100526 greve 2003


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100526 greve 2003

  1. 1. A Behavioral Theory of R&D Expenditures and Innovations : Evidence from Shipbuilding<br />-Henrich R. Greve<br />Song, Junho<br />Digital Contents Convergence, GSCST, SNU<br />26 May 2010<br />
  2. 2. <ul><li>Introduction
  3. 3. Organizational determinants of R&D and innovation
  4. 4. Method
  5. 5. Result
  6. 6. Discussion and conclusions</li></li></ul><li>Henrich R. Greve<br />Biography:<br />Ph.D. in Organizational Behavior from Stanford Graduate School of Business 1994. Assistant professor (until 1998) and associate professor (until 2002) at the University of Tsukuba.  Currently at the Norwegian School Business BI.  Has held visiting appointments at Department of Sociology, Stanford University (1998) and Department of Economics, Keio University (Japan, 1994).  Lecturer at Department of Sociology, Stanford University (1998, while visiting) and at Gakushuin University (Japan, 1995)<br />Research interests focused on organizational change of strategies, performance feedback processes, and research methods. <br />
  7. 7. Introduce<br /><ul><li>Two processes for innovation – traditional way</li></ul>- a development theory <br />: how the acquisition and management of knowledge and innovative people affect innovativeness <br /> what kinds of organizations have high levels of innovativeness<br />- a decision-making theory<br />: how organizations solve the opposition between innovations and organizational stability <br /> what conditions allow managers to take risks<br /><ul><li>This study</li></ul>Using behavioral theory to predict search intensity and innovation rates<br />- how performance and slack affect R&D<br />- how performance affects innovation rates<br />Data : 11 large Japanese shipbuilding firms : 1971 ~ 1996<br />
  8. 8. Organizational determinants of R&D and innovation<br /><ul><li>Overall Model</li></ul>Managers evaluate based on their ‘aspiration level’<br />low<br />Problemistic Search <br />: search that is stimulated by a problem… and is directed toward finding a solution to that problem<br />Slack Search<br />: innovations that would not be approved in the face of scarcity but have strong subunit support<br />Solutions<br />: existing in organizations’ environment or contacting with consultants …<br />
  9. 9. Organizational determinants of R&D and innovation<br />
  10. 10. Organizational determinants of R&D and innovation<br /><ul><li>Overall Model</li></ul>Two important theoretical implications<br />1) R&D : one component of organizational search<br /> Innovations : one type of potential solution<br />2) Having innovations in a pool of solutions is a necessary condition for launching innovations<br />innovation<br />Innovation Rate<br />- R&D<br />- Managerial demand for risky solutions<br />noninnovation<br />Solution Stock<br />
  11. 11. Organizational determinants of R&D and innovation<br /><ul><li>Hypothesis</li></ul>[ Problemistic Search : Performance Relative to Aspirations]<br />Ⅰ. When performance relative to aspiration level decrease, R&D intensity increases<br />[Slack Search : Organizational Resources]<br />Ⅱ. When organizational slack increase, R&D intensity increases<br />[Decision Making : Risk Preferences<br />Ⅲa. When performance relative to aspiration level increases, the rate of launching innovations decreases<br />Ⅲb. The rate of launching innovations decreases more rapidly for performance increases above aspiration level than for performance increases below aspiration level<br />
  12. 12. Methods<br /><ul><li>The Japanese Shipbuilding Industry : 1971 ~ 1996
  13. 13. Measures</li></ul>Dependent Variables<br />- R&D intensity : R&D expenditures divided by sales<br />- Innovation launches : number of innovations made by a firm as reported by Techno Japan<br />Performance variables<br />- ROA(return on assets) (ROS(return on sales), ROE(return on equity))<br />
  14. 14. Methods<br /><ul><li>Measures</li></ul>Slack variables<br />- Absorbed slack <br /> : SGAE ( the ratio of selling, general and administrative expenses to sales)<br />- Unabsorbed slack<br /> : the ratio of quick assets (cash and marketable securities) to liabilities<br />- Potential slack<br /> : the ratio of debt gives lower borrowing ability (negative coefficient) <br />Industry control variables <br />- Number of employees<br />- Annual production<br />- Annual growth<br />- Annual freight rate<br />
  15. 15. Results<br />H2<br />H1<br />
  16. 16. Results<br />H3a<br />H3b<br />
  17. 17. Results<br />
  18. 18. Discussion and Conclusions<br /><ul><li>The need to emphasize decision-making variables in innovation research , not knowledge management
  19. 19. Innovation development cycle, because of not quick reacting
  20. 20. Researchers can predict what kinds of firms are likely to launch innovations that change the evolution of an industry</li>