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The Level of Innovation in SMEs, the Determinants of Innovation and their Contribution to Development of Value Chains
Available online at www.sciencedirect.com
ScienceDirect Procedia Manufacturing 11 (2017) 2203 – 2210
27th International Conference on Flexible Automation and Intelligent Manufacturing, FAIM2017, 27-30 June 2017, Modena, Italy
The level of innovation in SMEs, the determinants of innovation and their contribution to development of value chains Joanna Oleśków Szłapkaa*, Agnieszka Stachowiakb, Aglaya Batzc, Profesor Marek Fertscha a
Poznan University of Technology, Department of Production Management and Logistics, Marie Curie Skłodowskiej 5, 60-951 Poznań, Poland b Brandenburg University of Technology Cottbus- Seftenberg, Universitätsplatz 1, 01968 Senftenberg, Germany
Abstract The article describes a synthetic presentation of the innovativeness proposal. It includes an analysis innovativeness level represented by companies of various sizes and industries from all over the world. The analysis leads to the conclusion, that an innovativeness of Polish companies is at low to moderate level, hence it needs some support. This is rationale for formulating a proposal on enhancing innovativeness by cooperation, skills and competence flow between companies. The paper presents both the rationale and framework of the research project, striving for development of an IT tool/platform supporting innovative knowledge and sill transfer and absorption. © by Elsevier B.V. by This is an open access article under the CC BY-NC-ND license © 2017 2017Published The Authors. Published Elsevier B.V. (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility ofthe scientific committee of the 27th International Conference on Flexible Automation and Peer-review under responsibility of the scientific committee of the 27th International Conference on Flexible Automation and Intelligent Manufacturing. Intelligent Manufacturing Keywords:Innovation level of SMEs, innovation level of Polish companies, innovation enhancement, value chains, SMEs
1. Introduction
* Corresponding author. E-mail address: [email protected]
2351-9789 © 2017 Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the scientific committee of the 27th International Conference on Flexible Automation and Intelligent Manufacturing doi:10.1016/j.promfg.2017.07.367
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The article describes a synthetic presentation of the innovativeness idea. The article points out the basic characteristics of innovations such as definition and core elements based on literature research. Furthermore authors try to indicate why there arise a gap for proposed research and what is actual state of innovativeness in polish SMEs as well as companies all over the world. Finally the framework of the project is presented where the main project’s ambition is to support organizations, especially SMEs, in improving their innovation performance while developing collaborative radical and disruptive innovations. Authors assume that quantitative and qualitative analysis will be conducted in relation to the clusters organizations dealing with manufacturing processes. 2. Innovation – theoretical background (definition, types and factors) Innovations are one of the main sources of a competitive advantage and they are essential for a company growth. Fast technology development, combined with the globalization and fast changes in customer demand, implies that a competitive advantage of a company can be only temporary. The basic definitions and types of innovation (sometimes referred to as ‘shapes’ or ‘typology’ of innovation) are established by Organization for Economic Cooperation and Development (OECD). The latest revision of these is the Oslo Manual which defines innovation “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations” [1] . Innovation can be viewed as having three distinct but related components: inputs, or resources, such as people and money; these get fed into processes, which act on and transform the inputs; and outputs, or the end results, which include both cash returns and indirect benefits, such as a stronger brand and acquired knowledge that can be applied to other offerings and purposes. All three components can, and should, be measured [2]. Innovation can be related to product, process or organization, and applying one of the perspectives is usually combined with the others. Godin [3] defines 12 concepts of innovation which can be described as follows: A. innovation as process of doing of something new: - innovation as imitation; - innovation as invention; innovation as discovery; B. innovation as human abilities to creative activity: - innovation as imagination; - innovation as ingenuity; - innovation as creativity; C. innovation as change in all spheres of life: - innovation as cultural change; - innovation as social change; - innovation as organizational change; political change; technological change; D. innovation as commercialization of new product Detailed classification of the aspects and dimensions of innovation is also given by Ram, Cui and Wu [4]. The authors distinguish the following aspects of innovation: - innovation as something new; - innovation as a conduit of change - innovation as a process; - innovation as a value driver; - innovation as an invention (see table 1). Table 1 Classification of the aspects and dimensions of innovation Aspect of innovation Creation (invention) Event Diffusion and learning Change (incremental or radical) Process (firm-level) Context (region, nature etc.) level process
Focus of definition Use of resources (people, time and money) to invent or develop a new product, service, new way of doing things, new way of thinking about things On acquiring, supporting or using a product, service or ideas Discrete event, such as the development of a single product, service, idea or decision Enacting of change. Some innovations are minor adjustments whilsr other innovations are radical or discontinuous in nature Innovations is not a single act, but a series of activities that are carried out by a firm to lead to the production of an outcome (namely, the innovation) Act beyond the confines of an individual or firm. Focus on institutional frameworks, socio-political networks, and proximal factor as important factors in the act of innovation.
