JBR-07575; No of Pages 12 Journal of Business Research xxx (2012) xxx-xxx Contents lists available at SciVerse ScienceDirect Journal of Business Research Organizational innovation as an enabler of technological innovation capabilities and rm performance Csar Camisn , Ana Villar-Lpez Universitat de Valncia, Spain a r t i c l e i n f o Article history: Received 1 October 2010 Received in revised form 1 January 2011 Accepted 1 June 2012 Available online xxxx Keywords: Organizational innovation Firm performance Technological innovation capabilities a b s t r a c t This study assesses the relationship between organizational innovation and technological innovation capabilities, and analyzes their effect on rm performance using a resource-based view theoretical framework. The article presents empirical evidence from a survey of 144 Spanish industrial rms and modeling of a system of structural equations using partial least squares. The results conrm that organizational innovation favors the development of technological innovation capabilities and that both organizational innovation and technological capabilities for products and processes can lead to superior rm performance. 2012 Elsevier Inc. All rights reserved. 1. Introduction Organizational innovation (OI) is the introduction of new organizational methods for business management in the workplace and/or in the relationship between a company and external agents (OECD, 2005). OI currently represents one of the most important and sustainable sources of competitive advantage for rms because of its context-specic nature (Hamel, 2006, 2007, 2009). However, OI remains poorly understood (Hamel, 2006: 82). Few conceptual and methodological contributions address the monitoring of OI (Armbruster, Bikfalvi, Kinkel, & Lay, 2008: 645). The number of studies on OI development (Armbruster et al., 2008; Birkinshaw, Hamel, & Mol, 2008; Hamel, 2006, 2007, 2009) and the factors that promote this development (Battisti & Stoneman, 2010; Birkinshaw & Mol, 2006; Mol & Birkinshaw, 2009) have increased in the last few years. However, few studies report on the consequences of OI (Damanpour & Aravind, 2011), and those that do are limited in scope (Mol & Birkinshaw, 2009: 1270). The present study addresses this issue through analysis of: (1) the effect of OI on the generation of technological product This research was nancially supported by research funding from the Spanish Ministry of Science and Innovation (ECO2009-1252) and from the Consellera de Educacin of the Generalitat Valenciana (ACOMP/2010/233). Also, the authors thank the three anonymous reviewers for their excellent suggestions. Comments by Fariborz Damanpour, Rutgers University, Newark, United States, Mariano Nieto-Antoln, Universidad de Len, Len, Spain, and Pedro Lpez-Sez, Universidad Complutense de Madrid, Madrid, Spain, to an earlier draft were helpful in revising this paper. Corresponding author at: Departamento de Direccin de Empresas, Juan Jos Renau Piqueras, Facultad de Economa, Edicio Departamental Oriental, Universitat de Valncia, Av. Tarongers, s/n, C. P. 46022, Valencia, Spain. E-mail addresses: Cesar.Camison@uv.es (C. Camisn), Ana.Villar@uv.es (A. Villar-Lpez). and process innovation capabilities (IC); and (2) the impact of OI and technological IC on rm performance (FP). The present study expands current knowledge on OI in two ways. First, Damanpour and Aravind (2011) encourage research on the effect of OI on technological IC. To date, the main arguments identifying OI as a prerequisite for technological IC stem from reports on organizational change published in the 1950s (Lawrence, 1954; Lewin, 1958). Although there are more recent reports showing a direct correlation between these types of innovation (Damanpour & Evan, 1984; Kimberly & Evanisko, 1981), few studies extend the original reasoning (Damanpour, Szabat, & Evan, 1989). The importance of both organizational and technological innovation has only been shown very recently, but has as yet little advanced our understanding of the connection between them (Battisti & Stoneman, 2010; Damanpour, 2010; Damanpour, Walker, & Avellaneda, 2009). The present study contributes to an understanding of the association between OI and technological IC and supports the hypothesis that while OI is a positive factor in the development of process IC, its effect on product IC is mediated by process IC. This is an important issue in strategic management given that innovative activity is an important source of sustainable competitive advantage (Damanpour & Schneider, 2006; Damanpour & Wischnevsky, 2006). Identication of internal factors that stimulate technological IC can promote a better understanding of the innovative process within a rm (Galende & de la Fuente, 2003) and will enable advancement of the study of the interrelationship between innovation types and IC (Damanpour, 2010). Second, as Mol and Birkinshaw (2009: 1270) state, \"The literature offers very little evidence of the empirical relationship between the introduction of new management practices and FP\". Consequently, debate on the impact of OI on FP is ongoing, with one side maintaining that OI has a positive effect on FP (Armbruster et al., 2008; Mol & Birkinshaw, 2009) and is an essential source of competitive advantage (Hamel, 0148-2963/$ - see front matter 2012 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2012.06.004 Please cite this article as: Camisn, C., & Villar-Lpez, A., Organizational innovation as an enabler of technological innovation capabilities and rm performance, Journal of Business Research (2012), doi:10.1016/j.jbusres.2012.06.004 2 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxx-xxx 2009) and the other maintaining that its existence has a weak effect on FP (Cappelli & Neumark, 2001). This paper sheds light on this question by building on the stream of research that proposes that OI positively affects FP. Furthermore, unlike previous research, this study specically considers how product and process IC separately affect FP and how they interrelate to achieve a positive effect on FP. This research question is important because provides a better understanding of how rms benet from these two types of technological IC to obtain superior FP. Until now, the impact of product and process IC on FP has mainly been studied by considering both of them in a construct (Calantone, Cavusgil, & Zhao, 2002; Tsai, 2004) and this paper tries to shed light on whether they provide the same (or different) results for a rm considering them separately. The structure of the remainder of the article is as follows. Section 2 includes a review of relevant literature and a sound theoretical model of the relationships among OI, technological IC, and FP. Section 3 describes the procedures used to test the hypotheses. Section 4 comprises the results of the analysis. The discussion and conclusions with academic and practical implications follow in Section 5. 