Innovation Value Chain Research Articles

Study of Selected Livestock Innovations in Ethiopia

Ethiopia is endowed with significant livestock resources and holds the largest livestock population in Africa, estimated at around 60 million cattle, 60 million sheep and goats, 52 million chickens, 4.5 million camels, 10 million bee colonies and 7.2 million equines. The livestock production and management system in Ethiopia is mainly extensive, where indigenous breeds are kept under low input/low-output husbandry practices. This study is part of a multi-country African livestock innovation study covering three East and West African countries (Ethiopia, Kenya and Mali) supported by the Program of Accompanying Research for Agricultural Innovation (PARI). The purpose of the study was to provide guidance to policy makers and private and public investors on promising innovations in Ethiopian livestock value chains and their contexts, which could enable transformation of the livestock sector. The study also aimed at providing private and public decision-makers with guidance on investment opportunities building on a review of broad trends of Ethiopian livestock development and in-depth analyses of success stories from selected innovations to encourage wider lesson-learning and knowledge-sharing. The study is based on a desk review of important documents, key informant interviews, consultations with major stakeholders on respective innovations and analyses of official customs data and other data from the national statistical agency of the country. The study focused on four selected livestock innovations: beekeeping, feed production and marketing, integrated feedlot operation and index-based livestock insurance. These innovations were selected at an inception workshop held in Kenya, Nairobi, in October 2019. Results of the study reveal the possibility to increase honey production six fold through improved frame hive, from the current level of 15-20 kg/hive/year to 90-120 kg/hive/year by raising farmers’ skill and knowledge on apiary site management, and facilitating access to inputs. On the other hand, an assessment of feed innovations revealed attractive investment opportunities in the harvesting, conserving and proper utilization of crop residues, hay and other feed resources. Harvesting and conservation of crop residues alone can create employment opportunities for over 245,000 youths for two months a year. Investments in industries that produce feed premixes and additives to supply the Ethiopian livestock sector also hold promise, in light of imports over 4,000 tons of these feed ingredients per annum an. Investment in integrated feed production, feedlot operation, slaughter and export of beef is also indicated as an promising business opportunity to enhance benefits from the Ethiopian beef industry. Index-based livestock insurance is also found to be a scalable innovation in the Ethiopian livestock industry that can benefit both livestock producers and the financial sector actors. The study has shown adoption and impact, trade-offs/externalities, potential for scaling and broad policy and development implications of all the four selected livestock innovations in Ethiopia.

Entrepreneurship and global health: activating the ecosystem and preventing disease

What kind of business models can be used to provide affordable healthcare on a viable basis? This paper points to new business models that attract participants in a value chain for innovation. Public-private partnerships can help to activate a supportive ecosystem and draw in participants to contribute to the innovation value chain. There are few economic incentives stimulating R&D for diseases of poverty. But policies with global reach have created new sources of financing to accelerate healthcare innovation in resource-poor settings. Combining resource-based theory of the firm with ecosystem analysis, we extend entrepreneurship theory beyond conventional applications and point to new business models to achieve global health objectives. We use case study evidence from the Meningitis Vaccine Project to show how entrepreneurial innovation can build resources and create value in the healthcare ecosystem.

How the Interaction of Big Data Analytics Capabilities and Digital Platform Capabilities Affects Service Innovation: A Dynamic Capabilities View

The emergence of big data analytics capability (BDAC) and the development of service innovation have aroused the interest of scholars and practitioners in exploring the mechanism of BDAC-service innovation value chain from the inside. The current study adopts the dynamic capabilities view to examine the effects of the different types of BDAC on service innovation. Our findings from a survey of 175 organizations in China provide empirical evidence of two positive effects of big data analytics technical capabilities (BDAT) and big data analytics personnel capabilities (BDAP) on service innovation via dynamic capabilities. Furthermore, this study illuminates the significant and different quasi-moderating roles of digital platform capabilities. Such capabilities positively enhance dynamic capabilities and strengthen the effects of BDAT on dynamic capabilities but weaken the effects of BDAP on dynamic capabilities. Introduced environmental dynamism aims to examine how the influence of environmental factors negatively moderates the relationship between dynamic capabilities and service innovation. Our study offers theoretical and practical contributions.

How Environmental Regulations Affect the Efficiency of Green Technology Innovation?

