User cooperation effects on firm's innovation outputs

• Date: 01 June 2015
• Author: Liliana Herrera,Gloria Sánchez‐González
• Published date: 01 June 2015
• DOI: http://doi.org/10.1002/cjas.1319

User cooperation effects on firm’s innovation

outputs

Gloria Sánchez-González

Liliana Herrera*

University of León

Abstract

We analyzed the effects of R&D cooperation with users

and the intensity/continuity of such cooperation on f‌irms’

innovation output—whether radical or incremental. We

also examined the moderating effect of f‌irm size on these

relationships. Results show that cooperation with users

favours the development of both radical and incremental

product innovations. In addition, we found that the higher

the intensity/continuity of the relationship with users, the

more likely radical innovations are to develop when

compared with incremental innovations. We note that the

positive effect of cooperation on the development of

innovation is especially signif‌icant for small f‌irms.

Copyright © 2015 ASAC. Published by John Wiley &

Sons, Ltd.

Keywords: cooperation with users, innovation output, prod-

uct innovation, radical innovation, incremental innovation,

intensity/continuity of cooperation, f‌irm size

Résumé

Cet article analyse les effets de la coopération R et D avec

les utilisateurs et l’intensité/la continuité d’une telle coopér-

ation sur le rendement de l’innovation des entreprises —

que cette innovation soit radicale ou graduelle. Il examine

aussi l’effet modérateur de la taille des entreprises sur ces

relations. Les résultats révèlent que la coopération avec

les utilisateurs favorise le développement des innovations-

produits radicales et graduelles. Par ailleurs, plus

l’intensité/la continuité de la relation avec les utilisateurs

est élevée, plus les innovations radicales sont susceptibles

d’être développées. L’effet positif de la coopération sur le

développement de l’innovation est particulièrement évident

pour les petites entreprises. Copyright © 2015 ASAC.

Published by John Wiley & Sons, Ltd.

Mots-clés : coopération avec les utilisateurs, rendement de

l’innovation, innovation-produit, innovation radicale, inno-

vation graduelle, intensité/continuité de la coopération, taille

de l’entreprise

Economic activity takes place in a very complex,

dynamic environment. Brusque changes in technology,

customers, and competition mean that f‌irms must engage

in a continual process of renewal in order to survive, and

in many cases they must seek new ways of carrying out

their activities, leading to innovation. Thus, f‌irms need to

design and adopt organizational structures and strategies

that facilitate knowledge creation and transfer (Chen,

Huang, & Hsiao, 2010; Saldanha & Krishnan, 2012). Firms

need not—and indeed should not—rely exclusively on their

own research and development (R&D), and should instead

assimilate external ideas in order to leverage the potential

of their own innovation capabilities and investments

(Chesbrough, 2003a; Chesbrough & Crowther, 2006;

Dogson, Gann, & Salter, 2006; Lindic, Baloh, Ribière, &

Desouza, 2011). This idea is the central point of the

“Open Innovation”model (Chesbrough, 2003a, 2003b),

which emphasizes the interactive nature of the innovation

process. According to this model, the phenomenon of inno-

vation is inf‌luenced by various actors both inside and out-

side the f‌irm (Kaufmann & Tödtling, 2001; Lindic et al.,

2011; Pérez Pérez & Sánchez, 2002; Romijn & Albu,

2002). Generally, and particularly in the case of complex

and radical innovations, maintaining cooperation relation-

ships with a diverse group of agents is benef‌icial to f‌irms

as it allows for assimilation of knowledge and ideas from

different sources (Pittaway, Robertson, Munir, Denyer, &

Neely, 2004).

External partners can include a large and diverse number

of knowledge sources (suppliers, users and consumers, com-

petitors, universities, etc.). A f‌irm’s choice of such sources

will differ widely according to the type of partner (Bayona,

García-Marco, & Huerta, 2003; Miotti & Sachwald, 2003;

Santamaría & Rialp, 2007; Tether, 2002). The choice of

*Please address correspondence to: Gloria Sánchez-González, University of

León, Business Management, Campus de Vegazana s/n, CP: 24007, León,

Spain. Email: gloria.sanchez@unileon.es

Canadian Journal of Administrative Sciences

Revue canadienne des sciences de l’administration

32:86–101 (2015)

Published online 12 May 2015 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1319

Can J Adm Sci

32(2), 86–101 (2015)Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd. 86

partner is very important and should be consistent with the

f‌irm’s aims and strategies (Arranz & Fdez. De Arroyabe,

2008; Hagedoorn, 1990; Miotti & Sachwald, 2003). In

general, a f‌irm’s motivation to cooperate with others can be

grouped into two categories: technology-related, such as

technological complexity in industry or reducing R&D

expenditures and risks, and those linked to the market,

such as creating or entering new markets, launching new

products, or internationalization (Bayona, García-Marco, &

Huerta, 2001).

