Regions as Catalysts of Open Innovation? The case of SAP in the Regional
Innovation System of Baden-Württemberg
Diez and Kramer
There is a shift from closed innovations towards open innovations, whereas
industries rely on external knowledge to boost their innovative performance and
competitiveness.
Absorptive capacity, i.e. the ability of a firm to absorb, apply, and draw
commercial benefits from knowledge produced outside of its boundaries, plays a
key role in this context.
Keywords:
- Open Innovation: is the use of purposive inflows and outflows of
knowledge to accelerate innovation. With knowledge now widely
distributed, companies cannot rely entirely on their own research, but
should acquire inventions or intellectual property from other companies
when it advances the business model.
- Absorptive capacity: a firm's ability to recognize the value of new
information (or knowledge produced outside of its boundaries), assimilate
it, and apply it to commercial ends
- Localized Learning: outlines how local conditions and spatial proximity
between actors enable the formation of distinctive cognitive repertoires
and influence the generation and selection of skills, processes and
products within a field of knowledge or activity.
- Regional Innovation Systems (RIS): innovative hotspots and local
nodes in global innovation networks that can provide firms with valuable
opportunities for knowledge creation and learning (encourage the rapid
diffusion of knowledge, skills and best practice within a geographic area
larger than a city, but smaller than a nation)
The article temps to find answers to the following three questions:
- What are the conceptual linkages between Open Innovations and localized
learning in RIS?
- To what extent does SAP engage in innovation networks and what is the
spatial distribution of SAP’s network ties?
o Based on patents and publication databases, since these are
generally seen as useful throughput indicators of applied research
and technological development.
- Does geographical proximity or ‘being physically close to regional centers
of exccellence’ enable SAP to increase its absorptive capacity?
Overall conclusion: firms receive higher performance of their innovations when
living in a cluster (region) than when they are spread.
Location, Location: The geography of industry clusters
Holger Schiele (2011)
Example of a cluster; half of the world’s tiles are produced in two regions in Italy
and Spain.
EXAMPLE: For instance, Nokia officials explained that they closed the last
mobile phone factory in Germany because they had failed to attract a cluster of
suppliers near the factory. Most suppliers are located in Asia and even though
transport costs are negligible, the distance to the industry centre and the
resulting long lead times prevented Nokia from achieving the necessary flexibility
, to react quickly to market changes. Clusters do not form in every industry, but in
industries characterized by dominant regional clusters, membership in a cluster
is essential for sustained strategic equality.
In industries characterized by dominant regional clusters, membership in a
cluster is essential for sustained strategic equality.
Porter (1998) defines clusters as; A cluster is a group of firms and institutions
of one industrial sector that are complementing each other along a value chain
and also overlapping in a limited geographical area. Lots of firms are not aware
that they are in a cluster, therefore firms in agglomerations can miss
opportunities through not communicating with each other sufficiently.
Firms within a cluster enjoy a higher productivity, innovation and profitability
advantages compared to their isolated competitors. An explanation is that, when
you have access to the resources around you, firms can specialize on its core
competencies.
Firms can use Porter’s “diamond of competitive advantage” to determine if they
are members of any cluster. (competitors of a company, customers, suppliers and
institutions)
Managers play a big role in identifying a cluster. When not in a cluster, two
opportunities arise; link up with a cluster, or find a niche market.
It is important to see whether or not you are in a cluster,
The ambidextrous organization
Charles A. O’Reilly and Michael L. Tushman (2004)
We discovered that some companies have actually been quite successful at both
exploiting the present and exploring the future, and as we looked more deeply at
them we found that they share important characteristics. In particular, they
separate their new, exploratory units from their traditional, exploitative ones,
allowing for different processes, structures, and cultures; at the same time, they
maintain tight links across units at the senior executive level. In other words, they
manage organizational separation through a tightly integrated senior team. We
call these kinds of companies "ambidextrous organizations," and we believe they
provide a practical and proven model for forward-looking executives seeking to
pioneer radical or disruptive innovations while pursuing incremental gains.
Architectural innovations; applying technological or process advances to
fundamentally change some component or element of their business. (the other
two types of innovations are continuous/incremental and discontinuous/radical)
Companies tend to structure their breakthrough projects in one of four basic
ways:
- Functional design; completely integrated into regular organizational and
management structure
- Cross-functional teams; groups operating within the established
organization but outside the existing management hierarchy
- Unsupported teams; independent units set up outside the established
organization and management hierarchy
Innovation System of Baden-Württemberg
Diez and Kramer
There is a shift from closed innovations towards open innovations, whereas
industries rely on external knowledge to boost their innovative performance and
competitiveness.
