No title

Introduction Multi-dimensionality of learning in new product development teams New product team learning has been rece...

Author: Christos Kalantaridis

8 downloads 457 Views 1MB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form

DOWNLOAD PDF

Introduction

Multi-dimensionality of learning in new product development teams

New product team learning has been receiving quite a bit attention both in practice as well as in academe in the last ten years (Moorman and Miner, 1997; Lynn et al., 2000). Scholars assert that new product team learning is a collective knowledge generation and dissemination activity carried out by acquiring, processing, storing, manipulating and unlearning information and knowledge during a project (Nonaka and Takeuchi, 1995; Grant, 1996; Meyers and Wilemon, 1989; Edmondson, 1999). However, most of the studies in the current literature view team learning as a single construct, instead of treating it as a collection of processes (Pentland, 1995). Although previous literature on organizational learning shows that knowledge representation and learning are multi-dimensional, involving socially shared cognitive processes, such as information acquisition, information dissemination, information implementation, unlearning, thinking, intelligence, improvisation, sensemaking and memory (Huber, 1991; Dixon, 1992; Nicolini and Meznar, 1995; Klimecki and Lassleben, 1998), we know surprisingly little about the multi-dimensionality of learning in new product development teams. Thus, the purpose of this research is to: . classify new product development team learning in a framework of socially shared cognitive process, including information acquisition, information dissemination, information implementation, unlearning, thinking, improvisation, intelligence, sensemaking and memory; and . empirically test the multi-dimensionality of team learning.

Ali E. AkguÈn Gary S. Lynn and Richard Reilly The authors Ali E. AkguÈn is a Research Fellow in the School of Business Administration, Gebze Institute of Technology, Turkey. Gary S. Lynn is an Associate Professor and Richard Reilly is a Professor, both in the Wesley J. Howe School of Technology Management, at Stevens Institute of Technology, Hoboke, New Jersey, USA. Keywords Cognition, Teamwork, Organizational learning, Product development Abstract New product development team learning is important in today's turbulent and uncertain markets and technologies. However, the literature treats team learning as a single construct, ignoring its multi-dimensionality. In this study, we develop a multi-dimensional team learning framework based on socio-cognitive constructs. By studying 124 new product development projects, we show empirically that learning in new product development is best conceived as a multi-dimensional structure with nine correlated but distinct constructs including: information acquisition, information implementation, information dissemination, unlearning, thinking, improvisation, memory, intelligence and sensemaking. Further, we demonstrate that a model based on the multi-dimensionality of team learning provides a more robust explanation of new product success than does a unidimensional team learning model.

Learning and cognition in new product development teams

Electronic access

Since the seminal work of Cyert and March (1963), Cangelosi and Dill (1965) and Argyris and SchoÈn (1978), the field of organizational learning has been growing very rapidly in both academia and practice. With the increased popularity and growth of learning in organizations, many academics and practitioners apply organizational learning concepts to different fields, such as human resources (Dixon, 1992),

The research register for this journal is available at http://www.emeraldinsight.com/researchregisters The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm European Journal of Innovation Management Volume 5 . Number 2 . 2002 . pp. 57±72 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060210428168

57


European Journal of Innovation Management Volume 5 . Number 2 . 2002 . 57±72

Ali E. AkguÈn, Gary S. Lynn and Richard Reilly

organizational culture (Schein, 1993), and strategic management (Senge, 1990) to name a few. However, one of the areas in which learning is vital is new product development, where teams must respond to rapidly changing technologies, customer needs and competitive actions (Moorman, 1995; Lynn et al., 2000; Meyers and Wilemon, 1989). Tidd (1997), for instance, explains that learning is important for new product development due to the complexities of organizational, market, technological and environmental factors. Hughes and Chafin (1996) argue that continuous learning in new product development increases the ability of a company to succeed in dynamic environments. As shown in Table I, learning in new product development teams spans many activities, such as acquiring, processing, disseminating, retaining and retrieving information. Many empirical studies on team learning operationalize learning narrowly, ignoring its multi-dimensionality. Interestingly, literature on organizational learning indicates that learning is multifaceted and multiphased and its multi-dimensionality should be investigated based on socially shared cognition (Virkkunen and Kuutti, 2000; Pentland, 1995; Nicolini and Meznar, 1995). Socially distributed cognition refers to the fact that individuals in a group pass their knowledge to each other to accomplish their task more effectively (Cicourel, 1990; Martin and Clark, 1990). Larson and Christensen (1993, p. 5), for instance, define social cognition as:

dimensional team learning framework. Scholars (e.g. Audi, 1998; Fiske and Taylor, 1991; Goldman, 1986; Pentland, 1995; Posner, 1996) demonstrate that social cognitive activities are: acquiring, disseminating and implementing information, discarding old information (i.e. unlearning), storing information and skills (i.e. memory), manipulating memory (i.e. thinking), action learning (i.e. improvisation), information processing ability or capability (i.e. intelligence) and giving meaning to information (i.e. sensemaking). A brief description of each unit of cognition in NPD teams is shown below and Table II shows the summary of each factor. Information acquisition Information acquisition is a critical component of cognition and team learning (Garvin, 1993). Literature on epistemology and cognitive psychology indicates that information acquisition refers to individual attention given to gathering external information with sensory system (Audi, 1998). In a similar fashion, information acquisition is the gathering of internal and external information (i.e. customers, markets, technologies and competitors) (Moorman, 1995). Information acquisition involves environmental scanning and transferring that information into the group to sense the signals of environmental changes (Moorman, 1995). Therefore, teams have the opportunity to learn and therefore to act on that information for more successful new products. Iansiti (1995), for instance, asserts that during the development stage of a product, continuous acquisition of customer and competitor information and continuously incorporating this information into prototypes and models helps teams to learn about changing customer needs and competitive reactions. Furthermore, in a study of boundary spanning, Ancona (1990), and Ancona and Caldwell (1992) demonstrate that actively observing external environments increases team performance and team learning. They empirically found that when teams (i.e. probing teams) scan both market and technical environments, communicate with outsiders and initiate programs with them, they perform internal activities better and increase long-term success.

. . . those social processes involved in the acquisition, storage, transmission, manipulation, and use of information for the purpose of creating a group-level intellective product.

Since team learning is a collective activity rather than individualistic, it can be understood to involve social cognition (Cook and Yanow, 1993), because team members encode, interpret, and recall information together rather than apart (Argote, 1999; Levine and Moreland, 1991). For instance, Madhavan and Grover (1998, p. 1) state that: New product development teams, however, are engaged in knowledge-producing activity, which implies that an understanding of team social processes should be complemented by a cognitive perspective [emphasis added].

Consequently, we will use the components of social cognition to develop a multi58




Table I Team learning literature review Author

Study

Brooks (1994)

Identified team learning tasks and examined how organizational structure impacts the abilities of team members who have low power in the team to carry out those learning tasks by studying four teams in an organization. Her study demonstrated that collective team learning occurs when team members share knowledge, combine and recombine their knowledge, gather data from outside team boundaries, and disseminate new knowledge. Her study also indicated the importance of power dissemination in the team, and she found out that collective team learning occurs when power differences are either controlled or not present in the team Definition of team learning: the construction of collective new knowledge by a team (p. 215) Team learning processes: problem posing, sharing knowledge and ideas, integrating new knowledge, gathering data, disseminating new information Edmondson Presented a model of team learning and tests it in a multi-method field study. Her model depicts that team structures (i.e. context (1999) support and team leader coaching) impact shared team beliefs, such as psychological safety and team efficacy, and team beliefs effect team performance via team learning behavior. By studying 51 work teams, she found that team learning is associated with team performance; psychological safety and team efficacy are associated with team learning; and team leader coaching and support impact team psychological safety Definition of team learning: processes and outcomes of group interaction activities through which individuals acquire, share and combine knowledge Team learning processes: asking questions, seeking feedback, sharing information, experimenting, discussing errors or unexpected outcomes of actions Kasl et al. Presented a research-based model of team learning. By demonstrating two case studies in petrochemical and manufacturing industries, they (1997) identified team leaning processes and conditions (e.g. appreciation to teamwork, individual expression, common goals, values and beliefs) Definition of team learning: a process through which a group creates knowledge for its members, for itself as a system and for others. Team learning processes: perception of issues based on inputs or past experiences, transforming that perception into a new understanding, experimenting, testing hypotheses, crossing boundaries, seeking and/or disseminating information with other individuals or units Purser et al. Studied team-learning process by examining deliberations ± patterns of exchange and communications, which team members engage (1992) in to reduce uncertainty during the product development process. By studying two product development projects, they identified the factors that are associated with the management and design of deliberations tp enable and obstruct team learning. They found that knowledge acquisition, knowledge sharing and planning, knowledge frame of reference, and knowledge handling procedures are important constructs for team learning and deliberations Definition of team learning: development of a knowledge base that can inform technical problem solving and decision making Team learning processes: knowledge sharing and active inquiry, holistic view in organization and team members, participative management, and small and informal forums Identified the problems in effective team learning, conditions which promote errors, and ways to transfer learning from project to Meyers and project by getting questionnaire feedback from 80 team leaders or team members. They derived their team learning principles from Wilemon organizational learning literature and they did not exactly define team learning. Their exploratory study showed the factors that (1989) facilitate team learning, including: formal and informal communication; employing experienced people to the team; open communication with other teams; keeping project learning logs; clear project goals; learning from the experience of other people; and small scale experimentation McKee (1992) Examined product innovation as an organizational learning perspective. He developed a conceptual framework for how different types of organizational learning skills are needed for different types of innovation, such as incremental and discontinuous. He demonstrated that three levels of organizational learning are associated with three types of innovation: (1) single-loop is associated with incremental innovation; (2) double-loop is associated with discontinuous innovation; and (3) meta-learning is associated with institutionalizing innovation in organizations However, he did not clearly define team learning in his study Lynn et al. Demonstrated the applicability of several individual learning models to product development teams by studying 281 new product (2000) development projects Definition of team learning: knowledge generation, dissemination, and implementation process Team learning processes: recording, filing, and retrieving information, and developing common, stable and supported goals for projects

new product development process (Moorman, 1995). For instance, Low and Mohr (2001) argue that when market related information is gathered, that information can be directly applied to market strategy

Information implementation The second factor is information implementation. Information implementation refers to using information to solve market and technically related problems during the 59




Table II Summary of cognitive factors Variable

Definition

Information acquisition

A collection of primary and secondary information from a variety of sources

Information implementation

Information dissemination Thinking

Unlearning Improvisation Sensemaking

Memory

Intelligence

Operational definition

Gathering data from customers, competitors, economic, financial and social reports, consultants, new members, acquisition and mergers, cross-functional teams Applying market and technical information Incorporated lessons learned pre-launch into the product for to influence market strategy and technical full-scale launch Uncovering and correcting product problem areas with which related actions customers were dissatisfied New product strategy implementation The process by which information from Memos, reports, formal courses and training, informal different sources is distributed and shared communication, dialogue, teleconferencing, Internet and intranet Decision making, problem solving, judgment Purposeful, reasoned, and goal-directed action involves solving problems, formulating inferences, calculating likelihoods and making decisions The process of reducing or eliminating Changing the organizational beliefs, norms, values, pre-existing knowledge or habits procedures, behavioral routines, and physical artifacts Planning and implementing any action Continuous improvement, experimenting, trial and error simultaneously Giving meaning to data and information Information coding, summarizing

Stored information (i.e. detailed past decisions, results, past surprises and the organization's responses and unwritten decisions) from an organization's history Capability and ability to process, interpret, manipulate and use information in the organization

Core competencies, culture, structure, beliefs, physical structure

Capability to gather information from outside of the organization (e.g. customers, vendors suppliers, libraries, consultants, etc.), generate different market and technology scenarios, interpret the environmental signals, transfer customer needs to product design specifications

decisions. Pentland (1995) also notes that unless knowledge is applied in practice, there is no possibility of obtaining the kind of performance improvement that is characteristic of learning.

Distinct characteristics Attention, perception

Active usage of information and/or knowledge

Transfer of information and knowledge from one source to another Manipulation of memory

Memory eliminating Action learning, reflection Understanding, categorization, abstraction Storage of knowledge and information

Cognitive capabilities and abilities

distribution/dissemination processes are instrumental for making individual insights and know-how accessible to others. Consequently, information dissemination helps teams to create new knowledge and provide access to existing and tacit knowledge (West and Meyer, 1997). The sharing of information helps to keep everybody up to date, build cohesion within the group and acts as a source of peer pressure (Imai et al., 1988).

Information dissemination Information dissemination is one of the most important components of team learning (Kasl et al., 1997). Information dissemination is the transferring and sharing of information throughout the team by formal (e.g. memos, reports, bulletin boards) and informal means (e.g. face-to-face meeting, breaks, etc.) (Dixon, 1992; Huber, 1991; Sinkula, 1994). For effective and successful new product development, sharing information among the team members is vital (Slater and Narver, 1995; Gupta et al., 1986). For instance, Purser et al. (1992) note that information

Unlearning The fourth factor is unlearning in new product development teams. Unlearning has been defined as discarding obsolete and misleading knowledge (Hedberg, 1981), replacing old ideas and beliefs (Nystrom and Starbuck, 1984) or reducing or eliminating pre-existing habits (Newstrom, 1983). 60




Unlearning is important in new product development teams. For instance, Imai et al. (1988) note that one of the strengths of the Japanese product development process is its flexibility in being able to respond to changes in the external world. Furthermore, they state that unlearning prevents projects from becoming too rigid. Similarly, Iansiti (1995) states that extreme turbulence requires flexibility and responsiveness, especially in the development of new products and technologies. Teams can cope with these conditions by `èmbracing change'' (Iansiti, 1995, p. 38) during the product development process. Brown (in Slater and Narver, 1995) also states that, `Ùnlearning is critical in these chaotic times because so many of our hard-earned nuggets of knowledge, intuition, and just plain opinion depends on assumptions about the world that are simply no longer true.''

selecting an appropriate product development process to use. Teams think, for example, by manipulating existing knowledge structures (e.g. team memory, routines, etc.), continuously experimenting, and using simulations and scenarios to develop contingency plans. Intelligence Intelligence is the sixth construct. At the group/team level, intelligence is the functional intelligence of a group of people working as a unit (Williams and Sternberg, 1991). Accordingly, team intelligence is a result of team interaction that team members cannot display individually (Sternberg, 1985; Glynn, 1996). Intelligence is defined as the capability and ability to process, interpret, manipulate and use information in organizations or groups (McMaster, 1996; Glynn, 1996). Applying intelligence to new product development, it is the ability and capability of the team to understand changing market and technical dynamics, to articulate a clear vision for the project, to figure out an effective development process for the product/service, to gather information and knowledge regarding the market, technology, environment, industry and process, and to process and disseminate that information within and between teams.

Thinking Manipulation of memory or thinking (Flesch, 1951; Ray, 1967) is another factor in an organizational learning system. Thinking is a process of decision making, judgment, creativity, and a deliberate search for alternatives and processing that information (Jay, 1991). It is a planned, intentional and goal seeking activity to solve complex and ill-defined problems by the use of memory (Jastrow, 1931). Thinking involves the planning process (if/then), exploration (search) and evaluation (scan). Thinking is vital in new product development teams, especially when the product involves uncertain markets, technologies and other environmental conditions. Teams encounter and experience something previously unknown and they begin a process of inquiry, reasoning and judgment to solve problems. New product development team thinking includes: . problem identification, such as market, and customer needs and wants, technical assessment of new product, and team member selection; . decision making, such as determining milestones and inchstones during the development process, formulating the budget and securing funding during the project; . judgment, such as assessing test results, evaluating pros and cons of decisions and

Improvisation The seventh construct, which occurs within the framework of social interaction, is team improvisation (Preston, 1991). Improvisation is derived from Latin improvisu, meaning ``not seen ahead of time'' (Barrett, 1998, p. 606). It is defined as planning and implementing any action simultaneously (Moorman and Miner, 1998). The premise of improvisation is experimental and action learning in teams operating under turbulent environments (Eisenhardt and Tabrizi, 1995; Moorman and Miner, 1998). Sensemaking Sensemaking is another construct of social cognition and team learning. Sensemaking is giving meaning to data and information, or making inferences from information acquired. Dougherty et al. (2000) note that sensemaking is a social process of developing a common or shared understanding by organizing information, insights, and ideas in 61




improvisation, intelligence, sensemaking, and memory. H2. A model based on the multidimensionality of team learning provides a more adequate explanation of new product outcome than does a unidimensional model.

meaningful ways. At the group/team level, sensemaking is related to understanding and interpreting information as one unit, which can be achieved by information forming or coding (Tidd, 1997). For instance, Davenport and Prusak (1998) explain that codification organizes information and knowledge, making it easier to understand and communicate. In this way, team members communicate, transfer and learn effectively.

Research design Measures To operationalize the constructs, a 0 to 10 Likert measurement scale was used (0 = strongly disagree to 10 = strongly agree). Question items that survived after the exploratory factor analysis are shown in the Appendix. A brief summary of the measures included the following:

Memory The last construct is memory ± knowledge and skill storage. Walsh and Ungson (1991) define memory as stored information from an organization's history. El Sawy et al. (1986) identify memory as a repository of detailed past decisions and their perceived results, past surprises, and the organization's responses and unwritten decisions. New product team memory involves the storage of skills and experiences from team members about project routines and the team culture (Moorman and Miner, 1997). It is also an absorptive capability of teams (Cohen and Levinthal, 1990). Moorman and Miner (1997, p. 92) note that:

Information acquisition and implementation We adapted the constructs regarding information acquisition and implementation from Lynn et al. (2000). We asked three questions for information acquisition and four questions for information implementation. Information dissemination The literature on information dissemination demonstrates that communication is one primary medium for information sharing and dissemination (Moorman, 1995). Huber (1991) and Dixon (1992), for instance, note that information dissemination includes individual written communication (e.g. memos, reports, letters, etc.), training, briefing, internal publications (e.g. video, print, audio), and informal communications. In this study, we operationalized information dissemination as informal communication by asking two questions as shown in the Appendix. Face-to-face communication is the richest mode for sharing information because it provides immediate feedback, a variety of cues (body language) and is extremely important in transmitting tacit knowledge (Dixon, 1992). Madhavan and Grover (1998), for instance, state that:

If firms fail to understand the subtle ways in which different features of organizational memory influence product development, they may fail to harvest the full value of organizational learning.

By studying 92 new product projects, Moorman and Miner (1997), for instance, found that organizational memory positively impacts the performance and the creativity of new products. On the other hand, they also demonstrated that under turbulent environments the impact of organizational memory on new product success diminishes. Hypotheses Based on the above discussion on social cognitive factors, statistically, a covariance among the nine distinct dimensions can be expected to account for learning in new product development teams. Therefore, we hypothesize: H1. Learning in new product development is best conceived as a multidimensional structure with nine correlated but distinct constructs: information acquisition, information dissemination, information implementation, unlearning, thinking,

Team members cannot effectively utilize or create new knowledge without being able to interact directly (i.e. face-to-face).

Meyers and Wilemon (1989) also found that informal communication is more significant than formal communication in transferring learning. 62




from Moorman and Miner (1998). They operationalized improvisation as acting and planning simultaneously during a product development project.

Unlearning There have been a number of studies showing how groups unlearn; especially how they change their beliefs. However, an accepted way to operationalize unlearning at the new product development team level has yet to emerge. Since many new product developments typically are in a group or team, and unlearning is thought of as belief change in groups, we then operationalized new product team unlearning as belief changes during the new product projects. The specific measurement items were modified from the scholarship on group belief change (e.g. Croker et al., 1984; Weber and Crocker, 1983; Walsh and Charalambides, 1990) in a new product development context. Unlearning was operationalized as belief changes in new product development teams that occurs based on the perception of markets, technologies, and product development processes. We asked four questions to assess team unlearning.

Intelligence At the new product development team level, there is yet no clear operationalization of team intelligence. In this sense, we modified the construct used by McMaster (1996) at the organizational level to new product development teams, including ability and capability of the team to gather, transfer and use information during the NPD process. We thus asked four questions to assess NPD team intelligence. Sensemaking Sensemaking in new product development teams is developing a common grammar (Weick, 1979) or processing information and coding it (Moorman, 1995). Teams organize cues and messages gathered from the environment into meaningful patterns for sense making. In this logic, we asked three questions adapted from Davenport and Prusak (1998) and Moorman (1995), including: coding and sorting information collected by the team, and organizing market and technical information.

Thinking Thinking has been studied at the individual level for centuries; however, it has yet to be operationalized at the new product development level. Thinking covers three kinds of intellectual activities, including problem solving, decision making, and brainstorming (Galotti, 1989). Galotti (1989, p. 331) noted that decision making refers to an assessment and choice of alternatives; problem solving refers to people's behavior when confronted with a situation that required insight to solve; and brainstorming refers to the generation of ideas used to solve problems. Using this framework, we asked four questions to assess NPD team thinking: (1) showing curiosity to understand customers' needs and wants; (2) identifying technical problems; (3) generating a large quantity of alternative solutions to overcome problems; and (4) considering the pros and cons of many alternatives.

Project outcomes For new product success (NPS), we used items developed by Cooper and Kleinschmidt (1987). We asked 12 questions to assess new product success, including: meeting or exceeding managerial, cost, profit, and technical expectations. Sampling To test the above hypotheses, a questionnaire was developed based on previous research (e.g. Moorman, 1995; Moorman and Miner, 1998; Lynn et al., 2000). After designing and refining the questionnaire, we selected a contact person in each of a variety of technology-based companies in the northeast of the USA to participate in this study. The selected projects should have been in the market at least six months. The targeted respondents were predominately product/project managers. The sample of respondents in this study was similar to samples used in prior studies on innovation (e.g. Ettli and Rubenstein, 1987; Larson and Gobeli, 1988; Rochford and Rudelius, 1992; Thamhain, 1990). We

Memory We adapted Moorman's (1995) constructs to measure memory ± skills and knowledge within the new product development teams ± by asking six questions. Improvisation We asked three questions to assess team improvisations. These constructs are adapted 63




correlations, one at a time, were restricted to unity. The fit of the restricted models was compared with that of the original model. As shown in Table IV, in total we performed 36 models ± 72 pairs of comparisons ± by using EQS 5.7 (Bentler, 1995). Chi-square change (2) in each model, constrained and unconstrained, were significant, which suggests that constructs demonstrate discriminant validity.

selected product/project managers as respondents because managers perceived things as better than they were due to their involvement and responsibility for project performance. For instance, Phillips and Bagozzi (1986) note that informants tend to provide more valid reports on issues directly related to their work roles. Also, our operationalization of constructs assesses the general structure of the team, which could be answered by a senior person or product/ project manager. For instance, team memory (skill and experience of team) or team thinking (decision making and problem solving, etc.) may have unbiased answers by senior people who see the whole picture of the project. Additionally, as Huber and Power (1985) note, simply averaging multi sources is less likely to be accurate compared to using a key informant. After we selected the respondents, each was informed that their responses would remain anonymous and their responses would not be linked to a company or product name. This approach increases the motivation of informants to cooperate without fear of reprisals (Huber and Power, 1985). Of the 157 contact people asked to participate, 124 completed and returned a questionnaire (79 percent response rate). Several industries were represented, including: telecommunications, computer and electronics, fabricated metal products, information services, pharmaceuticals, chemical manufacturing, food manufacturing, and machinery manufacturing.