2. Literature review and hypotheses 2.1. Resource-based view (RBV) of innovation Among numerous classications of types of innovation, one of the most commonly accepted is that of the OECD (2005) in the Oslo Manual, which distinguishes four types of innovation: product innovation, process innovation, marketing innovation, and OI. Technological innovation involves product and process innovations, while non-technological innovation involves marketing and organizational innovations. This paper focuses on all of the types identied by the OECD (2005) except for marketing innovation, consideration of which would be beyond the scope of this study. Schumpeter (1934) and other important innovation researchers such as Damanpour (Damanpour, 1991; Damanpour & Evan, 1984) and Edquist, Hommen and McKelvey (2001) have classied innovation types in several ways. Without detracting from these classications, the classication of the Oslo Manual synthesizes and homogenizes these previous important innovation classications. Specically, this paper focuses on the role of OI, technological (product and process) IC and its effects on FP. The theoretical framework provided by the resource-based view (RBV) facilitates clear analysis of innovation and its association with performance (Damanpour et al., 2009; Galende & de la Fuente, 2003; Mol & Birkinshaw, 2009; Yang, Marlow, & Lu, 2009). RBV uses the internal characteristics of rms to explain their heterogeneity in strategy and performance. According to the main assumption of RBV, only rms with certain resources and capabilities with special characteristics will gain competitive advantages and, therefore, achieve superior performance. The distinctiveness of a factor depends on its rarity, value, durability, nonsubstitutability, inimitability and appropriability of generated rents (Amit & Schoemaker, 1993; Barney, 1986, 1991; Grant, 1991; Peteraf, 1993; Wernerfelt, 1984). Sustainable competitive advantage determines the ability of an organization to recongure and to constantly renew its supply of valuable and idiosyncratic resources and capabilities to foster innovation (Eisenhardt & Martin, 2000; Grant, 1996; Nelson & Winter, 1982; Teece, Pisano, & Shuen, 1997; Winter, 2000). According to RBV, a capability refers to the deployment and reconguration of resources to improve productivity and achieve strategic goals (Makadok, 2001). A capability is a lower-order functional, operational or technological capability (Ortega, 2009). Technological IC is identied as one of the most important sources of competitive advantage (Coombs & Bierly, 2001, 2006) owing to its causal ambiguity (Gonzlez-lvarez & Nieto-Antoln, 2005). Specically, technological IC is the ability to perform any relevant technical function or volume activity within the rm, including the ability to develop new products and processes, and to operate facilities effectively (Teece, Pisano & Shuen, 1997). Recent empirical research provides statistical evidence that technological IC is an important determinant of FP (Ortega, 2009; Tsai, 2004). The next section examines OI, given the necessity to clarify this concept. 2.2. Organizational innovation The denition of OI is not as easily agreed in innovation literature as those for technological IC (Armbruster et al., 2008). This is due to the fact that literature on OI is still scarce and scattered (Armbruster et al., 2006, 2008; Mol & Birkinshaw, 2009), reecting various denitions of the concept (Table 1). The rst scientic studies on innovation in rms were on administrative innovation (Daft, 1978; Damanpour, 1991; Damanpour & Evan, 1984; Damanpour, Szabat & Evan, 1989; Ettlie & Reza, 1992), dened as innovation concerning changes in organizational structure and human resource (HR) practices. More recent papers, however, refer to management innovation (Hamel, 2006, 2007, 2009; Mol & Birkinshaw, 2009), managerial innovation (Damanpour & Aravind, 2011) or OI (Armbruster et al., 2006; Battisti & Stoneman, 2010; OECD, 2005). As Damanpour and Aravind (2011: 35) posit, the denitions of administrative, organizational and management innovations overlap markedly. The present study uses the terminology and denition proposed by the OECD, which encompass the essence of both the traditional and more recent denitions. Specically, the OECD (2005) denes OI as the implementation of a new organizational method in a rm's business practices, workplace organization, or external relationships. The feature that distinguishes OI from other organizational changes is the implementation of an organizational method that has not been used before in the rm and that is the result of strategic management decisions (OECD, 2005). In particular, the OECD (2005) considers that OI in business practice involves the implementation of new methods for organizing routines and procedures, such as establishing databases of best practice, improving worker retention, or introducing management systems. Innovation in workplace organization involves the implementation of new methods for distributing responsibilities and decision-making among employees for the division of work, as well as new concepts for the structuring of activities. Finally, innovation in organization methods for external relationships involves the implementation of new ways of organizing relationships with other rms or public institutions, such as collaboration with research organizations or customers, methods for integration with suppliers, or outsourcing. This OECD (2005) denition of OI has similarities to and differences from previous denitions (Table 1). With regard to the similarities, most of the denitions establish that OI (or management innovation, depending on the terminology used by the authors) consists of the use of new managerial and working concepts and practices (e.g. Armbruster et al., 2006, 2008; Birkinshaw et al., 2008). Therefore, OI refers to the implementation of a new organizational method in a rm. With regard to the differences among denitions, the OECD (2005) and other authors such as Armbruster et al. (2006, 2008) and Battisti and Stoneman (2010) introduce a further twist to the denition of OI. These definitions include inter- and intra-organizational dimensions to OI. Intra-organizational OI occurs within an organization or company, whereas inter-organizational OI includes new structures or procedures outside the company boundaries (e.g. cooperation agreements) (Armbruster et al., 2008). This difference suggests that OI is different from management innovation and the terms are not interchangeable. On the contrary, the OECD (2005) denition of OI includes the concept of management innovation (intra-organizational innovation) and expands the denition by considering the case of inter-organizational innovation. This enriches the denition of management innovation because considers intra- and inter-organizational innovations simultaneously with regard to the use of new managerial and working concepts and practices. Please cite this article as: Camisn, C., & Villar-Lpez, A., Organizational innovation as an enabler of technological innovation capabilities and rm performance, Journal of Business Research (2012), doi:10.1016/j.jbusres.2012.06.004 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxx-xxx 3 Table 1 Organizational innovation denitions. Study Terminology Daft (1978) Administrative innovation Kimberly and Evanisko Administrative (1981) innovation Damanpour and Evan Administrative (1984) innovation Damanpour et al. Administrative (1989) innovation Hwang (2004) Managerial innovation OECD (2005) Organizational innovation Hamel (2006) Management innovation Armbruster et al. Organizational (2006, 2008) innovation Birkinshaw