Source: adapted from Ahmed, Shepherd [5]
The types of innovations are widely discussed an taxonomies are based on various criteria, Garcia and Calantone
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[6] state that innovations are frequently classified in taxonomies in order to identify their innovation characteristics and the degree of innovativeness involved. For example Durand [7] presents the opinion that four different perspectives can be adopted in order to analyze the intensity and the significance of technical change: 1. Technological input: technical novelty or scientific merit; 2. Competence throughput: new requirements on the competencies (resources, skills and knowledge), translucence [8] 3. Perception of the market: market novelty, new functions proposed to customers; 4. Strategic output: impact on the competitive position of the firms. Another approach is based on empirical studies and classifies innovations in two fields: a) at the macro level, the characteristics of innovation that are new to the world, market or sector are considered ([9], [10]), In this case, the innovativeness is based on factors that are exogenous to the firm, such as the familiarity of an innovation to the world and the industry or the creation of new competitors due to the introduction of new innovations; b) at the micro level, innovation is new to firm or to the consumer [11]. The similar taxonomies are discussed by ([12] ; [13]; [14]). Pavitt [15] on the other hand classified innovation according to the firms that generate it, identifying four sectorial taxonomies, and describing the behavior of innovating firms, to predict their actions and to suggest a framework for policy analysis. His approach referred to four main categories: 1. Supplier dominated firms active in traditional industries such as clothing and furniture (i.e. firms which innovate by acquiring machinery and equipment). 2. Specialized suppliers of capital goods and equipment who live in symbiosis with their customers. 3. Science-based firms born to exploit new scientific discoveries in fields such as electronics, chemicals, pharmaceuticals and aerospace, where the main source of knowledge is associated with in-house R&D laboratories. 4. Scale-intensive firms active in mass production industries. Disregarding the taxonomy, innovations are crucial for companies striving for continuous, sustainable development. Most organizations are intrinsically motivated to develop innovations, since it gives them the possibility to augment their performance and retain their competitive advantage[16]. The literature has shown that the participation of organizations in innovation actions correlates with their size. Thus, although SMEs tend to take part more frequently on radical innovation projects[17] , different studies have shown that innovation in SMEs is hampered by the lack of financial resources, limited opportunities to recruit skilled workers, deficient monitoring structures, scarce access to new technology, lack of external partners opportunities and small portfolios for their innovation[18,19].
3. Rationale for the research Innovation is determined by many factors both internal as external one. The most commonly innovation factors are as follows: financial factor, firm size, institutional factor, technological capability, consumer preferences, economic factor, culture factor, management skills, market orientation, competitive advantage, learning capability.[20] The factors listed are the innovation drivers. They are universal and do not depend on the size or industry the company operates within, though the relationship between size, innovation and performance has long been debated. Many empirical studies have sought to test the Schumpeterian hypothesis that large firms tend to have a resource advantage over smaller ones when it comes to the development and commercialization of new technologies. Small firms are widely regarded as promoters of economic growth [21] and as being capable of creating, transferring and exploiting innovations ([22], [23], [24]). In addition, it is believed that small firms have a strong positive effect on employment [25]. However, previous quantitative empirical studies have primarily focused on innovations in large
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firms ([26]; [27]). The comparison of innovation levels for SMEs, large companies, manufacturers and services providers, R&D supported companies for countries all over the world is presented in the table 2. Analysis has been done based on the statistics from Eurostat and other internationally recognized sources such as the OECD and the United Nations available the time of analysis. In Poland source of data was various publications from the Central Statistics Office of Poland. Table 2 Innovativeness level (percentage of companies) comparison firm size
economic sector
R&D status
total
SMEs
Large
manufacturing
services
R&D
as a percentage of all firms
as a percentage of all SMEs
as a percentage of all large firms
as a percentage of all manuf. firms
as a percentage of all serv. firms
as a percentage of all R&D active firms
No R&D as a percentage of all firms with no R&D
AUS
39,5
39,2
49,3
26,5
41,8
82,1
34,1
AUT
28,7
27,1
61,2
33,2
25,2
70,0
17,5
BEL
31,1
30,0
56,1
36,9
27,3
66,9
16,7
CAN
36,2
35,6
44,7
48,0
29,2
#N/D!
#N/D!
CHL
15,6
15,0
24,9
22,8
13,2
70,0
12,2
CZE
24,0
22,2
56,6
26,6
21,4
68,0
14,0
DNK
23,1
21,8
51,7
25,0
22,0
45,3
16,7
EST
23,8
22,7
67,0
24,6
19,7
62,5
12,4
FIN
29,3
28,0
55,0
35,1
25,3
66,3
9,1
FRA
24,1
23,0
49,4
27,9
21,1
63,4
10,4
DEU
25,5
23,9
57,6
31,0
20,7
53,4
14,6
GRC
25,6
25,0
56,3
27,3
24,3
75,2
18,1
HUN
8,3
7,1
36,0
9,4
6,8
48,9
4,0
IRL
25,9
24,3
62,9
33,4
22,5
#N/D!
#N/D!
ISR
16,8
15,9
44,4
23,7
14,9
60,2
11,5
ITA
30,4
29,9
58,7
34,7
22,6
73,1
21,6
JPN
15,6
14,9
30,5
20,2
12,2
53,7
9,6
KOR
5,4
5,0
16,8
7,4
3,7
28,0
1,8
LUX
32,8
31,9
48,2
42,1
30,9
#N/D!
#N/D!
MEX
4,8
4,6
7,0
6,8
3,5
#N/D!
#N/D!