Multi-dimensionality To assess the multi-dimensional structure of team learning, we performed the same procedures recommended by Anderson and Gerbing (1988) and Li and Cavusgil (1999). As shown in Table V, we performed ten confirmatory factor analysis (CFA) models to determine the dimensions of team learning through EQS 5.7 (Bentler, 1995). During the CFA analysis we used subscales or item parcels for confirmatory factor analysis instead of individual items, as recommended by Drasgrow and Kanfer (1985), and Schmit and Ryan (1993). These researchers noted that goodness-of-fit measures were affected when the number of items used to identify a small number of factors was relatively large. Consistent with this approach, two subscores or parcels for each scale were created, each consisting of a randomly divided subset of the items in the scale. The CFA produced a good fit with a normed fit index of 0.91, comparative fit index of 0.99, and goodness fit index of 0.92 (also: 2 = 84.99, p = 0.23, RMSEA = 0.031) for nine-factor model. Based on the results of dimensionality, multidimensionality, and the correlation matrix, which is shown in Table VI, we conclude that nine constructs of team learning are correlated but distinct, supporting H1.

Analysis Dimensionality An exploratory factor analysis was performed to assess the dimensions of nine constructs of team learning. The analysis used a principle component with a varimax rotation of all items with eigenvalues greater than 1.0. Table III shows rotated loadings for the nine factors. After performing the exploratory factor analysis, which is a useful technique for scale construction, a subsequent confirmatory analysis was conducted to assess the resulting scales, as suggested by Anderson and Gerbing (1988). A series of two-factor models recommended by Bagozzi et al. (1991) were estimated in which individual factor

Nomological validity Nomological validity of team learning measures was evaluated by linking nine constructs of team learning on new product success using a maximum likelihood (ML) structural equation model in EQS 5.7 (Bentler, 1995). During the analysis we used the parceled or subscored items for constructs due to the small sample size. Table VII demonstrated that each team learning construct and project outcome (i.e. success) factor loading was large and significant. 64




Table III Discriminant validity of construct measures actor rotation Constructs Information implementation (F1)

Thinking (F2)

Improvisation (F3)

Memory (F4)

Intelligence (F5)

Unlearning (F6)

Information acquisition (F7) Information dissemination (F8) Sensemaking (F9)

Items

F1

F2

F3

F4

F5

F6

F7

F8

F9

V1 V2 V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13 V14 V15 V16 V17 V18 V19 V20 V21 V22 V23 V24 V25 V26 V27 V28 V29 V30

0.64 0.75 0.84 0.85 0.04 0.13 0.21 0.19 0.23 0.17 0.08 0.06 ±0.03 0.08 0.15 0.15 ±0.05 0.28 0.26 ±0.01 0.02 0.09 ±0.09 0.32 0.29 0.03 0.06 0.16 ±0.07 0.16

0.12 0.13 0.24 0.19 0.74 0.82 0.76 0.75 0.15 0.05 0.4 0.02 0.03 ±0.06 0.19 0.12 0.02 0.28 0.22 ±0.16 ±0.02 0.04 0.06 0.31 0.17 0.21 0.04 0.24 ±0.12 0.30

0.10 0.14 0.10 0.19 0.10 ±0.02 0.06 0.11 0.80 0.82 0.83 ±0.41 ±0.21 ±0.09 0.18 0.07 0.27 ±0.06 ±0.06 ±0.07 ±0.12 0.13 0.48 0.10 0.01 0.15 0.08 ±0.06 0.05 0.03

0.06 0.07 0.02 0.13 0.05 0.03 0.12 ±0.04 ±0.12 ±0.08 ±0.02 0.55 0.84 0.87 0.68 0.12 0.16 0.03 ±0.09 0.05 0.02 ±0.14 0.03 0.04 0.14 ±0.12 0.06 0.31 0.10 0.11

0.21 0.12 0.10 0.22 0.20 0.16 0.02 0.19 0.05 0.03 0.07 ±0.12 0.02 0.10 0.06 0.71 0.70 0.77 0.75 ±0.05 0.01 0.03 0.05 0.09 0.14 0.05 0.07 0.15 0.08 0.15

±0.19 ±0.09 0.18 0.15 ±0.17 0.05 0.04 0.02 ±0.03 0.08 0.05 0.18 0.08 ±0.11 ±0.12 0.11 0.22 ±0.11 ±0.13 0.73 0.81 0.79 0.67 0.04 ±0.06 ±0.07 ±0.02 0.11 0.14 ±0.08

0.39 0.28 0.17 ±0.01 0.25 0.21 ±0.10 0.17 ±0.14 0.14 0.14 0.38 0.23 ±0.11 0.03 0.32 0.24 ±0.12 ±0.04 ±0.01 0.003 0.003 ±0.09 0.77 0.69 0.01 ±0.08 0.03 0.01 0.36

0.03 0.13 0.02 ±0.02 0.15 0.06 0.07 0.03 ±0.08 0.25 0.14 0.16 0.02 ±0.1 ±0.15 ±0.03 ±0.13 0.10 0.12 ±0.10 ±0.09 0.09 0.03 ±0.04 ±0.09 0.83 0.89 0.10 ±0.12 0.01

±0.11 0.10 0.03 0.09 0.03 0.14 0.12 0.02 0.13 0.14 ±0.13 0.14 0.11 0.05 0.20 0.19 ±0.05 0.12 0.09 0.29 ±0.01 0.03 ±0.04 0.08 0.14 ±0.11 0.03 0.57 0.81 0.64

Overall, the model produced good fit indices, providing an adequate model fit. To asses H2, the multi-dimensional model was compared with the unidimensional model (i.e. all factor items combined into one variable). As shown in Table VIII, the unidimensional model produced less significant indices than the multi-dimensional model. The multi-dimensional model of team learning offered a more robust explanation of new product success than the unidimensional organizational learning model, supporting H2.

thinking, unlearning, intelligence, improvisation, sensemaking, and memory. Further, we empirically showed that the multi-dimensionality of team learning provides a better explanation of its impact on NPD success vs. a one-dimensional construct of team learning. These findings indicate that team learning is not just information acquisition or information implementation, it is a combination of many cognitive components. Team learning thus should not be explained by reducing its scope to one or two elements, unless only those constructs are of interest. Virkkunen and Kuutti (2000), for instance, use an analogy of water to explain the multidimensionality of a construct, which they adapted from Vygotsky. They note that we cannot learn much about water's ability to extinguish fire by studying separately its constituent elements of oxygen and hydrogen. Oxygen is needed for burning and hydrogen is

Discussion In this study, we demonstrated that team learning can be classified by distinct but correlated socio-cognitive constructs, such as information acquisition, information dissemination, information implementation, 65




Table IV Discriminant analysis of the construct measures Unconstrained (2 df)

Constrained (2 df)

2

28.11/19 32.23/13 33.5/19 45.85/19 39.35/19 6.72/8 7.57/8 26.07/13

43.47/20 46.86/14 38.18/20 70.35/20 53.58/20 17.56/9 12.69/9 32.16/14

15.36 14.63 4.68 24.5 14.23 10.84 5.12 6.09

28.8/13 40.38/19 38.17/19 38.87/19 13.09/8 14.85/8 22.40/13

43.52/14 56.17/20 70.03/20 69.28/20 27.39/9 46.06/9 29.42/14

14.72 9.79 32.86 30.41 14.3 31.21 7.32

36.44/13 10.38/13 26.38/13 9.94/4 4.65/4 6.52/8

48.97/14 36.14-14 48.11/13 18.61/5 19.43/5 31.11/9

12.53 25.76 21.73 8.67 14.78 24.59

intelligence (F5) unlearning (F6) information acquisition (F7) uInformation dissemination (F8) sensemaking (F9)

23.80/19 23.94/19 37.55/8 13.09/7 45.49/13

31.21/20 30.51/20 42.26/9 19.88/8 53.32/14

7.41 6.57 4.71 6.79 7.83

vs. vs. vs. vs.

37.02/19 11.97/8 16.35/8 14.71/13

51.22/20 40.14/9 26.92/9 22.88/14

14.20 28.17 10.57 8.17

8.54/8 5.82/8 13.37/13

23.01/9 11.14/9 27.76/14

14.56 5.32 14.39

2.41/1 4.53/4 3.05/4

7.59/2 13.03/5 12.61/5

5.81 8.5 9.56

Constructs Information Information Information Information Information Information Information Information Thinking Thinking Thinking Thinking Thinking Thinking Thinking

implementation (F1) vs. thinking (F2) implementation (F1) vs. improvisation (F3) Implementation (F1) vs. memory (F4) implementation (F1) vs. intelligence (F5) implementation (F1) vs. unlearning (F6) iImplementation (F1) vs. information acquisition (F7) implementation (F1) vs. information dissemination (F8) implementation (F1) vs. sensemaking (F9)

(F2) (F2) (F2) (F2) (F2) (F2) (F2)

vs. vs. vs. vs. vs. vs. vs.

Improvisation Improvisation Improvisation Improvisation Improvisation Improvisation Memory Memory Memory Memory Memory

(F4) (F4) (F4) (F4) (F4)

Intelligence Intelligence Intelligence Intelligence

improvisation (F3) memory (F4) intelligence (F5) unlearning (F6) information acquisition (F7) iInformation dissemination (F8) sensemaking (F9)

(F3) (F3) (F3) (F3) (F3) (F3)

vs. vs. vs. vs. vs.

(F5) (F5) (F5) (F5)

vs. vs. vs. vs. vs. vs.

memory (F4) intelligence (F5) unlearning (F6) information acquisition (F7) information dissemination (F8) sensemaking (F9)

unlearning (F6) information acquisition (F7) information dissemination. (F8) sensemaking (F9)

Unlearning (F6) vs. information acquisition (F7) Unlearning (F6) vs. information dissemination. (F8) Unlearning (F6) vs. sensemaking (F9) Information acquisition (F7) vs. information dissemination. (F8) Information acquisition (F7) vs. sensemaking (F9) Information dissemination (F8) vs. sensemaking (F9) Note: All 2 are significant at p < 0.05 level

Table V Fit indices for the multidimensional structure of team learning and competing models Models Null One factor Two factors Three factors Four factors Five factors Six factors Seven factors Eight factors Nine factors

2

df

2/df

NFI

NNFI

CFI

656.48 619.48 598.43 508.815 436.664 372.44 208.752 231.361 113.72

135 134 132 129 125 120 114 107 99

4.86 4.63 4.53 3.94 3.49 3.1 2.01 1.95 1.15

0.381 0.417 0.436 0.521 0.589 0.649 0.736 0.782 0.89

0.349 0.39 0.405 0.504 0.58 0.646 0.754 0.804 0.98

0.426 0.466 0.487 0.582 0.657 0.722 0.817 0.863 0.98

66




Table VI Correlation matrix and descriptive statistics 1 1 2 3 4 5 6 7 8 9 10

New product success Information acquisition Information implementation Team memory Team thinking Team intelligence Team improvisation Team unlearning Team sensemaking Information dissemination

Mean Standard deviation Notes: *p < 0.1;

**

p < 0.05,

***

2

3

4

(0.97) 0.31*** (0.82) 0.48*** 0.54*** 0.32*** 0.20** 0.29*** 0.48*** 0.28*** 0.31*** 0.09 0.15 -0.12 ±0.04 0.28*** 0.33*** 0.13 0.05

(0.86) 0.19** 0.46*** 0.46*** 0.26*** 0.07 0.25*** 0.14

(0.76) 0.18** 0.15* ±0.21** ±0.07 0.42*** ±0.07

5.54 3.26

6.04 2.33

6.95 2.15

5

5.95 2.27

6

8

9

10

(0.84) 0.39*** (0.79) 0.23*** 0.21** (0.86) 0.03 0.06 0.29*** 0.36*** 0.26*** 0.06 0.24*** 0.16* 0.31***

(0.79) 0.09 0.02

(0.62) ±0.06

(0.78)

6.81 1.88

5.29 2.39

5.07 2.23

6.42 2.33

6.11 2.07

7

5.63 2.57

p < 0.01; alpha coefficients are shown in parentheses on diagonal

Table VII EQS measurement model results Constructs

Parcels

Construct loadings

Information implementation (F1)

P1 P2 Thinking (F2) P3 P4 Improvisation (F3) P5 P6 Memory (F4) P7 P8 Intelligence (F5) P9 P10 Unlearning (F6) P11 P12 Information acquisition (F7) P13 P14 Information dissemination (F8) P15 P16 Sensemaking (F9) P17 P18 Success (F10) P19 P20 2 Notes: = 147.52; df = 125, NFI = 0.89, CFI = 0.98, GFI = 0.90, RMSEA = 0.038

2/df

Unidimensional Multi-dimensional

710.332/169 147.152/125

P

NFI

CFI

GFI RMSEA

0.0 0.45 0.51 0.64 0.13 0.89 0.98 0.90

± 10.90 ± 9.04 ± 7.61 ± 6.28 ± 6.93 ± 4.41 ± 7.55 ± 4.18 ± 2.94 ± 7.99

implement, unlearn, and retrieve information to increase the probability of product development success.

Table VIII Fit indices for unidimensional and multi-dimensional models Model

1.0 0.91 1.0 1.10 1.0 1.31 1.0 0.85 1.0 0.83 1.0 1.54 1.0 0.74 1.0 0.81 1.0 1.80 1.0 0.66

t-value

0.161 0.038

Managerial implications

an explosive gas. We thus need an integrating unit of analysis. To that end, during the product development process, teams should explicitly and seriously consider these factors to be more successful. Team should have the ability and capability to acquire, process,

Since team learning requires a combination of cognitive elements, top managers should consider the cognitive factors during the NPD process. In this vein, a systematic design of team cognition is recommended for an 67




(1998) investigated team learning from the perspective of memory, improvisation, and information processing. Lynn et al. (2000) studied team learning from the perspective of information acquisition and implementation. However, team thinking (manipulating team memory), unlearning, and intelligence are not extensively studied in NPD literature. Questions such as, how can teams think or reason? What are the facilitating factors for team thinking? How does team thinking impact project outcomes? How can we create an intelligent team? What are the antecedents and consequences of team intelligence? How do teams unlearn? What are the antecedents and consequences of team unlearning? When is team unlearning important? Another promising area is that the application of team learning constructs can vary over different stages of the product development process, different environmental conditions and innovation types. For instance, we do not know which constructs are vital in the pre-development, development, testing, and commercialization stages. In future studies, a ``path analysis'' can also be established by using these constructs. For instance, how thinking, memory, unlearning, and intelligence impact sensemaking, or are interwoven relations among these factors.

effective product development process. Top managers can facilitate conditions for better team learning and cognition. For instance, for effective team memory, top management may create an information recording, filing, documenting, and reviewing system as well as promoting a ``transactive memory'' system[1] on the team. For effective team unlearning, especially under turbulent conditions, managers could promote cross-team communication, team experimentation, and change the team's routines or product development plans. For effective team sensemaking (i.e. people can understand and internalize information and knowledge), management can form small groups to code and cluster information into topics, sources, types and importance levels (Garvin, 1997). Then, these information clusters might be entered into a central database which everybody could easily access (Garvin, 1997). For effective information acquisitions and implementation, management can form a knowledge team to monitor and capture this information. Schein (1993) suggested a ``transition group'' and Rothberg (1999) mentioned a ``shadow team'' that monitors external environments to capture information about customers and competitors, and integrates intelligence to create new learning. There could be a person known as a linking pin (gatekeeper) between the new product team and the knowledge team. In this way, team members could obtain current external information. For effective team thinking, managers can promote usage of scenarios, what/if analyses, and facilitate communication and dialogue within and outside of the team. Finally, effective team intelligence can be improved by considering team member personalities to give a project the appropriate mix by providing support and motivation from top management.

Conclusion This research tried to make three contributions to the literature. First we organized the literature on team learning into several socio-cognitive constructs, such as information acquisition, information dissemination, information implementation, thinking, unlearning, intelligence, memory, sensemaking and improvisation. Second, we found that nine cognitive factors are correlated but distinct and the multidimensionality of team learning has more power to explain team performance and project outcome. Third, we applied a new research area to new product development teams called ``cognition and epistemology''. Since the literature on innovation is broad, the importance of social cognition and social epistemology may become an important topic in new product development.

Future research This research triggers the need for more research in new product development literature regarding team learning. Though many scholars have investigated learning, memory and improvisation in new product development, there is still a great deal we do not know about thinking, unlearning and intelligence in new product development teams. For instance, Moorman and Miner 68




Attitudinal Judgment, Springer-Verlag, New York, NY. Cyert, R.M. and March, J.G. (1963), A Behavioral Theory of the Firm, Prentice-Hall, Englewood Cliffs, NJ. Drasgow, F. and Kanfer, R. (1985), `Èquivalence of psychological measurement in heterogeneous populations'', Journal of Applied Psychology, Vol. 70, pp. 662-80. Davenport, T.H. and Prusak, L. (1998), Working Knowledge: How Organizations Manage What They Know, Harvard Business School Press, Boston, MA. Dixon, N.M. (1992), `Òrganizational learning: a review of literature with implications for HRD professionals'', Human Resource Development Quarterly, Vol. 3, pp. 29-49. Dougherty, D., Borrelli, L., Munir, K. and O'Sullivan, A. (2000), ``Systems of organizational sensemaking for sustained product innovation'', Journal of Engineering and Technology Management, Vol. 17, pp. 321-55. Edmondson, A. (1999), ``Psychological safety and learning behavior in work teams'', Administrative Science Quarterly, Vol. 44, pp. 350-83. Eisenhardt, K.M. and Tabrizi, B.N. (1995), `Àccelerating adaptive processes: product innovation in the global computer industry'', Administrative Science Quarterly, Vol. 40, pp. 84-110. El Sawy, O.A., Gomes, G.M. and Gonzalez, M.V. (1986), ``Preserving institutional memory: the management of history as an organizational resource'', Academy of Management Best Paper Proceedings, Vol. 37, pp. 118-22. Ettlie, J.E. and Rubenstein, A.H. (1987), ``Firm size and product innovation'', Journal of Product Innovation Management, Vol. 4, pp. 89-108. Flesch, R. (1951), The Art of Clear Thinking, Harper & Row, New York, NY. Fiske, S.T. and Taylor, S.E. (1991), Social Cognition, McGraw-Hill, New York, NY. Galotti, K.M. (1989), `Àpproaches to studying formal and everyday reasoning'', Psychological Bulletin, Vol. 105, pp. 331-51. Garvin, D.A. (1993), ``Building a learning organization'', Harvard Business Review, Vol. 71, pp. 78-91. Garvin, D.A. (1997), Putting the Learning Organization to Work: Case Study of US Army, video, Harvard Business School, Boston, MA. Glynn, M.A. (1996), `Ìnnovative genius: a framework for relating individual and organizational intelligence to innovation'', Academy of Management Review, Vol. 21, pp. 1081-1111. Goldman, A.L. (1986), Epistemology and Cognition, Harvard University Press, Boston, MA. Grant, R.M. (1996), ``Prospering in dynamicallycompetitive environments: organizational capability as knowledge integration'', Organization Science, Vol. 7, pp. 375-87. Gupta, A.K., Raj, S.P. and Wilemon, D. (1986), `À model for studying R&D marketing interface in the product innovation process'', Journal of Marketing, Vol. 50, pp. 7-17. Hedberg, B. (1981), ``How organizations learn and unlearn'', in Nystrom, P.C. and Starbuck, W.H. (Eds), Handbook of Organizational Design, Vol. I, Oxford University Press, Oxford.

Note 1 Wegner (1987), defines ``transactive memory'' as using people as a memory aid.