et al. Management (2008) innovation Mol and Birkinshaw Management (2009) innovation Battisti and Stoneman Organizational (2010) innovation Damanpour and Aravind Managerial (2011) innovation Denition Concerns organizational structure and administrative processes Adoption of electronic data processing for a variety of internal information storage, retrieval and analytical purposes, indirectly related to the basic work activity of the hospital and more immediately related to its management Innovations introduced into the organizational structure, into administrative processes and/or human resources Innovations in the administrative component that affect the social system of an organization Design of an appropriate organizational structure and processes, and a human resource system Implementation of a new organizational method in the business practices, workplace organization or external relations A marked departure from traditional management principles, processes and practices or a departure from customary organizational forms that signicantly alters the way the work of management is performed Changes in the structure and processes of an organization due to implementation of new managerial and working concepts and practices, such as teamwork in production, supply chain management, or quality management systems Invention and implementation of a management practice, process, structure or technique that is new and is intended to further organizational goals Introduction of management practices that are new to the rm and intended to enhance rm performance Innovation involving new management practices, new organization, new marketing concepts and new corporate strategies New approaches in knowledge for performing management functions and new processes that produce changes in the organization's strategy, structure, administrative procedures, and systems The literature on OI is scarce (Armbruster et al., 2006, 2008), particularly in terms of empirical evidence (Battisti & Stoneman, 2010). Apart from some early contributions (Damanpour et al., 1989), the importance of OI as a distinct innovation type has only emerged in the last decade. The OECD (2005) recognition of OI as separate from product, process, and marketing innovations partly triggered this change in direction. Recent studies have expanded the concept of OI (Armbruster et al., 2006, 2008; Hamel, 2006, 2007, 2009) and carry out various empirical papers (Armbruster et al., 2008; Battisti & Stoneman, 2010). Some studies address the development of OI (Birkinshaw et al., 2008; Hamel, 2006, 2007, 2009) and factors favoring its development (Mol & Birkinshaw, 2009). Others consider business responses to the inclusion of OI (O'Mahoney, 2007) and its effect on organizational performance (Camisn & Villar-Lpez, 2010; Walker, Damanpour, & Devece, 2010) or FP (Damanpour et al., 2009; Mazzanti, Pini & Tortia, 2006; Mol & Birkinshaw, 2009). Specic innovation practices are also the focus of research (Cappelli & Neumark, 2001; Mazzanti et al., 2006; PerdormoOrtiz, Gonzlez-Benito, & Galende, 2009; Prajogo & Sohal, 2006; Ulusoy, 2003). Nevertheless, knowledge of the consequences of OI remains limited (Damanpour & Aravind, 2011: 35). 2.3. OI and technological IC Researchers have for a long time been aware of the close relationship between organizational and technological innovations (Burns & Stalker, 1961; Damanpour & Evan, 1984; Kimberly & Evanisko, 1981). However, although the role of OI in promoting technological IC development has been proposed theoretically (Armbruster et al., 2006, 2008), no conclusive empirical proof exists. The study by Damanpour et al. (1989) is a noteworthy exception. Their empirical study of a sample of libraries in the United States shows that administrative innovation promotes technological innovation over time. Some recent studies emphasize the complementary nature of organizational and technological innovations (Battisti & Stoneman, 2010; Damanpour et al., 2009; Martnez-Ros & Labeaga, 2009; Piva, Santarelli & Vivarelli, 2005), showing that synergism between the two types of innovation renders them complementary processes rather than substitute processes. Using RBV, the present study proposes that OI favors the development of technological IC. In particular, with respect to the relationship between OI and process IC, the paper states that OI directly favors the development of process IC. According to RBV, introduction of OI in a rm, which comprises rare, valuable, inimitable and non-substitutable working practices, can favour development of the ability to perform a technical function. OI in business practices, innovations in workplace organization or new organizational methods in external relations can favor a more efcient organization and the use of innovative manufacturing and technological processes. In the empirical area, OI is directly linked to the generation of process IC. For example, business practices such as quality control can promote an increase in efciency and can therefore improve the capability to develop process IC (Damanpour & Gopalakrishnan, 2001). Inter-organizational collaboration is also an important method for the generation of process IC (Shoenmakers & Duysters, 2006). Previous empirical studies have demonstrated that external relationships and participation in cooperative agreements are positively associated with the development of process IC (Camisn, Boronat, & Villar, 2010). H1a. A positive relationship exists between the rm's introduction of new management practices (OI) and its development of process innovation capabilities. The introduction of certain new organizational practices per se does not directly lead to the development of product IC. On the contrary, this paper argues that the effect of OI on product IC is mediated by the generation of process IC. When a rm has introduced OI, to accumulate capabilities to introduce new products in the market, OI needs an appropriate organizational infrastructure as well as engineering and technological skills to design the production processes, layout, and logistics to efciently support the new product design and its commercialization. Empirical proof of this can be found, for example, in Prajogo and Sohal (2006), who demonstrate that the use of total quality management does not directly favor product innovation if that relationship is mediated by technology/R&D management. If OI is utilized to improve process IC, this will favor the development of product IC. Fritsch and Meschede (2001: 345) demonstrate empirically that process innovation positively affects product innovation and that the development of process innovation will enable a rm to improve its product quality or produce completely new products. The effect of OI on product IC is not direct but is mediated by process IC. Please cite this article as: Camisn, C., & Villar-Lpez, A., Organizational innovation as an enabler of technological innovation capabilities and rm performance, Journal of Business Research (2012), doi:10.1016/j.jbusres.2012.06.004 4 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxx-xxx H1b. The effect of the introduction by a rm of new management practices (OI) on product innovation capabilities is mediated by its generation of process innovation capabilities. The positive effect of the adoption by a rm of new organizational practices does not have to be limited to the extension of OI. The continuous improvement of management systems and techniques can stimulate technological innovation capabilities by opening new opportunities to exploit and explore innovative combinations of resources. 