NLD
25,9
25,6
37,4
28,5
24,5
57,5
9,3
NOR
11,9
11,3
26,1
14,2
11,0
36,6
4,2
POL
11,0
9,5
45,3
12,3
9,1
65,0
7,5
PRT
33,5
32,6
71,5
32,6
34,5
82,6
22,8
SVK
13,5
12,3
33,1
13,7
13,5
63,2
7,7
SVN
22,5
20,6
65,1
25,7
19,5
69,7
5,6
ESP
15,1
14,1
53,8
18,6
11,9
54,6
10,2
SWE
23,9
23,1
45,4
28,8
21,0
52,8
11,7
CHE
27,6
26,5
52,8
32,0
24,8
47,0
12,2
TUR
20,4
19,9
37,5
21,9
18,6
79,0
12,6
GBR
7,2
7,0
12,4
17,2
14,5
36,6
5,5
LVA
12,7
12,1
35,4
14,1
11,7
76,5
8,9
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BRA
31,7
31,2
47,2
31,7
31,5
78,9
IND
12,2
11,8
22,3
12,1
16,6
48,7
27,2 6,6
RUS
5,4
2,9
14,2
6,4
4,9
55,9
3,5
Innovation in Poland is lower than in most of the countries analyzed, disregarding the size, branch or R&D level (in the figure innovativeness level for Poland is marked with font bolded and underlined and innovativeness higher that Polish ones in each category are marked as grey) When compared to the Member States of the European Union, innovativeness of Polish economy is still low. According to the report Innovation Union Scoreboard 2015, reaching a synthetic innovation result at level of 0.313 Poland is among countries depicted as moderate innovators. It was classified on the 24th place in the ranking, i.e. one position higher in comparison to the ranking from the previous year, ahead of Romania (0.204), Bulgaria (0.229), Latvia (0.272) and Lithuania (0.283). In the most recent report from 2016 Poland is classified at the same position – 24th location. However, changes in this year’s ranking result not only from changes of innovation activity of various countries but also from changes in measurement methodology, hence their comparability is limited. Expenditures incurred for innovative activity, especially expenditure on R&D, which constitute a sine qua non condition of technological progress and emergence of radical innovation, are one of the indicators most commonly used in the assessment of the economic innovativeness. Although Poland is constantly increasing the expenditures for this purpose, its indicator of R&D intensity is still low. In 2013, the value of intramural expenditures on research and development (GERD) amounted to over PLN 14 billion, which constituted 0.87% of GDP. The level of this indicator was twice lower than the goal adopted in the Strategy for Innovation and Efficiency of the Economy (1.7% in 2020). This was one of the lowest results recorded in EU-28 countries. There was a particularly big distance between Poland and leaders of innovation, such as the Scandinavian countries (on average 3.2%), Germany (2.85%) and Austria (2.81%); it has also a lot to catch up with respect to some of the new Member States (the Czech Republic - 1.91%, Hungary - 1.41%). Innovation performance has been somewhat volatile within a relatively narrow range. Compared to 2008, performance has increased marginally. Poland's relative performance has declined from 59% in 2009 to 56% in 2015 In order to increase innovativeness level of Polish economy, it is necessary to enhance the cooperation of enterprises from SME sector, cooperation and cluster relations as well as to raise awareness of entrepreneurs in the field of industrial property protection and its benefits. It is also necessary to implement joint projects leading to increased cooperation between various participants in the innovation system. Innovative police measures provided for in the Strategy for Innovation and Efficiency of the Economy, in particular those aimed at stimulating cooperation in the R&D field both between enterprises as well as enterprises and science sector will have to serve to meet these challenges. This is simply the rationale of the research project that is just being developed in cooperation with BTU Germany and SMEs companies and cluster organizations throughout EU.
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4.
The framework of the research
This project’s main ambition is to support organizations, especially SMEs, in improving their innovation performance while developing collaborative radical and disruptive innovations. Hence, the research project will best owan “open space” platform, where organizations will be able to evaluate their competences towards innovation, look after partners interested in participating in their innovation activities and fulfill their capabilities-gap upon the capabilities of others. The IT-structure behind the project will enable cross-border and cross-sectorial cooperation towards the production of radical and disruptive innovation. As added value of the project, roadmaps are going to be automatically generated based on the collected information from projects and organizations; helping to recognize the surface of industrial developments and the formation of new industrial value chains. The research areas of the project comprise three main components (see figure 1).
Fig. 1 Structure of the proposal – Research areas
Project phases comprise following stages: • Analysis of the conceptual foundations for collaborative innovations- In this phase the analytical steps is performed, particularly regarding: SMEs competences towards innovation, industrial and cluster gaps towards a sustainable industrial development, SMEs collaborative R&D/Innovation process, innovative value chain structures targeting SMEs. Additionally, an internal call targeting defined industries will be developed an executed. An attempt is made to close knowledge gaps in the literature as far as possible and to reach an overall assessment of the initial situation • Concept design - Definition of the concepts/models that will assist SMEs to better structure their innovation process, and value chains, while aligning their innovation activities with their organizational structures. SMEs executing innovation processes in form of cross-border and cross-sectorial collaboration will be continuously assessed in order to acknowledge and further support those competences that have to be developed in view of creating new industrial value chains fostering the growth of emerging industries. • Development of the instruments fastening the systemic approach- Instruments to capture the information from the organizations will be developed based on the conceptual models. Likewise OUTPUT instruments are going to be implemented to: gauge the organisations, to estimate the innovation potential diagnose the
Joanna Oleśków Szłapka et al. / Procedia Manufacturing 11 (2017) 2203 – 2210
•
arrangements to pursue innovation and value chain structures, Propose governance recommendations to better exert coordination and control along the value chain. Concept validation- Together with the SMEs participating in the project, the defined instruments part of the conceptual framework will be validated and adjusted in order to fulfill the requirements of the praxis. Cluster management strategies will be highlighted in order to improve the management of the value chain and foster at the same time a sustainable industrial development.
Fig. 2 Conceptual framework definition – Maturity model
Final evaluation and transfer to the industry - Virtual and On-Site capacitating for the SMEs taking part on the project are going to be organized in this phase. Manuals and virtual assistance tools will be provided for any SME in the EU willing to use the generated instruments. The methodology to support the creation of a culture of innovation within SMEs is supported by an Innovation Capability Maturity Model (ICMM), allowing the evaluation and continuous optimization of the innovation process within SMEs. In order to achieve it, SMEs and cluster organizations have to become aware of the requisites and exigencies of each of the innovation process phases. Thus, this methodology has embedded a dissemination strategy to reach different clusters within the European Union. The ICMM will support the evaluation of the capabilities required to undergo each phase of the innovation process. Conceptual framework definition and maturity model is presented on the figure 2. •
Hence, the created consortium combines the required expertise to carry out the project. The Chair of Production and Operations Management belonging to the Brandenburg University of Technology initiates this innovation action, based on its experience developing a “maturity model for disruptive technologies in R&D networks”. In order to improve the development of conceptualization of the project the consortium gathers the competencies regarding collaborative innovation and multi-agent performance management from the Poznan University. For the development of the IT-structure the IT software developer provides the capability to rapid integrate and analyze complex databases. Their semantic and context-sensitive algorithms have been used to collect the competences of organizations belonging to the carbon value chain. These algorithms are going to be improved to shape Inn Valuable. Finally, clusters belonging to the smart specialization strategy of the participant countries are going to support the validation of the envisioned framework. Cluster organizations are also going to help managing the collaborative innovation projects led by their associated SMEs.