References Ancona, D.G. (1990), `Òutward bound: strategies for team survival in an organization'', Academy of Management Journal, Vol. 33, pp. 334-65. Ancona, D.G. and Caldwell, D.F. (1992), ``Bridging the boundary: external activity and performance in organizational teams'', Administrative Science Quarterly, Vol. 37, pp. 634-65. Anderson, J.C. and Gerbing, D.W. (1988), ``Structural equation modeling in practice: a review and recommended two-step approach'', Psychological Bulletin, Vol. 103, pp. 411-23. Argote, L. (1999), Organizational Learning: Creating, Retaining and Transferring Knowledge, Kluwer Academic Publishers, Norwell, MA. Argyris, C. and SchoÈn, D.A. (1978), Organizational Learning: A Theory of Action Perspective, Addison-Wesley, Reading, MA. Audi, R. (1998), Epistemology: A Contemporary Introduction to the Theory of Knowledge, Routledge, New York, NY. Bagozzi, R., Yi, Y. and Phillips, L.W. (1991), `Àssessing construct validity in organizational research'', Administrative Science Quarterly, Vol. 36, pp. 421-58. Barrett, F.J. (1998), ``Creativity and improvisation in jazz and organizations: implications for organizational learning'', Organization Science, Vol. 9 No. 5, pp. 605-22. Bentler, P.M. (1995), EQS Structural Equations Program Manual, BMDP Statistical Software Inc., Los Angeles, CA. Brooks, A.K. (1994), ``Power and the production of knowledge: collective team learning in work organizations'', Human Resource Development Quarterly, Vol. 5, pp. 213-34. Cangelosi, V.E. and Dill, W.R. (1965), `Òrganizational learning: observation toward a theory'', Administrative Science Quarterly, Vol. 10, pp. 175-203. Cicourel, A.V. (1990), ``The integration of distributed knowledge in collaborative medical diagnosis'', in Galegher, J., Kraut, R. and Egido, C. (Eds), Intellectual Teamwork, Lawrence Erlbaum, Hillsdale, NJ. Cohen, W.M. and Levinthal, D.A. (1990), `Àbsorptive capacity: a new perspective on learning and innovation'', Administrative Science Quarterly, Vol. 35, pp. 128-52. Cook, S.D.N. and Yanow, D. (1993), ``Culture and organizational learning'', Journal of Management Inquiry, Vol. 2, pp. 373-90. Cooper, R.G. and Kleinschmidt, E.J. (1987), ``Success factors in product innovation'', Industrial Marketing Management, Vol. 16, pp. 215-23. Croker, J., Fiske, S.T. and Taylor, S. (1984), ``Schematic bases of belief change'', in Eiser, J.R. (Ed.),

69




Huber, G.P. (1991), `Òrganizational learning: the contributing processes and the literatures'', Organization Science, Vol. 2, pp. 88-115. Huber, G.P. and Power, D.J. (1985), ``Research notes and communications retrospective reports of strategiclevel managers: guidelines for increasing their accuracy'', Strategic Management Journal, Vol. 6, pp. 171-80. Hughes, G.D. and Chafin, D.C. (1996), ``Turning new product development into a continuous learning process'', Journal of Product Innovation Management, Vol. 13, pp. 89-104. Iansiti, M. (1995), ``Shooting the rapids: managing product development in turbulent environments'', California Management Review, Vol. 38 No. 1, pp. 37-58. Imai, K., Nonaka, I. and Takeuchi, H. (1988), ``Managing the new product development process: how Japanese companies learn and unlearn'', in Tushman, M. and Moore, W.L. (Eds), Readings in the Management of Innovation, 2nd ed., Harper, New York, NY. Jastrow, J. (1931), Managing your Mind, Grenlerger, New York, NY. Jay, D. (1991), Creativity, Creative Education Association, New York, NY. Kasl, E., Marsick, V.J. and Dechant, K. (1997), ``Teams as learners: a research-based model of team learning'', The Journal of Applied Behavioral Science, Vol. 33 pp. 227-46. Klimecki, R. and Lassleben, H. (1998), ``Modes of organizational learning: indications from an empirical study'', Management Learning, Vol. 29, pp. 405-30. Larson, E.W. and Gobeli, D.H. (1988), `Òrganizing for product development projects'', Journal of Product Innovation Management, Vol. 5, pp. 180-90. Larson, J.R. and Christensen, C. (1993), ``Groups as problem-solving units: toward a new meaning of social cognition'', British Journal of Social Psychology, Vol. 32, pp. 5-30. Levine, J.M. and Moreland, R.L. (1991), ``Culture and socialization in work groups'', in Resnick, L.B., Levine, J.M. and Teasley, S.D. (Eds), Perspectives on Socially Shared Cognition, American Psychological Association, Washington, DC. Li, T. and Cavusgil, S.T. (1999), ``Measuring the dimensions of market knowledge competence in new product development'', European Journal of Innovation Management, Vol. 2 No. 3, pp. 129-45. Low, G.S. and Mohr, J.J. (2001), ``Factors affecting the use of information in the evaluation of marketing communications productivity'', Academy of Marketing Science, Vol. 29 No. 1. Lynn, G.S., Reilly, R. and AkguÈn, A.E. (2000), ``Knowledge management in new product teams: practices and outcomes'', IEEE Transaction on Engineering Management, Vol. 47 No. 2, pp. 221-31. McKee, D. (1992), `Àn organizational learning approach to product innovation'', Journal of Product Innovation Management, Vol. 9, pp. 232-45. McMaster, M.D. (1996), The Intelligence Advantage: Organizing for Complexity, Butterworth-Heinemann, Newton, MA. Madhavan, R. and Grover, R. (1998), ``From embedded knowledge to embodied knowledge: new product

development as knowledge management'', Journal of Marketing, Vol. 62, pp. 1-12. Martin, L.L. and Clark, L.F. (1990), ``Social cognition: exploring the mental processes involved in human social interaction'', in Eysenck, M.W. (Ed.), Cognitive Psychology: An international Review, Willey, Hillsdale, NJ. Meyers, P.W. and Wilemon, D. (1989), ``Learning in new technology development teams'', Journal of Product Innovation Management, Vol. 6, pp. 79-88. Moorman, C. (1995), `Òrganizational market information processes: culture antecedents and new product outcomes'', Journal of Marketing Research, Vol. 32, pp. 318-35. Moorman, C. and Miner, A.S. (1997), ``The impact of organizational memory on new product performance and creativity'', Journal of Marketing Research, Vol. 34, pp. 91-106. Moorman, C. and Miner, A.S. (1998), ``The convergence of planning and execution: improvisation in new product development'', Journal of Marketing, Vol. 62, pp. 1-20. Newstrom, J.W. (1983), ``The management of unlearning exploding the `clean slate' fallacy'', Training and Development Journal, Vol. 37, pp. 36-9. Nicolini, D. and Meznar, M. (1995), ``The social construction of organizational learning: conceptual and practical issues in the field'', Human Relations, Vol. 48, pp. 727-46. Nonaka, I. and Takeuchi, H. (1995), The Knowledgecreating Company: How Japanese Companies Create the Dynamics of Innovation, Oxford University Press, New York, NY. Nystrom, P.C. and Starbuck, W.H. (1984), ``To avoid organizational crises, unlearn'', Organizational Dynamics, Spring, pp. 53-65. Pentland, B. (1995), `Ìnformation systems and organizational learning: the social epistemology of organizational knowledge systems'', Accounting, Management and Information Technologies, Vol. 5 No. 1, pp. 1-21. Phillips, L.W. and Bagozzi, R.P. (1986), `Òn measuring organizational properties of distribution channels: methodological issues in the use of key informants'', Research in Marketing, Vol. 8, pp. 313-69. Posner, M.I. (1996), Foundations of Cognitive Science, 5th ed., MIT Press, Boston, MA. Preston, A. (1991), `Ìmprovising order'', in Mangham, I.L. (Ed.), Organization Analysis and Development, John Wiley & Sons, New York, NY. Purser, R.E., Pasmore, W.A. and Tenkasi, R.V. (1992), ``The influence of deliberations on learning in new product development teams'', Journal of Engineering and Technology Management, Vol. 9, pp. 1-28. Ray, W.S. (1967), The Experimental Psychology of Original Thinking, Macmillan, New York, NY. Rochford, L. and Rudelius, W. (1992), ``How involving more functional areas within a firm affects the new product process'', Journal of Product Innovation Management, Vol. 9, pp. 289-99. Rothberg, H.N. (1999), ``Fortifying strategic decisions with shadow teams: a glance at product development'', Competitive Intelligence Magazine, Vol. 2, pp. 9-11.

70




theory'', The International Journal of Organizational Analysis, Vol. 3, pp. 337-60. Crossan, M.M., Lane, H.W., White, R.E. and Klus, L. (1996), ``The improvising organization: where planning meets opportunity'', Organizational Dynamics, Vol. 20, pp. 20-35. Fiol, C.M. and Lyles, M.A. (1985), `Òrganizational learning'', Academy of Management Review, Vol. 10, pp. 803-13. Levine, J.M. and Resnick, L.B. (1993), ``Social foundations of cognition'', Annual Review of Psychology, Vol. 44, pp. 585-612. Resnick, L.B. (1991), ``Shared cognition: thinking as social practice'', in Resnick, L.B., Levine, J.M. and Teasley, S.D. (Eds), Perspectives on Socially Shared Cognition, American Psychological Association, Washington, DC. Weick, K.E. (1993), `Òrganizational redesign as improvisation'', in Huber, G.P. and Glick, W.H. (Eds), Organizational Change and Redesign, Oxford University Press, New York, NY.

Schein, E.H. (1993), ``How can organizations learn faster? The challenge of entering the green room'', Sloan Management Review, Winter, pp. 55-62. Schmit, M.J. and Ryan, A.M. (1993), ``The big five in personnel selection: factor structure in applicant and non-applicant populations'', Journal of Applied Psychology, Vol. 78, pp. 966-74. Senge, P. (1990), The Fifth Discipline: The Art and Practice of the Learning Organization, Doubleday, New York, NY. Sinkula, J.M. (1994), ``Marketing information processing and organizational learning'', Journal of Marketing, Vol. 58, pp. 35-45. Slater, S.F. and Narver, J.C. (1995), ``Market orientation and the learning organization'', Journal of Marketing, Vol. 59, pp. 63-74. Sternberg, R.J. (1985), `Ìmplicit theories of intelligence, creativity, and wisdom'', Journal of Personality and Social Psychology, Vol. 49 No. 3, pp. 607-27. Thamhain, H.J. (1990), ``Managing technologically innovative team efforts toward new product success'', Journal of Product Innovation Management, Vol. 7 No. 1, pp. 5-18. Tidd, J. (1997), ``Complexity, networks and learning: integrative themes for research on innovation management'', International Journal of Innovation Management, Vol. 1, pp. 1-21. Virkkunen, J. and Kuutti, K. (2000), `Ùnderstanding organizational learning by focusing on activity systems'', Accounting, Management and Information Technologies, Vol. 10, pp. 291-319. Walsh, J.P. and Ungson, G.R. (1991), `Òrganizational memory'', Academy of Management Review, Vol. 16 No. 1, pp. 57-91. Walsh, J.P. and Charalambides, L.C. (1990), `Ìndividual and social origin of belief structure change'', The Journal of Social Psychology, Vol. 130 No. 4, pp. 517-32. Weber, R. and Crocker, J. (1983), ``Cognitive processes in the revision of stereotypic beliefs'', Journal of Personality and social Psychology, Vol. 45 No. 5, pp. 961-77. Wegner, D.M. (1987), ``Transactive memory: a contemporary analysis of the group mind'', in Mullen, B. and Goethals, G.R. (Eds), Theories of Group Behavior, Springer-Verlag, New York, NY. Weick, K.E. (1979), The Social Psychology of Organizing, 2nd ed., Addison Wesley, Reading, MA. West III, G.P. and Meyer, G.D. (1997), ``Communicated knowledge as a learning foundation'', The International Journal of Organizational Analysis, Vol. 5, pp. 25-58. Williams, W.M. and Sternberg, R.J. (1988), ``Group intelligence: why some groups are better than others'', Intelligence, Vol. 12, pp. 351-77.

Appendix. Measures We will use a Likert scale (0 = strongly disagree to 10 = strongly agree) and list, the survived items after the exploratory factor analysis. (1) Information acquisition: . The team did an outstanding job discovering technical shortcomings of this product. . The team did an outstanding job discovering manufacturing shortcomings. (2) Information implementation: . Overall, the market perceived this product had fewer problems than what was considered normal in the industry. . Most of the lessons learned pre-launch were incorporated into the product for full-scale launch. . Overall, the team did an outstanding job uncovering product problem areas with which customers were dissatisfied. (3) Intelligence: . During the project, the team had the ability to transfer customer needs to product design specifications. . During the project, the team had the ability to generate different market and technology scenarios. . During the project, the team had the ability to gather information from different functions within our organization.

Further reading Crossan, M. and Sorrento, M. (1997), ``Making sense of improvisation'', in Walsh, J.P and Huff, A.S. (Eds), Advances in Strategic Management, Vol. 14, pp. 155-80. Crossan, M.M., Lane, H.W., White, R.E. and Djurfeldt, L. (1995), `Òrganizational learning: dimensions for a

71




During the project, the team had the capability to gather information from outside of the organization (e.g. customers, vendors suppliers, libraries, consultants, etc.) (4) Unlearning. The team's beliefs changed what they were from pre-prototyping to postlaunch regarding: . The features customers demanded. . The features that were technically possible. . The rate of technological improvements. . The new product development process needed. (5) Memory: . There was a well-defined procedure for developing this product. . There was a well-defined procedure for commercializing this product. . There was an abundance of knowledge readily available on how to commercialize this product. . There were adequate skills on the team to commercialize this product. (6) Improvisation: . The team figured out the new product development process as it went along vs. following a rigid, well-defined plan. . The team improvised in developing this product vs. strictly following the plan. . The team improvised in commercializing this product vs. strictly following the plan. (7) Thinking: . Team members generated an abundance of alternative solutions to overcome problems encountered during the project. . Team members considered pros and cons of many alternative solutions before selecting an appropriate course of action. . During the project, team members were extremely curious about

understanding customers' needs and wants. . During the project, team members were extremely curious about identifying technical problems (e.g. product performance shortcoming, cost overruns, etc.). (8) Sensemaking: . Information collected by the team (e.g. test results) was coded and sorted to be understood easily by other team members. . Market information was organized in meaningful ways. . Technical information was organized in meaningful ways. (9) Information dissemination: . Team members conducted frequent informal communications at the water cooler/coffee maker with fellow project team members. . Team members conducted frequent informal communications at lunch or after work with fellow project team members. (10) New product success: This product: . Met or exceeded volume expectations. . Met or exceeded sales dollar expectations. . Met or exceeded the first year number expected to be produced and commercialized. . Met or exceeded overall sales expectations. . Met or exceeded profit expectations. . Met or exceeded return on investment expectations. . Met or exceeded senior management expectations. . Met or exceeded market share expectations. . Met or exceeded customer expectations.

.

72

Introduction

Innovation management education for multicultural organisations: challenges and a role for logistics

In an increasingly globalised world, organisations have to face the challenges of managing cultural diversity both within and outside national borders. In the first case, the pressing need for equal opportunities and positive action to ensure the representation of women, ethnic minorities, immigrants and other cultural groups in organisations have been leading to a shift in organisational structures in order to adapt to new affirmative policies geared to ensuring cultural diversity and cultural representation. In the second case, on an international dimension, the blurring of borders and the increasing transnationalisation of organisations have meant, among other things, that managers and staff in general have been moving more frequently to cultural environments different to their own. The relevance of managing cultural diversity for business was highlighted at the recent Cimeira Conference held in Rio de Janeiro in June 1999, which brought together 48 heads of states and governments from Latin America, the Caribbean and the European Union. In their formal declaration, DeclaracËaÄo do Rio de Janeiro, the Cimeira Conference participants expressed their aims and views, which clearly emphasised the need for awareness of distinct cultural values which underpin economic moves and strategies. It is worthwhile pointing out some of those views, particularly relevant in the context of our discussions: ``We, heads of state and of governments of the European Union, Latin America and the Caribbean, have decided to promote and develop our relationships . . . on the basis of our immense cultural heritage and cultural expressions which have produced our vigorous and multiple identities, as well as the will to create an international scenario where the levels of well-being of our societies and of their sustainable development in the face of an increasingly globalised world can be

Alberto G. Canen and Ana Canen The authors Alberto G. Canen is a Professor in the Department of Production Engineering at COPPE/Universidade Federal do Rio de Janeiro, Rio de Janeiro, Brazil. Ana Canen is a Senior Lecturer in the Faculty of Education at the Universidade Federal do Rio de Janeiro, Rio De Janeiro, Brazil. Keywords Innovation, Management development, Cultural synergy, Logistics Abstract This paper aims to discuss ways for fostering innovation management and innovation in management education sensitive to cultural diversity. It explores strands in the literature concerning cross-cultural awareness and undertakes a case study, carried out in a multicultural organisation, aimed at pinpointing challenges faced by managers working in such environments. Argues that logistics could help understanding, sensitising and taking into account cultural diversity in management education. Also claims that cultural plurality is an asset, rather than a constraint. The article concludes by suggesting possible ways ahead in the development of culturally sensitive managers in an increasingly globalised but also highly multicultural world.

Electronic access

The authors would like to thank AndreÂ Cordeiro, Charles O'Nan and Richard W.A. Keech ± directors of TBG ± for their willingness to participate in this study, as well as their crucial contribution to it. Also, many thanks to JoaÄo Arquimedes C. da Silva, human resource manager of TBG, who paved the way for the development of the case study. Last, but not least, the authors are grateful to the anonymous journal reviewers, for their comments and suggestions.

The research register for this journal is available at http://www.emeraldinsight.com/researchregisters The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm European Journal of Innovation Management Volume 5 . Number 2 . 2002 . pp. 73±85 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060210428177

73

Innovation management education for multicultural organisations


Alberto G. Canen and Ana Canen

consequence, managers should be prepared to act as transforming agents within a multicultural environment. Innovation management sensitive to cultural diversity should, therefore, demand innovation in management education equally geared towards fostering deeper cultural appreciation. That, we argue, should require more than mere training of cultural competencies. It would demand a multicultural, holistic approach to intercultural competence, so as to foster commitment towards equity oriented organisational strategies. In this sense, the university should be a privileged arena for such an approach, challenging racist and other biased perceptions towards cultural differences and promoting ethical values of tolerance and appreciation of cultural plurality. In order to develop the argument, first the paper focuses on the main strands detected in recent studies involving management and cultural diversity, drawing out implications for management education. It focuses particularly on the partnership between universities and organisations so as to establish a realistic link between the logistics which is taught and the logistics in demand by the job market (Canen, 1998). It then describes a case study carried out in a Brazilian multicultural organisation, which depicts the challenges involved in its cultural approach and the needs for management education according to its directors' perceptions. It concludes by stressing the need for fostering multicultural management education and logistics in an increasingly global and multicultural scenario.

achieved . . .'' (AgeÃncia Brasil, 1999, paragraph 1). Also, it is stated that: ``. . . We commit ourselves to work towards plurality and diversity, without distinction of race, religion or gender so as to help build an open, tolerant and broad-looking society. . .'' (AgeÃncia Brasil, 1999, paragraph 54). In this sense, cultural awareness and the valuing of cultural plurality have been coming to the forefront of international business dealings. The fact that so many world leaders express such concerns may be a boost to increase research in the field of cultural diversity and strategies to deal with it. In fact, the need for the development of a cross-cultural approach may prove to be the cutting-edge for innovation management and organisational success in an increasingly multicultural scenario. Kandola and Fullerton (1998, p. 8) stress that: . . . diversity and differences between people can, and should, if managed effectively, add value to the organisation.

As argued by Canen and Canen (1999), an organic link between logistics and cultural diversity could represent a way for organisational success. Scott and Canen (1995) point out that logistics is a management process for ensuring continuing and smooth flow of goods, services and people. According to Goldsborough and Anderson (1994), logistics planning should be integrated into the company's strategic planning process to assist in planning activities ranging from site location to customer delivery programs. Canen and Canen (1999) claim that linking logistics to cultural diversity issues should move it to a new stage, providing organisations with sustained tools for dealing successfully with diverse cultural settings. The present paper aims to further debate in the area, seeking to detect ways for fostering innovation management and management education sensitive to cultural diversity. It points out that, even though the case for the importance of managing cultural diversity is being increasingly recognised, different strands, emphases and approaches to how it could be done in management and management education exist, which should be carefully considered. We suggest that such a relation should involve not only the recognition of cultural diversity, but also the need to challenge stereotypes and prejudices. As a

Multicultural management thinking Kandola and Fullerton (1998, p. 8) contend that the basic concept of managing diversity involves the idea that diversity consists of: . . . visible and non-visible differences, which will include factors such as sex, age, background, race, disability, personality and workstyle.

According to these authors: . . . it is founded on the premise that harnessing these differences will create a productive environment in which everybody feels valued, where their talents are being fully utilised and in which organisational goals are met.

74




In this line of argument, Kincheloe and Steinberg (1997) stress the point that multiculturalism represents the ways in which such diversity is taken into account: multiculturalism is, therefore, a concept which refers to the ways in which different areas and systems respond to cultural diversity. It seems that some main strands can be pinpointed in the literature dealing with management and cultural diversity. Canen and Canen (2001) have called them non-critical and critical multicultural strands. The non-critical one (also called a liberal multicultural approach) tends to emphasise responses to cultural diversity that improve organisational performance without challenging sociocultural stereotypes and exclusions. The idea is to tackle cultural plurality with either technical or human competencies in order to: create a cultural tolerant environment in the organisation; try to minimise disruptions and mismanagements due to cultural diversity ignorance; and optimise market profits, by offering an organisational image fitted to consumers' culturally diverse profiles. Jarratt (1999), for example, examines the challenges facing managers within larger organisations, looking at the management of diversity in terms of technical requirements, such as time scales, marketplaces, financial characteristics and the need for a mix between a centralised and a decentralised form, as well as for accountability and acceptance of change. In a more human version of this liberal approach to multicultural competencies, authors such as Richter (1998) describe the change, based on a case study at IBM's ``re-emergence from the ashes'', such as: getting rid of old job evaluation systems and salary grades, replacing them with a classification approach, linking compensation to performance, embracing diversity, increasing employee choices and responsibilities and using open, candid communication with employees. Also in this human approach, Milburn (1997) stresses the need for sensitivity to differing patterns of listening and interrupting behaviour among different groups, exhorting policies to be scrutinised for cultural assumptions. Zintz (1997), in the same vein, stresses the development of an organisational identity

geared towards the embracing of diversity within its workforce. In another technical version of the liberal approach to multicultural management, corporate culture is privileged in the analyses (as opposed to the emphasis in individual employees' cultural patterns). Robinson and Dechant (1997), for instance, claim that even though personnel diversity is important, it is hard to make it a ``compelling business case''. These authors point out that organisational optimisation of profits should move away from the inner organisational multicultural training of personnel and turn towards the cultural patterns of potential consumers. In this approach, Greenslade and Pickard (1991), for instance, list the goals of the cultural diversity programme prepared by a UK-based multinational, which emphasises the recruitment and development of coloured people and women as part of a culturally diverse workforce. Even though, at first sight, such an approach could be taken as an equal opportunities oriented one (to be commented on next), its intentions firmly put it in a liberal, multicultural strand. In fact, it states that this programme is due to the recognition of minority groups as ``key consumers'' of the company products, and the need to reflect the purchasing power of these groups in the employee population, rather than a means towards intercultural awareness and cultural empowerment of minority groups. In the same vein, Robinson and Dechant (1997) indicate that consequences of mismanagement of cultural diversity may include staff turnover, absenteeism, legal costs, and damage to the attraction and retention of good talent. They claim that market needs and demands are improved through the employment of those ``with culturally relevant backgrounds'' in the organisations. Even though the abovementioned authors do not specify what ``culturally relevant backgrounds'' mean and who is to judge such relevance, one may infer they refer to the cultural backgrounds of those who have purchasing power in the consumer market. A second strand in the literature concerning management and cultural diversity deals with a more critical approach to multiculturalism. It is interesting to note that such an approach is not homogeneous. Going beyond Canen and Canen (2001), we could divide the 75