2.4. OI, technological IC, and FP According to RBV reasoning, OI is an immediate source of competitive advantage (Goldman, Nagel, & Preiss, 1995) that can lead to an improvement in performance (OECD, 2005). RBV regards differences in business performance as consequences of an organization's internal characteristics. The main assumption of this approach is that only rms with strategic assets will obtain sustainable competitive advantage and will, therefore, achieve superior performance. First, strategic assets are characterized by their scarcity, their similarity to key success factors in the industry, their durability, the difculty of substitution or imitation of products, and the appropriateness of generated rents (Amit & Schoemaker, 1993; Barney, 1986, 1991; Grant, 1996; Peteraf, 1993; Wernerfelt, 1984). Second, sustainable competitive advantage relies on a rm's dynamic capabilities to innovate, understood as the ability to adapt and recongure resources and capabilities (Eisenhardt & Martin, 2000; Grant, 1996). Therefore, OI is a fundamental strategic asset for the development of sustainable competitive advantage capable of generating superior income. Innovation scholars have also pointed out the importance of OI for performance, yet have not conducted adequate empirical studies to explain this relationship fully (Damanpour & Aranvind, in press: 28-29). Although contrasting points of view exist in the literature, a greater number of studies support the benecial effect of OI on FP. For example, Mazzanti et al. (2006) use quantitative analysis to demonstrate a positive and signicant correlation between FP and OI, and conclude that companies with better performance participate more extensively in organizational changes. A large number of studies show that specic OI practices, such as quality management systems (Osterman, 1994; Perdormo-Ortiz et al., 2009; Prajogo & Sohal, 2006) and high-performance management methods (Caroli & Van Reene, 2001; Greenan, 2003; Osterman, 1994), positively affect FP. In the present study, RBV reasoning leads to the proposal that OI has a positive effect on FP. OIs are specic to the system that generates them, which is normally a highly complex social system involving a wide array of participants and the relationships among them (Birkinshaw & Mol, 2006). In addition, OI is by nature, more so than technological innovations (Birkinshaw & Mol, 2006). These basic OI characteristics provide a unique capability to create long-term competitive advantage (Hamel, 2009). In addition, the goal of OI introduction is to improve FP (Hamel, 2009). H2. A positive relationship exists between introductions of new management practices (OI) and rm performance. Numerous studies focus on the relationship between technological innovation and FP (Damanpour & Evan, 1984; Damanpour et al., 1989; Ortega, 2009). Most of the empirical studies analyze how technological innovation performanceinnovation as outputor technological effort for innovationinnovation as inputaffect FP (Jimnez Jimnez & Sanz Valle, 2011; Martnez-Snchez, Vela-Jimnez, Prez-Prez, & de-LuisCarnicer, 2009). A smaller group of studies based on RBV focuses on the analysis of ICinnovation as organizational capabilityand its effect on FP (Calantone et al., 2002; Garca-Morales, Matas-Reche, & HurtadoTorres, 2008; Ortega, 2009; Tsai, 2004; Yang et al., 2009). The current article grows on this last body of research to analyze the relationship between product and process technological IC and FP. Most papers on technological IC consider different types of IC simultaneously, such as the cumulative impact of product and process IC on FP. These studies either consider innovation as a second-order factor with two dimensions, one for each type of innovation (Sanz-Valle, Jimnez-Jimnez, & Hernndez-Espallardo, 2007) or include the different innovation types within one latent construct (Calantone et al., 2002; Ortega, 2009; Yang et al., 2009). This empirical research supports the strategic potential of technological IC to generate a higher FP. However, although this research is valuable, extension of this line of research requires the analysis of the independent effect of each type of IC on FP. This paper empirically tests the separate effects of product and process IC on FP because as product and process innovations are distinct phenomena (Damanpour & Aravind, 2006) that contribute to organizational competitiveness and growth in different ways (Damanpour, 2010), so may product and process IC similarly operate. With regard to the relationship between product IC and FP, this study argues that the rst will positive and directly inuence the latter. The objective of product innovation is to respond to customers' demand for new products or executives' desire to capture new markets (Damanpour, 2010). In essence, product innovation enables the organization to differentiate its products (Porter, 1985) and changes what the organization offers to the outside world (Bessant, Lamming, Noke, & Philips, 2005). Consequently, from RBV, product IC can be considered essential for the generation and sustainability of competitive advantage (Barney, Wright, & Ketchen, 2001; Prahalad & Hamel, 1990) owing to the inherent difculty in imitating such products (Gonzlez-lvarez & Nieto-Antoln, 2005), and, therefore, having a positive impact on FP. H3a. A positive relationship exists between product innovation capabilities and rm performance. However, the effect of process IC on FP is mediated by the generation of product IC. Process innovation is pursued to reduce delivery lead-time or decrease operational cost (Damanpour, 2010), which changes the way an organization produces and delivers its products (Bessant et al., 2005). Thus, process innovation has an internal focus (Martnez-Ros, 2000) orientated towards efciency, facilitating rms to follow cost leadership strategies (Porter, 1985). Therefore, to inuence FP, these capabilities must favor the development of product IC. In this way, a congruent development of process and product IC is achieved, resulting in improvement in FP. Previous studies have demonstrated that additive effect of innovation types favors FP (Damanpour et al., 2009). From RBV, the synergistic interrelationship between both types of IC that allows rms to achieve competitive advantage that will result in improvement in FP. H3b. The effect of process innovation capabilities on rm performance is mediated by the development of product innovation capabilities. 