Innovativeness & Interaction: Conceptual Research Approach

1. Innovativeness & Interaction: Conceptual Research Approach Maria M. Smirnova Sergey P. Kouchtch GSOM Saint Petersburg

2. Structure of presentation • Aims of the study • Main drivers of innovations & interactions research • Conceptual model considerations • Some empirical evidence • Propositions for future research • Conclusion

3. Research motivation • Main aim – development of a conceptual model for an empirical qualitative study on innovativeness in buyer-supplier interaction and value creation networks • Theoretic motivation – searching for integration of overall marketing and interaction frameworks to study innovation processes • Empirical motivation – contradictions in Russian business practice

4. Overall marketing perspective Inputs • Environmental challenges (technological turbulence, market turbulence) • Competitive pressure • Superior resources & capabilities • Customer needs Outcomes • SCA-perspective and positional advantage creation • Performance outcomes

5. Positional advantage creation model adaptation (Day, Wensley, 1988) Sources of advantage Positional advantage Performance outcomes Marketing capabilities Superior value for customer Lower costs Differentiation Advantage Speed of reaction Optimized quality of interaction Profit Sales Customer Satisfaction New product success Adaptability Innovation capabilities SCM capabilities Networking capabilities

6. Internal advantages • creating market orientation in firm-supplier interaction • creation of relational norms and frames for relationships governance • providing internal marketing mechanisms and interfunctional coordination • evaluation techniques and feedback from customers • NPD process coordination • network effects

7. Interaction perspective • “No business is an island” (Håkansson,Snehota, 1989) • Complementary assets & capabilities • ARA framework • From value chain to value network & value system creation • Preconditions for cooperative innovation • Relationship history • Relationship quality • Shared values and goals alignment

8. IMP research: innovation perspective • Main IMP papers topics overview: • Collaborative innovations • Innovations in networks • Transparency of value creation • Value innovation • Innovation networks/Strategic networks/Commercialization networks • Supply chain innovation • Organizational innovation capability • Customer perceived value

9. Conceptual scheme of analysis • Type of interaction • Trust, commitment created • Social embeddedness, reputation • Existing relational capital or network effects • Resources & Capabilities • Value creation potential • Knowledge sharing • Actors-resources–activities framework • Matching potential • Aims alignment • Access to resources, markets, • Lots vs short term

10. Conceptual scheme of analysis Potential outcomes Type of innovation Potential sources of advantage Type of interaction

11. Creation of competitive advantage Commercialization Network Better adaptation & flexibility Innovations Network Better use of resources Strategic Network product innovation Reduced uncertainty Dyadic interaction process innovation Customer New markets entrance Supplier Value chain advantage Business model advantage Preconditions Resources & capabilities Matching potential

12. Research context: some empirical findings from SCM study 2006 • Results of a round table on Purchasing Strategy & SCM in Russia (June 2007) • Innovations – main sources of competitive advantage • Innovative collaboration with suppliers – key aims in supplier relationships development • High emphasis on innovativeness of strategy • Results of an empirical study 2006 • Very low emphasis on innovations • Innovations as part of supplier interaction process • Assessment of R&D department involvement in SCM

13. Preconditions • Type of interaction (research context): • Dyadic • Key supplier relationship • Type of product (5-point Likert scale) • Unique product – 2,82 (out of 5) • Innovative product – 2,69 • New products success • Number of new products (3,60) • Time-to-market (3,38) • New products success (3,58) • Readiness for R&D outsourcing • Current (1,85), future (1,97)

14. Preconditions (cont.) Technology turbulence Mean = 3.3 (5-point Likert scale) • Technology-based market opportunities (3,61) Speed of technology changes (3,28) • Probability of new product development in industry (3,26) • Technology trend forecast-ability (3,14)

15. Potential sources of advantage • Potential sources of advantage • Integration potential – similar motivation, interest in joint efforts • Knowledge creation & knowledge sharing • Main aims of the companies in the field of supply and strategic purchasing: • Joint R&D: • 11th position in priorities, relevant for 11,8% if firms in a sample • #1 – cost reduction • #2 – creation of long-term supplier relationships • #3 – delivery time reduction

16. Top management Finance 4.05 3.90 Production 3.70 Accounting 3.62 Purchasing process involvement Marketing 3.39 3.33 Legal consulting 3.03 Product planning 2.39 End user 2.11 Security dept 1.82 1.40 R&D Customs dept R&D involvement in purchasing process

17. Marketing-Purchasing integration outcomes

18. Sources of advantage: matching potential

19. Sources of advantage: matching potential • Top priorities in supplier relationships development: #1 Quality of products & services (4,78 out of 5) #2 Profit as relationship outcome (4,54) #3 Cost reduction (4,51) #4 Trust (4,35) • … #10 Strategic perspectives of interaction (4,06) #15 Innovation potential of supplier (3,40)

20. Sources of advantage: additional value and innovation sources

21. Sources of advantage: resources & capabilities

22. Type of innovation & potential outcomes • Type of innovation: • Process innovation – in research context of supplier relationships • Emphasis on improvement of operational effectiveness • Time management • Reduction of delivery time • Potential advantages addressed in the study • Strategic • Customer-oriented

24. Joint function execution

25. Joint functions execution-outcome relationship • New product success – n.s. • Differentiation – n.s. • Performance: • Joint problem solution – performance • Joint R&D – performance Maybe problem because of the single item measurement of function’s involvement.

26. Conclusions • Two perspectives can be integrated to study innovation processes • Overall creation of SCA: link between marketing and purchasing to enhance innovations • Innovations as result of previous relationships experience and matching potential • Integration of both approaches can provide a basis for a longitudinal study • Presented empirical results are taken from a study not developed to measure innovativeness, nevertheless the results show: • Contradiction between qualitative and quantitative study results (round table and survey); • Some attempts to build an innovative collaboration; • Potential for further research using SEM methodology.