Absorptive capacity, i.e. the ability of a firm to absorb, apply, and draw
commercial benefits from knowledge produced outside of its boundaries, plays a
key role in this context.
Keywords:
- Open Innovation: is the use of purposive inflows and outflows of
knowledge to accelerate innovation. With knowledge now widely
distributed, companies cannot rely entirely on their own research, but
should acquire inventions or intellectual property from other companies
when it advances the business model.
- Absorptive capacity: a firm's ability to recognize the value of new
information (or knowledge produced outside of its boundaries), assimilate
it, and apply it to commercial ends
- Localized Learning: outlines how local conditions and spatial proximity
between actors enable the formation of distinctive cognitive repertoires
and influence the generation and selection of skills, processes and
products within a field of knowledge or activity.
- Regional Innovation Systems (RIS): innovative hotspots and local
nodes in global innovation networks that can provide firms with valuable
opportunities for knowledge creation and learning (encourage the rapid
diffusion of knowledge, skills and best practice within a geographic area
larger than a city, but smaller than a nation)
The article temps to find answers to the following three questions:
- What are the conceptual linkages between Open Innovations and localized
learning in RIS?
- To what extent does SAP engage in innovation networks and what is the
spatial distribution of SAP’s network ties?
o Based on patents and publication databases, since these are
generally seen as useful throughput indicators of applied research
and technological development.
- Does geographical proximity or ‘being physically close to regional centers
of exccellence’ enable SAP to increase its absorptive capacity?
Overall conclusion: firms receive higher performance of their innovations when
living in a cluster (region) than when they are spread.
Location, Location: The geography of industry clusters
Holger Schiele (2011)
Example of a cluster; half of the world’s tiles are produced in two regions in Italy
and Spain.
EXAMPLE: For instance, Nokia officials explained that they closed the last
mobile phone factory in Germany because they had failed to attract a cluster of
suppliers near the factory. Most suppliers are located in Asia and even though
transport costs are negligible, the distance to the industry centre and the
resulting long lead times prevented Nokia from achieving the necessary flexibility
, to react quickly to market changes. Clusters do not form in every industry, but in
industries characterized by dominant regional clusters, membership in a cluster
is essential for sustained strategic equality.
In industries characterized by dominant regional clusters, membership in a
cluster is essential for sustained strategic equality.
Porter (1998) defines clusters as; A cluster is a group of firms and institutions
of one industrial sector that are complementing each other along a value chain
and also overlapping in a limited geographical area. Lots of firms are not aware
that they are in a cluster, therefore firms in agglomerations can miss
opportunities through not communicating with each other sufficiently.
Firms within a cluster enjoy a higher productivity, innovation and profitability
advantages compared to their isolated competitors. An explanation is that, when
you have access to the resources around you, firms can specialize on its core
competencies.
Firms can use Porter’s “diamond of competitive advantage” to determine if they
are members of any cluster. (competitors of a company, customers, suppliers and
institutions)
Managers play a big role in identifying a cluster. When not in a cluster, two
opportunities arise; link up with a cluster, or find a niche market.
It is important to see whether or not you are in a cluster,
The ambidextrous organization
Charles A. O’Reilly and Michael L. Tushman (2004)
We discovered that some companies have actually been quite successful at both
exploiting the present and exploring the future, and as we looked more deeply at
them we found that they share important characteristics. In particular, they
separate their new, exploratory units from their traditional, exploitative ones,
allowing for different processes, structures, and cultures; at the same time, they
maintain tight links across units at the senior executive level. In other words, they
manage organizational separation through a tightly integrated senior team. We
call these kinds of companies "ambidextrous organizations," and we believe they
provide a practical and proven model for forward-looking executives seeking to
pioneer radical or disruptive innovations while pursuing incremental gains.
Architectural innovations; applying technological or process advances to
fundamentally change some component or element of their business. (the other
two types of innovations are continuous/incremental and discontinuous/radical)
Companies tend to structure their breakthrough projects in one of four basic
ways:
- Functional design; completely integrated into regular organizational and
management structure
- Cross-functional teams; groups operating within the established
organization but outside the existing management hierarchy
- Unsupported teams; independent units set up outside the established
organization and management hierarchy
