Knowledge ambiguity, innovation and subsidiary performance

Which intermediate import source is best for innovation in MNEs?

Purpose

This paper explores the importance of the importing intensity for different intermediate inputs depending on their source (internal sourcing or intra-firm trade versus external sourcing or foreign suppliers) for different types of innovation (product and process innovation) and applied to MNEs (foreign versus domestic).

Design/methodology/approach

The sample contains 2,448 firm-year observations (2006–2016) of firms located in Spain that belong to an MNE group. The authors applied a conditional mixed process to a panel recursive bivariate probit model with robust standard errors.

Findings

The authors obtained three key results. First, intermediate imports do not always contribute to improving innovation, since their effects vary depending on their source. Second, intermediate imports from foreign suppliers (external source) are more advantageous for product innovation than those from intra-firm trade (internal source). Third, intermediate imports from intra-firm trade are more important for process innovation than those from foreign suppliers. Thus, the impact of importing intermediate inputs on innovation is contingent on the source of the imports, the ownership of the MNE and the type of innovation.

Originality/value

The paper contributes to this topic with new insights and results for MNEs. It identifies which import source is best for innovation depending on the type of innovative result expected. Moreover, it helps to uncover simultaneity and causal relationships between product and process innovation, issues which have not previously been considered in the literature.

The effect of knowledge management on environmental innovation

Purpose

– The purpose of this paper is to analyze whether knowledge management (KM) practices trigger environmental innovation. Additionally, distinguishing between two types of KM practices, the authors want to examine whether different types of KM practices have the same role for environmental innovation.

Design/methodology/approach

– Employing two French surveys, namely, the Community Innovation Survey (2002-2004 and 2006-2008) and Annual Firm Survey (EAE, 2000), the authors analyze empirically the relationship between KM practices and environmental innovation. The theoretical relationship the authors propose is tested using bivariate probit model on 1,117 French manufacturing firms.

Findings

– The econometric estimations show that the investment in KM practices trigger environmental innovation. Furthermore, the authors distinguish between two types of KM practices: a written policy of KM and a culture intended to promote KM sharing. The main results are also confirmed for both types of KM practices. Moreover, based on coefficients and significance levels, the empirical results indicate that a culture intended to promote KM sharing has a more substantial impact on green innovation than a written policy of KM.

Practical implications

– KM can boost environmental innovation, which also enhances firm business performance. Therefore, managers should foster investment in KM capabilities. They need to create working atmosphere that generates, stores, transfers and applies knowledge in order to improve a firm’s green innovativeness. Additionally, the study results show that managers can choose among different KM practices in order to enhance environmental innovation. However, managers should be aware that not all KM practices provide the full advantage in terms of performance improvement. They should know that different KM practices have differential impacts on different performance outcomes. In this sense, managers should implement KM practices that fit their performance strategy.

Originality/value

– The relationship between KM and innovation performance has received increasing attention from researchers during the past years. However, even though scholars underline the importance of environmental innovation, the relationship between KM and environmental innovation remains significantly under-researched. The findings suggest that KM should be considered as an important source for environmental innovation improvement.

Knowledge management practices and innovation performance in Finland

Purpose

– Recent empirical studies have suggested that knowledge-based issues are closely related to companies’ innovation performance. However, the majority of research seems to be focused either on static knowledge assets or knowledge processes such as knowledge creation. The purpose of this paper is to concentrate on the conscious and systematic managerial activities for dealing with knowledge in firms (i.e. knowledge management (KM) practices), which aim at innovation performance improvements through proactive management of knowledge assets. The study explores the impact that KM practices have on innovation performance.

Design/methodology/approach

– The authors provide empirical evidence on how various KM practices influence innovation performance. The results are based on survey data collected in Finland during fall 2013. The authors use partial least squares to test the hypothesized relationships between KM practices and innovation performance.

Findings

– The authors find that firms are capable of supporting innovation performance through strategic management of knowledge and competence, knowledge-based compensation practices, and information technology practices. The authors also point out that some of the studied KM practices are not directly associated with innovation performance.

Originality/value

– This study adds to the knowledge-based view of the firm by demonstrating the significance of the management of knowledge for innovation performance. Furthermore, the division of KM practices into ten types and the provision of the validated scales for measuring these add to the general understanding of KM as a field of theory and practice. This study is valuable also from managerial perspective, as it sheds light on the potentially most effective KM practices to improve companies’ innovation performance.

Soft-systems approaches to knowledge-cum-values management as innovation drivers

Purpose

– Respecting the growing importance of interdependence of knowledge, values and social responsibility, the purpose of this paper is to introduce the concept of knowledge-cum-values management and to show how some soft systems approaches can support interdependence of knowledge and human values resulting in socially responsible innovative behavior, hence in success.

Design/methodology/approach

– The selected soft systems approaches are used to double-check the usefulness of the requisitely holistic approach to knowledge-cum-values management and innovation. The applied methodology for qualitative analysis is the Dialectical Systems Theory.

Findings

– One-sidedness, unlike the requisite holism, causes oversights and hence disables innovations as a new users’ benefit. Requisitely holistic knowledge-cum-values management prevents one-sidedness and therefore many oversights; hence it is a valuable driver of innovation. It is supported by social responsibility (exposing the systemic behavior by suggesting interdependence and holistic approach to one’s responsibility for one’s influences on society). By including values and by enabling consideration of interdependence of human values and knowledge, some soft systems approaches support innovative behavior with social responsibility.

Research limitations/implications

– Research is limited to theoretical findings resulting from authors’ previous empirical studies. The novel concept “knowledge-cum-values” erases the human dangerous one-sidedness resulting from the irrational rationalistic division of the two. Social responsibility supports informal use of some soft systems theories and diminishes this danger.

Practical implications

– The practical application of the selected soft systems approaches and social responsibility offers great possibilities for managers to improve the holism of their innovation processes, driven by knowledge-cum-values management. Fewer oversights are possible and lead to fewer mistakes and more success in the invention-innovation-diffusion processes. No human is rational or emotional only, either as a creator or as a consumer, but this fact is disregarded in the management literature.

Social implications

– Social responsibility shall be considered as an important novel soft-system approach and part of organizational innovative behavior aimed to replace the one-sided approaches prevailing so far and causing crises: the overseen attributes do not cease, but they still impact life and are out of control.

Originality/value

– The contribution introduces the new, still insufficiently researched concept of knowledge-cum-values management; it highlights new ways of attaining the requisitely holistic knowledge-cum-values management that enhances enterprise’s innovation capacity by requisite holism, supported by social responsibility.