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Conclusions The research project objectives are promising, both in terms of theory to be developed and practical support for businesses, both SMEs and cluster organization. The project is at early stage, as preliminary research is being carried to develop the proposal.The main objective is to design, develop and implement a framework to systematically help organizations, especially SMEs, complementing their innovation process by building new industrial value chains across different EU member states. Project findings should contribute to regional smart specialization strategies by capitalizing upon concentrated and complementary competences and it will provide a clear and measurable contribution to the innovation performance of SMEs References [1] OECD,. Oslo Manuals. Guidelines for Collecting and Interpreting Innovation Data, 3 rd edition, Paris, 2005 [2] Measuring innovation, The Boston Consulting Group , Boston 2006 [3] Godin B., Innovation: the History of a Category // Working Paper No. 1, Project on the Intellectual History of Innovation, Montreal: INRS, 2008 [4] Ram J., Cui B., Wu M.L., The Conceptual Dimensions of Innovation: A Literature Review // Proceedings of the International Conference on Business and Information, Sapporo, Japan, 3rd –5 th July, 2010 [5] Ahmed P.K., Shepherd C., Innovation Management: Context, Strategies, Systems And Processes // Harlow: Financial Times Prentice Hall, 2010 [6] Garcia R., Calantone R., A critical look at technological innovation typology and innovativeness terminology: a literature review, in The Journal of Product Innovation Management, n. 19, 2002, pp. 110-132. [7] Durand T., Dual technology trees: assessing the intensity and strategic significance of technology change, in Research Policy, n. 21, 1992, pp. 361-380. [8] Abernathy W.J., Utterback J.M. , Patterns of industrial innovation, in Technological Review, n. 50, 1985, pp. 41-47. [9] Maidique M.A., Zirger B.J., A study ofsuccess, and failure in product innovation: the case of US electronics industry, in IEEE Transaction on Engineering Management, EM- 31, n. 4, 1985, pp. 192-203. [10] Lee M., Na D., Determinants of technical success in product development when innovative radicalness is considered”, in Journal of Product Innovation Management, n. 11, 1994, pp. 62-68. [11] More R. A., Risk factors in accepted and rejected new industrial products”, in Industrial Marketing Management, n. 11, 1982, pp. 9-15. [12] Ali A., Krapfel R., LaBahn D., Product innovativeness and entry strategy: impact on cycle time and break-even time, in Journal of Product Innovation Management, n. 12, 1995, pp. 54- 59. [13] Cooper R.G. , The dimension of industrial new product success and failure, in Journal of Marketing, n. 43, 1979, pp. 93-103. [14] Cooper R.G., de Brentani U., New industrial financial service: what distinguishes the winners”, in Journal of Product Innovation Management, n. 8, 1991, pp. 75-90. [15] Pavitt K., Sectoral patterns of technical change: towards a taxonomy and theory”, in Research Policy, 13, 6, 1984, pp. 343-373. [16] Alegre J., Chiva R., Assesing the impact of organizational learning capability on product innovation performance: An empirical test, Technovation 28(6), 2008, pp. 315-326 [17] Dougherty D., Hardy C. Sustained product innovation in large, mature organizations, overcoming innovation to organization problems, The Academy of Management Journal Vol. 39, No. 5 (Oct., 1996), pp. 1120-1153 [18] Carol Yeh-Yun Lin, Mavis Yi-Ching Chen, Does innovation lead to performance, An empirical study of SMEs in Taiwan, Management Research News, Vol. 30 Issue: 2, pp.115-132, (2007) [19] Madrid-Guijarro, A., Garcia, D. & Van Auken, H., Barriers to Innovation among Spanish Manufacturing SMEs. Journal of Small Business Management, 47, 465-488 (2009) [20] Ebru Beyza Bayarçelik, Fulya Taşelb , Sinan Apak, A research on determining innovation factors for SMEs, Procedia - Social and Behavioral Sciences 150 ( 2014 ) 202 – 211 [21] Westhead, P. and Storey, D. J. , An Assesment of firms located on and off science parks in the United Kingdom, London: HMSO, 1994 [22] Autio, E., Evaluation of RTD in regional systems of innovation, European Planning Studies, 1998, Vol. 6, No. 2, pp. 131-140. [23] Fontes, M., Creation and development of new technology-based firms in peripheral economies, in Dylan-Jones, E. and Klofsten, M. (Eds.), Technology, Innovation and Enterprise, MacMillan, London 1997, pp. 107-147. [24] Kuratko, D.F. and Hodgetts, R. M. , Entrepreneurship: A contemporary approach, Harcourt, New York, 2001 [25] Storey, D., Understanding the Small Business Sector, Routledge, London 1994. [26] Gudmundson, D., Tower, C.B. and Hartman, E.A., Innovation in small businesses: Culture and ownership structure do matter, Journal of Developmental Entrepreneurship, 2003, Vol. 8, No. 1, pp. 1-17. [27] Woodcock, D.J., Mosey, S.P. and Wood, T.B.W., New product development in British SMEs, European Journal of Innovation Management, 2000, Vol. 3, pp. 212-231.