people from different cultures can learn from each other. The word empowerment is brought to the centre, emphasising the need for a multicultural community in which all voices are heard and ethnocentric views challenged. Bartz (1990) defines the management of diversity as the understanding of differences among employees as an asset, stressing the need for the harnessing of those differences for the betterment of the organisation. It classifies diversity issues in five areas: organisational acceptance and commitment; understanding the concept of diversity and the attributes of subpopulations; work styles and motivation; development needs and career aspirations; and personal needs. In order for these to be achieved, they argue, more is needed than simply complying with national laws designed to ensure equality in employment, on-the-job treatment and promotion. Looking at both approaches, we could argue that both ± liberal multicultural and equal opportunities ± seem to be incomplete to provide innovation management sensitive to cultural diversity. The liberal, multicultural approach tends to view culturally diversity in terms of a sum of cultural diverse individuals (employees, consumers), targeting its strategies at developing tolerance and acceptance among them, as well as adaptation of the organisation to market demands. It tends to ignore or, at least, pay little attention to cultural identities and differences based on determinants such as race, gender disabilities and others. Even though an equal opportunities approach goes further towards sensitising managers to cultural differences and the need to challenge stereotypes and unequal power relations which legitimise certain groups to the detriment of others, its action is also limited. In opposition to the first strand, this approach tends to emphasise collective cultural identities based on race, gender, disabilities and others, to the detriment of understanding individual cultural identities as hybrid constructions, which are built on diversity rather than on a sole marker of identity. The intercultural approach, on the other hand, tries to view multicultural management as necessarily working on both levels of culturally diverse identity construction: the collective and the individual. It builds on the concept of hybridisation (McLaren, 2000), which stresses the fluidity of identity construction,

critical multicultural strand into two perspectives: (1) equal opportunities; and (2) intercultural perspective. Whereas in a liberal, multicultural strand, issues of stereotyping, discrimination and unequal cultural power relations are not targeted, they are the main focus in the equal opportunities approach to multicultural management. Kandola and Fullerton (1998) list the main characteristics of the equal opportunities strand: it concentrates on discrimination, it is perceived as an issue for minorities, it concentrates on the numbers of groups employed, it is seen as an issue to do with personnel and human resource practitioners, and it relies on positive action. In this view, managers are trained in attitudinal competencies related to: sensitivity to and valuing of alternative culturally diverse worldviews; challenging of stereotypes; and accepting representation of cultural and ethnic minorities in the organisational workforce. Even though such an approach goes further into questioning unequal power relations and promoting appreciation of cultural diversity and the need to challenge stereotypes and ethnocentrism, it is still perceived as problematic by many authors. Riccucci (1997), for example, examines the diversity programmes set up by both private and public sector organisations in the USA, following the equal opportunities approach determined by the ``Work Force 2000'' report. That report stressed the demographic shifts in the US workforce and made a strong case for organisations to embrace cultural diversity. However, as argued by Riccucci (1997), one of the mistakes of such diversity programmes as carried out by the organisations studied was focusing too narrowly on affirmative action and equal employment opportunities, and failing to look at the broader issues. Authors such as Chandler et al. (1998) also express their worries about the mistake of viewing cultural diversity solely in terms of affirmative action, to the detriment of the need for the development of management cross-cultural dimensions in the everyday life of companies, such as changing people's belief systems, affinity groups and councils within organisations. In this perspective, McMillen et al. (1997) view the organisation in terms of a learning environment in which 76




discussing and developing theoretical approaches and methodological strategies in order to prepare managers and future managers to deal with cultural diversity and challenge ethnocentric and stereotyped views related to cultural differences. It should be noted that even though the culturally diverse nature of societies and the increasing cultural interchanges inherent to the globalisation process may be starting to be widely recognised, the need for a multicultural management education in order to tackle cultural diversity effects on the organisation is still hard to come by. Canen and Canen (2001) developed an experiment in a higher education institution in which the lack of exposure to multiculturalism in the philosophies and strategies of management education courses became clear, despite the fact that management cross-cultural abilities are increasingly required in an increasingly multicultural world. Critical multicultural management education would imply the need to understand collective and individual factors in the construction of employees' cultural identities, as well as the relationships and conflicts between those culturally diverse identities and the organisational culture in which they act. Such an intercultural approach refuses to understand cultural competencies as a sum of separate abilities, but rather views competence as a holistic approach to management education, which takes into account those factors in a holistic, articulated framework. It views the globalisation processes and the marketoriented perspective as potentially bringing new opportunities for cross-cultural training, but is also sensitive to the exclusions it provokes on cultures and economies marginalised from cultural power. In this sense, cross-cultural competence is understood as the need to sensitise managers to cultural diversity and cultural power inequalities, equipping them critically to understand cultural links, interchanges and exclusions, so as to go beyond a market perspective, even though considering its existence. It does not deny the other perspectives: it tries to articulate them into a broader framework. Ways to promote innovation in management education delivery taking cultural diversity into account should involve a rethinking of curricular contents and

articulating group and individual identity markers. It tries to work out the tensions between those layers of identity, challenging stereotypes, valuing cultural diversity and taking into account individual, group and organisational cultural values. Next, we will expand on possible ways to boost an intercultural approach, through management education.

Implications for management education and logistics The strands of innovation multicultural management described above have differentiated consequences for multicultural management education. The liberal approach tends to reduce multicultural management education to the training of competencies, which do not take into account the whole picture of the required management competence for a multicultural world. Either in its more human version (targeted at the creation of a culturally tolerant organisational environment), or in its technical and marketoriented version (targeted at the optimisation of the organisational strategies and the market demands), the liberal multicultural approach fails to challenge cultural stereotypes and the process of construction of cultural differences. By limiting multicultural management education to multicultural training geared towards the immediate organisational environment and market forces and demands, it fails to provide managers with a broader and more critical view of cultural diversity. It therefore fails to instil attitudes and skills to face cultural diversity and cultural inequalities that go beyond the immediate organisational environment and the momentary and volatile market forces. In order to foster intercultural management awareness, a process of critical, multicultural management education would be necessary. Canen (1999) has discussed theoretical approaches and classroom implications of multiculturalism in the educational field. Canen and Grant (1999) have also analysed the extent to which educational policies in the Mercosul countries have been taking on board the tensions between globalised moves towards market-oriented competencies and the need to respond to local cultural diversity. Pushing the idea a little further, critical multicultural management education means 77




strategies. Henninger (1998) points out that issues such as globalisation and diversity should not be neglected in favour of the teaching of core business processes. On the contrary: they should be part of the core curriculum, rather than an add-on. In terms of strategies, he outlines encouraging students to think and write about diversity and their own identity; exposing them to diverse points of view; and allowing them to apply such knowledge. Coombs and Sarason (1998) state that many white, majority students have little awareness of their cultural roots, and propose a strategy of ``culture circles'' which, according to them, forces students to examine their ethnic, racial and geographic origin and be more open to the cultural components of identities and differences. Hames (1998) also outlines a model for a teaching exercise, intended for undergraduate human resource management (HRM) courses, about diversity and organisational culture, in which students gain greater awareness of the importance of understanding diversity than they do when taught through lectures alone. Figure 1 shows the main features of multicultural management thinking, as discussed in the present paper. Innovation management education, in a critical, intercultural approach, brings cultural awareness to the forefront, by involving students in their inner search for their own identity construction, and the way normalcy and difference are intertwined. More than essentialised concepts, normalcy and difference are constructed and can be put into perspective so as to build empathy and sensitivity to cultural plurality. This way,

discussions of real life situations faced by organisations dealing with cultural diversity, as well as the cultural circles referred to above, can be brought to the fore. Strategies suggested in training packages can be discussed in the light of the multicultural approaches they build on, looking for challenges as well as potentials for developing cross-cultural sensibilities in future managers. The scenarios and true stories presented in the guides developed by the UK Department of Trade and Industry (DTI, 1994), for instance, can represent starting points for discussions and research agendas geared to developing intercultural awareness in management education. Bringing these materials to the university (rather than confining them to a training perspective on the job) means that they are to be part of management education, to be deeply delved into, as opposed to being merely used for immediate success in the face of market demands. Logistics should have a strategic role in bringing cultural determinants to the forefront of management education. Due to its object of interest, logistics delivery can stress the extent to which cultural values embed its domestic and international dimensions. It is interesting to note that international logistics is more complex in this respect, because there are deep differences concerning languages, customs and laws, as already mentioned by Magee (1968). Even though recognising that greater awareness of ethnic, racial and geographic origin does not necessarily make students more open to others, these strategies geared towards sensitising them to cultural diversity

Figure 1 Multicultural management thinking: main features

78




agencies ± and representatives of the indigenous communities. That focus on preservation of cultural communities around the pipelines area, as well as the constitution of the company by culturally diverse organisations (as shown above), determined the relevance of using it as a case study so as to gauge the multicultural implications for cultural identity building and logistics implementation within the company, as well as the concept of competence identified by its directors. It is important to note that TBG is owned by culturally diverse organisations working together within its borders but otherwise competing very strongly among themselves in other activities away from the company itself. Its directors are not hired by TBG but are rather seconded by the companies which are shareholders in TBG. That would allow us to pinpoint links between management and cultural diversity, possible cultural discrepancies and commitments, as well as understand the extent to which cultural assumptions from the different companies' perspectives were being articulated to build a cultural identity for TBG. That scenario should be compared with the directors' views concerning the perceived needs for management education which takes into account the preparation of managers to act in increasingly multicultural companies, such as TBG.

and stereotype building and challenging can help open ways to achieve that aim.

Innovation management and management education requirements in a multicultural organisation This section examines the innovation management and management education requirements in a multicultural organisation, by studying the case of Transportadora Brasileira Gasoduto BolõÂvia-Brasil SA (TBG). In order to understand management competence as perceived by the directors of a multicultural company ± operationally understood as one which has people working in it from different cultural perspectives and has within its profile an exhibited focus towards valuing differentiated cultural communities ± a case study was carried out in TBG. According to its annual activities report (TBG, 1999), TBG owns and operates the Brazilian side of the Bolivia-Brazil Gas Pipeline, and started its commercial activities that year. It has around 180 employees. That is the biggest pipeline in Latin America, with 3,150km (557km in Bolivian territory and 2,593km in Brazilian territory), designed to transport 30 million m3 of natural gas per day. The company stocks are owned by Gaspetro (51 per cent), BBPP Holdings Ltd (29 per cent), British Gas, El Paso and BHP hold equal quotas), Transredes (12 per cent), 6 per cent belonging to the Bolivian pension funds, 3 per cent to Shell and 3 per cent to ESAE (Enron). Also, Shell and ESAE hold direct shares (4 per cent each). The gas pipeline covers a region responsible for 75 per cent of the Brazilian GNP; it crosses 135 municipalities and almost 5,000 properties. The company invests in the improvement of the quality of life in the communities located in the area crossed by the gas pipe, and this ``constitutes a priority issue for TBG'' (TBG, 1999). Also, according to its leaflet (TBG, 2000), 22 indigeneous villages located in a radius of up to 30km from the pipeline site have received support from the TBG to buy lands, build houses, health centres, schools and artesian wells. The Development Plan for the Indigenous People (DPIP) has been jointly elaborated by Funai (National Foundation for the Indigenous People), Ibama (Brazilian Institute for the Envirnoment) ± both Brazilian Government

The interviewing process The three directors of TBG interviewed were the superintendent director (S), the operations director (OP), and commercial and planning director (CP), respectively Brazilian, American and English. They were interviewed separately in their offices. The interviews were in-depth, following a semi-structured pattern with open questions, which allowed them to elaborate on the issues. The main topics revolved around: logistics in the organisation, perceived requirements for managers to act in the organisation, organisational cultural identity, cultural challenges, and management education. The logistics used by the organisation within its multicultural, highly complex structure was the first topic of the interview. However, from the interviews it became clear that TBG does not have a formal logistics department in its organisational structure, 79




despite having logistics activities. For the directors interviewed, the departments of purchasing, maintenance, transportation and third party handle logistics. That seems to be in keeping with recent research carried out by IMAM (1996) which showed that among 921 organisations in Brazil, only 29 per cent have a formal logistics area. Likewise, when asked about their perceived requirements for managers in the organisation, none of the answers pointed out any aspect related to cultural diversity. In fact, the answers talked about technical aspects, such as: ``deep knowledge of the process involved as well as the importance of the equipment'' (S), ``business person's skills'' (OP) and `àbility to manage and operate contracts'' (CP). That seems to confirm the idea that many executives do not seem to attach a significant role to sensitivity to cultural diversity as part of management competence. This way, neither logistics nor cultural diversity seem to be perceived as crucial for organisational management and management performance. However, the cultural differences of the companies involved and the need to take them into account to build a cultural identity to TBG were recognised by all the directors interviewed, even though their views concerning what cultural differences were and the ways in which cultural identity should be built have varied considerably. The following extracts should help clarify the point:

Elegance involves . . . transporting gas but also understanding that it is done by individuals, human beings . . . who have to have their ideas heard . . . it involves helping each other do their part, so as to help the companies involved grow. It has to do with ethical positions within the company. Moderation means good humour. For instance, in case there is a disagreement concerning some aspect those with good humour will be more likely to solve it than those who would rather, say, go to the tribunals to fight for it . . . Those are the bases for the construction of organisational culture. There are also others: the organisation . . . has a multilateral vision. It invests in having an interdisciplinary team. Those who understand about logistics have got to understand about maintenance, too. It also seeks a matrix approach. Beforehand, there used to be a manager in one area of the pipeline, another in another area, each one building his or her own systems. That was due to the fact that they had come from departmental cultures . . . How to tackle that problem? The organisation is one, seated in ``far away desks'' ± there are people in Campo Grande, others in other places . . . but now, the team responsible for buying is going to think together, to discuss matters. Beforehand, one of that team would discuss with the manager located there ± not now. Now they are a group of people, working together. It is also not the other way round ± where the centre determines everything ± a balance has been struck, which has not been easy at all. OP: TBG is a big new project in Latin America . . . it has attracted the best people from those companies, highly motivated and good. TBG is trying to keep that enthusiasm going. A comment that I hear is that we are doing more things than people are used to where they have come from . . . What I view is that Petrobras, which holds 51 per cent of the shares, views itself as an asset management group on behalf of Brazil. It does a good job. El Paso benefits for its shareholders. Both of them have got lots of the same priorities. Some of our partners, such as Enron, go in the direction of business focus, which is different from the others. Shell is a good partner. It is technical, rather than political. It tends to analyse things from the business point of view. All partners understand their jobs with different business interests, even though in the technical field there is no problem. Some challenges: for instance, on the surface, Brazil looks like using international standards, specifications, state of the art. However, down there the implementation is left to the local people. If they have good standards, it is fine. In the USA, if you set a policy, everyone is required to follow it; or else they lose their jobs. In our chain here, they have more flexibility to comply or not with those standards . . . One thing that is working well in El Paso is reengineering and downsizing, reducing people but investing in multiskilled technicians. We have a small number of people, getting smaller; therefore we cut out lots of non-productive work. At the same

S: All the companies which bring their cultures to TBG generally work with big machines. Here, however, there are other characteristics ± they have to get out of their ``mother'' perspectives, they have to conceive of other ways of working within this grouping of people from other companies, trying to search for something more adequate for the company . . . The mixture of those cultures is interesting, but it can be harming . . . We work with people who have been seconded and who, because of their cultures, could not understand the need for adjustment . . . particularly considering they know that eventually they are due to go back to their original company. So, how to build a cultural identity? . . . That is a difficulty. However, if people realise they are growing together as human beings then they are more likely to enter wholeheartedly in that miscegenation of cultures . . . The culture of the company is supported by some ideas. Basically there are three main principles: responsibility, elegance and moderation. Responsibility involves return to the shareholders, as well as a contribution to society in terms of contributing to generating quality of life for those with whom the company relates.

80




identity which ``works'' for the improvement of organisational performance. Answers from S and OP seem to focus more on technical and/or individual human aspects of organisational culture, whereas CP locates cultural diversity within a broader frame of reference on the lines of nationality, and historically constructed, group identity markers. In fact, as can be noted from the excerpts, S stresses the need to go beyond technical ``mother'' cultures so as to create a TBG culture, as well as working out between matrix and local management as technical requirements within the TBG cultural organisational identity. At the same time, he focuses on the human side of culture building, by invoking values which are within the main aims of the organisation (as also shown in the TBG leaflet) concerning responsibility, elegance and good humour with reference to individuals working at TBG. A more critical social concern is shown by reference to the social responsibility of the organisation towards the populations where the gas pipeline operates, which could be potentially a critical, intercultural concern, albeit not predominant in S's discourse. Multicultural aspects which relate more to technical diversity are more evident in OP: here, multiculturalism within the organisation is mainly perceived by reference to different cultural assumptions towards management skills, working habits, business or technically oriented approach to decision taking, downsizing of the company and Brazilian cultural views on conceiving and implementing technical decisions. Some common aspects between both S and OP refer to the trend for management to be multiskilled, although OP goes further in the way of invoking human aspects of empowerment of people working within the company, even though that empowerment is mostly viewed within a framework of maximising the organisational performance, rather than an equity-oriented approach to empowerment as claimed by more critical approaches to multiculturalism. As for CP, organisational culture is perceived in terms of the adjustments of the assumptions concerning the main aims attached to an organisation within a globalised world (more social in Petrobras, more profit-oriented in the case of the other seven companies involved), as well as the cultural assumptions of the groups of people

time, we empower people, we let them take decisions, they have got credit cards, for example, to buy whatever they think is needed. They are highly skilled technicians, who can do lots of work in all areas. This was good! The more training we put into it, the more valuable they have become. So even though they are expected to do more work, they are empowered, they have more freedom. We are in that direction in TBG . . . That is culturally good for Brazil . . . before you come to Brazil, there is cultural training about Brazilian culture, which can sometimes raise some prejudices. Here we work with Petrobras, which is not the same as the Brazilian culture, but it is part of it, and I can say that, from my experience, if I am here at 7 a.m. I already see people working. If needed, at 10 p.m. they also stay. I am very pleased. CP: The company brings together different cultures, different perspectives. Petrobras is the main shareholder and TBG has seven more component organisations ± all aggressive and competitive in the international market . . . Their main objective is to maximise the profits of the shareholders, in contrast to Petrobras, which has a more social intention. In the Chinese model, health is based upon two aspects ± yin and yang, the full and the empty, happiness and frustration, objectivity and emotion . . . Within the organisational culture, that means making the necessary adjustments so that both ± yin and yang ± both aspects, both kinds of perceptions within the organisation can be worked out. In other words: what is needed is to create a culture, which balances Petrobras' perceptions and the others'. TBG will arrive at that culture of its own . . . Challenges and clashes do occur. If I look at something with objectivity and the other one with emotion ± if I say that a project is not good, I will try to maintain my level of objectivity. However, metaphorically speaking, from the emotional point of view, within the social structure of Brazil, that project might indeed be needed, emotion is playing its necessary part . . . I should look at my values and at those of Petrobras, so as to arrive at a point of balance . . . In Brazil, the concept of consensus is very strong. This is a cultural aspect inherent to decision making here. A group, which is going to discuss matters, will try to reach a consensus, which is not the case in other parts of the globe, where decision making can be top-down. I did some courses before coming here. Learning through suffering, no! . . . If I had come to a Brazilian organisation without being aware of these aspects, both from my cultural point of view and from the Brazilian one, I would not have been able to solve many problems.

From the three above answers, it becomes evident that the multicultural nature of TBG is a relevant and complex dimension of its organisational management. It involves being sensitive to cultural assumptions and perspectives in order to build a cultural 81




involved, perceived as groups' identity markers rather than individuals. In fact, in CP's discourse, individuals' cultural perceptions are located within a national marker of group identity building, going beyond technical aspects or individuals' cultural frameworks. They have to do with cultural groups' historically constructed identity markers and worldviews, such as cultural groups' prevalence of objectivity or emotions, as well as the drive for consensus in decision making in opposition to a top-down approach prevalent in other cultural groups. Clashes are perceived to occur when such cultural assumptions and identity markers are not taken into account. Despite those differences, the three approaches to multiculturalism presented so far indicate the importance of cultural dimensions within organisational performance, as discussed in the first section. They also seem to point out the predominance of a liberal strand of multiculturalism, since they tend to focus on technical and human aspects of cultural diversity so as to optimise organisational performance, rather than challenge sociocultural stereotypes and asymmetrical relations as would be the case in the more critical strand of multiculturalism. We were also interested to know what their perceptions would be concerning management education, in the light of the previous answers. These were their opinions:

between ``mine'' and ``yours'' are changing. The student should perceive more of the ``chain'' than the ``limits''. OP: Managers should have skills important to a businessperson. The pipeline companies in the USA were monopolies; they had some similarities with Petrobras. With the deregulation of the pipelines, there is more competition and lots of prices dropped by half ± competition has been good. However, many things have to be done more efficiently. A lot of managers had to go through cultural change with deregulation, they have had to start thinking like a businessperson ± about costs, etc. CP: The basis should be cross-cultural . . . Brazilian culture is more linked to consensus building . . . In matrix management, we start creating consensus before the final decisions . . . In order for me to work there I had to understand my cultural background as well as those in which Brazilian culture operates, otherwise I would not be able to work there . . . In the university it is important to show students that cultures have different values. Students should have access to objective, cultural models whereby they can perceive the balance between objectivity and emotions within different cultural perspectives in the globe, as well as the relations between power and distance in decision-making patterns for those groups. I have attended many interesting and important intercultural courses and workshops . . . The important thing for students is to understand that they should not be closed within a cultural paradigm, they should be aware of the possibilities of exits from paradigms. Those exits should be possible when there is a will to perceive that differences exist, but they should not expect that the other side will change . . . They should also be prepared for the concept of globalisation. More and more organisations, like Petrobras, are expanding . . . There are international opportunities they should be prepared to face.

