External information sourcing and lead-time advantage in product innovation
| Pages | 709-726 |
| DOI | https://doi.org/10.1108/JIC-07-2019-0187 |
| Date | 04 June 2020 |
| Published date | 04 June 2020 |
| Author | Kristof Van Criekingen |
| Subject Matter | Accounting/accountancy,HR & organizational behaviour,Organizational structure/dynamics,Behavioural accounting,Knowledge management,Accounting & Finance |
External information sourcing and
lead-time advantage in
product innovation
Kristof Van Criekingen
Danish Centre for Studies in Research and Research Policy (CFA),
Aarhus University, Aarhus, Denmark and
Expertise Centre for Research and Development Monitoring (ECOOM),
KU Leuven, Leuven, Belgium
Abstract
Purpose –Having a short throughput time for innovation projects, i.e. lead-time, can put firms in an
advantageous position. The time that lapses between a project’s start and its completion, is influenced not only
by the firm’s internal capabilities but also by how the firm connects to external knowledge. This paper assesses
the relation between knowledge sourcing and lead-time advantage.
Design/methodology/approach –This paper empirically tests the relation between external knowledge
sourcing and lead-time advantage based on firm level Community Innovation Survey (CIS) data.
Findings –I find that breadth and depth of the external knowledge sourcing are positively relating to lead-
time advantage, albeit with diminishing returns. Investment into absorptive capacity, i.e. internal R&D,
mitigates the diminishing of returns. Firms directing their external knowledge sourcing strategy toward
consumers, suppliers and science are better able to capitalize on their innovations through lead-time
advantages and firms also benefit from the special case of collaboration for product development.
Originality/value –The conceptual novelty of this research largely consists in empirically bringing together
for the first time conceptualizations of external knowledge sourcing and the strategic use of lead-time. Given
the prevalence of both concepts in the modern and fast changing economy, investigating this link is of great
importance.
Keywords Lead-time, Innovation, Imitation, External knowledge
Paper type Research paper
1. Introduction
Lead-time advantage has been described as an avenue leading to better appropriation of the
returns to innovation investment (Hall et al., 2014). This paper argues that lead-time
advantage is a result of other upfront decisions made by the firm and that certain information
sourcing strategies might be conducive for achieving an effective lead-time advantage for
innovation projects.
It should be made clear from the outset that having a lead-time advantage does not
necessarily correspond to being a first or early mover. Lead-time, as commonly defined in the
management literature, is the time that lapses between a project’s start and its completion.
With regard to innovation projects, having a short lead-time could both imply becoming a
first or early mover (i.e. by introducing a market novelty), or it could imply that a firm out-
imitates “the rest of the pack”(i.e. by introducing an imitation to market in a timely way). By
achieving an effective lead-time advantage over rivals’product development cycles, firms can
Knowledge
sourcing and
lead-time
advantage
709
The author is grateful for the support and data-access provided by the centre for R&D monitoring at KU
Leuven, BE. Furthermore, The author thanks Dirk Czarnitzki, Carter Bloch, Laura Verheyden, Cem
Ermagan and Steven Vanhaverbeke for their valued input. Also, the participants at the Competition and
Innovation Summer School 2018(Ulncji, Monenegro) and the DRUID 2019 (Copenhagen, Denmark, 2019)
and R&D 2018 (Leuven, Belgium) conference are acknowledged for their valuable comments. The
manuscript greatly benefited from the comments received from the anonymous reviewers.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 31 July 2019
Revised 15 January 2020
19 February 2020
Accepted 8 March 2020
Journal of Intellectual Capital
Vol. 21 No. 5, 2020
pp. 709-726
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-07-2019-0187
enable better appropriation of the returns to their investments. I aim to contribute by using
Belgian firm level Community Innovation Survey (CIS) data to answer the question: “which
external information sourcing strategies are most frequently observed to coincide with the build-
up of effective lead-time advantages?”
Although some inventions were come across haphazardly by a lone inventor, the
canonical story of the lone genius inventor is largely, as Lemley (2012) puts it, a myth:
“...Edison didn’t invent the lightbulb; he found a bamboo fiber that worked better as a filament
in the lightbulb developed by Sawyer and Man, who in turn built on lighting work done by
others...”(also see Hargadon, 2003;Hargadon and Sutton, 1997;(Singh and Fleming, 2010).
Over the course of history, information became more widely available and knowledge sharing
between partnering firms, universities and customers became custom practice. Indeed, to
bypass the constraints of own internal knowledge, firms are (increasingly) drawing upon
external knowledge (Penrose, 1959;Teece, 1986;Barney, 1991;Grant, 1996). As such, external
knowledge sourcing may be systematically used to promote information-enabled innovation
(Reeves et al., 2017).
The perception that innovation is a network activity is not a new one. Efficient uptake and
management of information are since long considered a prime attribute of successful
innovators (Rothwell et al., 1974;Rothwell, 1977,1992). More recent contributions argue that
companies are increasingly sourcing knowledge from outside the firm to complement their
own knowledge base. In addition, companies increasingly use external pathways to
commercialization to monetize on innovation (cfr. e.g. Chesbrough, 2003).
One way to capture value from innovation is to become a first mover with regard to
innovationand pre-empt the competition.Another is to enter themarket at a later stage with an
imitative offering and become a deliberatelate mover. See Lieberman and Montgomery, 1988,
for a literaturereview on the topic. At least sincethe 1980s when Japanese productschallenged
existing world markets, it is well-known amongst scholars and practitioners that lead-time
advantages are a crucial factor in competition. As a reason for the success of Japanese
manufacturingcompanies in the 1980, typicallythe nowadays well-known businessstrategies
such as just-in-time production and flexible manufacturing are quoted. In the literature, less
attention has been paid to time-based innovation. Exceptionally, it has been argued that
Japanese companies followed an innovation strategy thatinvolved updating productsin small
steps but muchmore frequently than existing rivals(see Stalk, 1988). Today, Chinais the new
champion of accelerated innovation, leveraging concurrent engineering techniques to gain a
time-to-marketadvantage for non-breakthrough innovations (Williamson and Yin, 2014).
A recent report by McKinsey & Company ranked “capturing external ideas”among the
top innovation management practices that differentiates the most from the least agile
companies (Bazigos et al., 2015). In their meta-analysis, Cankurtaran et al. (2013), find that
development speed is associated with increased new product success. Moreover, they also
find in their analysis of the antecedents of development speed that integration with external
partners, i.e. customers, suppliers and others, is positively contributing.
Chesbrough (2017) argues that managing the impact of open innovation on internal
innovation is one of the main future challenges of open innovation. He also mentions that
bringing in external knowledge into the organization could potentially slow down the
innovation process if a company has not invested adequately in capacity to process the influx.
Accordingly, in this paper, I study the nexus between external information sourcing and
appropriation through lead-time advantage. In what follows I will consider three
characteristics of the external sourcing strategy through which firms influence
appropriation: (1) external knowledge sourcing breadth and depth, (2) use of specific
external knowledge sources (3) the special case of co-development.
I find that firms that are drawing information from consumers, suppliers and science are
more likely to enhance appropriation through lead-time advantages. The returns to breadth
JIC
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