Green technology innovation is an effective driving force to achieve the optimization and upgrading of industrial structure. Environmental regulations principally behave in guiding green technology innovation activities. Based on the Super-Sbm-Dea efficiency model with undesirable output, this paper estimates the provincial-level efficiency of green industrial technology innovation (Gtie) in China from the aspects of technology development, technology transformation and industrial innovation value chain (IVC) from 2005 to 2015, and analyzes its dynamic trend with kernel density function. The conclusions are as follows: 1) Gtie is low and on the rise generally, and tends to decrease in the stages of technology development, achievement transformation and industrialization; in the stage of technology development, the gap between the eastern region and other regions of China tends to increase, while Gtie is on the contrary in the other stages. 2) Gtie spatial spillover is obvious. In the traditional panel model, the effects of command and public environmental regulations are obvious, while the roles of FDI and market regulations are opposite, and the impact of openness and economic development level is not significant. 3) Based on the analysis of Durbin model, market, public regulations and openness improve the efficiency directly. However, economic development level shows significant inhibition effect, while the role of the command regulations and FDI are not significant.

Reprint of "Performance evaluation of China's high-tech innovation process :Analysis based on the innovation value chain"

The Chinese high-tech industry has developed greatly since the beginning of China's “National High-tech R&D (863) Program” and “China Torch Program”. This paper introduces a conceptual model extended from the innovation value chain model to simultaneously estimate the R&D and commercialization efficiencies for the high-tech industries of 29 provincial-level regions in China. To match reality, a network DEA incorporating both shared inputs and additional intermediate inputs is constructed to open the “black box” view of decision making units used in single-stage DEA. This study is the first attempt to link the R&D and commercialization with a solid theoretical foundation and feasible mathematical methods. The empirical findings show that most of the 29 regions have low efficiency in the commercialization sub-process compared to the R&D sub-process, although there are regional differences in China's high-tech industry. Pearson correlation shows that the R&D sub-process is not closely correlated to the commercialization sub-process in terms of efficiency. Our analysis can provide information for the formulation of policies to achieve high innovation efficiency.

Exploring the characteristics of 3D printing global industry chain and value chain innovation network

In this study, we attempted to fill an important gap that literature has yet to investigate: the characteristics of the 3D printing global industry chain and value chain innovation network. The network characteristics analysis is based on patents and the patent data download from the European Patent Office (EPO) database covering the period from January 1, 1989 to December 31, 2017. The concept of the 3D printing global industry chain and value chain network is defined, then the network model is divided by employing case analysis, and finally the network characteristics are analyzed by using social network analysis. This research enriches the relevant theories of global innovation networks in emerging industries and provides theoretical support for the development of global innovation strategies and policies for the 3D printing industry.

Analysis of the innovation value chain in strategic projects of the Brazilian Army

PurposeThe purpose of this paper is to describe and compare seven case studies of strategic innovation projects of the Brazilian army; these projects present high transformational potential and high investments and are supported by technology and science policies.Design/methodology/approachThe authors present herein multiple case studies in which the authors conduct a documentary analysis of the innovation processes in the Brazilian army, as well as semi-structured interviews conducted with eight servicemen with more than 15 years of working experience.FindingsThe results obtained suggest that the innovation process occurs in four stages: creation, selection, development and diffusion of ideas.Practical implicationsThe research is relevant because it presents how the interaction between the Brazilian army, companies and academia strengthens the innovation ecosystem, stimulating the development of best practices for the management of strategic projects.Originality/valueThe main contribution of this study is to present the strategic project management of innovation based on public policies and investment in projects of the Brazilian army, which are drivers for the development of ecosystems that promote the creation and expansion of companies, the diffusion of technological knowledge in universities, and suitable solutions for the military sector.

Hierarchical business value of information technology: Toward a digital innovation value chain

Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain.

THE IMPORTANCE OF INTERNAL KNOWLEDGE GENERATION AND EXTERNAL KNOWLEDGE SOURCING FOR SME INNOVATION AND PERFORMANCE: EVIDENCE FROM IRELAND

This paper analyses the knowledge sourcing, transformation, and exploitation stages of the innovation value chain for a sample of Irish small to medium sized enterprises (SMEs) using Community Innovation Survey data. It explores the role of internal research and development (R&D) and external knowledge on SMEs’ innovation and performance. The open innovation paradigm, which stresses the importance of external linkages, is used to examine the impact of different external knowledge sources on SMEs’ innovation. The consideration of external linkages in the innovation performance of SMEs is crucial as these firms may be constrained in their ability to perform R&D due to their size. The analysis expands the traditional CDM methodology beyond the consideration of research and development as the sole source of knowledge for innovation by also considering a range of potential external knowledge sources. The findings indicate that SMEs generate knowledge internally through the performance of R&D, while also exploiting linkages to external agents. However, the impact of external sources of knowledge is not uniform. The results suggest that backward linkages have a positive impact on SME product innovation, but negatively affect SME process innovation, while public knowledge sources are positively related to the probability of product innovation occurring. This may have important policy implications. Finally, process innovation is also found to be a key determinant of SME productivity, while product innovation has no impact on SME performance.