3. Research method 3.1. Sample population In this paper, the empirical study was undertaken by Spanish industrial companies. The contact information was obtained by the Sistema de Anlisis de Balances Ibricos (SABI) database, which offers identication and nancial data of Spanish industrial companies. The following prerequisites were included in the population under study: First, the availability of complete contact details was necessary. Second, the population excludes the energy sector and micro-businesses (companies with b10 workers) to avoid heterogeneity problems (Spanos & Lioukas, 2001). Third, rms had to have only one production plant. Please note that this condition is due to the fact that the sample was generated in the context of wider research on competitiveness of industrial Spanish rms and that the inclusion of this requisite does not affect to the results of this paper. The number of industrial companies meeting these conditions held in the SABI database at the end of 2005 was 2145 from a total of 30 industrial sectors (2-digit SIC). Please cite this article as: Camisn, C., & Villar-Lpez, A., Organizational innovation as an enabler of technological innovation capabilities and rm performance, Journal of Business Research (2012), doi:10.1016/j.jbusres.2012.06.004 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxx-xxx To gather the data, the submitted questionnaires to the rms based on a wide literature review. Before sending the questionnaire, a pretest validation of the design with seven companies. The questionnaire was subsequently revised to improve understanding of its content. Fieldwork on the nal questionnaire occurred during April-November 2006 asking about data from 2005. The questionnaire was distributed by postal mail with follow-up telephone calls to request rms' participation. 175 companies answered. Of these, 16 were eliminated from the sample because of incomplete or incorrectly completed questionnaires. This left 159 questionnaires that were satisfactorily completed, with a sample error of 7.6% (p = q = 0.5). However a nal requirement to be included in the sample was that rms had to have complete nancial data available in the SABI database to measure FP. Thus, the nal sample comprises 144 companies. Of these, 25% are small (10-250 employees), 46.5% are medium-sized (250-500 employees), and 28.5% are large (>500 employees) rms, covering 19 industries. To examine if the sample reects the population for some of the control variables, the organizational size variable are checked for correspondence. The distribution by number of employees of the sample reects the population characteristics in terms of organizational size, where most of the rms are medium-sized. In the population of this study, 16.4% are small (10-250 employees), 53.1% are medium-sized (250-500 employees), and 30.5% are large (>500 employees). With this data a signicant difference between the number of employees and sales volume of the rms in the sample compared with those that did not respond to the survey. Therefore, non-response bias does not seem to be a major concern. 3.2. Statistical analysis The study uses the partial least squares (PLS) approach (Chin, 1998a, 1998b, 2001; Wold, 1966) to test the theoretical model, specically PLSGraph 3.0 Build 1126 (Chin, 2003). This technique is preferable to a covariance-based approach for the following reasons. First, the sample contains 144 observations, which can be considered small, which PLS is particularly suitable for. Second, the research model contains both formative and reective constructs. In particular, formative secondorder factors can only be modeled using PLS (Chin & Newsted, 1999). Other structural equation models (e.g., covariancebased model performed by EQS or LISREL) make it impossible to run these models (Diamantopoulus & Winklhofer, 2001). 3.3. Measurement variables In the research model, all variables correspond to rst-order factors with multi-item scales using a seven-point Likert scale for managerial perceptions, except for OI, which is a second-order factor. This approach requires a choice between molar and molecular factors. Whereas the molar approach represents an emergent construct that is formed from rst-order factors, the molecular approach hypothesizes that an overall latent construct exists and is indicated and reected by rst-order factors (Chin & Ghopal, 1995). If a change in one of the dimensions necessarily results in similar changes to the other dimensions, then a molecular model is appropriate. Otherwise, a molar model is more suitable (Chin & Ghopal, 1995). A list of items for each measurement scale is presented in Appendix A. The measurement approach for each construct in the model is described below. 3.3.1. OI The measurement of this variable is derived from the OECD (2005) denition and adapted from Camisn and Villar-Lpez (2010), the resulting scale capturing assessment of the implementation of a set of advanced management practices for the rst time in the rm. The measurement scale distinguishes between three dimensions that coincide with the categorization provided by the OECD OI denition: The rst dimension is called OI in business practices, which includes three reective 5 indicators that involve the implementation of new methods such as the use of a database of best practices or quality management systems. The second dimension is named Innovations in workplace organization, which includes three reective indicators regarding the implementation of new practices related to organizational design. The last dimension is named New organizational methods in the external relationships, which is made up of three reective items that involve the implementation of new ways of organizing relationships with other agents such as customers or suppliers (see Appendix A for details). This latter variable has been dened as a molar second-order factor because an increment in one of the dimensions does not imply that the remaining dimensions will change similarly. Participants in the survey assessed the degree to which the rm had recently used the management practices listed for the rst time. 3.3.2. Product IC Numerous researchers have analyzed IC using reliable valid scales that allow its measurement (e.g., Miller & Friesen, 1983; Spanos & Lioukas, 2001). However, most of these scales measure product and process IC jointly. To develop a specic measurement scale for product IC, the OECD's (2005) denition of product innovation was adapted. And, the scales to achieve the objective of this paper was undertaken by Tuominen and Hyvnen (2004), Menguc and Auh (2010), and Camisn and Villar-Lpez (2010). Five reective items make up the nal measurement scale. This scale assesses a rm's ability to develop new or signicantly improved products (see Appendix A for details). Participants in the survey assessed the extent to which product IC constitutes a particular strength for the rm in comparison with competitors. 3.3.3. Process IC To develop a specic measurement scale for process IC, this paper used the OECD's (2005) denition of process innovation and adapted previously validated scales by Tuominen and Hyvnen (2004), and Camisn and Villar-Lpez (2010). Eleven reective items make up the measurement scale. These items represent a rm's ability to develop new or signicantly changed productive and technological processes (see Appendix A for details). Participants in the survey assessed the extent to which process IC constitutes a particular strength for the rm in comparison with competitors. 