S: Brazil used to have two models of organisations: state ones and familial ones. Now with international capital, organisations are becoming more societal/transocietal. I am now in a societal company and this is rather new in our country. Even family organisations are starting to go into the market and offer shares to institutions and/or the public: they have to share their power. The manager of tomorrow cannot have a ``tunnel vision''. Future managers should have the opportunity to spend some time in a trainee programme within the organisations, so that they can actually have first-hand experience. TBG delegates part of its work to third party companies so half of the process carried out by the organisation is delegated to other agent companies. There are opportunities to place the students looking at both sides, which means that the students could learn from spending time in each. Borders are moving; now supplier and customer are more like a pair of co-operating companies than two different sides: one does what the other one needs. In our case, at each kilometre of the pipeline, there is a turbo compressor and I need an employee from the third party factory to act there. The limits

As shown in the three excerpts, different perspectives emerge, in line with each of the directors' views concerning the organisational culture and aims. In fact, OP considers that a cultural shift in management education is needed so as to take into account a market, business-oriented perspective. S understands what is needed in terms of a more holistic and interdisciplinary approach to management education within increasingly complex organisational structures. CP gives more weight to developing cultural awareness and flexibility so that organisational culture builds on cultural strengths and reciprocal cultural understanding, leading to effective decision making. However, it becomes clear that management education is perceived by the three interviewees as needing to take cultural 82




its consequences in organisations. They present a mathematical model for managing cultural diversity. As Canen and Canen (1999) suggest, logistics could help pave ways to link cultural diversity and strategies to foster a cross-cultural approach to management education and development. Even though, in our literature search, the links between management and cultural diversity could be pointed out, the link between logistics and cultural plurality does not seem to be prevalent, which indicates the need for further research in that area.

dimensions and a global, international approach into account. That represented a change with reference to the first answer referring to managers' perceived competence to act in the organisation, in which no cultural aspects were mentioned. That change could probably be explained in the light of the content of the rest of the interview, which mainly centred on the cultural aspects involved in the TBG organisational management and identity construction. Such a fact can arguably show the relevance of talking about cultural diversity so as to raise awareness to its implications in organisational management and management performance. It reinforces the case for logistics to take multiculturalism on board, as mentioned before. As can be noted from the last excerpts, the need to take cultural diversity into account in innovative management education is starting to be recognised in the context of multicultural organisations within a globalised world, such as the one in the case study. However, Kandola and Fullerton (1998, p. 68) argue, ``while training does have a very important role to play . . . there is a great risk that it is being used as a show-piece to tell the rest of the world: `Look, we're a diversity-oriented organisation!'. . .''. We have been arguing (Canen and Canen, 2001) that the university is a privileged arena for going beyond management training towards management education. Under this lens, instead of viewing sensitivity to cultural diversity as a sum of competencies, we move to regarding it as a holistic approach to competence. In other words: if competence is not the same as a sum of competencies, management education is preferred to management training. It is regarded as a long-running process, which goes beyond the immediate needs of organisations, incorporating a multicultural approach to curricular theories and practices in management education. In order to be innovative, organisations should arguably do more than just see to it that their staff work well together. They should not think going further would be unwarranted interference in the private lives of their employees. As a tool for optimising organisational performance, logistics is regarded by some as the last frontier. Authors such as Bhadury et al. (2000), for example, look at the effects of workforce diversity and

Conclusions The present paper has made a case for the importance of managing cultural diversity for business, as well as highlighting the centrality of multicultural management education for deeper cultural appreciation within an increasingly multicultural scenario. It has pinpointed non-critical and critical multicultural strands, contending that no neutrality is present in this territory. This way, when a technical and market-oriented approach is taken, competence is viewed as a sum of competencies aimed at taking into account cultural diversity within a technical framework. Likewise, when multicultural awareness is perceived as a human concession, strategies are viewed in a psychological framework: they focus on individual skills such as increasing listening capabilities. In a more critical, intercultural framework, on the other hand, the political representation and construction of cultural identities in the organisation are stressed. Building on a critical intercultural framework, we have argued that both non-critical and equal opportunity approaches offer a partial view of the links between cultural diversity and business. The focus on technical, human or political dimensions, taken in isolation, would reduce intercultural competence to a sum of competencies which will very likely fail to equip future managers to deal with cultural plurality as a multidimensional issue, which has to be faced with a multifocused lens. We have contended that a holistic approach to intercultural competence should be more effective towards that aim. We have also suggested that logistics could help understanding, sensitising and taking into 83




management education. It seems that multicultural competence should not be viewed merely as a technical, neutral territory. Also, it should not be viewed as a ``concession'' to people that are ``different'' from us. The need for viewing cultural diversity should not be dismembered from the need to view our universal condition of human beings in management education. At the same time, building an organisational cultural identity should not be viewed as a sum of bureaucratic, instated dimensions. Like a conductor who extracts order from differing musical instruments, cross-cultural management should aim to extract an organisational cultural identity, which builds on cultural diversity for its symphony. In turbulent times of economic and social upheaval, when so many doctrines rise and fall, those managers prepared to view their own cultural identities as part of the multicultural tissue of society should be potentially equipped to face many challenges to the established global economic and social order. More than a sum of competencies contingent on the market-oriented, neoliberal trend, multicultural management education should address that which is beyond any economic wave: the need for viewing cultural plurality as an asset, rather than a constraint, not only to business dealings but to human growth.

account cultural diversity into management education. The case study carried out in a multicultural organisation ± TBG ± highlighted the cultural challenges involved in contemporary multicultural organisations. It also showed the raising of awareness towards taking cultural diversity on board in management and management education. As shown in the interviews with the directors of TBG, all of them recognised that the fact that TBG's stocks are owned by several companies with differing and sometimes conflicting cultural values raises challenge, which have to be competently addressed. All of them stressed that cultural differences of the companies involved should be taken into account in order to build a cultural identity in TBG. Also, some of their answers highlighted the need for management education to provide students with opportunities to enhance cultural understanding. As one of the TBG directors argued, bringing students to engage on a trainee basis for the day to day work on the company would allow them to understand the whole chain which takes place in it, as well as making them sensitive to the increasing blurring of borders between consumers and suppliers and other binomials which used to be prevalent in organisations before globalisation. We believe innovation management education could benefit from working out, through literature review, case studies of multicultural organisations, as well as promoting visits, interviews, and other strategies where students perceive the constructed character of their cultural identities. Partnership between universities and organisations would be a fruitful road towards multicultural management education. It should raise discussions concerning questions such as: how can universalism and cultural boundedness be balanced in management education? Equally, how should cultural diversity be valued and, at the same time, build an organisational cultural identity? What impacts have the educators' values on future managers? How can logistics help in building up intercultural competence? We would like to stress, above all, that the answers to such questions are not ready made. However, we should also recognise that because they are difficult to answer, does not justify their being silenced in curricula for

References AgeÃncia Brasil (1999), available at: www.radiobras.gov.br Bartz, D.E. (1990), `À model for managing worforce diversity'', Management Education and Development, Vol. 21 No. 4, pp. 321-6. Bhadury, J., Mighty, E.J. and Damar, H. (2000), ``Maximizing workforce diversity in project teams: a network flow approach'', Omega, Vol. 28 No. 2, pp. 143-53. DTI (1994), Trading Across Cultures, HMSO, London. Canen, A. (1999), ``Multiculturalismo e formacËaÄo docente: experieÃncias narradas'', EducacËaÄo e Realidade, Vol. 24 No. 2, pp. 89-102. Canen, A. and Grant, N. (1999), `Ìntercultural perspective and knowledge for equity in the mercosul countries: limits and potentials in educational policies'', Comparative Education, Vol. 35 No. 3, pp. 319-30. Canen, A.G. (1998), `Ùniversity and organisations: a partnership for the learning of logistics'', presented at the Operational Research Group of Scotland Meeting, Glasgow Caledonian University, Glasgow, February. Canen, A.G. and Canen, A. (1999), Logistics and Cultural Diversity: Hand in Hand for Organisational Success,

84




Cross-cultural Management: An International Journal, Vol. 6 No.1, pp. 3-10. Canen, A.G. and Canen, A. (2001), ``Looking at multiculturalism in international logistics: an experiment in a higher education institution'', International Journal of Educational Management, Vol. 15 No.3, pp. 145-52. Chandler L., Dagit, D., Gaskins, R., Mathews, I.C., McCain, V., Whiting, C., Vogl, A. J. and Budman, A. (1998), ``Do they get it? (diversity)'', Across the Board, Vol. 35 No. 3, pp. 26-33. Coombs, G. and Sarason, Y. (1998), ``Cultures circles: a cultural self-awareness exercise'', Journal of Management Education, Vol. 22 No. 2, pp. 218-26. Goldsborough, W.W. and Anderson, D.L. (1994), `Ìmport/ export management'', in Robeson, J.F. et al. (Eds), The Logistics Handbook, Free Press, New York, NY. Greenslade, M. and Pickard, J. (1991), ``Managing diversity'', Personnel Management, Vol. 23 No. 12, pp. 28-32. Hames, D.S. (1998), ``Training in the Land of Doone: an exercise in understanding cultural differences'', Journal of Management Education, Vol. 22 No. 3, pp. 430-6. Henninger, E. (1998), ``Multiculturalism in collegiate management education'', Journal of Workplace Learning, Employee Counselling Today, Vol. 10 Nos 6/7, pp. 330-1. IMAM (1996), Atualidades em Qualidade & Produtividade, No. 37. Jarratt, A. (1999), ``Managing diversity and innovation in a complex organisation'', International Journal of Technology Management, Vol. 17 Nos 1/2, pp. 5-15. Kandola, R. and Fullerton, J. (1998), Diversity in Action, Institute of Personnel and Development, London.

Kincheloe, J.L. and Steinberg, S. (1997), Changing Multiculturalism, Open University Press, Buckingham. McLaren, P. (2000), Multiculturalismo RevolucionaÂrio: Pedagogia do Dissenso Para o Novo MileÃnio, Editora ArtMed, Porto Alegre. McMillen, M.C., Baker, A.C. and White, J. (1997), ``Cultural analysis, 'good conversation' and the creation of a multicultural learning organisation'', Management Learning, Vol. 28 No. 2, pp. 197-215. Magee, J.F. (1968), Industrial Logistics: Analysis and Management of Physical Supply and Distribution System, McGraw-Hill, London. Milburn, T. (1997), ``Bridging cultural gaps'', Management Review, January, pp. 26-9. Riccucci, N.M. (1997), ``Cultural diversity programs to prepare for Work Force 2000: what's gone wrong?'', Public Personnel Management, Vol. 26 No. 1, pp. 35-41. Richter, A.S. (1998), ``Compensation management and cultural change at IBM: paying the people in black at big blue'', Compensation and Benefits Review, Vol. 30 No. 3, pp. 51-9. Robinson, G. and Dechant, K. (1997), ``Building a business case for diversity'', The Academy of Management Executive, Vol. 11 No. 3, pp. 21-31. Scott, L.G. and Canen, A.G. (1995), ``Cutting edge of timber logistics in Scotland'', in Pawar, K.S. (Ed.), Proceedings of the 2nd International Symposium on Logistics, University of Nottingham, Nottingham, pp. 249-57. TBG (1999), Annual Activity Report. TBG (2000), ``Folder institucional'', CoordenacËaÄo Editorial, TBG GereÃncia de ComunicacËaÄo Empresarial, Rio de Janeiro. Zintz, A.C. (1997), ``Championing and managing diversity at Ortho Biotech Inc.'', National Productivity Review, Vol. 16 No. 4, pp. 21-8.

85

Introduction

Individual and teambased idea generation within innovation management: organisational and research agendas

Most texts regard innovation and creativity as a beneficial process in a company. The continuous hegemony of innovation and creativity arises from organisations recognising that correctly harnessed creativity can offer companies a competitive advantage (Porter, 1980). In an analysis of the strategies of the top 100 UK companies of the future, the Corporate Research Foundation found that structural flexibility and innovative power were listed among the top six drivers of future success. Cook (1998) considers creativity as an element of competitive advantage for organisations. It is more accurate to state that creativity is a resource that has the potential to provide a competitive advantage. Any potential advantage will not materialise if the company fails to harness this resource. New ideas will be stifled. A company will create new products for a variety of reasons, but usually in an attempt to increase profits. The most profitable new products will be those that meet the customer needs more effectively than competitors' products, and are therefore preferred by more customers. Companies need to identify those needs, and then generate ideas and solutions to address them. Many articles on innovation and creativity begin with a general statement that companies must innovate or they will die. While this is generally true, any company that is inefficient in vetting and implementing new product ideas or a company that continually introduces the wrong products will consume its own resources and will also fail. There are several suggestions in the literature that the innovation and creativity process benefits companies beyond direct sales growth or efficiency improvements. A company that establishes an effective creativity and innovation process is also likely to realise the social benefits that arise from team working and employee motivation. The main body of the review in this paper examines the idea generation part of the creativity process at the levels of the individual and the group. It notes the factors in the literature that are creativity stimulants, and those that hinder creativity at each level. The aim of this paper is to critique and review the role of individuals and teams in idea generation as part of the overall organisational creativity and innovation process. Key

Rodney McAdam and John McClelland

The authors Rodney McAdam is a Senior Lecturer and John McClelland is a Research Assistant, both at the School of Management, University of Ulster, Belfast, UK. Keywords Innovation, Creativity, Employees, Teamwork Abstract The aim of this paper is to critique and review the role of individuals and teams in idea generation as part of the overall organisational creativity and innovation process. Key objectives are to determine organisational development needs and research agendas in this area. Organisations continue to emphasise the need for increased creativity and innovation within their employees and markets. However, the literature and organisational practice relating to these areas remains somewhat lacking in regard to the front end of creativity and innovation, namely idea generation. First, this paper briefly reviews the creativity literature from individual and team perspectives, identifying the need for more research into idea generation as part of creativity. Second, this paper reviews the idea generation literature and identifies agendas for further research.

Electronic access The research register for this journal is available at http://www.emeraldinsight.com/researchregisters The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm

European Journal of Innovation Management Volume 5 . Number 2 . 2002 . pp. 86±97 # MCB UP Limited . ISSN 1460-1060 DOI 10.1108/14601060210428186

86

Individual and team-based idea generation



objectives are to determine organisational development needs and research agendas in this area.

part of innovation, namely the front-end of the innovation process. Creativity definitions Heap (1989) suggests that creativity is the ``synthesis of new ideas and concepts by the radical restructuring and re-association of existing ones'', whereas innovation is the implementation of the results of creativity''. This definition is consistent with that of Majaro (1988) and Zhuang et al. (1999) in that creativity is seen as preceding innovation. However, the definition does not use innovation as an overarching term. Gurteen (1998) similarly defines creativity as the generation of ideas whereas innovation is about putting these into action by sifting, refining and implementing. Gurteen also believes that creativity is about divergent thinking whereas innovation requires convergent thinking. This approach shows idea generation to be a key component of creativity. Titus (2000) has defined creativity as ``the birth of imaginative new ideas''. Amabile (1983, 1997, 1998), whose work will be considered in more detail in the following sections, suggests that the process involved in developing the idea for a new product is creativity:

Defining creativity and innovation The definitions of creativity and innovation must be clearly established before proceeding. There are numerous definitions of ``creativity'' and `ìnnovation'' in the literature. Several published articles use these terms interchangeably and this can mislead the literature reviewer. Innovation definitions Figure 1 shows Majaro's (1988) concept of the innovation process. This four-stage definition is seen as including creativity. Here, innovation is seen as a process where ideas are generated and transformed into implementable business products and services. Zhuang et al. (1999) describe an innovation as either: . an invention which may be considered completely new; . an improvement of an existing product or system; or . a diffusion of an existing innovation into a new application Once again, innovation is seen as stretching from idea generation through to an `ìnvention'' or product/service for use. In each of these definitions creativity is seen as

A product or response will be judged creative to the extent that it is a novel and appropriate, useful, correct or valuable response at hand, and the task is heuristic rather than algorithmic (Amabile, 1998).

Thus, creativity is clearly identified with idea generation and learning, and not necessarily with end products or services. Farr and Ford (1990) offer a similar definition of creativity to Amabile. They consider that creativity is context specific and a subjective judgement of the novelty and value of an outcome of an individual's or collective's behaviour. Thus the context in which creativity takes place and the people involved are key factors. For the purposes of this study, `ìnnovation'' is assumed to be a process with distinct stages stretching from `ìdea generation'' to `ìmplementation''. Creativity is considered as that part of the process which leads to, and includes, the idea generation stage in the innovation process.

Figure 1 The innovation process

87




Creativity

preferred cognitive style of an individual (for problem solving) lies somewhere on a continuum between innovative and adaptive problem solving. An `ìnnovative'' solution is regarded as a step-change solution, whereas an `àdaptive'' solution is a more incremental solution fitting within known organisational and environmental boundaries. Kirton (1976) suggests that individuals will have preference for offering either innovative or adaptive solutions. His theory defines the characteristics of `àdapters'' and `ìnnovators'' at the individual and team levels. The KAI inventory is a list of 32 statements against which individuals are scored according to their preference. Kirton and his followers have conducted many surveys using the KAI tool, examining individuals in different departments within companies, different industries, different sexes and in different countries. The higher the KAI score, the greater the individual's preference towards innovative problem solving. These studies have shown that the KAI score for an individual is stable over time. They have also demonstrated that the preferred cognitive style is not related to intelligence quotient scores. People can be creative no matter where they lie on the adaption-innovation continuum. The individual's response to a problem (adaptive or more innovative) and therefore the outcome will vary according to his or her preferred cognitive style. Kirton's work has many inferences for companies, which are recommended to try to create the right balance between innovators and adapters and to foster tolerance of team members with different preferred cognitive styles. Individuals with either preference can be valuable contributors to a company and managers need to understand and accommodate these preferences. For example, those with a preference towards adaptive problem solving may view `ìnnovators'' as abrasive and insensitive. Clearly, this has the potential to cause internal friction within the company. Another example of a potential problem is that adaptive solutions are usually more easily understood and comfortable to the management of a company. Innovators need to work harder to sell their ideas, and disturb the status quo of the company.

In this section a brief context setting review of creativity is presented from individual and team perspectives, before a more in-depth treatment of idea generation as part of creativity is presented. Individual level research Generally, researchers examining creativity at the individual level regard individuals as the building blocks of the organisation. Encouraging creativity at an individual level will result in improved creativity at the level of the group or organisation. Research on individual creativity can be split into that based on the characteristics of ``creative'' people, preferred cognitive style for problem solving, and the stimulants for individual creativity. Such knowledge could help companies to hire potentially creative people, to understand the kind of solutions that they are likely to propose and how these people can be motivated to be creative. The traits of the ``creative'' individual The earliest research into creativity, at the level of the individual, attempted to isolate the traits or characteristics of highly creative people. Most researchers isolated these people by assessing the creativity of their work, their lifestyles, and their life histories. Such case studies examined the lives of artists, composers and famous inventors who were widely regarded as being ``creative''. Traits identified in this literature include a desire for autonomy and social independence, a high tolerance of ambiguity in problem solving and a propensity for risk taking. One of the most widely quoted early research works is that of MacKinnon (1962), who studied 40 of the most creative architects in the USA (as assessed by a third party), and found that this group exhibited the trait of high independence from their colleagues. From his studies, West (1997) found that creative people generally have intellectual and artistic values, are attracted to complex situations, tolerate ambiguity, are driven to excellence and persevere in adversity. These people needed autonomy, make independent judgements, thrive on risk, and are self-confident. Kirton's adaption-innovation (KAI) theory (Kirton, 1976) postulates that the 88




related research suggests that its effect varies according to the situation). Controlling motivators, such as constraints on how work should be done, will have a negative impact. Extrinsic motivators may be detrimental when a high level of novelty is required. Amabile's study found that intrinsically motivated employees should be identified and assigned to jobs involving creativity to enhance the emergence of new ideas. Farr and Ford (1990) state that most creativity models such as Amabile's begin with a problem recognition stage. This is followed by a search for alternatives that could provide a solution. The search is restricted according to the individual's perception of the problem. An individual will first explore his/her past experience and expertise for a solution. If an adequate solution is not uncovered, the individual will approach others for ideas. Ideas may also be uncovered by an examination of competition or by talking to customers. At an individual level, creativity enhancing tools may be used to generate new ideas. Social factors such as feedback from others, leadership style, and organisational reward systems can influence the individual's efforts to innovate. Farr and Ford (1990) agree with Amabile that innovation is possible for most individuals in a work role, and that the level of their innovation may be increased by a number of idea generation techniques including brainstorming, morphological analysis and lateral thinking. Kao (1997) suggests that the ``creativity'' process in individuals requires both right (emotional, intuitive) and left (logical, rational) sided brain co-operation. The initial preparation stage requires rational, left-sided information gathering. The idea generation stage is right-sided. A number of writers (e.g. Drazin et al., 1999; Eskildsen et al., 1999) have noted that traditional education systems tend to discourage creativity by encouraging analytical rather than creative thinking. This limitation is usually carried into organisations, resulting in limited creativity and innovation, resulting in limitations to idea generation.

Facilitators of individual level creativity Early work by ``creativity researchers'' suggested that creativity was something only done by creative people. Amabile's componential theory of individual creativity (Figure 2) proposes that anyone of normal capability can be creative, and that the work environment influences the level and frequency of this creativity. This theory also indicates that intelligence quotient level is not related to creativity. Amabile (1998) first offers a social psychological model of the creativity process: . The task or problem is presented. . A store of relevant information is prepared. . New ideas are generated. . These ideas are validated. . The outcome of each is assessed. Amabile's componential theory of creativity suggests that there are three components to individual creativity: (1) Expertise. The individual needs to possess relevant skills or knowledge in the problem area. This may be influenced by the education level and experience of the individual. (2) Creative-thinking skill. This refers to the ability to consider different perspectives with intellectual independence. It may be influenced by knowledge of the many, possible creativity enhancing techniques such as brainstorming. (3) Task motivation. Intrinsic motivation is needed for the task to motivate the individual, and for the individual to produce ideas. It is more conducive to the processing of divergent information than extrinsic drivers (rewards, goals, constraints). If a company attempts to add extrinsic to intrinsic motivation to assist creativity, the success will be determined by the person's initial motivational state prior to the task, the type of extrinsic motivation and its timing. These components and their relationship to the stages in the creativity process are also shown in Figure 2. Extrinsic motivation can be additive when the person is already intrinsically motivated, or negative when the intrinsic motivation is weak. Feedback on performance, or enablers that increase the person's involvement in his/her work can be positive. (Feedback

Group or team level research Research on creativity in teams or groups is more scarce than that at the individual or organisational level. In general, group level creativity studies have focused on the effect of 89




Figure 2 Componential theory of individual creativity

West (1990) describes the innovation process at the group level. He lists the following facilitators of group innovation: . A vision ± the group should have a clear focus or goal that is negotiated and shared by the group, valued within the group, and is accepted as attainable. This is evidenced by the fact that the best performing companies had a clear set of guiding beliefs for their group activities (Peters and Waterman, 1982). . Participative safety ± the group works in a non-threatening environment that allows motivated involvement in decision making by the group participants. . A climate for excellence in task performance ± group members expect and welcome critical evaluation and appraisal of quality. . The company provides practical support for innovation.

leadership style, and cohesiveness between team members. King and Anderson (1995) explored the literature related to `ìnnovation in working groups''. They identified that the following factors promote innovation in a group environment: . A democratic, collaborative leadership style that encourages and motivates group members. . Cohesiveness between team members ± a heterogeneous team is an advantage for idea generation to avoid ``group think'' and a homogeneous team for smooth implementation. . Group longevity ± short-lived groups have been found to be more creative. . Group structure ± a more organic structure is preferred to adapt to new problems They also highlight that groups are more willing to take risks than individuals, which can be advantageous if innovation is being inhibited by too much caution. Developing the concept of `ìnnovation within working groups'', Shapiro (2000) reports on research conducted in 14 large European companies (mostly from the telecommunications industry) that focuses on employee diversity issues. In this research, teamwork is frequently used to solve problems or develop new ideas. While diverse teams are often more creative than homogeneous teams, they are also more likely to fail if their diversity is not positively managed. Team members need to understand and value the diversity within the group.