ScienceDirect Procedia Manufacturing 11 (2017) 2203 – 2210
27th International Conference on Flexible Automation and Intelligent Manufacturing, FAIM2017, 27-30 June 2017, Modena, Italy
The level of innovation in SMEs, the determinants of innovation and their contribution to development of value chains Joanna Oleśków Szłapkaa*, Agnieszka Stachowiakb, Aglaya Batzc, Profesor Marek Fertscha a
Poznan University of Technology, Department of Production Management and Logistics, Marie Curie Skłodowskiej 5, 60-951 Poznań, Poland b Brandenburg University of Technology Cottbus- Seftenberg, Universitätsplatz 1, 01968 Senftenberg, Germany
Abstract The article describes a synthetic presentation of the innovativeness proposal. It includes an analysis innovativeness level represented by companies of various sizes and industries from all over the world. The analysis leads to the conclusion, that an innovativeness of Polish companies is at low to moderate level, hence it needs some support. This is rationale for formulating a proposal on enhancing innovativeness by cooperation, skills and competence flow between companies. The paper presents both the rationale and framework of the research project, striving for development of an IT tool/platform supporting innovative knowledge and sill transfer and absorption. © by Elsevier B.V. by This is an open access article under the CC BY-NC-ND license © 2017 2017Published The Authors. Published Elsevier B.V. (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility ofthe scientific committee of the 27th International Conference on Flexible Automation and Peer-review under responsibility of the scientific committee of the 27th International Conference on Flexible Automation and Intelligent Manufacturing. Intelligent Manufacturing Keywords:Innovation level of SMEs, innovation level of Polish companies, innovation enhancement, value chains, SMEs
1. Introduction
* Corresponding author. E-mail address: [email protected]
2351-9789 © 2017 Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the scientific committee of the 27th International Conference on Flexible Automation and Intelligent Manufacturing doi:10.1016/j.promfg.2017.07.367
2204
Joanna Oleśków Szłapka et al. / Procedia Manufacturing 11 (2017) 2203 – 2210
The article describes a synthetic presentation of the innovativeness idea. The article points out the basic characteristics of innovations such as definition and core elements based on literature research. Furthermore authors try to indicate why there arise a gap for proposed research and what is actual state of innovativeness in polish SMEs as well as companies all over the world. Finally the framework of the project is presented where the main project’s ambition is to support organizations, especially SMEs, in improving their innovation performance while developing collaborative radical and disruptive innovations. Authors assume that quantitative and qualitative analysis will be conducted in relation to the clusters organizations dealing with manufacturing processes. 2. Innovation – theoretical background (definition, types and factors) Innovations are one of the main sources of a competitive advantage and they are essential for a company growth. Fast technology development, combined with the globalization and fast changes in customer demand, implies that a competitive advantage of a company can be only temporary. The basic definitions and types of innovation (sometimes referred to as ‘shapes’ or ‘typology’ of innovation) are established by Organization for Economic Cooperation and Development (OECD). The latest revision of these is the Oslo Manual which defines innovation “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations” [1] . Innovation can be viewed as having three distinct but related components: inputs, or resources, such as people and money; these get fed into processes, which act on and transform the inputs; and outputs, or the end results, which include both cash returns and indirect benefits, such as a stronger brand and acquired knowledge that can be applied to other offerings and purposes. All three components can, and should, be measured [2]. Innovation can be related to product, process or organization, and applying one of the perspectives is usually combined with the others. Godin [3] defines 12 concepts of innovation which can be described as follows: A. innovation as process of doing of something new: - innovation as imitation; - innovation as invention; innovation as discovery; B. innovation as human abilities to creative activity: - innovation as imagination; - innovation as ingenuity; - innovation as creativity; C. innovation as change in all spheres of life: - innovation as cultural change; - innovation as social change; - innovation as organizational change; political change; technological change; D. innovation as commercialization of new product Detailed classification of the aspects and dimensions of innovation is also given by Ram, Cui and Wu [4]. The authors distinguish the following aspects of innovation: - innovation as something new; - innovation as a conduit of change - innovation as a process; - innovation as a value driver; - innovation as an invention (see table 1). Table 1 Classification of the aspects and dimensions of innovation Aspect of innovation Creation (invention) Event Diffusion and learning Change (incremental or radical) Process (firm-level) Context (region, nature etc.) level process
Focus of definition Use of resources (people, time and money) to invent or develop a new product, service, new way of doing things, new way of thinking about things On acquiring, supporting or using a product, service or ideas Discrete event, such as the development of a single product, service, idea or decision Enacting of change. Some innovations are minor adjustments whilsr other innovations are radical or discontinuous in nature Innovations is not a single act, but a series of activities that are carried out by a firm to lead to the production of an outcome (namely, the innovation) Act beyond the confines of an individual or firm. Focus on institutional frameworks, socio-political networks, and proximal factor as important factors in the act of innovation.
