Technology-intensive Firms Research Articles

Impact of political, guanxi ties on corporate value

PurposeGuanxi is an influential factor of doing business in China. This research focuses on a specific guanxi type, political connection and studies the impact of political connection on corporate value. Moreover, in the technology innovation studies, few studies have examined the impact of politics on technology innovation of firm. This paper aims to examine the relations among political connection, technology innovation and corporate value by an empirical study.Design/methodology/approachA sample of listed technology-intensive firms in China is used. This research examines the impact of political connection and technology innovation on corporate value with two dimensions, namely, the owner type of firm and the political connection level of firm.FindingsBased on an empirical study, this research has four main findings. First, technology innovation has positive impact on corporate value. Second, compared to non-connected firms, politically connected firms value more. Third, political connection to a government of higher administrative level contributes more to corporate value. Finally, the relations among political connection, technology innovation and corporate value differ by the owner type of firm.Originality/valueThis research contributes to the study of guanxi by considering the specific guanxi type, political connection, as well as to the study of technology innovation by considering the impact of politics.

Motivation synergy, knowledge absorptive capacity and NPD project performance in multinational automobiles in Thailand

Employee motivation is crucial in technology intensive firms, particularly when individuals must utilize existing knowledge and apply past experience to enhance new product development (NPD). This research investigates the roles of project team's motivation (intrinsic and extrinsic) on knowledge absorptive capacity (realize and potential) and NPD project performance (short and long run) relations. We use data obtained from returned questionnaire survey from NPD project leaders in multinational automobiles viewed as technology intensive firms in Thailand to analyze the relationships. Hierarchical regression analysis results suggest that intrinsic motivation can accelerate the influence of project team's potential knowledge absorptive capacity on the long-run NPD project success and that extrinsic motivation demonstrates its role in service of intrinsic motivation moderating the influence of intrinsic motivation with NPD project outcomes. In doing so, we contribute to technology management literature suggesting the condition under which performance impact of knowledge absorptive capacity can be enhanced. Implications for these results are discussed.

Patenting Velocity and Market Signaling

With less than 3% of patents making money, investors are left in the dark as to what the real value of patents is. To secure a positive market valuation, firms use the behavior and the velocity of their patenting activity to fill this informational gap. In this study we define patenting velocity as firms’ frequency in patenting and claim that the real value of patenting activity resides in the signal sent to investors. Results from 203 US technology-intensive firms indicate that exploration and exploitation patenting trajectories have opposing effects on firms’ market value with high velocity patenting boosting this effect and ambidextrous patenting diminishing it.

The effect of intellectual capital disclosure on cost of capital: Evidence from technology intensive firms in Indonesia

The effect of intellectual capital disclosure on cost of capital: Evidence from technology intensive firms in Indonesia

Dynamic marketing capabilities and radical innovation commercialisation

Innovation research tends to deem marketing management does not occupy salient place of strategic significance in innovation policy formulation. More recently, strategic marketing scholars have begun to highlight marketing capabilities as an integral part to general dynamic capabilities to facilitate radical innovation commercialisation. However, comprehensive frameworks are still required in substantiating the strategic conduciveness of specific dynamic marketing capabilities to radical innovation commercialisation in the international technology–intensive sector. The current study develops and validates the radical innovation commercialisation model that reconfigures relevant theoretical conceptualisations and empirical verifications to narrow this gap. As the model reveals, innovative corporate culture drives radical innovation commercialisation of international technology–intensive firms directly as well as through the mediation of dynamic marketing capabilities. Most noteworthy, the mediated impact is proven almost equivalent to the direct impact, illustrative of the strategic role of dynamic marketing capabilities in facilitating radical innovation commercialisation for international technology–intensive firms.

Do Technology Leaders Deter Inward R&D Investments? Evidence from Regional R&D Location Decisions in Europe

Leading technology intensive firms have incentives to protect knowledge outflows to collocated firms in order to enhance the returns to R&D (Alcacer and Zhao, 2012). In this paper we argue that leading firms’ knowledge protection strategies are likely to discourage other firms from setting up new R&D establishments in their vicinity. Knowledge protection is facilitated by an R&D organization emphasizing internal knowledge flows drawing on complementary contributions by dispersed R&D units. We examine whether the presence and R&D organization of local technology leaders discourages inward R&D investments in an analysis of the (NUTS-1) regional location of 196 cross-border R&D investment projects in EU-15 countries during 2003-2008. While the strength of the local relevant technology clusters attracts inward R&D investments, investors are generally discouraged by the concentration of technology activities due to the presence of regional technology leaders in the industry. This discouraging effect occurs specifically in case the leaders exhibit an internally oriented R&D organization drawing on cross-border intra-firm knowledge flows in their technology development activities. Our study challenges the common notion in the literature on clusters and innovation that agglomeration is generally associated with greater knowledge spillovers.

