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To Strive for Greatness

To Strive for Greatness: Better understanding innovation processes

In a world of rapidly developing technology and the threat from disruptors, companies need to improve the efficiency of their business operations to stay ahead or face the consequences.

Substantial resources have been invested in developing theoretical frameworks for understanding process innovation (the implementation of a new or significantly improved production or delivery method) to meet this goal.

But open innovation research in recent years, understanding why and how external parties share ideas and expertise to support an organisation’s innovative ability, has focused mainly on the development of new products (product innovation), largely ignoring the introduction of new processes (process innovation). Now there is a pressing need for more theoretical and practical work analysing the relationship between open and process innovation.

Our most recent research conducted at Durham University Business School’s Centre for Innovation and Technology Management has attempted to address this gap. By drawing on the resource-based view (RBV) and institutional theory, we have managed to provide a framework explaining how engaging with open innovation leads to process innovation and how this relationship is affected by the motivation to achieve legitimacy, with recommendations for managers embarking on innovation projects.

By analysing innovation literature, we were able to discern how engaging with open innovation can support an organisation’s process innovation.

Cooperation with external parties, use of external information and the acquisition of external research and development, based on the concept that no company, no matter how capable or how big, could innovate effectively on its own, can improve an organisation’s ability to introduce a new process. Our research has gone one step further, extending this thinking to explain how the use of information and acquisition of research and development contribute to an environment of learning which benefits an intermediary outcome such as the development of a process.

The motivation to achieve legitimacy, to find a way of doing things which adheres to regulatory requirements and meets standards of best practice, on the relationship between open innovation and process innovation is more complex. When efforts to cooperate with external parties are combined with the motivation to achieve legitimacy, the impact on process innovation is positive. However, it is very much the opposite when the motivational focus is on the use of external information. This seemingly counter-intuitive result would suggest that external information will be used to justify the existing state of affairs rather than inspire real change.

In light of such results, managers can benefit from advice tailored to their innovation needs. A rounded approach would work best for managers aiming to improve existing processes and introduce new ones. By looking externally and cooperating with customers and suppliers, they can achieve both product and process innovation. Based on current literature and our findings, our recommendation to managers utilising open innovation as a means of boosting their ability to introduce new processes would be to focus more on developing partnerships with external parties rather than simply acquiring information.

Although comprehensive, our research has revealed there is scope for further analysis into this area. We would encourage further exploration into the role of external collaborators and the impact of the supply chain integration content on the theoretical framework and performance. We recommend studies explore how different types of process innovation and different types of motivation affect results.

Open innovation may seem to be positive in all situations but runs the risk of creating some dangerous scenarios. An investigation into the U-shaped relationship between open innovation and process innovation where the effects become negative would serve to further our understanding of innovation, including situations where intellectual property is at risk and contractual relationships are breached.

Tsinopoulos, C. and Sousa, C. and Yan, J. (2018) 'Process innovation: open innovation and the moderating role of the motivation to achieve legitimacy.', Journal of product innovation management., 35 (1). pp. 27-48.

Article first published in IMPACT Magazine in June 2017

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