Source: adapted from Ahmed, Shepherd [5]
The types of innovations are widely discussed an taxonomies are based on various criteria, Garcia and Calantone
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[6] state that innovations are frequently classified in taxonomies in order to identify their innovation characteristics and the degree of innovativeness involved. For example Durand [7] presents the opinion that four different perspectives can be adopted in order to analyze the intensity and the significance of technical change: 1. Technological input: technical novelty or scientific merit; 2. Competence throughput: new requirements on the competencies (resources, skills and knowledge), translucence [8] 3. Perception of the market: market novelty, new functions proposed to customers; 4. Strategic output: impact on the competitive position of the firms. Another approach is based on empirical studies and classifies innovations in two fields: a) at the macro level, the characteristics of innovation that are new to the world, market or sector are considered ([9], [10]), In this case, the innovativeness is based on factors that are exogenous to the firm, such as the familiarity of an innovation to the world and the industry or the creation of new competitors due to the introduction of new innovations; b) at the micro level, innovation is new to firm or to the consumer [11]. The similar taxonomies are discussed by ([12] ; [13]; [14]). Pavitt [15] on the other hand classified innovation according to the firms that generate it, identifying four sectorial taxonomies, and describing the behavior of innovating firms, to predict their actions and to suggest a framework for policy analysis. His approach referred to four main categories: 1. Supplier dominated firms active in traditional industries such as clothing and furniture (i.e. firms which innovate by acquiring machinery and equipment). 2. Specialized suppliers of capital goods and equipment who live in symbiosis with their customers. 3. Science-based firms born to exploit new scientific discoveries in fields such as electronics, chemicals, pharmaceuticals and aerospace, where the main source of knowledge is associated with in-house R&D laboratories. 4. Scale-intensive firms active in mass production industries. Disregarding the taxonomy, innovations are crucial for companies striving for continuous, sustainable development. Most organizations are intrinsically motivated to develop innovations, since it gives them the possibility to augment their performance and retain their competitive advantage[16]. The literature has shown that the participation of organizations in innovation actions correlates with their size. Thus, although SMEs tend to take part more frequently on radical innovation projects[17] , different studies have shown that innovation in SMEs is hampered by the lack of financial resources, limited opportunities to recruit skilled workers, deficient monitoring structures, scarce access to new technology, lack of external partners opportunities and small portfolios for their innovation[18,19].
3. Rationale for the research Innovation is determined by many factors both internal as external one. The most commonly innovation factors are as follows: financial factor, firm size, institutional factor, technological capability, consumer preferences, economic factor, culture factor, management skills, market orientation, competitive advantage, learning capability.[20] The factors listed are the innovation drivers. They are universal and do not depend on the size or industry the company operates within, though the relationship between size, innovation and performance has long been debated. Many empirical studies have sought to test the Schumpeterian hypothesis that large firms tend to have a resource advantage over smaller ones when it comes to the development and commercialization of new technologies. Small firms are widely regarded as promoters of economic growth [21] and as being capable of creating, transferring and exploiting innovations ([22], [23], [24]). In addition, it is believed that small firms have a strong positive effect on employment [25]. However, previous quantitative empirical studies have primarily focused on innovations in large
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firms ([26]; [27]). The comparison of innovation levels for SMEs, large companies, manufacturers and services providers, R&D supported companies for countries all over the world is presented in the table 2. Analysis has been done based on the statistics from Eurostat and other internationally recognized sources such as the OECD and the United Nations available the time of analysis. In Poland source of data was various publications from the Central Statistics Office of Poland. Table 2 Innovativeness level (percentage of companies) comparison firm size
economic sector
R&D status
total
SMEs
Large
manufacturing
services
R&D
as a percentage of all firms
as a percentage of all SMEs
as a percentage of all large firms
as a percentage of all manuf. firms
as a percentage of all serv. firms
as a percentage of all R&D active firms
No R&D as a percentage of all firms with no R&D
AUS
39,5
39,2
49,3
26,5
41,8
82,1
34,1
AUT
28,7
27,1
61,2
33,2
25,2
70,0
17,5
BEL
31,1
30,0
56,1
36,9
27,3
66,9
16,7
CAN
36,2
35,6
44,7
48,0
29,2
#N/D!
#N/D!
CHL
15,6
15,0
24,9
22,8
13,2
70,0
12,2
CZE
24,0
22,2
56,6
26,6
21,4
68,0
14,0
DNK
23,1
21,8
51,7
25,0
22,0
45,3
16,7
EST
23,8
22,7
67,0
24,6
19,7
62,5
12,4
FIN
29,3
28,0
55,0
35,1
25,3
66,3
9,1
FRA
24,1
23,0
49,4
27,9
21,1
63,4
10,4
DEU
25,5
23,9
57,6
31,0
20,7
53,4
14,6
GRC
25,6
25,0
56,3
27,3
24,3
75,2
18,1
HUN
8,3
7,1
36,0
9,4
6,8
48,9
4,0
IRL
25,9
24,3
62,9
33,4
22,5
#N/D!
#N/D!
ISR
16,8
15,9
44,4
23,7
14,9
60,2
11,5
ITA
30,4
29,9
58,7
34,7
22,6
73,1
21,6
JPN
15,6
14,9
30,5
20,2
12,2
53,7
9,6
KOR
5,4
5,0
16,8
7,4
3,7
28,0
1,8
LUX
32,8
31,9
48,2
42,1
30,9
#N/D!
#N/D!
MEX
4,8
4,6
7,0
6,8
3,5
#N/D!
#N/D!
