1) The document compares innovation in the furniture industries of Croatia and the United States through surveys of manufacturers in both countries. 2) It finds that US manufacturers achieved significantly higher revenue from new products than Croatian manufacturers, but Croatian manufacturers believe they are more innovative than peers. 3) Innovation in products, processes, and business practices was found to significantly correlate with competitiveness in both countries, except for product innovation in the US which did not significantly correlate. Innovation did not significantly correlate with company age in either country.

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A COMPARISON OF INNOVATION IN THE
FURNITURE MANUFACTURING INDUSTRIES
OF CROATIA AND THE UNITED STATES
Andreja Pirc
Instructor & Doctoral Student
University of Zagreb,Faculty of Forestry, Croatia
Richard Vlosky
Director & Professor
Louisiana Forest Products Development Center
Louisiana State University Agricultural Center
L ii St t U i it A i lt l C t
Forest Products Society 65th International Convention
June 19/21, 2011
Research was co‐financed by the Unity Through Knowledge Fund and The National Foundation for
Science, Higher Education, and Technological Development of the Republic of Croatia
INTRODUCTION
Why the furniture industry? Why Croatia & USA? Why innovation?
... Is an ... Is a metric for
important ... Small country vs. economic growth ...
value‐added large country...
wood product ... Is necessary for
sector ... ...Both are facing firms to compete ...
globalization & fierce
competition for
market share ...
... Decline of
domestic
consumption ...
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I N N O V A T I O N
... IS NOT A NEW PHENOMENON/CONCEPT ...
... IS AS OLD AS MANKIND ITSELF ... BUT COMPLEX
IS AS OLD AS MANKIND ITSELF BUT COMPLEX
(Fagerberg, Mowery, and Nelson, 2006)
• The terms innovative and innovation are used to describe the flexibility of
firms in meeting changes in the business environment (Tyson, 1997).
• Innovation has a broad array of definitions going back to Schumpeter
(1911), cited by Cao and Hansen (2006), who describe innovation as the
(1911) cited by Cao and Hansen (2006) who describe innovation as the
engine of economic development.
• According to Dewar and Dutton (1986) innovation is an idea, practice, or
object that is perceived as new to an individual or another unit of adoption.
• Adapting to changes in competitive markets through innovation is
necessary for firms to survive (Bullard, 2002).
I N N O V A T I O N
• In its various forms and iterations, innovation has long been recognized as
critical to a firm’s competitive advantage (Brown and Eisenhardt, 1995;
Stock et al., 1996; Motwani et al.,1999; Cooper 1996; Damanpour and
Gopalakrishnan, 2001; Scarborough and Zimmerer, 2002).
• Many activities can constitute innovation such as new product
development, product line improvements and extensions, improvements in
production processes, and innovative marketing and management practices
(Wagner and Hansen,2005).
(W dH 2005)
• Although the most familiar forms of innovation are new or improved
products or manufacturing systems, innovation can also take place in
business management processes (Nybakk et al., 2009).
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THE STUDIES
Objectives: 1) characterize the furniture manufacturing industries
in each country; 2) delineate innovation into three areas: product,
in each country; 2) delineate innovation into three areas: product,
production process, and business process and; 3) See how
innovation influences competitiveness and; 4) examine
innovation‐demographic relationships identified in the literature.
Data Collection:
• Mail‐based survey following Dillman (2007)
• Furniture manufacturers randomly selected
– (U.S.: 430; Croatia: 409)
• Quantitative data used; Likert scales for model variables
• Croatia: 77 useable responses‐adjusted response rate: 24.2%
• US: 74 useable responses‐adjusted response rate of 23.5%
RESULTS Demographics
Number of Employees (U.S.: n=70; Croatia: n=74)
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RESULTS Demographics
Average Age of Employees (U.S.: n=70; Croatia: n=74)
* Significant difference at α=0.05
RESULTS Demographics
Average Education of Employees (U.S.: n=71; Croatia: n=76)
* Significant difference at α=0.05
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RESULTS Demographics
Employee Gender (U.S.: n=70; Croatia: n=77)
RESULTS Demographics
Average Age of Large Capital Equipment (U.S.: n=72; Croatia: n=77)
* Significant difference at α=0.05
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RESULTS Innovation (U.S.: n=72; Croatia: n=77)
Percent of 2008 company
revenue that came from sales of
revenue that came from sales of
new/improved products:
U.S. = 35.6% **
Croatia = 2.8%
Average Age of Respondent Companies
U.S. = 36 years old **
Croatia = 16 years old
** Significant difference at α=0.001
RESULTS Innovation
Level of Company Flexibility (U.S.:n=74, Croatia: n=77)
Flexibility is the ability to be open to change and supportive of continuous improvements.
What do you consider the level of flexibility to be in your company?
* Significant difference at α=0.05
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RESULTS Innovation Innovation Relative to Other
Companies in the Furniture Industry
(U.S.:n=74, Croatia: n=77)
* Significant difference at α=0.05
RESULTS Innovation Innovation Relative to Other Non‐
Furniture Industries
(U.S.:n=74, Croatia: n=77)
* Significant difference at α=0.05
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THE MODEL Innovation Indices & Items
Product • Has cutting-edge product designs
• Has unique products not found elsewhere on the market
Innovation • Introduces new products into markets before competitors
• Makes major improvements in technology
Production Process • Use of breakthrough production technology
Innovation • Uses computer software to manage/schedule projects
• Has patented manufacturing processes
• Use of market research to determine customer needs
• Use of market research to determine customer satisfaction
Business Process • Has a web site
Innovation • Strength of information technology capabilities
• Strength of distribution/logistics capabilities
• Active in continuous improvement
THE MODEL Innovation & Competitiveness
Correlation Sig. (2-tailed)
Product
P d t -.046 NS
Innovation .298 .008
Production Process .390 .001
Competitiveness
Innovation .483 .000
Business Process .400 .000
Innovation .531 .000
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THE MODEL Innovation & Company Size
Correlation Sig. (2-tailed)
Product
P d t -.147 NS
Innovation -.306 .007
Production Process .375 .002
Company Size
Innovation -.032 NS
Business Process .445 .000
Innovation .217 NS
THE MODEL Innovation & Company Age
Correlation Sig. (2-tailed)
Product
P d t .082 NS
Innovation .029 NS
Production Process .040 NS
Company Age
Innovation -.034 NS
Business Process -.034 NS
Innovation -.068 NS
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Summary
• U.S. Respondents
– Higher Education Level
– Older Companies
– Older Employees
• Croatia Respondents
– Companies More Flexible
– Newer Large Capital Production Machine Centers
• Both Countries’ Respondents
– Same Company Size Distribution (employees)
– Same Gender Mix
Summary
• U.S. Respondents
– Achieved a much higher level of revenue from sales of
new/improved products compared to Croatian respondents.
new/improved products compared to Croatian respondents
• Croatia Respondents
– (Believe are) more innovative than other companies in
furniture sector and other industry sectors.
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Summary
• Product, Process & Business Innovation
– Positively and significantly correlated to Competitiveness in
both countries….Except Product Innovation in the U.S.
both countries Except Product Innovation in the U S
(Negative, NS).
– Not significantly correlated to Company Age in either country.
Questions? Comments?
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