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Rosenbusch, N., J. Brinckmann, and A. Bausch (2011), Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs

36 important questions on Rosenbusch, N., J. Brinckmann, and A. Bausch (2011), Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs

Why can smaller organizations profit by adjusting to environmental changes faster than bigger organizations?

Due to their nimbleness (rapheid)
Missing hierarchies
Quick decision-making

What about small firms and their resources?

Innovation demands substantial resources. For resource-scarce small firms the resources required by innovation project can overstrain their possibilities and innovation implies increased uncertainty and risks.

Why does the failure of an innovative product evokes existential risks for smaller firms?

They often lack organizational capability and thereby experience running the risk of engaging in managerial undertakings without experience. Innovation is a task fraught with high failure rates or at least temporary unprofitability.

What is the first RQ?

Does theory and empirical evidence support the general assumption that innovation is indeed always the better approach?

What is the second RQ?

In which contexts is innovation more beneficial for the performance of the small firm?

How do the authors define innovation?

The process of the adoption of internally and externally generated devices, systems, policies, programs, processes, products, or services that are new to the adopting organization

Which different types of innovation are distinguished as antecedents of firm performance?

Innovation orientation of the venture
Inputs dedicated to an innovation process --> internal input / external input
Ouputs derived form an innovation process (patens/new products)

What does Schumpeter (1934) argue about innovation?

It is an opportunity for entrepreneurial firms to gain rents through the temporary establishment of a monopoly. Considers continuous innovation activity as the key source of long-term entrepreneurial success

What is particularly advantageous for SMEs compared to large firms due to their limited size and greater nimbleness?

Serving attractive niches with innovative products.

What is an opportunity to stand out from the competition?

The introduction of innovative products, services, processes, or business models tailored to attractive niches

In doing so, where can SMEs benefit from?

From high brand loyalty of buyers and a reduced price sensitivity of demand as a consequence of customers valuing the uniqueness of the innovation

How is the product development process considered?

As a path-dependent idiosyncratic dynamic capability which leads to competitive advantage via enhancement, recombination or creation of resources and their deployment in value-creating strategies

What does learning during the innovation process generate?

Absorptive capacity: the ability to identify, assimilate and apply knowledge. The absorptive capacity developed by innovating SME implies competitive advantages

What are the further benefits of innovation?

Learning economies
Economies of scale and scope
Pre-emption of limited resources
Advantages in further innovation
Ability to set standards

Which negative effect results can innovation have?

Innovation causes resistances to their adoption in the innovating organization and the marketplace
Innovation is a risky undertaking which consumes substantial resources
The successful development and introduction of innovations depend special organizational resources and capabilities in order to generate and appropriate the benefits of innovation
The context in which the innovating firm operates might affect the outcome an innovation has for the firm
Innovation is a multifaceted phenomenon. Hence, it can be suspected that some forms of innovation might be more beneficial than other forms

What about innovation process input vs. innovation process output?

If firms devote substantial resources to the innovation process, but are unable to turn them into innovative offerings, resources are squandered (verspild) and firm performance suffers

What are the factors that are inputs in the innovation process?

Financial resources
Number of people working in R&D

What are the factors that are outputs in the innovation process?

Number of patents
New services
Products
Manufacturing processes

What about innovation orientation vs. innovation process outputs

SMEs with a strong orientation toward innovation are capable to develop specialized, innovative capabilities and innovative offerings. Moreover, an innovation orientation shapes the culture of the SMEs.

What does the strategic orientation of a firm shape?

How an organization perceives the environment, sets its goals, allocates resources, structures the value-creation process, and builds organizational as well as dynamic capabilities

When does innovation orientation increase performance?

In situations of resource scarcity
Market entry
When facing established and more resourceful incumbent

What do the employees develop in organizations that focus on innovations?

Greater sense of commitment and proactivity. It can:

Increase employee satisfaction
Help in attracting scarce talent
Reduce employment turnover
Increase the productivity of the firm

Where does innvoation orientation lead to?

Positive branding effects
The development of innovative capabilties of the firm

In sum: the benefits of SMEs orientation towards innovation extend beyond tangible outcomes of the innvoation process such as patents, new products, services, or production processes

What is hypothesis 2b?

Hypothesis 2b. The positive relationship between an innovation orientation and performance is stronger than the positive relationship between innovation process output and performance. (Supported)

What about internal vs. external innovation process input?

Innovation process inputs could be deployed to develop innovations internally or to create innovation in collaboration with external stakeholders

What are the positive effects of developing innovation in conjunction with external (larger) partners?

New and small firms rarely have resources and capabilities to respond to the innovation deamnds at any given time
The bundling of internal and external resources enables resource-scarce SMEs to augment their capacity of delivering innovations to the market
The likelihood of successful innovation increases and the cash-flow is augmented (although the benefits need to be shared)
A resource-scarce SME can leverage its unique knowledge by actively configuring and reconfiguring its collaborations
External collaborations allow to leverage an external partner's growth

What are the negative effects of developing innovation in conjunction with external (large) partners?

The collaboration with external partners implies great complexities regarding to coordination efforts, protection of intellectual property, appropriation of rents, etc.
SMEs might lack experience needed to manage collaborations
SMEs can be expected to suffer from dominance of external innovation partners
SMEs dependence on the success of these projects is high
SMEs might suffer from a liability of smallness in competitive markets
SMEs might experience a liability of newness lacking experience concernign who to cooperate with and how to manage external collaborations

What is positive when focusing on internal innovation development?

Reduces complexities
Allows expertise development
Permits a full appropriation of innovation returns

What is hypothesis 2c?

Hypothesis 2c. Focusing on internal innovation projects has a stronger positive impact on SME performance than focusing on external collaboration in innovation projects. (Supported)

What about firm age?

It is a matter of the nature of firms' resources rather than their quantity. New ventures draw on resources that are less specialized, but flexily deployable. Mature firms have a specialized resource base that enables them to efficiently operate in given market conditions

What happens when firms do not manage to adapt to environmental change and fails to keep up with competition?

Core competencies based on firm-specific knowledge become core rigidities

Where are new venture free to?

To create processes and structures to form specific, opportunity-related capabilies that are difficult to imitate or substitute, thus, fostering the creation of a competitive advantage.

Why is innovation recognized as a promising strategy for new ventures?

New firms can be expected to be more flexible and agile than established SMEs, they have prolonged time of operating under conditions of limited competition in case they pioneer innovations

Why is there a trade-off between flexibility and specialization of assets?

Both specialization and flexibility of strategic assets are of importance to the innovation process. Older firms benefit more from the specializateion of their resources, however, specialization comes at the cost of more limited flexibility

Which four obstacles to innovations does innovation hinge on? (regarding the ability to adjust as an organization)

People are prone to harvest and protect existing practices and routines that enabled their prior development
While innovations originate often at the individual level, they need to be understood and embraced by the whole organization requiring social impetus
Various functional groups need to make a coordinated effort hence resulting in a challenge to link the processes of organization parts to a whole
The organization needs not only to embrace the innovation but also to transform its existing structure and practices demanding strategic leadership

What does the level of individualism determine?

Behaviors such as social interactions and psychological needs such as achievement motivation

The question on the page originate from the summary of the following study material:

Artikelen Innovation & Entrepreneurship 2016

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