NLD
25,9
25,6
37,4
28,5
24,5
57,5
9,3
NOR
11,9
11,3
26,1
14,2
11,0
36,6
4,2
POL
11,0
9,5
45,3
12,3
9,1
65,0
7,5
PRT
33,5
32,6
71,5
32,6
34,5
82,6
22,8
SVK
13,5
12,3
33,1
13,7
13,5
63,2
7,7
SVN
22,5
20,6
65,1
25,7
19,5
69,7
5,6
ESP
15,1
14,1
53,8
18,6
11,9
54,6
10,2
SWE
23,9
23,1
45,4
28,8
21,0
52,8
11,7
CHE
27,6
26,5
52,8
32,0
24,8
47,0
12,2
TUR
20,4
19,9
37,5
21,9
18,6
79,0
12,6
GBR
7,2
7,0
12,4
17,2
14,5
36,6
5,5
LVA
12,7
12,1
35,4
14,1
11,7
76,5
8,9
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BRA
31,7
31,2
47,2
31,7
31,5
78,9
IND
12,2
11,8
22,3
12,1
16,6
48,7
27,2 6,6
RUS
5,4
2,9
14,2
6,4
4,9
55,9
3,5
Innovation in Poland is lower than in most of the countries analyzed, disregarding the size, branch or R&D level (in the figure innovativeness level for Poland is marked with font bolded and underlined and innovativeness higher that Polish ones in each category are marked as grey) When compared to the Member States of the European Union, innovativeness of Polish economy is still low. According to the report Innovation Union Scoreboard 2015, reaching a synthetic innovation result at level of 0.313 Poland is among countries depicted as moderate innovators. It was classified on the 24th place in the ranking, i.e. one position higher in comparison to the ranking from the previous year, ahead of Romania (0.204), Bulgaria (0.229), Latvia (0.272) and Lithuania (0.283). In the most recent report from 2016 Poland is classified at the same position – 24th location. However, changes in this year’s ranking result not only from changes of innovation activity of various countries but also from changes in measurement methodology, hence their comparability is limited. Expenditures incurred for innovative activity, especially expenditure on R&D, which constitute a sine qua non condition of technological progress and emergence of radical innovation, are one of the indicators most commonly used in the assessment of the economic innovativeness. Although Poland is constantly increasing the expenditures for this purpose, its indicator of R&D intensity is still low. In 2013, the value of intramural expenditures on research and development (GERD) amounted to over PLN 14 billion, which constituted 0.87% of GDP. The level of this indicator was twice lower than the goal adopted in the Strategy for Innovation and Efficiency of the Economy (1.7% in 2020). This was one of the lowest results recorded in EU-28 countries. There was a particularly big distance between Poland and leaders of innovation, such as the Scandinavian countries (on average 3.2%), Germany (2.85%) and Austria (2.81%); it has also a lot to catch up with respect to some of the new Member States (the Czech Republic - 1.91%, Hungary - 1.41%). Innovation performance has been somewhat volatile within a relatively narrow range. Compared to 2008, performance has increased marginally. Poland's relative performance has declined from 59% in 2009 to 56% in 2015 In order to increase innovativeness level of Polish economy, it is necessary to enhance the cooperation of enterprises from SME sector, cooperation and cluster relations as well as to raise awareness of entrepreneurs in the field of industrial property protection and its benefits. It is also necessary to implement joint projects leading to increased cooperation between various participants in the innovation system. Innovative police measures provided for in the Strategy for Innovation and Efficiency of the Economy, in particular those aimed at stimulating cooperation in the R&D field both between enterprises as well as enterprises and science sector will have to serve to meet these challenges. This is simply the rationale of the research project that is just being developed in cooperation with BTU Germany and SMEs companies and cluster organizations throughout EU.
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4.
The framework of the research
This project’s main ambition is to support organizations, especially SMEs, in improving their innovation performance while developing collaborative radical and disruptive innovations. Hence, the research project will best owan “open space” platform, where organizations will be able to evaluate their competences towards innovation, look after partners interested in participating in their innovation activities and fulfill their capabilities-gap upon the capabilities of others. The IT-structure behind the project will enable cross-border and cross-sectorial cooperation towards the production of radical and disruptive innovation. As added value of the project, roadmaps are going to be automatically generated based on the collected information from projects and organizations; helping to recognize the surface of industrial developments and the formation of new industrial value chains. The research areas of the project comprise three main components (see figure 1).
Fig. 1 Structure of the proposal – Research areas
Project phases comprise following stages: • Analysis of the conceptual foundations for collaborative innovations- In this phase the analytical steps is performed, particularly regarding: SMEs competences towards innovation, industrial and cluster gaps towards a sustainable industrial development, SMEs collaborative R&D/Innovation process, innovative value chain structures targeting SMEs. Additionally, an internal call targeting defined industries will be developed an executed. An attempt is made to close knowledge gaps in the literature as far as possible and to reach an overall assessment of the initial situation • Concept design - Definition of the concepts/models that will assist SMEs to better structure their innovation process, and value chains, while aligning their innovation activities with their organizational structures. SMEs executing innovation processes in form of cross-border and cross-sectorial collaboration will be continuously assessed in order to acknowledge and further support those competences that have to be developed in view of creating new industrial value chains fostering the growth of emerging industries. • Development of the instruments fastening the systemic approach- Instruments to capture the information from the organizations will be developed based on the conceptual models. Likewise OUTPUT instruments are going to be implemented to: gauge the organisations, to estimate the innovation potential diagnose the
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•
arrangements to pursue innovation and value chain structures, Propose governance recommendations to better exert coordination and control along the value chain. Concept validation- Together with the SMEs participating in the project, the defined instruments part of the conceptual framework will be validated and adjusted in order to fulfill the requirements of the praxis. Cluster management strategies will be highlighted in order to improve the management of the value chain and foster at the same time a sustainable industrial development.
Fig. 2 Conceptual framework definition – Maturity model
Final evaluation and transfer to the industry - Virtual and On-Site capacitating for the SMEs taking part on the project are going to be organized in this phase. Manuals and virtual assistance tools will be provided for any SME in the EU willing to use the generated instruments. The methodology to support the creation of a culture of innovation within SMEs is supported by an Innovation Capability Maturity Model (ICMM), allowing the evaluation and continuous optimization of the innovation process within SMEs. In order to achieve it, SMEs and cluster organizations have to become aware of the requisites and exigencies of each of the innovation process phases. Thus, this methodology has embedded a dissemination strategy to reach different clusters within the European Union. The ICMM will support the evaluation of the capabilities required to undergo each phase of the innovation process. Conceptual framework definition and maturity model is presented on the figure 2. •
Hence, the created consortium combines the required expertise to carry out the project. The Chair of Production and Operations Management belonging to the Brandenburg University of Technology initiates this innovation action, based on its experience developing a “maturity model for disruptive technologies in R&D networks”. In order to improve the development of conceptualization of the project the consortium gathers the competencies regarding collaborative innovation and multi-agent performance management from the Poznan University. For the development of the IT-structure the IT software developer provides the capability to rapid integrate and analyze complex databases. Their semantic and context-sensitive algorithms have been used to collect the competences of organizations belonging to the carbon value chain. These algorithms are going to be improved to shape Inn Valuable. Finally, clusters belonging to the smart specialization strategy of the participant countries are going to support the validation of the envisioned framework. Cluster organizations are also going to help managing the collaborative innovation projects led by their associated SMEs.