A systems-based R&D management model for the road and transport engineering sector applied to a community access roads and transport research programme

A conceptual non-linear, systems-based R&D management model for the road and transport sector was developed to address the associated complexities of transport and road research. It takes account of all the elements of the innovation value chain as well as stakeholders. It stimulates systems-thinking in the R&D management process and allows for a non-linear approach to the process with a number of process pathways, both ‘backward’ (back casting) and ‘forward’ thinking, thus facilitating eventual impact and uptake. It includes an impact assessment ‘sensor’ that influences the process of R&D management. The model was used to augment key performance indicators in an existing transport and road research programme. It was shown that a systems-based approach can improve the impact assessment indicators of an R&D programme in a community access roads and transport research programme.

Improving smallholder livelihoods and ecosystems through direct trade relations: High‐quality cocoa producers in Ecuador

AbstractGlobal trade in niche commodities has increased the influence of consumers' choices on land use change and livelihoods in developing rural areas. New niche commodity markets for fine cocoa—produced by old tree varieties frequently grown in shaded agroforestry systems—create more direct linkages between producers and buyers. We explored the socioeconomic and environmental outcomes for cocoa smallholders that participated in direct trade relations compared with smallholders that sold through mainstream markets. Household interviews were conducted with cocoa smallholders in northern Ecuador. Biodiversity conditions at farm level were monitored for 75% of surveyed households. Using a counterfactual based on genetic matching, we found that smallholders engaged in direct trade (a) captured superior prices for cocoa sales; (b) had greater access to agricultural training, technical assistance, and improved social networks; and (b) applied more nature‐friendly management practices, compared with smallholders selling through mainstream markets. However, a strong overlap between direct trading practices and organic certification made attribution of environmental benefits difficult. This overlap likely explained why farmers engaged in direct trade used more organic fertilizers and less herbicide. Shade level and plant species richness and abundance in plantations were unrelated to market participation. Additional qualitative analyses suggest that certification facilitates engagement in direct trade and that some direct buyers request certification. This study provides insights on the potential of developing value chain innovations for high‐quality commodity trade. The success of value chain innovations hinges on the competitiveness of farmers' cooperatives and involvement of governments, nongovernmental organizations, and private actors.

Partnering for sustainability in agri-food supply chains: the case of Barilla Sustainable Farming in the Po Valley

The objective of the paper is to understand the process of designing a multi-stakeholder partnership in the adoption of sustainable innovations in value chains. More specifically, the focus is on the design of feasible types of horizontal agreements and contractual formulas to be implemented in the agri-food supply chain in order to introduce sustainable agricultural practices. To this purpose, the Barilla Sustainable Farming initiative, which is currently in the first phase of designing an MSP, is used as a case study.

Innovation in seafood value chains: the case of Norway

This article provides econometric estimates of the determinants of collaboration in innovation processes and innovation outcomes in Norwegian aquaculture and other seafood sector firms, using linked innovation survey and register data on individual firms for the years 1990–2010. The seafood sector in Norway has an extensive innovation system and a high research and development (R&D) intensity, where public R&D institutions receive much of the funding. Our econometric estimates imply that firms with internal R&D resources collaborate more with external organizations in general, and research institutions in particular. Internal skills in the form of R&D employees and external collaboration with firms in the value chain have highly significant positive effects on innovation rates. Collaboration with R&D institutions has a smaller direct effect on innovation. Innovation is clustered at the beginning and end of the supply chain. Aquaculture input suppliers are highly innovative, while aquaculture farms mainly incorporate innovations from suppliers.

Innovation management and Value Chain Design: Case of a Small Professional Services Firm

The concepts of innovation and innovation management were usually associated with large firms in developed countries that focused on product manufacturing. More recently, researchers turned to studies of innovation in services and the relevance to small firms in developing countries. This paper explores the relevance and applicability of the concept of innovation management to small firms, particularly in the field of professional services, in the context of a developing state. A qualitative research method was employed involving collection and analysis of published articles, reports, and leading texts on the subject of innovation management. The main finding is that innovation management is highly relevant to small firms especially those that operate in the services sector. The value of the paper lies in the fact that innovation management and value chain innovation were not previously investigated in small professional services firms in the Caribbean, and, therefore, the paper contributes to filling that gap in the literature. The practical implications for managers are that open innovation and services innovation must be embraced, and business model and value chain innovation are critical to small firm delivery of services.