This second group of motivation is the main reason for

cooperation with users when f‌irms are pursuing commercial

aims (Bayona et al., 2001; Hagedoorn, 1993; Santamaría &

Rialp, 2007; van de Vrande, de Jong, Vanheverbeke, & de

Rochemont, 2009), and it is this type of cooperation that forms

the subject of the present study. Firms place increasing impor-

tance on users as a source of ideas because they need to obtain

accurate and updated information about market needs, an

aspect that has become crucial for any f‌irm’s success. Users

can provide f‌irms with inf ormation on new technologies and

on the evolution of markets (Rothwell, 1994; Whitley,

2002), which could be useful for generating highly novel

ideas (Amara & Landry, 2005; Meyers & Athaide, 1991).

This type of cooperation also helps f‌irms to identify

unsatisf‌ied needs, which in some cases users are unaware

of (von Hippel & Katz, 2002), and also reduces the cost of

developing and implementing new products and services

(Herstatt & von Hippel, 1992; Lilien, Morrison, Searls,

Sonnack, & von Hippel, 2002).

We aim to contribute to the debate about the effective-

ness and usefulness of users in the development of different

types of innovation. Due to the kind of knowledge wielded

by users, the literature tends to indicate that cooperation with

users is particularly geared towards achieving product inno-

vations (Schreier, Oberhauser, & Prügl, 2007; Urban & von

Hippel, 1988). However, few previous studies have ana-

lyzed the effects of this cooperation on the degree of novelty

of this innovation type (Amara & Landry, 2005; Nieto &

Santamaría, 2007). As a result, no def‌initive conclusions

have yet been drawn as to whether cooperation with users

favours the development of incremental and/or radical

innovations; clarifying this issue was the f‌irst objective of

this study.

We also consider theimpact of the intensity/continuityof

this cooperation. This variable provides information about

the structure of the relationships with users, and can be use-

ful when planning a cooperation strategy with these agents.

Sporadic or continuous cooperation could affect the pro-

cesses of knowledge transfer and, as a result, the degree of

novelty of the resulting innovation. To the best of our

knowledge, no previous study has been conducted to date

that considers the relationship between these variables;

thus, we present proposals for the design of cooperation

strategies according to the type of innovation desired by

the f‌irm.

Finally, we analyze the moderating effect of f‌irm size

on: (a) cooperation with users and the development of

radical and incremental product innovations, and (b) the

intensity/continuity of that cooperation and the type of

product innovation. Size is an important variable because it

can determine the necessity as well as the possibility of

implementing cooperation strategies with users in order to

develop new products. Nevertheless, this probable moderat-

ing effect has not previously been studied.

This paper is structured as follows. We next review the

literature on product innovation and cooperation with users.

We then provide a description of the sample characteristics,

the methodology, and the measurements of the variables.

Following that we present and discuss our empirical

f‌indings, and we then report the main conclusions together

with the study’s most signif‌icant contributions, its limita-

tions, and possible future lines of research.

Literature Review

The current worldwide situation of reduced innovation

cycles and falling R&D budgets is forcing f‌irms to seek

external partners for their innovation activities in order to

remain competitive (Gassman & Enkel, 2004). To achieve

this goal, it is essential that f‌irms acquire, share, and leverage

accurate knowledge on current as well as future user require-

ments (Teece, 2007). Many studies have conf‌irmed that

users have now become one of the most important sources

of innovation (Lilien et al., 2002; von Hippel, 1982). The

traditional approach in which the marketing department

should carry out market research and pass on the resultant

data to the R&D department has been replaced by the need

to involve users directly in product innovation processes

(Holman, Kaas, & Keeling, 2003).

This new approach is based on the belief that users pro-

vide knowledge that contributes to the development of more

successful, new products (Atuahene-Gima, 1995; Souder,

Buisson, & Garrett, 1997), improves the market share, and

strengthens the credibility of the f‌irm’s products (Tether,

2002; Tidd & Trewhella, 1997). Such knowledge also

contributes to the completion of the innovation process with

greater levels of eff‌iciency compared withthe use of other ex-

ternal sources (Bayona et al., 2003; Mason & Wagner, 1999;

Santamaría & Rialp, 2007; Tether, 2002; Tranekjer &

Søndergaard, 2013). In addition, user knowledge enhances

perceived customer orientation and creates more favourable

behavioural intentions (purchase, loyalty, positive word of

mouth, etc.) and corporate attitudes among users who have

not actively participated in the innovation process (Fuchs &

Schreier, 2011). As a result, the active participation of users

could be very valuable for the design and implementation of

different types of innovation.

It should also be kept in mind that developing success-

ful innovations requires two types of knowledge, which are

EFFECTS OF USER COOPERATION ON INNOVATION OUTPUT SANCHEZ-GONZÁLEZ & HERRERA

Can J Adm Sci

32(2), 86–101 (2015)Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd. 87