Patrick A.M. Vermeulen

Determinants of Product Innovation in Small Firms A Comparison Across Industries

Many studies have investigated the determinants of product innovation in small firms, suggesting product, firm, market and innovation process factors are its key drivers of success. Variations across industries relating to the determinants of product innovation are often expected, but due to a lack of data this is still under-researched. This article explores if composite effects due to broad samples indeed blur ones view. Drawing upon a database of 1250 small firms across 7 industries, we investigate if any differences are found in the presence and impact of various firm-level determinants. Controlling for size and age differences, the analysis reveals some major differences to the extent small firms use innovative practices, and their connection with new product introductions.

Uncovering Barriers to Complex Incremental Product Innovation in Small and Medium‐Sized Financial Services Firms*

Developing new products is of the highest importance for the survival of firms. This not only refers to really new products, but firms also need to invest in modifying their existing products. Small and medium‐sized companies are no exception to this rule. The present study focuses on the innovative activities of small and medium‐sized financial service companies and aims to answer how small and medium‐sized financial services firms organize their product innovation processes and what the main barriers during these innovative attempts are. Data from 30 financial small and medium‐sized enterprises were collected to address these issues. The data showed that the firms in our study experience problems in terms of resources, project‐based working, incentives, and information technology, despite the fact that the innovative efforts are aimed at modifying existing services. Although these issues may not be totally unexpected, the results from this study do point at some interesting distinctions with the previous literature. Furthermore, it is suggested that the impact of the barriers may be of lower importance than is often assumed in the innovation literature.

Identifying key determinants for new product introductions and firm performance in small service firms

Small firms have gained increasing attention in the innovation literature. Focusing mainly on manufacturing based literature we identified several key factors that contribute to the innovative potential of small firms. However, we do not know if these factors are recognised and used in small service firms. Distinguishing various types of service industries, our goal with this paper is threefold. First, we describe to what extent service firms use the key factors to their advantage. Second, we try to establish if there is a relation between the key factors and new product introductions. Third, we want to see if new product introductions indeed contribute to firm performance. After a survey among 502 Dutch service firms, we reveal some major differences between various types of service industries.

Information processing and strategic decision-making in small and medium-sized enterprises: The role of human and social capital in attaining decision effectiveness

The decision-making literature emphasizes that in high-stake decisions the characteristics of individual decision-makers, their interpretation of decision situations, and their social ties play an important role in decision outcomes. Despite these results, research on small- and medium-sized enterprises has only partially covered these influences. In a sample of 565 small-business owners, this study identifies the extent to which these characteristics and social ties affect decision effectiveness and the extent to which their impact is mediated by evaluative judgements of the decision situation. Our results suggest that the interplay between human capital and social capital affects decision outcomes via evaluative judgments and this effect is moderated by decision content, in such a way that depending on decision content (internal versus external focus) entrepreneurial experience and the breadth of social capital are either assets or liabilities for decision effectiveness.

Social capital as a decision aid in strategic decision‐making in service organizations

Purpose – This paper aims to examine the role of social capital as a strategic decision aid in small and medium sized enterprises (SMEs) in different service sectors.Design/methodology/approach – Data on 434 strategic decisions in service SMEs was gathered through computer‐aided telephone interviews and analyzed using structural equation modeling to test the mediating role of level of risk acceptance and confidence in the relationship between the breadth of social capital and decision effectiveness.Findings – Evaluative judgments (risk acceptance and confidence) explain the negative effects of social capital on decision effectiveness. Service delivery and dependency on tacit know‐how account for differences between SMEs in different service sectors and serve as explanations for different effects of social capital as a decision aid.Research limitations/implications – The study sheds light on the psychological underpinnings of social capital effects in strategic decisions. Higher varieties of actors make de...