Fluid Teams and Knowledge Retrieval: Scaling Service Operations

To scale service operations requires retrieving knowledge across the organization. However, prior work highlights that individuals on the periphery of organizational knowledge networks may struggle to access useful knowledge at work. A knowledge repository has the potential to help peripheral individuals gain access to valuable knowledge because it is universally available and can be used without social interaction. However, for it to successfully serve this equalizing function, those on the periphery of the organizational knowledge networks must actually use it, possibly overcoming barriers to doing so. In this paper, we develop a multilevel model of knowledge retrieval in teams to explore how individuals on the periphery of knowledge networks—because of their inexperience, location, lack of social capital, gender, or role—access knowledge from such a knowledge repository. Unexpectedly, we find that individuals whose experience and position already provide access to vital knowledge use a knowledge repository more frequently than individuals on the organizational periphery. We argue that this occurs because the knowledge repository—despite its appearance of equivalent accessibility—is actually more accessible to central than to peripheral players. Thus, knowledge retrieval is not driven primarily by the need to overcome limited access to other knowledge sources. Rather knowledge retrieval is facilitated when actors know how to reap value from the knowledge repository, which ironically improves with increasing access to other sources of knowledge. We conclude that a knowledge repository is unlikely to scale service operations without additional intervention. This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Toward Improving Factory Working Conditions in Developing Countries: An Empirical Analysis of Bangladesh Ready-Made Garment Factories

With supply chains now extending into developing countries, time and again, working conditions in supplier factories have been found to be unsafe. In this study, we focus on factories in the Bangladesh ready-made garment industry that supplies North American and European retailers. These retailers have adopted an innovative approach toward improving the working conditions of supplier factories by forming consortiums. The consortium of North American retailers is the Alliance for Bangladesh Worker Safety (“Alliance”). The consortium of European retailers is the Accord on Fire and Building Safety in Bangladesh (“Accord”). The central question addressed in this study is the following: How do working conditions in a supplier factory impact the supplier’s trustworthiness from a retailer’s perspective? We characterize supplier factory working conditions in terms of three types of risks, namely, structural risk, fire risk, and electrical risk. Next, we examine the implications of each type of risk for supplier trustworthiness measured as the number of retailers contracting with the supplier factory. The empirical analysis is conducted using archival data on safety inspections from the Alliance and Accord. The results support the contention that retailers are sensitive to working condition risks in a supplier factory; that is, as working condition risks in a supplier factory increase, the supplier’s trustworthiness decreases. However, these associations vary with the type of risk. Specifically, fire and electrical risks are associated with decreased supplier trustworthiness, while structural risk has a marginal effect. Furthermore, the negative associations between working condition risks and supplier trustworthiness are moderated by the size of the supplier factory such that the negative associations are significantly attenuated for larger-sized supplier factories compared to the smaller-sized factories. The study findings, taken together, provide nuanced insights into the marketplace implications of working condition risks in supplier factories and highlight the sensitivity of the retailer–supplier relationship to such risks. These findings also provide actionable guidance on how to manage working condition risks. The online appendix is available at https://doi.org/10.1287/msom.2017.0679 . This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Introduction to the Special Issue on Value Chain Innovations in Developing Economies

Introduction to the Special Issue on Value Chain Innovations in Developing Economies

The Cash Flow Advantages of 3PLs as Supply Chain Orchestrators

With an increasingly open global economy and advanced technologies, some third-party logistics providers (3PLs), such as Eternal Asia, have emerged as supply chain orchestrators, linking buyers with manufacturers worldwide. In addition to their traditional transportation services, these orchestrators provide procurement and financial assistance to buyers in the supply network, especially small- and medium-sized enterprises (SMEs) in developing countries. Oftentimes, the 3PLs can obtain payment delay arrangements from the financially stronger manufacturers, which in turn can be partially extended to the SME buyers, alleviating their high costs of capital. To illustrate the efficiency improvements of the aforementioned practice, we use a model to explicitly capture the cash-flow dynamics in a supply chain consisting of a manufacturer, a buyer, and a 3PL firm and explore the conditions under which this innovation benefits all parties in the supply chain so that the business model is sustainable. We characterize these conditions and show that the supply chain profit can be higher under leadership by the 3PL than by the manufacturer. The intermediary role of the 3PL is crucial, in that its benefit may vanish if the manufacturer chooses to directly grant payment delay to the buyers. We demonstrate that the benefit is more likely to occur with more buyers. We further identify the unique Nash bargaining solution for the transportation time and the payment delay grace period. The online appendix is available at https://doi.org/10.1287/msom.2017.0667 . This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Contract Design for the Stockist in Indian Distribution Networks

