies, that the predominant contribution is related to product- and process innovation.
Next, to this categorization of innovation scopes, NPD is frequently classified by the degree of radical or incremental innovativeness. Pure radical innovation are ‘new to the world’ discoveries that are introduced to the market. It is a disruption of existing capabilities, technologies and use of material that does invoke a new generation of products and services. On the other hand incremental innovations entail revisions, improvements and adjusted exploitations of existing capabilities and technologies. Innovations found in between, ‘new to the firm innovations’, are incremental contributions to the general technological trajectory but radically novel to the focal firm (Tidd et al., 2005; Chen et al., 2006). Although radical innovations receive major attention incremental innovations account for around 90% of all projects.
One way to conceptualize these degrees of innovation novelty is by the use of S-curves (Roy et al., 2004). An S-curve represents the evolving performance of a particular base technology over time or effort (figure 5). This evolvement of performance is a result of incremental innovative activities that improve that base technology. In case of a disruptive or radical innovation a new base technology is launched. Accordingly a new S-curve of that novel technology is initiated (figure 5). Both degrees of innovation can deliver value and can thus be pursued when integrating suppliers and purchasing to NPD. The only difference is that jumping to another S-curve involves leaving a current technology base, with an established performance-costs balance, for another one. Logically, substantial risks should be taken if a company leaves the established technology base with all its related knowledge, capabilities and past improvement trajectories of that base. Leaving a technology base often results in leaving a supplier base too. Novel technologies may require novel suppliers. So involving suppliers in radical innovation projects may involve a different approach compared to incremental innovation (existing supplier base), with more unpredictable inputs and outcomes.
Master Thesis – Roel Venderbosch 29 Two important dimensions that follow from this conceptualization are the delivered effort/ time (x-axis) and its resulting performance (y-(x-axis). Effort is an aggregation of investments in time, organizational arrangement and every other factor contributing to innovation. Performance has to do with the advantage or value the innovation delivers. This is intensively studied by many scholars (Roy et al., 2004; Hagedoorn and Cloodt, 2003; Cooper, 1994; Garcia et al., 2008; Porter, 1985). In close connection to the competitive advantage described by Porter (1985), performance is the firms’ delivery of value minus costs of related to delivering this value. As such costs should be reduced or value increased over time (effort)in order to increase performance. Products that deliver the highest performance at a specific moment in time are perceived to be superior. Cooper argues that superior products delivering superior value are comprised of seven features: unique attributes, good value for money, meeting customer needs, relative product quality, price/performance characteristics, useful by the customer and visible benefits (1994). In his study the top 20% performing products scored dramatically higher than 20% bad performing on these seven features (Cooper, 1994). Consequentially, companies should strive to create products that meet these demands. Moreover, when an imaginable optimum in value versus costs is met, a competitor may reach a higher technology standard suddenly by incremental or even radical innovation. Clearly the trade-off concerning NPD is about meeting the highest value, against minimal costs as quickly as possible. Derived from this product success measurement the related market performance should be assessed (Cooper, 1994). It has to be noticed that literature uses various terms for this market performance concerning innovation: NPD success (Cooper, 1994), NPD performance (Nijssen et al., 2002), innovation performance (Hagedoorn and Cloodt, 2003, Petroni and Panciroli, 2001), firm and financial performance (Chen et al., 2004), market performance (Garcia et al., 2008) and firm financial performance (Petersen et al., 2005). Altogether these measures aim at increase of sales, increase of profits, increase of market share, new markets, high return on investment (internal rate of return, net present value, payback time), ‘achievement of set goals on sales, profits and market shares’, commercial success compared to competitors, strengthened relation with customer, income before tax and variations of these. A major disadvantages of evaluating NPD with market performance measures is the missing causal relationship. Cooper noticed that many other factors as a superior sales force, brand name, competition, and availability of the product assured market success too (1994). Hence, although NPD affects market performance to a great extend it cannot be considered as the sole causation. Another major problem towards this evaluation method is the delay in time of actual NPD projects and its final introduction and corresponding performance in the market.
P erf o rm an ce Effort / time
New technology base
Radical innovation
Incremental Innovation
Base technology
Master Thesis – Roel Venderbosch 30 A way to overcome this misalignment of general market performance measurements and actual NPD success is the use of innovation related performance indicators. Many studies use indicators as R&D input, patent counts, patent citations and counts of new product announcements (Hagedoorn and Cloodt, 2003). Nevertheless, these performance indicators lack a suitable assessment of the successfulness of patents and new products. Next to that, R&D input and patent counts ignore issues of efficiency and effectiveness related to time, costs and marketable value as described earlier. One way to tackle time and cost matters in innovation is to conceptualize NPD as a process. A huge advantage of a process approach, with a beginning and an end, and an output versus input, is its evaluation suitability on effectiveness and efficiency. By adopting that premise, a single NPD project can be chartered on defined points in time. This linear approach is conceptualized in the Stage Gate Model (Cooper, 1988, 1994).
Figure 6 NPD Stage-Gate-Model (Cooper, 1994)
Figure 6 depicts such a stage gate model. 5 activity subsets of the NPD process are represented by 5 stages. In between each stage a gate is included in order to determine if the project may proceed or not. This go-no-go decision can be based on whatever grounds the firm identifies as important. Yet performance of each stage can be measured on the basis of predefined goals, benchmarked to other projects or evaluated on contextual market and technical success.
Master Thesis – Roel Venderbosch 31 on the basis of this basic performance evaluation, further organizational action or capability development can be derived. This evaluation must thus be considered as a means to further evaluate projects with additional qualitative information leading to improved knowledge and capabilities.
Generally, optimal innovative performance is reached when companies score high on all QCT criteria. This stems from the fact that innovation conditions, typified in the Open Innovation paradigm and hyper competition situation of D’Aveni (2005), necessitate it in order to survive. Nonetheless, the strive to excel on all criteria can lead to a situation of sub optimality since creating high quality products takes significant investments in time and costs. In mathematical sense these three variables are perceived to be inverses of each others. Porter refers to this strategic sub optimality as a “stuck in the middle” situation that companies should avoid (1985, p. 17). For the sake of differentiating one selves in the market, firms should choose specific criteria to deliver unique value to the customer. In conclusion firms must pursue high performance on all development performance criteria, but excel on one or two which suits their innovative capabilities best. This can be perceived as prioritizing one or two criteria that are intensively pursued. The following table (table 4) presents the performance criteria and several sub measures providing more detail on a firms’ innovative performance:
Innovative Performance Measure
Performance Criteria
1 Speed a. Project durations meet time schedules
b. Project durations are shorter than those of previous- and competing projects
c. Market introduction of products occur earlier than those of previous- and competing projects
2 Cost efficiency d. Project expenditures meet the budgeted investments
e. Project expenditures are lower than previous- and competing projects
3 Quality (Customer value) f. Product qualities are of higher level than previous- and competing products
Table 4 Innovative Performance