The Impact of Governmental Policies in Institutional Fields: The Case of Innovation in the Dutch Concrete Industry:

The creation of markets for new products involves interplay between various field constituents. A major challenge in this process is to establish a sufficient level of legitimacy in order for a market to become accepted in the organization field. Yet, this process of market creation may be suppressed by established institutional arrangements that actively block the diffusion of innovations and constrain change. In this paper, we examine the roles of regulatory structures, professional associations and competitors in market suppression. We pay particular attention to the actions and circumstances preventing change in a mature sector of the economy, despite state policies directed at change. Active resistance from professional associations and corporate actors inhibited creation of a new market. We draw upon institutional theory to provide an account of the different communities of interest involved in an institutional field, exploring how they are developed and negotiated. We argue that the role of the government and the impact of its policies in market construction may be overemphasized and that the complexity of its interaction with organizational fields may be underestimated.

Complex Incremental Product Innovation in Established Service Firms: A Micro Institutional Perspective:

Many product innovation studies have described key determinants that should lead to successful incremental product innovation. Despite numerous studies suggesting how incremental product innovation should be successfully undertaken, many firms still struggle with this type of innovation. In this paper, we use an institutional perspective to investigate why established firms in the financial services industry struggle with their complex incremental product innovation efforts. We argue that although the impact of micro institutional forces is often overlooked in innovation studies, these forces matter for innovation success. Our study complements the existing innovation literature and provides an additional explanation why incremental product innovation is highly complex and suffers from several liabilities in established firms. Using qualitative data from the Dutch financial services sector collected over the period 1997—2002, the paper illustrates how micro institutional forces at the business unit level affect complex incremental product innovation and how the interaction of these forces delivers their impact.

Cognitive representations of institutional change: Similarities and dissimilarities in the cognitive schema of entrepreneurs

Purpose – The purpose of this paper is to examine the cognitive factors explaining how exogenous institutional change (IC) impacts on organizational actions.Design/methodology/approach – The authors interviewed 121 Romanian entrepreneurs, 69 before and 52 after Romanias ascension to the EU and used cognitive mapping to elicit their cognitive schemas about this macro‐IC. Similarities and differences between cognitive structures are explored and the aggregated cognitive maps before and after the IC are created, in order to understand how managerial cognition changed following IC.Findings – The results show that the richness of the cognitive schemas before the IC is lower than after the IC took place. Furthermore, the entrepreneurs who framed the IC as a threat adopted isomorphic actions and reported less positive organizational outcomes as compared to the entrepreneurs that represented the IC as an opportunity.Research limitations/implications – The research described is exploratory in nature and opens new...

TOO MANY TOOLS? ON PROBLEM SOLVING IN NPD PROJECTS

Complaints that new product development projects frequently encounter problems keep occurring, despite the availability of a considerable body of literature and a large and still increasing set of tools to guide such projects. Against the wider background of managerial problem-solving in general and NPD-literature more specifically, we present and analyse two NPD-projects within the same financial services firm. These show a marked contrast in success. The reasons for this difference are explored and conclusions are drawn about the usefulness of NPD-literature and tools.

Market Meets Community: Institutional Logics as Strategic Resources for Development Work

We investigate how an intermediary organization, PRADAN, introduces and promotes market-based activities in tribal villages as a means to improve the social and economic conditions of rural women and their families in two districts in India. We draw from the literature on institutional logics and focus on the strategies and activities of PRADAN – an NGO working in poor rural areas in Northern India – to show how PRADAN instrumentally used a market logic and a community logic to develop new social structures in these rural communities. Moreover, we show what effect this had on beneficiaries and their families and how difficult it has been to convince rural communities and gain their trust. On the basis of these findings we show how logics can be deployed as a means to alter institutional arrangements. We find that the simultaneous enactment of both community and market logics was critical in the development of new social structures (Self-Help Groups). Finally, we show how the introduction of market-based activities by PRADAN is best understood as an ongoing and staged process that strongly builds on a continuous interplay of multiple logics.