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Conclusions The research project objectives are promising, both in terms of theory to be developed and practical support for businesses, both SMEs and cluster organization. The project is at early stage, as preliminary research is being carried to develop the proposal.The main objective is to design, develop and implement a framework to systematically help organizations, especially SMEs, complementing their innovation process by building new industrial value chains across different EU member states. Project findings should contribute to regional smart specialization strategies by capitalizing upon concentrated and complementary competences and it will provide a clear and measurable contribution to the innovation performance of SMEs References [1] OECD,. Oslo Manuals. Guidelines for Collecting and Interpreting Innovation Data, 3 rd edition, Paris, 2005 [2] Measuring innovation, The Boston Consulting Group , Boston 2006 [3] Godin B., Innovation: the History of a Category // Working Paper No. 1, Project on the Intellectual History of Innovation, Montreal: INRS, 2008 [4] Ram J., Cui B., Wu M.L., The Conceptual Dimensions of Innovation: A Literature Review // Proceedings of the International Conference on Business and Information, Sapporo, Japan, 3rd –5 th July, 2010 [5] Ahmed P.K., Shepherd C., Innovation Management: Context, Strategies, Systems And Processes // Harlow: Financial Times Prentice Hall, 2010 [6] Garcia R., Calantone R., A critical look at technological innovation typology and innovativeness terminology: a literature review, in The Journal of Product Innovation Management, n. 19, 2002, pp. 110-132. [7] Durand T., Dual technology trees: assessing the intensity and strategic significance of technology change, in Research Policy, n. 21, 1992, pp. 361-380. [8] Abernathy W.J., Utterback J.M. , Patterns of industrial innovation, in Technological Review, n. 50, 1985, pp. 41-47. [9] Maidique M.A., Zirger B.J., A study ofsuccess, and failure in product innovation: the case of US electronics industry, in IEEE Transaction on Engineering Management, EM- 31, n. 4, 1985, pp. 192-203. [10] Lee M., Na D., Determinants of technical success in product development when innovative radicalness is considered”, in Journal of Product Innovation Management, n. 11, 1994, pp. 62-68. [11] More R. A., Risk factors in accepted and rejected new industrial products”, in Industrial Marketing Management, n. 11, 1982, pp. 9-15. [12] Ali A., Krapfel R., LaBahn D., Product innovativeness and entry strategy: impact on cycle time and break-even time, in Journal of Product Innovation Management, n. 12, 1995, pp. 54- 59. [13] Cooper R.G. , The dimension of industrial new product success and failure, in Journal of Marketing, n. 43, 1979, pp. 93-103. [14] Cooper R.G., de Brentani U., New industrial financial service: what distinguishes the winners”, in Journal of Product Innovation Management, n. 8, 1991, pp. 75-90. [15] Pavitt K., Sectoral patterns of technical change: towards a taxonomy and theory”, in Research Policy, 13, 6, 1984, pp. 343-373. [16] Alegre J., Chiva R., Assesing the impact of organizational learning capability on product innovation performance: An empirical test, Technovation 28(6), 2008, pp. 315-326 [17] Dougherty D., Hardy C. Sustained product innovation in large, mature organizations, overcoming innovation to organization problems, The Academy of Management Journal Vol. 39, No. 5 (Oct., 1996), pp. 1120-1153 [18] Carol Yeh-Yun Lin, Mavis Yi-Ching Chen, Does innovation lead to performance, An empirical study of SMEs in Taiwan, Management Research News, Vol. 30 Issue: 2, pp.115-132, (2007) [19] Madrid-Guijarro, A., Garcia, D. & Van Auken, H., Barriers to Innovation among Spanish Manufacturing SMEs. Journal of Small Business Management, 47, 465-488 (2009) [20] Ebru Beyza Bayarçelik, Fulya Taşelb , Sinan Apak, A research on determining innovation factors for SMEs, Procedia - Social and Behavioral Sciences 150 ( 2014 ) 202 – 211 [21] Westhead, P. and Storey, D. J. , An Assesment of firms located on and off science parks in the United Kingdom, London: HMSO, 1994 [22] Autio, E., Evaluation of RTD in regional systems of innovation, European Planning Studies, 1998, Vol. 6, No. 2, pp. 131-140. [23] Fontes, M., Creation and development of new technology-based firms in peripheral economies, in Dylan-Jones, E. and Klofsten, M. (Eds.), Technology, Innovation and Enterprise, MacMillan, London 1997, pp. 107-147. [24] Kuratko, D.F. and Hodgetts, R. M. , Entrepreneurship: A contemporary approach, Harcourt, New York, 2001 [25] Storey, D., Understanding the Small Business Sector, Routledge, London 1994. [26] Gudmundson, D., Tower, C.B. and Hartman, E.A., Innovation in small businesses: Culture and ownership structure do matter, Journal of Developmental Entrepreneurship, 2003, Vol. 8, No. 1, pp. 1-17. [27] Woodcock, D.J., Mosey, S.P. and Wood, T.B.W., New product development in British SMEs, European Journal of Innovation Management, 2000, Vol. 3, pp. 212-231.