۱- Introduction

۲- Literature review on organizational innovation and new product development

۳- Research methodology

۴- Results and analysis

۵- Conclusions and discussion

References

Abstract

While organizational innovation is considered crucial for firms performance, its role as a type of intangible innovation in new product development remains under-explored in the literature. As such, this paper explores the impacts of organizational innovation on both product innovation and imitation for Chinese manufacturing firms based on original survey data. Latent class analysis is used to identify the classification of organizational innovation and their various characteristics. The results indicate a five-pattern of organizational innovation that range from low to high levels for the sample firms. Further, the multinomial treatment effects estimation suggests that middle- to high-level organizational innovation has a significant impact on product imitation intensity, demonstrating that knowledge management and standardization play important roles in facilitating product imitation. However, only a superior level of organizational innovation shows a significant effect on the intensity of product innovation, implying that the transition from product imitation to innovation requires a comprehensive improvement in organizational design.

Introduction

Innovation stems from a new technological concept or idea, reflecting the critical way in which organizations respond to either technological or market challenges. As one of the five innovation activities proposed by Schumpeter (1934), organizational innovation has drawn comparatively less attention among researchers than technological innovation, product innovation, process innovation, and market innovations in the literature. Organizational innovation is intangible in character, and, therefore, while some studies identify it as a facilitator for the effective use of technology and an intermediate source of competitive advantage, this type of innovation per se and its impacts are still under-explored due to the difficulties of identifying adequate survey data, established definitions, and measurement approaches (Sapprasert & Clausen, 2012). This potentially constrains our understanding of the interactions between the different innovative activities, especially that of the impacts of non-technical innovation on the technological innovation (Damanpour, 1991; Damanpour & Aravind, 2012; Kimberly & Evanisko, 1981). In any case, the successful catching-up experiences of East-Asian economies highlight the importance of organizational innovation. For example, the Original Equipment Manufacturing arrangement in the Korean electronics industry represents a process for integrating the market demands into the technological frontier accompanying organizational change, and gradually realizing the transition from imitation to innovation (Fagerberg & Godinho, 2006). Further, Westney (1987) states that the successful imitation of foreign social patterns in Meiji requires organizational transformation. Organizational changes thus enabled Japanese firms to simultaneously maintain scale economies and flexibility during the catching-up process. As an emerging economy, China is facing a similar situation, with Chinese firms experiencing immense organizational changes during the past few years, triggered by both market competition and foreign advanced practices. Hence, it is important to understand how organizational change corresponds to Chinese firms performance in terms of both imitation and innovation. From an empirical viewpoint, China is a particularly interesting case to analyze because of its fast-growing economy, as well as its controversial imitation activities in the international market. A major concern of policy makers in China is how to motivate Chinese firms to transform from imitation to innovation. While it can be argued that the success of such a transformation process is crucial for China’s development, the current debate rather focuses on technological aspects. As such, organizational innovation has not attracted enough attention of policy makers.