Pay Gap Among Executives and Firm Value

We simultaneously study the determinants of the pay gaps among top executives and their impact on firm value. We find that firms that require additional incentives to reduce shirking, such as the ones with high capital intensity and the ones with volatile stock performance, have higher pay gaps than other firms. On the other hand, firms that rely on efficient cooperation to survive and succeed, such as technology-intensive firms and firms with financial distress, tend to have lower pay gaps. We further find that firm value is impaired if the pay gap arrangements deviate substantially from the firm’s optimal range. Corporate governance can explain such deviation. CEO entrenchment is likely to lead to higher than optimal pay gaps. On the other hand, strong governance can result in lower than optimal pay gaps. We also document a substitution effect among various incentive mechanisms. When the alignment of interests improves, the pay gap level reduces and so does the effect of pay gap on firm value.

Knowledge sharing, knowledge leaking and relative innovation performance: An empirical study

External knowledge sharing and knowledge leakage often pose a strategic dilemma when firms conduct innovation activities. In this study, we focus on the positive and negative effects of this phenomenon. In particular, we empirically examine the effects of a firm׳s external knowledge sharing on its relative innovation performance under the contingencies of accidental and intentional leakage of business-critical knowledge. Results based on a survey of 150 Finnish technology-intensive firms show that external knowledge sharing has a positive effect on innovation performance, but high levels of accidental and intentional knowledge leakage by a firm׳s employees negatively moderate this relationship. These results contribute to the understanding of the potentially positive and negative issues related to external knowledge sharing and knowledge leakage, which have thus far remained empirically under-researched.

A performance measurement system for academic entrepreneurship: a case study

Purpose – This paper aims at proposing a performance measurement system (PMS) for academic entrepreneurship. Design/methodology/approach – The PMS has been developed through action research carried out within an Italian higher education and research centre on the basis of the literature background, focus groups and interviews. Findings – The study presents a new PMS based on an input–output model for academic entrepreneurship. As a result, a multidimensional framework for measuring technology entrepreneurship is proposed together with a set of key performance indicators (KPIs) to assess the “third mission” of universities. The application of the framework allows demonstration of its validity in public settings. Research limitations/implications – Because the research was conducted in a specific organisation, the possibility of generalizing the results to similar institutions is a key issue. Hence, it is important to distinguish between what is general in scope and what is case-specific. Practical implications – This study contributes to the extant literature on performance measurement of entrepreneurship process within research and higher education institutes that is traditionally focussed at the firm level. From a practitioner perspective, the model can be used both by universities which are interested in measuring their entrepreneurial capital and by other stakeholders who are interested in evaluating the value generation performances of universities. Implications for the society are clarified as well. Social implications – As for the society, the proposed model allows evaluation of the university’s pivotal role in the social and economic development of the region where it is located, especially in terms of new employments and new technology-intensive firms. Originality/value – The PMS is developed according to a process-oriented perspective of the academic entrepreneurship by identifying, for each step, a set of KPIs to meet the information needs of different stakeholders. The proposed PMS allows monitoring each phase of the technology entrepreneurship and managing the results in terms of social and economic impact developed. Contributions in PMS and intellectual capital literature are identified.

Augmenting Commercialization of New Technology Intensive Firms

Technology licensing and commercialization has increasingly been looked at as a complementary and attractive solution to gain insights into new technology innovations and market products. Stories of successful research commercialization programs from Silicon Valley have become the catalyst that encourages states to provide incentives and established structural reform in the form of state controlled agencies to accelerate and assist the commercialization of potential R&D products. Considerable debate has arisen about the effectiveness of those agencies, but asides for a few lone voices, the scholarly literature has largely neglected the views of grant recipients in commercializing of scientific research. This study hopes to shed some understanding of the impediments that grant recipients face in their endeavor to commercialize scientific research. Qualitative data examination utilizing theme analysis was performed and three main determinants were identified: human resources, market penetration, and financial constraints. We believe these three determinants have wider implication to the modern regime of commercialized scientific research.

The impact of cash incentives on TMT information seeking behavior in entrepreneurial firms

We explore the relationship between cash incentives for the top management team (TMT) and managerial information seeking from sources external to the firm. We hypothesize that TMT cash incentives in tandem with base compensation, the firm's technological intensity and use of an aggregate performance criterion influence TMT information seeking from customers and vendors/suppliers (what we refer to as affiliate sources). Our hypotheses are tested by using data obtained from CEOs and the TMT in 193 entrepreneurial firms. As hypothesized, our results suggest that: a) cash incentives influence TMT information seeking primarily from affiliate information sources, b) the effect of cash incentives on TMT information seeking from affiliate sources is much stronger in technology intensive firms, and c) use of aggregate performance criterion has a negative impact on information seeking from affiliate sources. Our findings also indicate that in technology intensive firms, the positive relationship between cash incentives and TMT information seeking from affiliate sources is strongly moderated by the base pay levels of executives – the relationship is much stronger when executive base pay is low.