Problem definition: Stockists are the entity in the supply chain who deliver to the millions of small shops that account for over 90% of retail sales in India. The stockist purchases product from the manufacturer, develops retailer interest in carrying the product, solves the logistics problem of delivery to retailers, and manages retail credit and money collection. In return, the stockist is provided assistance by the manufacturer and paid an associated margin that is a percent of the product’s retail price. We observed relatively low distribution margins offered to the stockists in India that was a surprise given infrastructure and financing challenges. We noted that the low margins are enabled by the efficiency in product delivery and demand stimulation induced by the stockist. In this paper, we focus on the analysis of screening contracts offered by manufacturers to stockists. Methodology: We use a principal–agent model structure and model the routing cost, inventory cost, and demand impact of the stockist’s capability. We then use a substitutes or complements relationship between manufacturer assistance and stockist impact to understand the optimal contract structure—i.e., level of assistance and associated retail margin. We describe the economics associated with the stockist, provide data regarding the margins and assistance provided by the manufacturer, and use the model to understand their use in developing an effective supply chain. Results: Our model uses three parameters to show that a manufacture can adjust the level of spatial retailer intensity and thus the impact of the stockist in generating demand, the fraction of high-performing stockists associated with the manufacturer and the nature of the relationship between assistance provided and its impact on the stockist’s performance (i.e., complements or substitutes relationship), to attain superior performance. Academic/practical relevance: We parameterize data from Indian firms in the consumer goods industry to understand the observed assistance provided by the manufacturer to the stockist, and associated margins. We then use our model to understand actions taken by a manufacturer in the Indian market. Managerial implications: Our analysis provides a framework for manufacturers to design screening contracts for stockists who play a vital role in managing the fragmented retail markets in developing countries. The online supplement is available at https://doi.org/10.1287/msom.2018.0722 . This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Ensuring Corporate Social and Environmental Responsibility Through Vertical Integration and Horizontal Sourcing

Firms have recently vertically integrated with suppliers to ensure corporate social and environmental responsibility (CSER) in sourcing. We investigate the conditions under which CSER concerns will drive vertical integration, and how actions of nongovernmental organizations (NGOs) impact CSER. This paper is inspired by Taylor Guitars’s acquisition of an ebony mill in Cameroon to ensure CSER. Whereas the majority of the responsible sourcing literature focuses on auditing as a mechanism for addressing CSER, we study vertical integration as an alternative. Our analysis confirms that CSER can be a potential driver of vertical integration aside from other well-known drivers. We analyze game-theoretical models where a firm can vertically integrate to potentially eliminate CSER risks. Two innovative features of our models are demand externalities (namely, a firm’s CSER violation can positively or negatively affect its competitor’s demand) and horizontal sourcing (namely, a vertically integrated firm can sell responsibly sourced supply to a competitor). We show that a firm’s CSER strategy depends on the risk of a CSER violation exposure, the level of demand externalities (positive or negative), and whether horizontal sourcing is feasible. We find that in industries where horizontal sourcing is unlikely, firms stay disintegrated under a low CSER violation exposure risk and vertically integrate under a moderate CSER violation exposure risk. Surprisingly, firms may stay disintegrated under a high CSER violation exposure risk combined with strongly negative demand externalities. In contrast, firms vertically integrate under moderate-to-high CSER violation exposure risk when horizontal sourcing is possible but may not share responsibly sourced supply through horizontal sourcing under strongly positive demand externalities. We show that firms should be conscious about demand externalities and the possibility of horizontal sourcing in the industry when considering vertical integration for CSER. We also provide guidance to NGOs interested in promoting CSER. When horizontal sourcing is unlikely, NGOs should specify both violating and nonviolating firms in their reports, but not over-scrutinize firms; whereas when horizontal sourcing is possible, NGOs should allocate more resources for scrutinizing firms’ CSER violations and create industry-wide violation reports, while avoiding naming of specific firms in their reports. This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.