3.3.4. FP Previous literature defends the use of different performance measures which vary mainly on the objective/subjective character of the measure. In principle, objective measurements have greater validity than subjective ones. However, it has been widely demonstrated in the literature that there is a high correlation and concurrent validity between objective and subjective measurements (Dess & Robinson, 1984; Homburg, Krohmer, & Workman, 1999; Venkatraman & Ramanujan, 1987). Therefore, this paper measures FP by adapting a scale developed by Calantone et al. (2002) which combines both objective and subjective performance measures. Specically, the scale contains three objective items (return on shareholders funds, return on capital employed, and return on total assets) and three subjective items (mean economic protability, mean nancial protability, and mean sales protability). Although this study uses cross-sectional data, to introduce a certain dynamic component in the model, the objective FP indicators date from 2006 while the subjective indicators refer to 2005. The indicators making up the measurement scale are commonly used in other studies (Yamin, Mavondo, Gunasekaran, & Sarros, 1997). Given the potential of implicit deviations in managerial perceptions of the performance of their rms (Conant, Mokwa, & Varadarajan, 1990), caution is necessary in evaluating the risk of common variance when all the variable data come from the same source. A process to test for such bias involves verication of the convergent validity of the performance measure using correlation coefcients for the self-evaluation of objective measures exogenous to the rm. This process is applied to the three 2005 Please cite this article as: Camisn, C., & Villar-Lpez, A., Organizational innovation as an enabler of technological innovation capabilities and rm performance, Journal of Business Research (2012), doi:10.1016/j.jbusres.2012.06.004 6 C. Camisn, A. Villar-Lpez / Journal of Business Research xxx (2012) xxx-xxx subjective indicators included in the performance scale (economic protability, nancial protability, and sales protability). The objective indicators referring to 2005 were obtained from the SABI database. However, because these exogenous indicators are not available for all the sample rms, only 105, 99, and 112 companies, respectively, are analyzed. Correlations between the objective and subjective performance indicators are statistically signicant (economic protability = 0.269; nancial protability=0.243; mean sales protability=0.299; pb 0.01). However, some studies in the literature on social psychology (e.g., Wall et al., 2004) report correlations of around 0.8 for good measures of subjective and objective performance; therefore, only weak convergent validity of the measures exists. 3.4. Control variables The study includes controls for contextual variables that might potentially confound the results. Previous studies show that organization size, age, and environmental uncertainty inuence a rm's IC (CamisnZornoza, Lapiedra-Alcam, Segarra-Ciprs, & Boronat-Navarro, 2004; Damanpour, 1991; Damanpour & Aravind, 2006; Mintzberg, 1979) and FP (Blau & Schoenherr, 1971; Dess, Lumpkin, & Covin, 1997). As some studies have cautioned that FP in time Y is a function of FP in time Y-1 (Walker et al., 2010), previous year's performance was also included as a control variable affecting FP. The metric for organizational size is the logarithm of the number of employees of the rm. Organizational age is measured as the number of years since the foundation of the rm. Environmental uncertainty comprises the dimensions dynamism, municence, and complexity, as identied by Dess and Beard (1984) and applied in relevant research (Ketchen, Thomas, & Snow, 1993; Lawles & Finch, 1989). A subjective measurement scale comprising 18 items measured on a seven-point Likert scale (see Appendix A) developed by Camisn (2004) measures this variable, which appears in the model as the average for the items comprising each dimension. Finally, FP in time Y-1 was measured with the objective indicator \"Return on Total Assets\Abu Dhabi University College of Business Administration Master of Business Administration Program Master of Human Resource Management Program MGT524 Research Methods in Business Fall Semester AY2015-2016 Term B 3rd Article Annotation Student Name Student ID No. Course Code and Title Course Instructor Course Section Group Project Submission MGT524 Research Methods in Business Dr. Avraam Papastathopoulos S_2 Both soft and hard copies should be submitted on Saturday November 28 at 2:00PM at the latest 3rd Article Annotation is worth 10% of the total grading Assignment Type Marking Scheme: Sections Article Information Points 1.5 Analysis Information Primary Details Presentation & Argumentation Evaluation 2 2 2 2.5 Total Score: Page 1 of 7 Score GENERAL INSTRUCTIONS Please read the instructions below. Failure to comply with the instructions will result in a penalty ranging from 5% to 100% of the grade 1. Use this document as a template for your response . In other words, type your student information and your answers into the document. 2. Each student will submit a hard copy (in class) and a soft copy (on Blackboard) of the 3rd Article Annotation by Saturday November 28 at 2:00PM. [There will be a 5% penalty for every day late. No submissions will be accepted after Tuesday December 1]. Assignment MUST be submitted before the due date. There will be NO exceptions. 3. Please name the MS Word file that you upload as follows: \"YourStudentId _ArticleAnnotation3_SectionNumber_MGT524_TermB.doc\" For example, a student with a student ID 00100001 from Section 2 will have the following file name: 00100001_ArticleAnnotation3_S2_MGT524_TermB 4. Your answers must be based on the article named \"Organizational innovation as an enabler of technological innovation capabilities and firm performance\". The article is attached in Blackboard. 5. Specific guidelines for annotating the aforementioned article are provided by the instructor (See \"Article Annotation Description\" file in Blackboard). 6. The 3rd Article Annotation is worth of 10 points of the total grading. Each field carries equal marks (0.5 points per field). 7. Please use Times New Roman, font size 12 and a line spacing of 1.0 8. No plagiarism please [100% penalty + referral to the OAI] If you use text from the textbook/case study, please make sure you paraphrase it in a way that fits with your overall discussion. Please put an appropriate citation to make it explicit that you are using information from the sources. If you think the text fits into your discussion without paraphrasing, please cite it in a way that makes it clear that this is a direct quote (e.g. indent a paragraph containing text or put a sentence in quotes) Page 2 of 7 Do not use information from the Internet to answer any of the questions. Please use your own thinking/writing to answer the questions. Students found guilty of plagiarism will be prosecuted in accordance with the ADU Academic Integrity Policy 9. No points will be given for responses that [up to 100% penalty] Cannot be understood Please make sure every paragraph conveys a coherent unit of thought. No points will be given for paragraphs which are, in essence, a random compilation of somewhat related ideas from various sources. Are not backed by evidence Use evidence from the case study to support your claims Are not related to the case study All of your responses should be related to the case study. Do not answer a question No points will be given for responses that do not answer a question but contain