Theoretical Background
by Maren Bruns
To overcome the barriers in the frame of the initiation and realisation of inter-organisational innovation processes (described here >>>), actors within innovation networks can make use of management support services. In the following, the theoretical background for offering management support services will be provided.
Transaction cost theory
Barriers related to the initiation and accomplishment of inter-organisational innovation activities occur due to the fact that actors need to make efforts to handle uncertainties by opening up their institutional borders (Williamson, 1985). These efforts can be subsumed under the term “transaction and coordination tasks”. A transaction is an agreement carried out between several actors, often involving the exchange of items of value (Walker and Weber, 1984; Williamson, 2005). Failures arising during this process are explained by transaction cost theory, which is classified within the field of new institutional economics (Erlei et al., 2007). New institutional economics considers additional costs arising which occur in connection with transactions – such as coordination costs. Transaction costs are cost based on the division of labour for the clarification, agreement and control of the production or distribution of a good or service (Theuvsen, 1997). Whereas coordination costs are expenditures and opportunity costs for the information procurement. They are comprised of transaction costs and costs for the organisational structure (Windsperger, 1996). In comparison, neoclassical theories assume complete market transparency. Goods and services are interchanged without recognition of additional costs which occur on top of the expected price. Coase (1999), (who introduced transactions costs into economic theory), causes the existence of firms by the costs of market utilisation. Firms exist since market utilisation costs are higher than firm's internal hierarchical utilisation costs (Voigt, 2002). The transaction cost theory provides an explanatory approach regarding the making of decisions to carry out transactions in the market, corporation internal or that relate to preferring a hybrid organisation mode (Erlei et al., 2007). In this regard three kinds of transaction cost categories need to be considered (Richter and Furubotn, 2003):
Innovation broker approach
In any case, barriers in connection with the initiation and realisation of inter-organisational innovation processes need to be taken into account. Transaction and coordination failures accrue especially at interfaces between participating actors. These failures might be minimised by a third party taking over coordinating tasks. When integrating a third party into inter-organisational innovation activities, this party should focus on the reduction of transaction and coordination barriers. “Such intermediary activities include: helping to provide information about potential collaborators; brokering a transaction between two or more parties; acting as a mediator, or go-between, bodies or organiszations that are already collaborating; and helping find advice, funding and support for the innovation outcomes of such collaborations” (Howells, 2006). According to Howells (2006) this third party might be “an organization or body that acts [as] an agent or broker in any aspect of the innovation process between two or more” actors. Beside that definition the literature describes many diverse terminologies regarding third parties with different functions. Most of them act as an innovation broker or intermediary in an innovation network. One can differentiate between two main and differing kinds of third parties: Some concentrate solely on the intermediation between actors. They work as a supporter in innovation systems aiming to facilitate collaborative innovation processes and innovation activities. Others additionally provide content and knowledge. They function as well as an innovation source (Chesbrough, 2006; Hargadon and Sutton, 1997; Hertog, 2000; Howells, 2006; Klerkx, 2008; Klerkx and Leeuwis, 2009; Winch and Courtney, 2007). The terminology is very varied. While Hargadon and Sutton (1997) for example define the term “knowledge or technology broker”, this study follows rather the definition of Winch and Courtney (2007) by using the term “innovation broker”: “An innovation broker is an organization acting as a member of a network of actors in an industrial sector that is focused neither on the generation nor the implementation of innovations, but on enabling other organizations to innovate.” The innovation broker does not participate directly in the generation of new knowledge during the innovation process. Assuming, by the integration of a third party supporting another organisation to innovate, inter-organisational innovation consortia would be more efficient and effective since the actors within the consortium would be able to concentrate solely on the content of an innovation activity – the generation, adaptation and exploitation of new knowledge.
Resource-based approach
- Figure 9
The development of the procedure model aiming to identify the demand for management support services for service recipients draws from transaction cost economics and governance aspects, extended by the resource-based view. Especially the resource-based approach covers the biggest part of the theoretical foundations for this analysis step. The resource-based approach is an economic instrument for a structured analysis of enterprise resources. Resources are considered to be company assets at a particular point of time (Barney, 1991). The literature distinguishes between human, intangible and tangible resources (see Figure 10). In general, resource analysis is conducted to work out options for strategic operations for a company (Wernerfelt, 1984). In this context, Wernerfelt (1984) combines the resource-based approach with Porter’s (1980) model of “Five Competitive Forces”. Porter’s model considers external forces affecting the market success of a company (see Figure 9).