Company vision and climate for excellence drive ``quality of innovation'', whereas participative safety and company support drive ``quantity of innovation''. All four factors need to be at a high level for the group to produce a large number of high quality ideas. West reports that large teams (more than 12 people) are less creative due to problems with communication and team co-ordination, whereas very small teams (three or less) suffer from lack of diversity in idea generation. Building on West's work, Thacker (1997) proposes that training team leaders to exhibit supportive, consultative, or non-controlling communication behaviour will create an environment that fosters creativity and should 90




enhance the creative efforts of team members. In supporting these views, King (1995) reports on a study conducted at the Roffey Park Management Institute that tried to identify how organisations could promote creativity in teams. It found that ``creativity team'' members needed freedom and that effective leaders selected team members on how they could work alongside their team colleagues rather than having the right technical skills. Amabile (1983) suggests that the placement of a supervisor with an appreciation of creativity alongside employees with the motivation to create is a promising scenario for creativity. This study also suggests that companies which want to promote creativity should provide their leaders/supervisors with relationship training. In summary, the literature closely associates creativity, at the individual and team levels with idea generation. However, there is a need to see if idea generation is a single entity or a series of constructs leading to the generation of useful ideas at the start of the creativity and innovation process. There is a need for further research in the area of idea generation, as summarised in the following section.

et al., 1993) approach using ``resonance'' from other fields of study (Grint, 1995). Segregation Osborn (1963) recommended that idea generation should be regarded as a separate activity from idea evaluation. This approach resulted in an increased emphasis on idea generation, which tended to be overshadowed by the more tangible downstream constructs of idea evaluation. Maier (1963) concluded that this segregation and increased focus would ultimately improve the quality of creative problem solving. This approach is consistent with Demerest's (1997) knowledge management approach, where knowledge creation is recognised as a key separate activity, supportive of idea generation. These events occur prior to the phase of knowledge embodiment in organisational groups, where filtering rules are applied, similar to that of idea evaluation. Furthermore, Morris (1999) argues that idea generation based on an expansive view of knowledge creation is essentially the grouping and integration of ideas from many sources of accepted knowledge, prior to the screening of those ideas Rickards and Freedman (1978) suggest an additional ``time'' separation or ``defermentof-judgement'' should occur in the idea generation phase. This time factor will allow the creativity process to develop before idea evaluation takes place. Titus speaks of periods of idea generation rather than discrete events, suggesting the need for reflection and further development. Similarly, Henry (1991) considers the need for a period of `ìncubation'' in idea generation. This period is referred to as ``deferred judgement'' (Henry, 1991), as distinct from ``dormancy''. Rather, it should be a period of knowledge creation through organisational dialogue, debates, scanning, etc. Thus, ideas are generated and shaped prior to idea evaluation.

Idea generation literature In addition to the individual and group creativity literature, as discussed, there is a considerable and relatively distinct set of `ìdea generation'' literature. Twiss (1974) suggests that companies which are successful innovators have a market orientation, a source of creative ideas, a receptive organisation, and a means to process new ideas. In a survey of marketing and R&D managers, it was revealed that fewer but more fruitful ideas originate in the R&D department. Hamel (1999) believes that large companies can match the wealth creating flair of smaller Silicon Valley companies if the creativity potential of staff down the organisational hierarchy can be released. The purpose of this section is to define some key constructs within the idea generation literature. The three summary constructs chosen from the brief literature review are segregation, structure and strategic intent. These constructs are used as exemplars rather than being seen as covering the entire field of idea generation. They represent a multidiscipline (Woodman

Structure A number of structures have been suggested to develop idea generation in organisations. Osborn (1963) developed the idea of brainstorming. Osborn also used checklists of ideas using the principles of combination and enhancement to develop ideas further. He had a list of ``fundamental questions'' (around 75) which were used to encourage 91




innovation gap. The prize was seed money to support the best ideas. A number of concerns were identified during this process: . Expectations for commercially successful ideas should not be too high from one competition. False expectations can demoralise participants. . An idea competition can help to foster a more innovative culture. . A network of cross-department competencies was established within the company.

ideas, e.g. adopt, modify, magnify, etc. Seaker and Waller (1996), consistent with Rickard's (1999) literature review, refer to the need for continuous brainstorming based on a cycle of differentiation and integration to generate ideas, some of which may have more immediate application and some may only have apparent application much later. Titus (2000) concludes that `òld ideas never die'', they can be kept until more appropriate circumstances for their application. The early stages of brainstorming, where ``no criticism'' and minimal discussion rules are applied, result in cognitive forms of knowledge being used mainly at the individual level and, to a lesser extent, in the form of distributed cognition. However, as the multifunctional group (for example) progresses and critical discussion emerges, then a process of knowledge more akin to social constructionism develops. This process is still separate from the formal stage of idea evaluation as described by Osborn. Parnes (1988) states the need to break free from cognitive habitual mental associations and patterns of thought, and to take a more constructionist approach (Ford, 2000). Other methods of developing ideas include wording changes to problems, turning negatives into positives and changing the focus of problems (Evans and Lindsay, 1999). Kelley and Storey (1998) investigated the preference for a range of idea generation techniques and found that brainstorming came top with suggestion boxes the lowest rated. Their category referring to brainstorming was actually labelled ``brainstorming and meetings'', potentially allowing for both cognitive and social constructionist approaches to knowledge creation. Rickards (1988) suggests that basic training in idea generation techniques across the workforce should take place. Schepers et al. (1999) describe an idea generating competition at the Siemens company in Germany. Often the people who have an idea (such as the R&D department) are not the people who can turn the idea into a business. The technological solution needs to be joined with a business opportunity. Siemens regarded the `ìdeas competition'' as a way of bringing departments together to work together and bridge the above

In investigating creativity techniques, Coates et al. (1996) surveyed idea generating. Sowrey (1989) and Parnes (1961) suggest there is a strong relationship between the number of idea generation techniques and the number of successful products. This view supports the argument of knowledge creation leading to a wide range of knowledge types being developed to support idea generation. Quinn (1985) describes how Hewlett Packard, 3M and Raychem have used the customer-pull approach to knowledge creation and idea generation, introducing radically new products through small teams that worked with key customers or ``lead users''. Amabile (1998) and Blum (2000) see the need for organisations to have cultures which ``reward and respect the free flow of ideas and enquiries'', where the ``social environment can influence both the level and the frequency of creative behaviour''. They encourage an atmosphere which ``questions all assumptions'' (Deazin et al., 1999). This approach is consistent with social constructionism where there are no ``taken for granteds'' and a process of sense making replaces the underlying organisational assumptions. This learning environment approach is supported by Edosomwan (1989) and Guimaraes and Langley (1994), who refer to the need for high performance companies to adopt a creative environment for idea generation. Andripoulos and Lowe (2000) describe this environment as ``perpetually challenging, where underlying assumptions are challenged routinely as in the social constructionist approach to knowledge creation. They see processes of `àdventuring, overt confronting, portfolioing and opportunising'' as enabling this development. 92




Of the techniques being used by 41 companies in the measuring precision instrument industry in the UK, ``brainstorming'' was found to be the best known technique, followed by ``morphological analysis''. These ideagenerating techniques were most commonly used in larger companies. Training in the use of techniques was rare and respondents had little interest in learning more about these techniques. There was a decreasing reliance on the importance of the customer as a source of new product ideas with increasing company size. This is likely to be related to the more common existence of new product development departments in large companies. The majority of new product ideas originated from outside the company in this industry, and the customer was still seen to be the most common and most important source (Figure 3).

competitive advantage. Sowrey (1989), in supporting this view, refers to research using case study analysis showing that innovative organisations average 65 acceptable ideas per year compared with 35 ideas per year for non-innovative organisations. Rochford (1991) argues that companies in slow changing environments are more likely to accept ideas driven by the market than those in fast changing environments. Companies in slow changing environments have time to survey market demand, and use R&D to develop more innovative solutions. Von Hippel (1988) surveyed the sources of ideas in various US industries (the sources were categorised as originating from user, manufacturer or supplier). The sources of ideas varied between industries. The type of innovation (product or process) is also linked to its likely source. Collins and Poras (1994) identified that financially successful companies shared some common qualities, which included a focus on idea generation, `à focus on continuous self-improvement'' and `à recognition of learning from failures''. Guimaraes and Langley (1994) conducted an exploratory survey of 108 companies in south-eastern USA to try to determine how high performance companies rate different aspects of the innovation process. Their aim was to determine which aspects of innovation these companies regarded as important. In theory, this would enable other companies to benchmark their own innovation processes against those of the high performance companies. The survey addressed whether the management in these companies created opportunities for and rewarded employee sourced innovation, and if the environment encouraged innovation (similar to Coates et al., 1996). It also examined the sources of new ideas, and rated the success of some of the existing methods of idea generation. The most commonly used methods were found to be internal meetings and brainstorming. The most effective idea sources were internal teams and employees. Sowrey (1989) summarised studies of new idea sources in the UK. There were only four studies with limited scope and content by 1989. He mentions that the idea generation step of the innovation process has had relatively little formal research compared the other steps (Fornell and Menko, 1981). The four studies are summarised below:

Strategic intent Guimaraes and Langley (1994) state that new ideas must be consistent with the company's goals. Amabile (1998) suggests that idea generation teams must share the team's goal, consistent with an appreciation of the organisation's strategy. Bessant and Francis (1999) suggest that ideas should be classified, differentiating between operational and strategic. They suggest the characteristics of the strategic approach are effective policy deployment to all employees and an ability to ``deploy the competence base to competitive advantage'', leading to idea generation consistent with the organisation's strategy. Gordan et al. (1997) consider idea generation as a critical means for achieving Figure 3 Sources of the last new product idea

93




(1) Greenhalgh (1971, cited in Sowrey, 1989) studied the idea sources of grocery brand manufacturers using a postal survey. (2) Mandry (1973) studied techniques for generating new product ideas in the UK grocery trade. He received very limited responses from these companies on grounds of confidentiality. Market analysis of overseas markets proved a popular source of ideas. (3) Randall (1980) (on behalf of the British Institute of Management) surveyed 975 member companies to determine how these companies organised themselves for new product development. The survey also identified a number of sources for generating ideas (see Table I). This survey did not identify the success rate from these idea sources. (4) Sowrey (1987) himself studied the sources and techniques for generating ideas for new consumer market products. He found that companies using a large number of techniques for generating new ideas also produced a larger number of successful new products. He found that competitive observation (visiting stores, and looking at competitors' products) were the most common techniques being used. However, the most successful ideas came from the marketing department, followed by R&D.

business sectors. They found very little evidence of service companies having idea search methodologies. Firms were leaving idea generation to chance. The survey found a low involvement of disciplines outside of sales and marketing in new service idea generation. Gordon et al. (1997) studied the use of the salesforce to identify opportunities. Various studies have found that commercially successful products are matched to the needs of customers by market research studies. Salesforces spend a significant portion of their time with customers and are an ideal source of primary information. Using a survey of 650 sales managers, they studied the sales patterns and responsibilities of salesforces. The survey indicated that salespeople were regarded as having extensive responsibility and being ideally placed to listen to the needs of the customer rather than just push existing products. Customers wanted to be asked what new products they required, and gave the supplier a favourable, ``caring'' image while the salesforce was gathering important information. On the other hand, the survey showed that salespeople tended to have a short-term focus, offering variations on existing products rather than radically new products. This may be related to personal compensation schemes for salespeople that encourage quick sales. It does emphasise the need to have a complementary longer term R&D based new product development focus. Although salespeople have been shown to be ideally placed to be information gatherers, there is a lack of training to facilitate this function. The survey also showed that ideas are slow to reach the company for evaluation (sometimes stalling at the sales manager), and indicated the need for widespread communication improvement. The survey indicates the potential and deficiencies that exist within the salesforce resource to identify new product ideas through their contacts with customers. Kono (1988) examined the factors affecting the creativity of high performance large Japanese corporations. This study found that top management, central R&D, the marketing department and the customer are important sources of new product ideas. High performing companies had significantly more ideas sourced from their R&D department than low performing companies. Higher

Kelley and Storey (1998) studied the level of structure in the systems used for developing and screening new ideas for services (as opposed to products). This survey focused on 154 UK service firms across five different Table I Sources of new ideas Idea source Technical knowledge within the company Bright ideas within the company Sales office Competitors Customer suggestions Problems from customer operations Other internal research Suppliers Problems from internal operation Academia Market research

Frequency of use (%) 50 33 31 26 22 16 11 8 5 5 3

Source: Adapted from Randall (1980)

94




screening ideas is ultimately a trade-off with creativity. This trade-off needs to be researched and the sensitivities of the parameters established. Overall, there is a need for systematic integrated research to investigate how organisations develop philosophies of knowledge, create knowledge and generate ideas, thus enhancing creativity and innovation. It is difficult to isolate these issues. The continuum and recursive aspects of such studies must be emphasised. Organisations have much to gain by adopting a more systematic approach to idea generation and by incorporating strategies for knowledge creation as a key catalyst for idea generation.

performing companies had idea collection systems.

Conclusions The literature review shows that the topic of ``creativity'' has been approached by researchers using a variety of methods and at different levels (individual and group). Although some of the fundamental research dates back to the 1960s, the volume of creativity related research has certainly increased dramatically in the 1990s. Perhaps this is due to ``creativity'' being linked with competitive advantage, and subsequently popularised by management consultants. Although the literature on the factors that can affect creativity is copious, it is often composed of consultants' lists, with little indication of hard research based evidence. It is rarely specific to a particular industry sector. Furthermore, creativity is often equated solely with idea generation as a single entity, without any attempt to look at the constructs of idea generation. Thus research agendas in this area have been restricted. The literature on the sources of ideas for new products is limited. There is a considerable variation of idea source categories, which has the potential to confuse subsequent research. The small number of studies that look at idea sources tend not to examine why these sources have been chosen by the companies concerned, or to examine how these companies exploit these sources. Furthermore, there is a lack of sector-specific studies showing the variation in sources of ideas across industrial sectors. The idea generation literature tended to focus on the mechanics of idea generation to the detriment of the underlying knowledge creation philosophy. These areas need much more careful research to understand the constructs involved. There was a focus on a source-based approach to idea generation with emphasis on external knowledge sources such as customers, markets and competitors. Idea screening is a distinct sub-set of idea generation. Case examples were given of more mechanistic approaches to idea generation; however, it is concluded that resource based criteria for

References Amabile, T. (1983), ``The social psychology of creativity: a componential conceptualisation'', Journal of Personality and Social Psychology, Vol. 45, pp. 357-77. Amabile, T. (1997), ``Motivating creativity in organisations: on doing what you love and loving what you do'', California Management Review, Vol. 40, pp. 39-58. Amabile, T. (1998), ``How to kill creativity'', Harvard Business Review, Vol. 76, pp. 76-87. Andriopoulos, C. and Lowe, A. (2000), `Ènhancing organisational creativity: the process of perpetual challenging'', Management Decision, Vol. 38 No. 10, pp. 734-42. Bessant, J. and Francis, D. (1999), ``Developing strategic continuous improvement capability'', International Journal of Operations & Production Management, Vol. 19 No. 11, pp. 1106-19. Blum, T. (2000), ``Matching creativity requirements and the work environment: effects on satisfaction and intentions to leave'', Academy of Management Journal, Vol. 43 No. 2, pp. 215-23. Coates, N., Cook, I. and Robinson, H. (1996), `Ìdea generation techniques in an industrial market'', Journal of Marketing Practice, Vol. 4 No. 3, pp. 107-18. Collins, J. and Porras, J. (1994), Built to Last ± Successful Habits of Visionary Companies, Harper Collins, New York, NY. Cook, P. (1998), ``The creativity advantage ± is your organization the leader of the pack?'', Industrial and Commercial Training, Vol. 30, pp. 179-84. Deazin, R., Glynn, M. and Kazanjian, R. (1999), ``Multilevel theorising about creativity in organisations: a sensemaking perspective'', Academy of Management Review, Vol. 24 No. 2, pp. 286-15. Demerest, M. (1997), `Ùnderstanding knowledge management'', Journal of Long Range Planning, Vol. 30 No. 3, pp. 374-84. Drazin, R., Glynn, M. and Kazanjian, R. (1999), ``Multilevel theorizing about creativity in organisations:

95




a sensemaking perspective'', Academy of Management Review, Vol. 24, pp. 286-307. Edosomwan, J. (1989), Integrating Innovation and Technology Management, John Wiley & Sons, New York, NY. Evans, J. and Lindsay, M. (1999), The Management of Quality, Southwestern College Co., Cincinatti, OH. Eskildsen, J., Dahlgaard, J. and Norgaard, A. (1999), ``The impact of creativity and learning on business excellence'', Total Quality Management, Vol. 10, pp. S520-S530. Farr, J.L. and Ford, C.M. (1990), in West, M.A. and Farr, J.L. (Eds), Individual Innovation: Innovation and Creativity at Work, John Wiley & Sons, Chichester. Fornell, C. and Menko, R.D. (1981), ``Problem analysis: a consumer-based methodology for the discovery of new product ideas'', European Journal of Marketing, Vol. 5 No. 5. Ford, C. (2000), ``Creative developments in creativity theory'', Academy of Management Review, Vol. 25 No. 2, pp. 284-5. Gordan, G., Schoenbachler, D., Kaminski, P. and Brouchous, A. (1997), ``New product development using the salesforce to identify opportunities'', Journal of Business and Industrial Marketing, Vol. 12 Vol. 1, pp. 33-50. Gordon, G.L., Schoenbachler, D.D., Kaminski, P.F. and Brouchous, K.A. (1997), ``New product development: using the salesforce to identify opportunities'', Journal of Business & Industrial Marketing, Vol. 12 No. 1, pp. 33-50. Grint, K. (1995), Management: A Sociological Introduction, Polity Press, London. Guimaraes, T. and Langley, K. (1994), ``Developing innovation benchmarks: an empirical study'', Benchmarking for Quality Management & Technology, Vol. 1 No. 3, pp. 3-20. Guimaraes, T. and Langley, K. (1994), ``Developing innovation benchmarks: an empirical study'', Benchmarking for Quality Management & Technology, Vol. 1 No. 3, pp.1351-3036. Gurteen, D. (1998), ``Knowledge, creativity and innovation'', Journal of Knowledge Management, Vol. 2, pp. 5-13. Hamel, G. (1999), `Ìnside track: how to capture the creativity of Silicon Valley'', in Maitland, A. (Ed.), Financial Times, 28 September. Heap, J. (1989), The Management of Innovation and Design, Cassell, London. Henry, J. (1991), Creative Management, Sage Publications, London. Kao, J. (1997), ``The art of discipline in business creativity'', Strategy and Leadership, Vol. 25, pp. 6-11. Kelley, D. and Storey, C. (1998), ``New service development: initiation strategies'', International Journal of Service Industry Management, Vol. 11 No. 1, pp. 45-62. King, N. and Anderson, N. (1995), Innovation in Working Groups, Innovation and Creativity at Work, in West, M.A. and Farr, J.L. (Eds), John Wiley & Sons, Chichester. King, S. (1995), ``Managing creativity and learning'', Management Development Review, Vol. 8, pp. 32-4.

Kirton, M. (1976), Adaptors and Innovators, Routledge, London. Kono, T. (1988), ``Factors affecting the creativity of organisations ± an approach from the analysis of new product development'', in Urabe, K. et al. (Eds), Innovation and Management, Walter de Gruyter, Berlin. MacKinnon, D. (1962), ``The personality correlates of creativity: a study of American architects'', Proceedings of the 14th Congress on Applied Psychology, Vol. 2, pp. 11-39. Maier, N. (1963), Problem Solving Discussions and Conferences, McGraw-Hill, New York, NY. Majaro, S, (1988), Managing Ideas for Profit, McGraw-Hill, Maidenhead. Mandry, G.D. (1973), ``New product development in the UK grocery trade'', Research Paper No. 2, Manchester Business School, Manchester. Morris, R. (1999), ``Front-end innovation at AlliedSignal and Alcoa'', Research Technology Management, Vol. 42 No. 6, pp. 15-24. Osborn, A. (1963), Applied Imagination, Scribners, New York, NY. Parnes, S. (1961), `Èffects of extended effort in creative problem solving'', Journal of Educational Psychology, Vol. 52. Parnes, S. (1988), Visioning, East Aurora Publishing, New York, NY. Peters, T.J. and Waterman, R.H. (1982), In Search of Excellence: Lessons from America's Best Run Companies, Harper & Row, New York, NY. Porter, M. (1980), Competitive Strategy: Techniques for Analysing Industries and Competitors, The Free Press, New York, NY. Quinn, J. (1985), ``Managing innovation: controlled chaos'', Harvard Business Review, Vol. 85 No. 3, pp. 73-84. Randall, G. (1980), Managing New Products, British Institute of Management, London. Rochford, L. (1991), ``Generating and screening new product ideas'', Industrial Marketing Management, Vol. 20, pp. 287-96. Rickards, T. (1988), Creativity at Work, Gower, Aldershot. Rickards, T. (1999), Creativity and the Management of Change, Basil Blackwell, Oxford. Rickards, T. and Freedman, B. (1978), ``Procedures for management in idea-deficient situations: an examination of brainstorming approaches'', The Journal of Management Studies, Vol. 15, pp. 43-55. Seaker, R. and Waller, M. (1996), ``Brainstorming'', International Journal of Quality & Reliability Management, Vol. 13 No. 1, pp. 24-31. Schepers, G., Schnell, R. and Vroom, P. (1999), ``From ideas to business ± how Siemens bridges the innovation gap'', Research Technology Management, Vol. 42, pp. 26-31. Shapiro, G. (2000), `Èmployee involvement: opening the diversity Pandora's Box?'', Personnel Review, Vol. 29 No. 3, pp. 304-23. Sowrey, T. (1987), The Generation of Ideas for New Products, Kogan Page, London. Sowrey, T. (1989), `Ìdea generation: identifying the most useful techniques'', European Journal of Marketing, Vol. 24 No. 5, pp. 20-9.