information about issues/terms related to the question. This type of a response is usually given in hope to receive partial credit Page 3 of 7 Article Analysis Sheet Article Information Title: Author(s): Source: Analysis Information Purpose: Audience: Subject: Sources: Primary Details Thesis: Evidence: Limits: Point of View: Page 4 of 7 Page 5 of 7 Presentation and Argumentation Concepts/Words: Use of Evidence: Conclusion: Implications: Evaluation Personal Reaction: Strength of Case: Evaluation: Quality: Other: Page 6 of 7 Page 7 of 7 Article Annotation Description The following guidelines will help students to understand and annotate the article critically. Students should use these guidelines in order to present the key issues of the article and complete the written assignment. Article Information Title: Write the title of the article here. Titles will tell you a lot about the content of the article: the geographical focus, period, subject, and, sometimes, something about the author's approach or interpretation (which may be indicated by a play on words or a question mark). You can also use this space to comment on what the title leads you to expect from the article. Author(s): Note the authors of the paper. If you know who he or she is, then make a note of that, too. What is the author's discipline? Source: Where was this article published? Note the original source of the article. The publication it appeared in can lend or deny the material credibility. Analysis Information Examine the article as a whole. Try to determine something about the purpose, audience, and content of the paper before you start reading. Look for clues in the title and/or subtitle, the acknowledgements (if any), the first foot/end note, and the author's biographical note (sometimes with the article, sometimes compiled separately). Purpose: Why do you think the author wrote this paper? Does it seem to be refuting someone else's interpretation of some event or phenomenon? Is it offering new information? You'll usually find clues to the answer to these questions in the first few paragraphs. That's where authors usually try to show why their paper is useful and worth reading. Audience: Who is this paper written for? Experts? the general public? Knowing who the authors are addressing can help you decide how to approach the article. If the authors are addressing an expert audience, then the style will likely be more academic. There may be fewer explanations or somewhat less background information. If the audience is a broader one, then there may be more detail but less detailed explanations. Subject: What does it seem the article is about? Look at the first couple of paragraphs; they should give you some hints. Again, refer to the title. Some Page 1 of 4 disciplines include an abstract that precedes the text. This will give you an uncritical summary of the paper's subject/content. Where is the author getting her or his basic information? Is it mostly from other books or articles? Is it based on interview, archival or survey data? Knowing where the author got the information will tell you whether the author is looking at something new, taking a new look at something old, or talking about something new. Sources: Primary Details Start reading. If the article has a labeled introduction, you should find the author's statement of purpose, or thesis statement, before the end of that section. You should also be able to tell what evidence the author is going to use to support the position she or he has taken. The author may also explain the limits on the article, the length of time, the geographic location, the extent of the information that's going to be used, the theories that are going to be applied. You should also be able to tell what the author's point of view is. Thesis: Write out the thesis statement as you find it in the article. It is sometimes only one sentence; sometimes two or three. Sometimes the sentences are separated from each other. An author might be obvious about it: "This paper will argue. . ." or subtle, giving only a statement of his or her interpretation followed by some indication of the evidence that will support that position. Evidence: Note here what evidence the author claims will be used to support her/his argument. This question may well have been answered in the first step, by checking the notes. Use this stop to expand your grasp of the evidence. Limits: Writers of articles rarely tackle big topics. There isn't enough room to write a history of the world or discuss big issues. Articles generally focus on a particular event, change, person, phenomenon, or idea. It may be further limited by a narrow geographic focus, a limited period, or being restricted to a particular group of people. Note what limits the author places on the article. Point View: of This is sometimes easy to detect; sometimes you have to feel it out by looking at what things are descibed positively and what are described negatively. Note what you learn about the author's point of view. Page 2 of 4 Presentation and Argumentation Keep reading but watch what the author is doing. This step requires that you read the article to gain an understanding of how the author presents the evidence and makes it fit into the argument. At this stage of the exercise, you should also take the time to look up any unfamiliar words or concepts. Also, watch how the author switches from first explaining how the evidence supports the argument and then to the summary. The last few paragraphs of the article should tidy up the discussion, show how it all fits together neatly, where more research is needed, or how this article has advanced knowledge, that is, the implications of the article. Use this space to note the words or concepts you had to look up. Did Concepts/Words: the author coin his/her own terms, or use common terms in unusual ways? Use of Evidence: How well did the author rely on his/her evidence? Was everything mentioned at the outset referred to in the article? Was quoted material used to illustrate or substantiate points? You may not have much to say for this section, or you might notice that materials listed in the bibliography or reference were not used in the paper. Conclusion: You can either write out the author's conclusions (though they're often a paragraph or so long), or you can summarize where the author went with the paper. You may refer to the thesis statement to help you phrase your summary. Implications: This is where you might note what the points the author has made might mean in a larger context. What might government officials make of this paper? Who might find it useful? Would anyone change the way they work, or approach an issue if they read this article? What difference has it made for you? You might also consider why your instructor has asked you to read this article. What new course-related information did it contain? Was the article assigned because it illustrated ideas or concepts covered in the course? Perhaps the author advanced thinking in the discipline. What do you think? Source: A Guide to Reading and Analysing Academic Articles http://ycdl4.yukoncollege.yk.ca/~agraham//guides/guidec.shtml - Amanda Graham at Yukon College, Canada Page 3 of 4 Evaluation Now that you've finished reading, consider your personal reaction to it: not only "did I like