From Creative Destruction to Intelligent Design

When the late Steve Jobs prominently adopted Wayne Gretzky’s slogan wanting to “skate where the puck will go, not to where it has been”, it sounded simply as a pragmatic response to the limitations of chasing the elusive ‘environmental fit’ (for the notion of strategy as a fit with the environment, see Porter, 1996, 1998). Yet, it prefigured a truly paradigmatic leap. With information technology becoming the dominant technology of the day, firms are no longer confined to either being simply part of the problem, part of the solution or part of the landscape. They now can quickly capture and move the entire landscape; but even more importantly, they can become an entire landscape in their own right. Firms need no longer be mired in perpetual reform efforts, endlessly defining, designing, and developing themselves form the inside out as transactional systems, configuring dimensions of strategy, structure, scale, and scope hopelessly imperfectly given environmental turbulence, technological transience, and socio-politico-economic complexity, and perpetually, almost wastefully tuning their internal synergies to merely becoming incrementally agile and increasingly nimble. The commonality among the recently quickly emerging complex information technology-intensive firms that are breaking the mold, especially represented by the social-media movement, is their deliberate and explicit social positioning. These firms are demonstrating a level of creative intelligence that allows them to aspire to, design, and construct, in their entirety, the very environments into which they want to project themselves. To enable and to leverage this new transformational nature they cultivate and nurture two additional dimensions that define such social positioning: scheme and soul. Scheme represents their agenda for social stance, positioning, action, and change. And soul is their intentionality to go beyond economic rationality and business logic in order to create logos from chaos. But while people may have overcome the controversy of creating social outcomes with economic means, one now has the mandate to design and govern how one creates economic outcomes with social means.

Rapid production ramp-up capability: a collaborative supply network perspective

This paper explores how technology intensive manufacturing firms operate to achieve rapid new product volume ramp-up capabilities within an international collaborative supply network. An exploratory multiple-case longitudinal research methodology was adopted involving three large Japanese Multinational Corporations and their respective international manufacturing supply networks comprising 19 factories in six countries. The findings suggest that a systematic ramp-up process is crucial to guide manufacturing operations in attaining a predictable initial production yield and rapid production volume ramp-up (time-to-volume). An empirically-based conceptual framework is then developed proposing linkages between critical elements within a manufacturing supply network and operational activities for a new product ramp-up. A structured ramp-up process is then proposed and pilot tested.

Matching slack resources and investment strategies to achieve long-term performance: New perspectives on corporate adaptability

Managers are continually challenged to balance the tradeoffs between adapting to rapidly changing market environments and focusing on existing core efficiencies. In this paper, we advance new perspectives on corporate adaptability by departing from the premise of the previous research that treats a firmʼs investment strategies and management of its slack resources in isolation. We contend that firms with adaptive capabilities attempt to match the type of slack resources (i.e., absorbed/specific or unabsorbed/flexible) with the nature of their investment strategies (i.e., exploration vs. efficiencies in existing assets). We further advance that the dynamics of strategy and performance relationship is moderated by the market turbulence level.Our empirical evidence from a sample of adaptive technology-intensive firms shows that under stable market environments, firms tend to use flexible slack resources (such as cash holdings and cash flows) to finance R&D expenditures in growth options. On the other hand, specific resources (such as plant, property and equipment) are used to support capital expenditures in existing assets. Our evidence further indicates that matched firmsʼ performance dominates that of unmatched firms, and, further, matched firms have fairly similar profitability in the long run. Under turbulent market environments such as the Dot.Com bubble (1999–2002) and the sub-prime mortgage crisis (2007–2009), we find investment in growth opportunities and innovation is slowed down while cash and liquid assets are accumulated to create a buffer against the risk of financial distress.

Is Sharing Suppliers with Competitors Good for Client Innovative Performance?

When outsourcing R&D services, despite the economic benefits client firms can obtain thanks to the supplier refining their capabilities by serving more clients in the industry, potential knowledge leakage conflicts arise for the client as a result of the supplier contracting with competitors. Taking a capability-based and learning approach we suggest that client’s commitment to the process of capability development coevolves with the commitment shown by the supplier by refraining from working also with client competitors. Specifically, we argue that sharing suppliers with competitors only boost the client's innovative performance when outsourcing standardized services. Using original survey data from 170 European and U.S. technology-intensive firms, we find that the provider supplying competitors negatively contributes to the client achieving its innovation objectives when outsourcing non-standardized R&D services. However, when outsourcing standardized services, having a shared supplier allows the client to benefit from the upgraded supplier's capabilities. These results get reinforced when outsourcing to providers located in non-OECD economies, contexts where appropriability concerns matter most.