96




Thacker, R. (1997), ``Team leader style: enhancing the creativity of employees in teams'', Training for Quality, Vol. 5 No. 4. Titus, P. (2000), ``Marketing and the creative problemsolving process'', Journal of Marketing Education, Vol. 22 No. 3, pp. 225-35. Twiss, B. (1974), Managing Technological Innovation, Pitman, London. Von Hippel, E. (1988), The Sources of Innovation, Oxford University Press, New York, NY. West, M. (1997), Developing Creativity in Organisations, British Psychological Society, Leicester.

West, M. (1990), '`The social psychology of innovation in groups'', in West, M.A. and Farr, J.L. (Eds), Innovation and Creativity at Work, Wiley, Chichester. Woodman, R., Sawyer, J., Griffin, J. and Ricky, E. (1993), ``Towards a theory of organisational creativity'', The Academy of Management Review, Vol. 18 No. 2, pp. 293-14. Zhuang, L., Williamson, D. and Carter, M. (1999), 'Ìnnovate or liquidate ± are all organisations convinced?'' , Management Decision, Vol. 37 No. 1, pp. 57-71.

97

Introduction

Assessing the validity of new product development techniques in Spanish firms

With the dawning of the new millennium, firms find themselves in an `àge of fast changes'', the likes of which the world has never known (Tomkovich and Miller, 2000). The demand for speed in the current business environment is increasing, forcing firms to make decisions faster in the face of frequently changing, high velocity environments (Kessler and Chakrabarti, 1999). This environment rewards those firms which develop new products and services fast. Consequently, compressing product development cycles has become one of the most important goals for improvement by world industries. Faster firms are said to be more efficient, avoiding wasting resources on peripheral activities, changes and rework (Stalk and Hout, 1990; Clark and Fujimoto, 1990). A review of the recent literature on accelerated product development shows a lengthy list of tools and techniques aimed to reduce new product development (NPD) cycle time (Cordero, 1991; Brown and Eisenhardt, 1995; Griffin, 1997; Ittner and Larcker, 1997; Langerak et al., 1999). However, most of the published studies are based on scattered cases and anecdotal evidence, and few systematic empirical studies have tested which of these techniques are actually useful in reducing the NPD cycle or improving the efficiency of the NPD process. The main goal of this study is to extend our empirical knowledge about which of these tools are more efficient in reducing development time. We depart from the few existing empirical studies, summarizing the main tools purported to accelerate the NPD process. Then, we discuss the design of the survey research used to measure the effectiveness of the different tools. Finally, this paper concludes with a discussion of the managerial implications of our results and an outline of future research directions.

TomaÂs Manuel BanÄegil Palacios and Francisco Javier Miranda GonzaÂlez The authors TomaÂs Manuel BanÄegil Palacios is Professor of Marketing and Chairman of the Business Management Research Group and Francisco Javier Miranda GonzaÂlez is Assistant Professor of Production Management and a member of the Business Management Research Group, both at the University of Extremadura, Badajoz, Spain. Keywords Product development, Success, Time-to-market, Quality Abstract Recent articles in the business press and academic literature affirm that one of the primary means for achieving competitive advantage through product development is by accelerating the development process. A wide range of advanced technologies and techniques have become available to accelerate the design, engineering and manufacture of new products. However, much attention has been focused on new product development techniques but little empirical research has been conducted to validate these techniques. In this exploratory study, we try to identify those techniques that are more useful to accelerating the product development process. Our findings, based on data from 54 Spanish firms, suggest that some available techniques are not effective in achieving this goal of reducing the time to market. Implications for researchers and managers are discussed. Electronic access The research register for this journal is available at http://www.emeraldinsight.com/researchregisters

Acceleration techniques

The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm

A broad set of new product tools and techniques has been developed over the years to reduce NPD cycle time. These new approaches include techniques as well known as quality function deployment (QFD) and


98

Assessing the validity of new product development techniques


T.M. BanÄegil Palacios and F.J. Miranda GonzaÂlez

Research methodology

product data management (PDM). If we consider all possible versions and modifications of these techniques, over 600 different types can be identified (Nijseen and Lieshout, 1995). Despite the numerous articles dealing with specific tools and techniques features, there is only a small number of studies aimed at classifying them from a broader perspective (Millson et al., 1992; Cordero, 1991; Pawar et al., 1994; Nijseen and Lieshout, 1995; Langerak et al., 1999). Taking these few previous classifications as a starting point, we try to create a systematic approach to the tools and techniques used by firms in their NPD process. We surveyed the literature on accelerated NPD and conducted an experience survey with six practitioners, trying to create a systematic list of the tools and techniques most used by firms to reduce the NPD cycle time. This survey identified 28 different tools for accelerating the NPD process that can be classified[1] as shown in Figure 1. In our study we tried to test the effectiveness of these acceleration techniques, which had been questioned by previous research (Karagozoglu and Brown, 1993). In fact, Zirger and Hartley (1996) affirm that in most cases the suggested techniques are not only ineffective, but even counterproductive.

A research study was designed to test the effectiveness of the previously identified techniques. Data were collected by mean of a mail survey sent to 195 firms taken from the ARDAN register of Spanish firms. The firms were selected between electric and electronic and transport equipment manufacturing industries. The choice of these two industries is justified because they are two of the Spanish industries in which R&D expenditures are higher[2]. This survey was biased toward larger firms, with sales over US$6 million, because they are more likely to have established new product development processes. The sample included firms from all major industrial regions of the country: 64.8 percent of them were industrial firms, whereas 20.4 percent operated in the consumer market and 14.8 percent operated in both. We sent an entry letter to an R&D, manufacturing or marketing executive, typically holding the rank of director, which explained the nature of the study and detailed the benefits of participation. The data collection instrument was developed from the previous surveys about accelerated NPD and was pretested twice. The first test involved six international experts and practitioners in NPD, and the second 12 firms between the selected

Figure 1 Product development techniques classification

99




industries. Both pretests yielded only minor suggestions for improvement which were incorporated in our final questionnaire. The 195 firms that met the criteria to participate in the survey (having developed a new product in the last five years) received a copy of the questionnaire by mail. One follow-up reminder letter was sent three weeks after the questionnaire was mailed. This was followed by a follow-up telephone call five weeks after the initial mailing. A total of 54 questionnaires were returned correctly completed, corresponding to an overall response rate of 28 percent. There was no noticeable bias in the responses versus those in the original mailing, so we can affirm that the responses reflect the population. Phone contact was made with randomly selected non-respondents to establish the reasons for the lack of response. The main answers were: ``the company policy is not to answer this kind of questionnaire'' (85 percent) and ``no time to answer the questions'' (7 percent). There were no significant differences in the response patterns between the two industries, thus, the two samples are combined and results presented together. The median size of the contacted companies was 200-500 employees (see Table I). The use of the single key information technique resulted in a sample consisting of respondents with different functional background (Table II). To test the validity of the single informant technique, the respondent perceptions regarding various Table I Size of the companies in the sample

Number of employees 1-50 51-100 101-200 201-500 > 500

Industry Electric and Transport electronic (%) equipment (%) 6.8 10.3 34.5 20.7 27.6

± 2 12 36 40

Table II Functional background of respondents Background R&D manager Marketing manager Manufacturing manager CEO Other

Number 21 2 3 16 12

aspects of NPD process were studied. No significant differences appear to exists in these perceptions among respondents from different functional backgrounds.

Measurements The development of our questionnaire began by identifying core concepts in the academy and engineering management literature. Most of the questions in the document were patterned after items found in previous research (Page, 1993; Youssef, 1995; Ittner and Larcker, 1997; Griffin, 1997; Swink, 1998). In our study we tried to find a relationship between the use of techniques and the main success factors. In order to assess the success of a development project we employed the next eight factors: (1) Time to market. (2) New product success rate. (3) Percentage sales from products less than three years old. (4) New product launching frequency. (5) Consumer satisfaction degree. (6) Market share. (7) New product quality level. (8) New product cost. These items were measured using five-point Likert scales. In order to avoid definitional problems and to achieve comparability between firms, relative measures were employed. The respondents were asked to compare their firms' performance with the industry average performance. The use of these subjective scales may be criticized for the lack of product performance standardized measures. However, this is the result of differences among firms, industries, economic conditions and temporal situations, and many recent studies have employed these scales (Jaworsky and Kohli, 1993; Olson et al., 1995; Youssef, 1995; Song and Parry, 1997). To assess the presence of the different tools and techniques for time reduction, respondents selected the techniques used in their NPD process from a list[3]. To limit the length of the questionnaire, the research was limited to 21 techniques and tools. Only those which had shown at least some degree of use by companies in previous research and some level of awareness within the two previous pretests were selected for our study.

100




Analysis and results

Table III Correspondence analysis results

The questionnaire responses were summarized in a contingency table, in which rows represented the different success factors previously identified and columns the different techniques for time reduction. Each cell showed the number of firms that employ a particular technique, classifying them as low or high efficiency firms with respect to a particular success factor. In order to represent this contingency table graphically in a low dimensional space for easier interpretation of the dependency relationships between rows and columns, we employ the correspondence analysis, which allows us to obtain the optimal representation for the table. The mathematical procedures involved in correspondence analysis are complex (Greenacre, 1988; Hoffman and Franke, 1986; Bendixen, 1996). In this paper we will describe the practical application and interpretation of this analysis for our data rather than the mathematical and statistical details. The first step in the interpretation of correspondence analysis is to establish whether there is or not a significant dependency between the rows and columns (Bendixen, 1996). The square root of the trace may be interpreted as a correlation coefficient between the rows and columns. Any value of this correlation coefficient in excess of 0.2 indicates significant dependency. In our case the value is 0.5465, indicating a high dependency between techniques (columns) and success factors (rows). The second step is to determine the appropriate number of dimensions to use in the representation. This may be achieved by examining the eigenvalue report (see Table III). The first, second and third axes account respectively for 47.1 percent, 18.7 percent and 12.2 percent of the information explained by all the axes. Among these three axes 78 percent of the information is explained[4]. The next step is the interpretation of the axes, from the contribution that each element makes toward the total inertia accounted for by the axes and their coordinates (see Table IV). The first axis explains 47 percent of the total inertia. If we observe the absolute

Axes 1 2 3 4 5 6 7 8 9 10 Total

Eigenvalues 0.00682 0.00271 0.00177 0.00116 0.00083 0.0006 0.00053 0.00005 0.00001 0.0 1,448

Individual percentages

Cumulative percentages

47.1 18.7 12.2 8.0 5.8 4.2 3.7 0.4 0.1 0.0 1.0

47.1 65.8 78.0 86.0 91.7 95.9 99.6 99.9 100.0 100.0 100.0

contribution of each row, the main factors that explain the axis are average market share, new product success rate and percent sales from new products, so this axis represents the success of new products in the marketplace. The positive side represents techniques used by firms with high success, while the negative side represents techniques used by less successful firms. The second axis (18.7 percent of the total inertia) is explained mainly by the time to market (60 percent). Opposing techniques are employed by firms with shorter development cycles (positive side) against those employed by firms with slower NPD process (negative side). Finally, the third axis (12.2 percent of the total inertia) represents the quality of new products, because the main factors related with it are quality levels and degree of consumer satisfaction. With the axes labeled as above, we can now plot the coordinates of the different techniques on them. The relative positioning of the various techniques, in the first and second axes are illustrated in Figure 2. Most techniques are well represented in the two first axes except electronic data interchange, rapid prototyping, incremental design, concurrent engineering, just in time and the Internet. Figure 2 shows that stagegate process, optimal product technology (OPT) and product data management (PDM) are the techniques most related with new product success (X axis), while rapid design transfer and conjoint analysis are mostly employed by the fastest firms (Y axis). The lack of a clear relationship between the rest of the techniques and time to market or success is surprising, taking into account that

101




Table IV Absolute contributions and coordinates Rows

Axis 1

Coordinates Axis 2

Quality (±) Quality (+) Cost (±) Cost (+) Market share (±) Market share (+) Percentage success (±) Percentage success (+) Frequency (±) Frequency (+) Satisfaction (±) Satisfaction (+) Time (±) Time (+) Sales (±) Sales (+)

±1.452 0.577 ±0.472 0.105 ±3.237 1.159 ±1.989 0.768 ±0.516 0.513 ±0.629 0.188 0.277 ±0.216 ±1.506 0.934

0.213 ±0.089 1.557 ±0.388 ±0.86 0.294 1.138 ±0.449 ±0.866 0.892 2.023 ±0.4 2.593 ±1.863 0.522 ±0.332

Axis 3

Absolute contributions Axis 1 Axis 2 Axis 3

±2.908 1.203 0.27 ±0.05 1.016 ±0.399 0.22 ±0.068 0.41 ±0.396 ±3.661 0.694 1.049 ±0.729 0.893 ±0.542

0.076 0.03 0.006 0.001 0.341 0.124 0.14 0.053 0.017 0.016 0.008 0.004 0.004 0.003 0.11 0.067

0.002 0.001 0.06 0.015 0.024 0.008 0.046 0.018 0.048 0.049 0.087 0.016 0.352 0.253 0.013 0.008

0.306 0.129 0.002 0.0 0.034 0.015 0.002 0.0 0.011 0.01 0.285 0.05 0.058 0.039 0.039 0.023

Figure 2 Success and time to market

numerous popular articles and books have trumpeted the value of these techniques. Nevertheless, few of these studies have addressed the contradictory effects these techniques potentially have on each other and other organizational processes (Zirger and Hartley, 1996).

We believe that these results suggest that efficient development requires simultaneous attention to NPD strategy, organizational structure and NPD tools. Firms must learn how to implement these tools and techniques, because some of them require changes in organizational structures and processes.

102




If we add the third axis (see Figure 3) only incremental design, concurrent design, MRP, QFD, group technology, rapid design transfer and the Internet are poorly represented. OPT and PDM seem to be the most used techniques in high quality firms, while rapid prototyping is associated with low quality levels.

Discussion and managerial implications The results of the correspondence analysis suggest that not all the techniques proposed to accelerate product development are equally effective and, in fact, some of them can be counterproductive. In this section we discuss the significant findings derived from our study and also address the limitations and managerial implications of these findings. Prior research suggests that careful assessment and selection of product and process technologies is strongly related to faster product development (Cooper, 1995). However, only some of the techniques analyzed show a clear relationship with time to market. Contingency theory argues that there is no unique solution to a particular problem; instead, the appropriateness of managerial decisions is dependent on the conditions that surround the problem. Depending on the level of uncertainty there appear to be different sets of techniques

effective for accelerating the new product development process. Therefore, if managers want to comprise the time to market, the most useful techniques would be conjoint analysis, rapid design transfer between different projects and group technology. However, to date, no research has examined the effects of these techniques on design and development costs, which could be increased by some of them. This enhanced cost may be the cause of the low usage rates of these techniques. Although speed is an important key variable, managers usually make trade-offs between time to market reduction and other strategic objectives such as cost reduction, customer satisfaction, product performance, etc. Techniques alone do not warrant NPD processes acceleration. Usually, a combination of techniques, organizational arrangements and managerial style are necessary. The results of our study indicate that extensive use of QFD is detrimental to NPD time. This result is against previous studies that describe QFD as a methodology that aids the prioritization of design objectives and the translation of customer desires into engineering specifications (Hauser and Clausing, 1988) being associated with better time performance on accelerated programs (Swink, 1998). An explanation of this result may be found in the time and effort necessary

Figure 3 Success and quality

103




to achieve the correct implementation of a new tool such as QFD. It is also important to consider carefully the relationship between market conditions and time to market, trying to avoid that speeding up the development process leads to products with low performance levels. Besides, efforts to improve performance through cycle time reduction should be coordinated with changes in organizational practices if the potential benefits from accelerated product development are to be achieved. Additional research is needed to understand why many of the techniques studied do not seem to reduce development time, as was expected. For instance, researchers should study possible interaction effects between some of them. Stage gate process, optimal product technology (OPT) and PDM are the tools most related with successful firms and, surprisingly, computer-aided manufacturing (CAM), computer-aided engineering (CAE) and conjoint analysis do not show a clear relationship with success. Moreover, these techniques can be counterproductive, probably due to inappropriate implementation. Effectively, the implementation of NPD techniques must be accompanied by personnel training and resource allocation to make them effective and efficient (Millson et al., 1992). Management should not expect to implement these techniques instantly and obtain immediate results. In many situations a firm's NPD process has become so bogged down in bureaucracy that the organizational changes alone required to speed up the process may take months to implement. Another view suggests that their use may be inappropriate for NPD due to the uncertainties usually inherent in the innovation process (Gupta and Wilemon, 1990). More focused study of the effects of these tools and their implementation is justified since our study has now empirically raised doubts regarding the efficiencies normally attributed to them. Finally, our results show that the most useful tools for obtaining a high quality level in new products are OPT, PDM, CAD and JIT. Some studies suggest that the performance benefits of accelerating product development should be greater when the perceived quality of the product design is

higher (Zirger and Maidique, 1990; Ittner and Larcker, 1997). In general, the relationships between time to market, cost and quality are unclear, and they may differ depending on the kind of innovation (radical versus incremental), which is why these findings must be treated with care. The results obtained do not reflect which is the most efficient sequence of the implementation of the different techniques, therefore firms must take care when using these findings to reduce the development cycle time. The fact that time to market reduction is not the only important factor in product development teams suggests that these time reductions must be seen in the context of the firm strategic objectives. Although we attempted to overcome some of the methodological problems encountered in previous studies on the impact of NPD techniques on new product success, some caveats also apply to this research. First, the results must be considered exploratory by nature because of the sources employed in our research. Second, the sample was restricted to two industries (electric and electronic and transport equipment), containing firms developing a variety of heterogeneous products. These industries may be unrepresentative and our results may not be generalized to the international economy. A third concern about our study was that all data were collected from a single respondent from each firm. While the respondents were shown to possess high degrees of relevant knowledge, they were still subject to respondents bias. Therefore, future research needs to replicate our findings in other industries, with multiple respondents from different functional areas in each firm. A final concern about our study was the relatively small sample size, given the statistical techniques we used to analyze the data. However, this study represents one of the larger empirical research studies about the relationships between development techniques and time to market. The limitations of the present study offer future research opportunities. Increasing the size and cultural diversity of the sample would be a worthwhile undertaking in future research. A question that remains unanswered is to identify the factors that can explain the low efficiency of some techniques. Hence, we

104




advise that future research should take a contingency approach by delineating the conditions under which the use of each particular NPD technique identified is more or less effective. In summary, our results clearly confirm that the adoption of some acceleration techniques do not have the expected effect over time to market, quality and success. Though state-ofthe-art research methods were employed, further research is needed using larger sample sizes (from other industries and different countries). Together, these findings advance extant theory and research by pointing to the important role of NPD techniques in contributing to project performance over time. Indeed, the present study's results suggest that decision makers must select which techniques are more useful in achieving their firm's goals. Our study provides a modest but promising beginning in the aim of getting a global hierarchy of acceleration techniques. We hope that our discussion of these data lead to enhanced knowledge about acceleration techniques and their effect on NPD success.

Notes 1 Only the tools and techniques most usually cited in the literature are included in our classification. 2 Between both industries more than 35 percent of total Spanish R&D expenditures are realized. 3 Using binomial scales (yes/no). The term use was not specified, capturing both formal andinformal use. 4 This latter figure is often referred to as the retention of the solution

References Bendixen, M. (1996), `À practical guide to the use of correspondence analysis in marketing research'', Marketing Research On-Line, No. 1, pp. 16-38. Brown, S.L. and Eisenhardt, K.M. (1995), ``Product development: past research, present findings and future directions'', Academy of Management Review, No. 2, pp. 343-78. Clark, K.B. and Fujimoto, T. (1990), ``The power of product integrity'', Harvard Business Review, No. 6, pp. 107-18. Cooper, R.G. (1995), ``Developing new products on time, in time'', Research Technology Management, Vol. 38 No. 5.

Cordero, R. (1991), ``Managing for speed to avoid product obsolescence: a survey of techniques'', Journal of Product Innovation Management, No. 8, pp. 283-94. Greenacre, M.J. (1988), Theory and Applications of Correspondence Analysis, Academic Press, London. Griffin, A. (1997a), Drivers of NPD Success: The PDMA Report, Product Development and Management Association. Griffin, A. (1997b), ``PDMA research on new product development practices: updating trends and benchmarking best practices'', Journal of Product Innovation Management, No. 14, pp. 429-58. Gupta, A.K. and Wilemon, D.L. (1990), `Àccelerating the development of technology-based new products'', California Management Review, No. 2, pp. 22-44. Hauser, J.R. and Clausing, D. (1989), `Òtra novedad japonesa: la casa de la calidad'', Harvard Business Review. Hoffman, D.L. and Franke, G. R. (1986), ``Correspondence analysis: graphical representation of categorical data in market research'', Journal of Marketing Research, No. 23, pp. 213-27. Ittner, C.D. and Larcker, D.F. (1997), `'Product development cycle time and organizational performance'', Journal of Marketing Research, No. 34, pp. 13-23. Jaworsky, B.J. and Kohli, A.K. (1993), ``Market orientation: antecedents and consequences'', Journal of Marketing, Vol. 57, pp. 53-70. Karagozoglu, N. and Brown, W.B. (1993), ``Time-based management of new product development process'', Journal of Product Innovation Management, No. 5. Kessler, E.H. and Chakrabarti, A.K. (1999), ``Speeding up the pace of new product development'', Journal of Product Innovation Management, No. 3, pp. 231-47. Langerak, F., Peelen, E. and Nijseen, E. (1999), `À laddering approach to the use of methods and techniques to reduce the cycle time of new-to-thefirm products'', Journal of Product Innovation Management, No. 2, pp. 281-9. Millson, M., Raj, S. and Wilemon, D. (1992), `À survey of major approaches for accelerating new product development'', Journal of Product Innovation Management, No. 9, pp. 53-69. Nijseen, E.J. and Lieshout, K.F.M. (1995), `Àwareness, use and effectiveness of models and methods for new product development'', European Journal of Marketing, No. 10, pp. 27-44. Olson, E.M., Walker, O.C. Jr and Ruekert, R.W. (1995), `Òrganizing for effective NPD: the moderating role of product innovativeness'', Journal of Marketing, Vol. 59, pp. 48-62. Page, A.L. (1993), `Àssessing new product development practices and performance: establishing crucial norms'', Journal of Product Innovation Management, Vol. 10 No. 4. Pawar, K.S., Menon, U. and Riedel, J. (1994), ``Time to market'', Integrated Manufacturing Systems, No. 1, pp. 14-22. Song, X.M. and Parry, M.E. (1997), `À cross-national comparative study of new product development processes: Japan and the United States'', Journal of Marketing, Vol. 61, April.