it?," "it was hard to read," or "it was boring/interesting." This, along with the work in the other steps, is the basis for a critical evaluation of the article. Even if you don't know anything about the topic, you can make some judgements about the article and how well the author made her or his case. Evaluation is a bit harder. "Evaluating" means comparing one thing to some kind of standard, that is, other articles in the same discipline or journal as the one you've read. If you are not familiar with those other articles, it can be hard to evaluate well. However, you can do a fairly good job of it by considering the conventions of other, similar articles. Does this one fit the pattern? Does it have quality, that is, does it make up to the academic standards of writing, presentation, organization, source citation, and such? Personal Reaction: Strength Case: This is where you note your personal reaction to the paper. Your comments might be one or two words, or might be longer. Remember, too, that these notes will allow you to quickly review the article later on. You might do well to write your future self fairly detailed notes. Did the author persuade you that the point/argument she/he was of making was true, or at least convincing? Did you feel, at any time, that the author was just hoping you'd agree? Use this space to note how convincing you thought the article was. Evaluation: Use this space to note how good this article was compared to other articles, either in the discipline/area, or in the same journal. It is helpful to write pages numbers of relevant passages in the article. Quality: Use this space to record your sense of the quality of the paper. In most published articles, the quality will be quite high. Many people contribute to helping an author revise and refine a paper and what you see published is rarely what the author originally wrote. There may be some technical problems, like spelling mistakes or formatting problems that you might note. Other: Use this space to record anything else you might need to know about the article either to write a summary or a review or to remember about it so you can read the summary sheet instead of reading the article again before tests or exams or for referring to it in a paper. Page 4 of 4 Abu Dhabi University College of Business Administration Master of Business Administration Program Master of Human Resource Management Program MGT524 Research Methods in Business Fall Semester AY2015-2016 Term B 1st Article Annotation Student Name Student ID No. Course Code and Title Course Instructor Course Section Group Project Submission Layla Abdulla AlHayyas 1053608 MGT524 Research Methods in Business Dr. Avraam Papastathopoulos S_2 Both soft and hard copies should be submitted on Saturday November 14 at 2:00PM at the latest 1st Article Annotation is worth 10% of the total grading Assignment Type Marking Scheme: Sections Article Information Points 1.5 Analysis Information Primary Details Presentation & Argumentation Evaluation 2 2 2 2.5 Total Score: Page 1 of 8 Score GENERAL INSTRUCTIONS Please read the instructions below. Failure to comply with the instructions will result in a penalty ranging from 5% to 100% of the grade 1. Use this document as a template for your response . In other words, type your student information and your answers into the document. 2. Each student will submit a hard copy (in class) and a soft copy (on Blackboard) of the 1st Article Annotation by Saturday November 14 at 2:00PM. [There will be a 5% penalty for every day late. No submissions will be accepted after Tuesday November 17]. Assignment MUST be submitted before the due date. There will be NO exceptions. 3. Please name the MS Word file that you upload as follows: \"YourStudentId _ArticleAnnotation1_SectionNumber_MGT524_TermB.doc\" For example, a student with a student ID 00100001 from Section 2 will have the following file name: 00100001_ArticleAnnotation1_S2_MGT524_TermB 4. Your answers must be based on the article named \"Business Ethics Research: A Global Perspective\". The article is attached in Blackboard. 5. Specific guidelines for annotating the aforementioned article are provided by the instructor (See \"Article Annotation Description\" file in Blackboard). 6. The 1st Article Annotation is worth of 10 points of the total grading. Each field carries equal marks (0.5 points per field). 7. Please use Times New Roman, font size 12 and a line spacing of 1.0 8. No plagiarism please [100% penalty + referral to the OAI] If you use text from the textbook/case study, please make sure you paraphrase it in a way that fits with your overall discussion. Please put an appropriate citation to make it explicit that you are using information from the sources. If you think the text fits into your discussion without paraphrasing, please cite it in a way that makes it clear that this is a direct quote (e.g. indent a paragraph containing text or put a sentence in quotes) Page 2 of 8 Do not use information from the Internet to answer any of the questions. Please use your own thinking/writing to answer the questions. Students found guilty of plagiarism will be prosecuted in accordance with the ADU Academic Integrity Policy 9. No points will be given for responses that [up to 100% penalty] Cannot be understood Please make sure every paragraph conveys a coherent unit of thought. No points will be given for paragraphs which are, in essence, a random compilation of somewhat related ideas from various sources. Are not backed by evidence Use evidence from the case study to support your claims Are not related to the case study All of your responses should be related to the case study. Do not answer a question No points will be given for responses that do not answer a question but contain information about issues/terms related to the question. This type of a response is usually given in hope to receive partial credit Page 3 of 8 Article Analysis Sheet Article Information Title: Business Ethics Research: A Global Perspective Author(s): Kam C. Chan, Hung-Gay Fung, Jot Yau Source: Journal of Business Ethics (2010) 95:39-53 DOI10.1007/s10551-009-0346-z Analysis Information Purpose: Audience: To showcase the trends across the institutions around the world in terms of how much importance they lay on business ethics research. To analyze the business ethics research contributing institutions and authors in Asia-Pacific, North America and Europe. To document the global rankings of various institutions on business ethics research publications. To identify the most prominent business ethics being used by institutions. This article is being used as a tool by academicians around the globe, researchers, institutions and authors to identify the global rankings on business ethics research. Subject: The subject of research paper is \"Business Ethics Research: A Global Perspective\". The subject covers the quantitative as well as qualitative data regarding the global trends of business ethics papers being done in various institutions around the globe. Sources: The author of this paper has done extensive research. He has used around 20 research papers and a data collected for a time period of 10 years from 1999 to 2008. The data has been extracted from some of the most reputed journals such as \"Journal of international business studies\