The influence of strategic orientations on business Performance in Korean technology intensive SMEs

This paper examines the relationships among technology orientation, market orientation, entrepreneurial orientation and business performance. It presents the findings from a survey of 426 Korean technology intensive firms. The empirical findings of this research suggest that the appropriate interrelationship actively provide an organisation with the ability to achieve and maintain competitive advantage. Market and technology orientations do not directly affect business performances. However, it turns out that market and technology orientations can positively affect innovation performances but only through entrepreneurial orientation. The implication here is that for Korean technology intensive small firms, market and technology orientations can improve business performance only when it is combined with entrepreneurial orientation. The research contributes to our understanding of how SMEs can improve their business performance. It shows that to achieve and maintain a positive business performance, it is vital that a firm is able to possess an organizational structure that integrates and incorporates all three of these areas into a coordinated framework that allows innovative activities to take advantage of the benefits that all three of these orientations allow.

Examination of the behavior of R&D returns using a power law

This paper provides an improved model, based on historical data, that describes the returns on assets that result from R&D efforts to assist managers of public and private R&D activities. Such a model may lead to better decision support tools to monetize the value that may be extracted from R&D, which is otherwise often undervalued. Real option pricing models are used to gauge appropriate funding levels for assets such as R&D projects that contain large time-dependent uncertainties. However, this study finds that assuming the Gaussian distribution describes fluctuations in value is not appropriate for assets whose value is derived from R&D activities. This conclusion is based on a study of 43 military R&D projects and 100 technology-intensive small firms. A power law, such as the Cauchy distribution, is shown to be more accurate in describing fluctuations in returns from R&D investments.

Assessing Knowledge Assets in Technology-Intensive Firms: Proposing a Model of Intellectual Capital

Knowledge assets are key organizational factors responsible for gaining a sustained competitive advantage in the new knowledge economy characterized by high degrees of environmental turbulence, complexity, and dynamism. Although the scientific and professional literature has provided numerous proposals for measuring a firm’s knowledge stock or intellectual capital, further research is still needed because empirically supported models for the classification and measurement of a firm’s intellectual capital, adapted to different contexts, are not very common. To fill this gap, a model has been developed in order to analyze the nature and measurement of intellectual capital blocks in technology-intensive firms.

The Role of Market Orientation and Learning Orientation in Improving Innovativeness and Performance of Small and Medium Enterprises

The purpose of study is to describe contradiction relationship between market orientation toward organizational performance and to provide a quantitative analysis, in which learning orientation, market orientation, entrepreneurial orientation, and innovativeness function as the key success factors in technology-intensive firms. The authors formulate a structural equation model to examine the relationship among these constructs. A structural equation model was designed to examine the relationship. To test the model, the authors conducted covariance structural analyses of data collected from 150 small medium enterprises in Banyumas Regency. The central finding is that learning orientation plays a mediating role in the relationship between market orientation and innovativeness. The results indicate that innovativeness has effect on business performance. Market orientation can strengthen learning orientation and innovativeness. In the small medium enterprises, the market information obtained from customers and competitors helps firms to keep an eye on the market. For better competitive advantages and business performance, firms must have learning capabilities and employees’ identity with organizational mission. The findings indicate that firms should strengthen their learning orientation and innovativeness to improve business performance.

Did IT consulting firms gain when their clients were breached?

Despite all the research investigating the impact of data and information technology (IT) breaches to the market value of the breached firms, few studies explore the effects of breach events on the stock price of consulting firms that supplies the know-how and infrastructure to create, implement and maintain those information systems that were hacked. Information transfer theory and capital market expectation suggest that as more data breaches occur every year, investors, clients and customers may well look beyond the faults of the individual firms, and place some responsibility on the shoulders of these IT providers. In this study, we investigated a total of 83 breach events affecting a wide range of US firms in various industries in year 2006 and 2007. We found that the market value of the IT consulting firms is positively associated with the disclosure of IT security breaches. The IT consulting firms realized an average abnormal return of 4.01% during the 2-day period after the announcement. Using the event-study method and Ordinary Least Squares Regression to calculate and analyze these firms’ abnormal returns, we found evidence that as the number of breached records increased, the IT consulting firms tended to suffer negative returns. In addition, the observed impact was more salient for breaches that affect technology intensive firms than retailing or other firms. In other words, generally speaking, the IT consulting firms have similar experiences with the attacked firms.