105




Stalk, G. and Hout, T.M. (1990), ``Competing against time'', Research Technology Management, No. 2, pp. 19-24. Swink, M. (1998), ``Project characteristics and management methods associated with time and lateness in accelerated and non-accelerated new product development'', Working Paper, Michigan State University, East Lansing, MI. Youssef, M. (1995), ``Design for manufacturability and time to market'', International Journal of Operations & Production Management, No. 1. Tomkovich, C. and Miller, C. (2000), ``Riding the wind: managing new product development in an age of change'', Vol. 17 No. 6, pp. 413-23. Zirger, B.J. and Hartley, J.L. (1996), ``The effect of acceleration techniques on new product development time'', IEEE Transactions on Engineering Management, No. 2, pp. 143-52. Zirger, B.J. and Maidique, M.A. (1990), `À model of new product development: an empirical test'', Management Science, No. 7, pp. 867-83.

Further reading Booz, Allen and Hamilton (1982), New Product Management for the 1980s, Booz, Allen and Hamilton, New York, NY. Clark, K.B. and Wheelwright, S. (1993), Managing New Product and Process Development, The Free Press, New York, NY. Cooper, R.G. (1979), ``The dimensions of industrial new product success and failure'', Journal of Marketing, No. 43, Summer, pp. 93-103. Cooper, R.G. and Kleinschmidt, E.J. (1993), ``Major new products: what distinguished the winner in the chemical industry?'', Journal of Product Innovation Management, No. 10, pp. 90-111.

Crawford, C.M. (1992), ``The hidden costs of accelerated product development'', Journal of Product Innovation Management, No. 9. Dale, B.G. and McQuater, R.E. (1997), Managing Business Improvement and Quality: Implementing Key Tools and Techniques, Basil Blackwell, Oxford. Eisenhardt, K.M. and Tabrizi, M.B. (1995), `Àccelerating adaptive processes: product innovation in the global computer industry'', Administrative Science Quarterly, No. 40. Gupta, A.K. and Souder, W.E. (1998), ``Key drivers of reduced cycle time'', Research Technology Management, No. 4. Karlsson, C. and AhlstroÈm, P. (1999), ``Technological level and product development cycle time'', Journal of Product Innovation Management, No. 4, pp. 352-62. Mahajan, V. and Wind, J. (1992), ``New product models: practice, shortcomings and desired improvements'', Journal of Product Innovation Management, No. 9, pp. 128-39. Maidique, M.A. and Zirger, B.J. (1984), `À study of success and failure in product innovation: the case of the US electronic industry'', IEEE Transactions in Engineering Management, No. 4, pp. 192-203. Maidique, M.A. and Zirger, B.J. (1985), ``The new product learning cycle'', Research Policy, No. 14, pp. 299-313. Poolton, J. and Barclay (1998), ''New product development from past research to future applications'', Industrial Marketing Management, No. 3, pp. 197-212. Reinertsen, D.G. (1992), ``The mythology of speed'', Machine Design, No. 64. Slater, S. (1993), ``Competing in high-velocity markets'', Industrial Marketing Management, No. 22. Takeuchi, H. and Nonaka, I. (1986), ``The new new product development game'', Harvard Business Review, No. 64, pp. 137-46.

106

The right of employees/ inventors to claim back their patents from corporations Radoslav P. Kotorov

The author Radoslav P. Kotorov is Director, Measurement and Analysis, ClubMom Inc., New York, NY, USA. Keywords Intellectual property, Patents, Legal matters Abstract Proposes a reform in the intellectual property rights system. The proposed changes give employees/inventors the right to claim back their patents from firms that do not commercialize the patented inventions within a limited period of time. Large corporations commercialize only a fraction of their patent portfolios, and yet the current intellectual property laws do not provide employees/inventors with alternative ways to realize their ideas. The proposed reform empowers nimble employees by providing them with ownership claims against the patent assignees. Ownership claims are considered more effective in empowering employees in an economy where technological and organizational transformation undermine the significance of stakeholder claims. Electronic access The research register for this journal is available at http://www.emeraldinsight.com/researchregisters The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1460-1060.htm


Introduction Mega-mergers and acquisitions have created corporations that are more powerful than many sovereign states. This has produced a power imbalance between management and employees, and has given some business ethics scholars reason to claim that the `àristocracy of business has become a permanent and is creating more wealth for the wealthy and more burdens for the very poor'' (Kelly, 2001). They argue that it is too late to try self-regulatory concepts such as corporate social responsibility and business citizenship, and call on employees to demand more transparency and more opportunity to participate in corporate governance and operational oversight (Kelly, 2001). Implicit in this recommendation is the understanding that stakeholders can make a change. But can stakeholders really make a change? Moreover, should we emphasize the stakeholder approach, if ownership may be more effective? In the present paper, I shall argue that the development of information technology has caused organizational transformations that undermine the relevance of stakeholders' claims. On the other hand, the same technology has increased the opportunities for new venture creation and new product marketing. If employees/inventors are entitled to claim back their patents from corporations that have not commercialized them, they are likely either to become entrepreneurs or to seek other corporations to commercialize their inventions. While Schumpeter (1975) and Galbraith (1962) saw the rise of big business as the end of entrepreneurship due to disproportionate access and control of resources, the proposed ownership policy may be viewed as a countervailing force for it encourages entrepreneurship and competition. Furthermore, the social benefits from commercialized inventions exceed the private benefits from preventing the commercialization of inventions. Thus, legislators have intentionally limited the term of patents to prevent inventors from blocking indefinitely their commercialization. A two-tiered ownership structure gives patent assignees an option to commercialize the invention before anyone else or to block the commercialization in order to secure first mover advantage in commercializing

107

The right of employees/inventors to claim back their patents

Radoslav P. Kotorov


functionally similar inventions. Yet, by limiting the period in which the assignee can hold the commercialization of the invention, the proposed policy preserves the monopoly incentives for the inventor and others who may wish to commercialize and profit from it.

organization was first put forward by Coase (1937). The decision of whether to produce internally or to outsource is based on a comparison of two sets of costs: (1) the cost of hierarchical management; and (2) the cost of transacting on the market.

Shareholders vs. stakeholders The dichotomy of stakeholders vs. shareholders has become so prevalent that it is diverting attention from how ownership claims can be used to achieve the same if not better results than stakeholders' claims. Shareholder theory is derived from the neoclassical theory of the firm, which lineage can be traced back to Adam Smith. According to the theory, also known as the production function theory of the firm, resources are needed for the organization of production. Since investors provide financial resources in exchange for equity stakes in the firm, the firm should be managed solely to maximize the returns to its investors/owners as long as its activities comply with the law (Friedman, 1970)[1]. Stakeholder theory, on the other hand, starts with different assumptions about what the firm is. According to an alternative theory of the firm, not all resources used by the firm are owned by it (Alchian and Demsetz, 1972; Cochran, 2000)[2]. Labor is an example of a resource that is used but not owned by the firm. A firm that does not own all of its resources has a complex web of contracts with its suppliers (Jensen and Meckling, 1976). The involvement of independent owners of resources seems to undermine the significance of ownership emphasized by the neoclassical theory of the firm. Hence, management is given the mediating role of balancing the interests of various constituencies, such as consumers, suppliers, owners, community members, etc. (Evan and Freeman, 1993)[3]. This principle of governance does not advocate merely a mutual respect of rights as shareholder theory does; it proposes a stronger commitment based on loyalty, mutual help, seniority, etc. But is the firm merely a web of contracts? I propose that contracts are means to design the organization of the firm according to what most contributes to the protection of its market share and profits. The important connection between contracts and firm

As information technology lowers transaction costs, more processes are outsourced and firms become more decentralized. The tendency to oursource inadvertently undermines the stakeholders' claims because in the open market only the rights claims between the exchanging parties are enforceable. A countervailing force against the decentralization of the firm is the protection of intellectual property. According to Von Hayek (1937), the market is a cheap communications network that disseminates important information to all participants, who in turn engage in adaptive learning. From this perspective, the use of hierarchy as opposed to the market mechanism is determined by considerations to secure the proprietary use of the employees' knowledge and skills[4]. The outsourcing of innovations is inherently risky due to leakage of information and systematic effects (Armour and Teece, 1980), as well as the possibility to develop and sell functionally similar inventions in the market (Kotorov, 2001). Confidentiality agreements and covenants not to compete are conditions sine qua non for many employment contracts for they secure: . that all intellectual products created by the employee during the employment relationship will be the property of the firm; and . that no firm specific knowledge will be transferred to another firm within a reasonable period of time after the termination of the employment relationship.

Underutilization of intellectual property If the production of intellectual assets, such as patents, know-how, etc., is internalized with the aim of securing their proprietary use with respect to some core competencies of the firm, then it is puzzling that firms do not commercialize all of these assets. Underutilization of assets occurs when the present return is less than the expected return

108



Radoslav P. Kotorov

if the asset is deployed in a different way. Patents that are not commercialized are dormant assets, for they do not generate return, and yet their maintenance cost is so low that management does not have an incentive to dispose of them. Another obstacle for the sale of patents is that the market for them is imperfect. If the expected returns from the commercialization of innovations are higher, then the question is why managers resist. First, many inventions in large corporations are simply the byproducts of R&D. Such serendipitous innovations are often only remotely connected to the core competencies of the firm. In turn, the firm has little incentive to commercialize innovations that fall outside of its core competencies. This is even more true of large, multi-product enterprises, where efficiency considerations and functional specialization limit significantly the resources that can be allocated to alternative activities, such as the commercialization of products or technologies that fall outside of the main product line[5]. Second, but no less important, is the underutilization of patents that fall within the core business of the corporation but are not commercialized because the deciding managers are risk averse. The commercialization of patents requires allocation of resources, which may be lost if the product fails on the market. Since product failure may impact adversely on the career paths of managers, they are less inclined to undertake commercialization risks. Managers in large corporations are willing to undertake only the commercialization of high volume products, which are economical to produce and less costly to market. Stated differently, the expected pay-off should exceed by far the risks in order to justify the commercialization of inventions. For instance, a study shows that managers tend to ignore patents resulting in products with expected sales of less that $100 million a year (The Economist, 1999). On the other hand, entrepreneurs often start new ventures with expected sales of less than $1 million. Given these considerations it comes as no surprise that many large corporations commercialize only 10 to 15 percent of their intellectual property. An internal resource audit in Procter & Gamble has revealed that the firm has used only 10 percent of its

25,000 patents (The Economist, 1999). Given the evidence about the abundance of dormant assets, it should come as no surprise that the break-up of some large corporations produces so much wealth. Today the companies created by the break-up of AT&T are worth $810 billion, while AT&T was worth $59 billion immediately before the breakup[6]. To show that this increase in market value is not simply the result of the overall increase in corporate market values one may compare the market capitalization of IBM during this period, which is 140 percent vs. 1,300 percent for the companies created out of the Bell System (Coy, 1999). Break-ups increase rapidly the market value of the new firms because competition forces the newly created rivals both to commercialize existing inventions as a means to differentiate from one another and gain competitive advantage, and, to develop new innovations.

Issues of justice Opportunities that large companies and their managers are willing to forgo because the expected revenues are not high enough are often worth taking for entrepreneurs. Thus, the questions that come to mind concern: (1) whether it is not a duty of management to commercialize at least the majority of the inventions assigned to the firm; and (2) if it is not, then should the assigned but not commercialized patents be reassigned to the individual inventors after some reasonable period of time? Since this intellectual property is legitimately acquired by corporations, we have to justify the interference in the property rights of the owners of the firm. Standard employment contracts require employees to assign their inventions to the employer/firm. Since the US patent law recognizes as inventors and grants patents only to individuals or groups of individuals, the assignment is needed to transfer the ownership of the patent from the inventor to the firm employing him/her. Once the ownership is transferred it is up to the managers of the firm to decide whether to produce or not the subject of the patent. The proposed reform makes the acquisition conditional on the use of the patent. But there is no such requirement for tangible property.

109



Radoslav P. Kotorov

The owner of a house is not required to use it in order to sustain his/her ownership right. What justifies the difference? The general protection secured with the employment contract should not extend beyond the goals of the firm and deprive others of opportunities. The development of innovations is such that employers cannot foresee and specify in a contract ex ante all elements which they want to protect. If they could, all processes would have been outsourced. On the other hand, if employers could specify exactly the subject of protection, then the serendipitous innovations that fall outside of the core activities of the firm would be owned by the inventors. Thus, inventors should be able to claim back their inventions, especially when these inventions do not contribute to the goals of the firm, which is evidenced by the fact that they are not commercialized. On this view the assignment of intellectual property rights to firms is an option granted to corporations to facilitate the protection of their market share and profits. If the patent contributes to the firm's goals, then it is in the interest of the firm to exercise its option and to commercialize the patented product or technology. On the other hand, since patents offer valuable protection for the realization of opportunities, if the firm does not exercise its option, others should be able to take advantage of the opportunity. The employees' right to claim back unused patents changes the ownership intermediately during the term of the patent. The change is intended to mobilize dormant assets prior to the date when the patent expires, and when the patented product and technology become part of the public domain, which reduces the incentives for their utilization[7]. Treating corporate ownership of intellectual property as an option establishes a principle of conditional acquisition of intellectual property by firms, which can be viewed as an application in the new economy of Locke's proviso, that the acquisition of resources is just when there is `ènough and as good left in common for others'' (as cited in Kirzner, 1985, p. 155).

Benefits from the proposed policy Even though the complete economic impact of the proposed policy requires further

analysis which is beyond the scope of the present paper, the following two effects appear to be self-evident. First, the policy would reduce the incentives for firms to engage in strictly protective patenting or purchasing of patents of functionally similar products and technologies. Protective patenting occurs when firms invent and patent alternative products and technologies, in order to prevent competitors from discovering and introducing functionally similar products and processes. If the products protected by a firewall of functionally similar inventions are successful, then the inventors of protective patents will have stronger incentives to claim back their patents and commercialize them, without eliminating the first mover advantage of the firm. In view of this threat, corporations may be expected both to commercialize more patents as a diversification strategy and to allocate more funds to R&D to leapfrog to new technologies that will reduce the commercial value of the re-assigned patents. The second benefit is primarily procedural. Without a well-established legal procedure to claim back their patents, employees are more likely to succeed in persuading the firm to commercialize their patents than to convince managers to reassign the patent to them. Managers are reluctant to reassign patents to the original inventors because, if the patented product or technology is commercially successful, they may be held accountable for their decision and for the resulting competitive damages. Even though a well-established legal procedure will release managers of the latter responsibility, it will also force them to be more accountable and entrepreneurially minded when they decide whether to commercialize firms' inventions. Finally, since the firm's option is limited in time, we may expect that firms will try to assist entrepreneurial employees in exchange for taking equity stakes in their enterprises.

Conclusion The key assumption in this paper is that the valuable ideas of individuals are the main source of wealth in industrial societies. The market process creates incentives for the commercialization of ideas because it makes the reward from innovations proportionate to their market success. Patents are granted to

110



Radoslav P. Kotorov

facilitate the commercialization of valuable ideas by restricting market entry and competition. Yet, the accumulation of patent portfolios has become a source of competitive advantage by itself. Many patents are not commercialized by the portfolio holders, and the present system lacks the adequate incentives to encourage their commercialization. To achieve this goal, I propose employees be given the right to claim back their patents, when the assignee firms do not develop the products and technologies specified in the patents. This reform will encourage employees to be more entrepreneurial and firms to be more proactive in the commercialization of inventions. Finally, the strengthening of ownership claims is a means to offset the decline in stakeholders' claims due to technological and organizational changes.

6 Secretary of Defense Weinberg argued that the military needed a single, integrated communications network, which only a powerful firm like AT&T could provide; A.A. Penzias, a Nobel Laureate at Bell Laboratories, testified that the laboratories would become a sinking ship after the break-up; and when the break-up was announced employees were found crying in the hallways of AT&T over the destroyed firm (Coy, 1999). 7 It must be noted that there are many proposals for changes in the patent system, all of which are motivated by concerns for better protection. However, the proposals clearly indicate that the interests of small inventors and large firms are different. The three most controversial issues are: whether patent applications should be published within 18 months after filing, whether early adopters of technology should be exempt from later patents, and whether the powers to re-examine patents should be increased. Small inventors fear that if patent applications, which are kept secret during the processing period, are published large firms would quickly develop alternative technologies and will deprive them of the first mover advantage. Large firms fear that small inventors strategically prolong the processing period in order to conceive, develop and begin using similar technology, and then, after the fact, to sue for damages. With respect to the second issue, small inventors fear bogus claims of prior use, which are hard to prove, while large firms view it as a protection of trade secrets. Finally, the reexamining can be used strategically by all to delay the issue of patents.

Notes 1 The duty of managers, as stated by Friedman (1970), is to increase profits ``so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud''. 2 Freeman (1984) traces the beginning of stakeholder theory to an obscure note in I. Ansoff's book on corporate strategy. On the other hand, Casey (1997) traces stakeholder theory back to an article in the 1930s, in which two political scientists argued about the existence of policy vacuum due to concentration of corporate ownership in the hands of passive owners. The policy vacuum was filled by corporate managers, who had unprecedented discretionary power to do what they pleased, as long as this increased the wealth of the owners. My opinion is that the structure of ownership theories of the firm provides firm theoretical grounds for the development of stakeholder theory. 3 As Evan and Freeman (1993, p. 103) state: ``[t]he corporation should be managed for the benefit of its stakeholders: its customers, suppliers, owners, employees, and local communities. The rights of these groups must be ensured, and, further, the groups must participate, in some sense, in decisions that substantially affect their welfare." 4 Managerial skill and know-how is also subject to proprietary use. As Drucker (1972) points out, it is an irreplaceable resource because it determines the going concern of the firm. Managerial advice can be bought from consultants, but the risks of leakage are inherent in such transactions. 5 Brain-drain in Microsoft is attributed to the fact that the company has 33,000 employees and 183 products. Thus, there is a significant amount of organizational layers which employees have to overcome in order to push their ideas onto the market (Business Week, 1999).

References Alchian, A. and Demsetz, H. (1972), ``Production, information costs and economic organization'', American Economic Review, Vol. 62, pp. 777-95. Armour, H.O. and Teece, D.J. (1980), ``Vertical integration and technological integration'', Review of Economics and Statistics, Vol. 60, pp. 470-4. Business Week (1999), November 29. Casey, J.L. (1997), Values Added, University Press of America, Lanham, MD. Chandler, A.D. Jr (1962), Strategy and Structure: Chapters in the History of the American Business, Harvard University Press, Boston, MA. Chandler, A.D. Jr (1990a), Scale and Scope: The Dynamics of Industrial Capitalism, Belknap Press, Cambridge, MA. Chandler, A.D. Jr (1990b), ``The enduring logic of industrial success'', Harvard Business Review, March-April, pp. 132-40. Coase, R.H. (1937), ``The nature of the firm'', Economica, Vol. 4, pp. 386-405. Coase, R.H. (1988), The Firm, the Market, and the Law, The University of Chicago Press, Chicago, IL. Cochran, P.L. (2000), ``Deriving ethical principles from theories of the firm'', in Dienhart, J.W. (Ed.), Business, Institutions, and Ethics, Oxford University Press, New York, NY.

111


Radoslav P. Kotorov


Coy, P. (1999), ``Commentary: the lessons of the AT&T breakup'', Business Week, November 22. Drucker, P.F. (1972), The Concept of the Corporation, New American Library, New York, NY. Evan, W.M. and Freeman, R.E. (1993), `À stakeholder theory of the modern corporation: Kantian capitalism'', in Beauchamp, T.L. and Bowie, N.E. (Eds), Ethical Theory and Business, Prentice-Hall, Englewood Cliffs, NJ, pp. 97-106. Freeman, R.E. (1984), Strategic Management: A Stakeholder Analysis, Pittman, Boston, MA. Friedman, M. (1970), ``The social responsibility of business is to increase its profits'', New York Times Magazine, September 13. Galbraith, J.K. (1962), The Affluent Society, Penguin, Harmondsworth. (The) Economist (1999), October 30. Jensen, M. and Meckling, W. (1976), ``Theory of the firm: managerial behavior, agency costs and ownership structure'', The Journal of Financial Economics, Vol. 3, pp. 305-60. Kelly, M. (2001), The Divine Right of Capital: Dethroning the Corporate Aristocracy, Berrett-Koehler, San Francisco, CA. Kirzner, I.M. (1985), Discovery and the Capitalist Process, The University of Chicago Press, Chicago, IL.

Kotorov, R.P. (2001), ``Why entrepreneurs establish firms: competition, protection costs, and the rise of the firm'', New England Journal of Entrepreneurship, Vol. 3. Krafft, J. and Ravix, J. (1998), ``Theories of the firm'', in Arena, R. and Longi, C. (Eds), Markets and Organization, Springer-Verlag, New York, NY. Leijonhufvud, A. (1986), ``Capitalism and the factory system'', in Langlois, R. (Ed.), Economics in Process: Essays in the New Institutional Economics, Cambridge University Press, Cambridge. Leijonhufvud, A. (1988), ``Farms, factories and firms'', Siena International School of Economic Research, Workshop II, July. Nelson, R. and Winter, S.G. (1978), ``Forces generating and limiting concentration under Schumpeterian competition'', Bell Journal of Economics, pp. 524-48. Schumpeter, J.A. (1975), Capitalism, Socialism and Democracy, Harper & Row, New York, NY. Stinchcombe, A.L. (1990), Information and Organization, University of California Press, Berkeley, CA. Teece, D. and Armour, H. (1983), ``Vertical integration and technological innovation'', Review of Economics and Statistics, Vol. 62 No. 3, pp. 47074. von Hayek, F.A. (1937), `Èconomics and knowledge'', Economica, Vol. IV, pp. 33-54.

112

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

No title

Recommend Documents