The Role of Innovation in Competitiveness and Economic Development

Abstract

It is apparent that understanding the link between the role of innovation in competitiveness and economic development is essential. This is because innovation ultimately holds the key to addressing the most pressing a nation's social and human challenges. In the past, some organizations viewed research and development (R&D) as an intangible, difficult to manage and measure process and do their best to stay away from it. On the other hand, organizations that have a clear understanding and mastery of R&D management seem to have great success in exploiting R&D in commercializing new technologies with speed and precision that enabled them to achieve numerous competitive edge, such as first-to-market advantages, greater market shares for their innovations, premium prices and dominant designs relative to their counterparts). However, the upsurge in enabling technologies such as the internet is changing the perceptions on managing R&D processes, moving from technology-oriented model to a more interactive and collaborative model. While it is evident that there is increased focus on fine-tuning R&D management processes the majority of these efforts were confined to the USA, Europe, Asia and other developed economies, with limited focus on R&D management on the African continent.

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This paper evaluates and discusses relevant aspects of the five generations of R&D management practices using an exploratory research approach and attempts to predict some of the most appropriate practices R&D managers may adopt in the R&D sixth generation. The findings suggest that the sixth generation of R&D management will be characterized by greater multi-disciplinary approach emphasizing cross-functional communication, collaboration, greater inclusion of stakeholders, such as suppliers, customers and partners in the full life cycle of the R&D management process. That is, from conception to market development, evaluation, reporting and re-conceptualization. This research provides further insight into the next generation of R&D.

Keywords

Research and development (R&D); sixth generation R&D; collaboration; open innovation; case studies.

Introduction

The trends in organizing, conducting and managing R&D have become apparent over the last two decades, together with a steady increase in R&D and innovation efforts and outputs (Busom & Fernadez-Ribas, 2008). Research and development (R&D) is the most popular means by which corporations and other institutions accumulate and increase the knowledge pool (Niosi, 1999).

Management of R&D takes various forms, A number of companies, even if engaged in multinational manufacturing and marketing of their products, made use of centralized research facilities, strategically located to enable easy access to external knowledge sources, such as leading universities, public research institutions as well as competitors' spillovers. The rationale behind this strategy was that, since knowledge is an intangible asset, it could be transferred at no cost by its proprietors when necessary. This is equivalent to saying that production and researching are subject to different location factors. However, a series of factors over the last two decades have forced the rapid modifications of the R&D management strategies, even for multinational firms (Campi & Bella, 1998:241 -242):

• the increase competition in the global market

the growing diversification of even the most basic commodity, hence the growing need to tailor products to local market specifications.

• the increasing R&D contribution in the value chain of any product

the attractive incentives offered by the governments of many countries to attract foreign investments in cutting-edge industries and/or research facilities in order to add to the advancement of indigenous technological base. Sometimes firms may be induced to set up local adaptive R&D by government regulations. There are two schools of thoughts about government industrial policies, viz. either internal investment in R&D are considered to fast-track economic growth, or foreign R&D units are viewed as a negative factor that does not contribute to the innovative capability and general welfare of the host country.

the easy availability of well trained and educated personnel in many countries other than the few traditionally regarded as the most developed (Campi & Bella, 1998:241 -242).

Zhao (2003) further argued that the management of R&D requires the correct form of business organization in order to encourage innovation while controlling any associated risks.

Innovation was a term initially coined by Chesbrough (2005). The notion of open innovation entails collaborative endeavour while dealing with the issue of intellectual property rights

The next section provides critical review of various generations of R&D management strategies leaning onto the sixth generation, as well as the predictors of the sixth generation of R&D management strategies.

Literature Review

Research and development (R&D) is the most popular means by which corporations and other institutions accumulate and increase the knowledge pool. However, R&D managing process is fraught with several operational, methodological, strategic and efficiency challenges (Nobelius, 2004).The most common channel used in the conduction of R&D is: through company research laboratories, government research hubs and university laboratories. Within these three research channels, R&D management has undergone several metamorphoses.

Paraponaris (2003:96-98) argued that the models of R&D strategies have undergone several metamorphoses over the past couple of decades resulting in the current hybrid structures that combined a market-driven approach with networking practices.

Generations in R&D management

According to Zhao (2003), the first generation of R&D management also referred to as push-technology approach, spans 1950s - 1960s. During this era, R&D management was characterized by lack of strategic framework, with R&D activities organized by scientific or engineering disciplines. R&D funds were allocated to cost centres with no specific profit objectives, resource plan, or time frame of budget. Furthermore, there was minimum evaluation of R&D performance other than by R&D function itself, coupled with little communication between R&D centres.

The second generation of R&D management, also known as the market-pull approach, gained popularity between the 1960s-1970s to build upon the first generation. The second generation provides the start of a strategic framework for R&D at the project level, while seeking to improve communication between R&D and other functions for commercial purposes. The centralized model which characterized the first R&D generation limits the opportunities for business collaboration and prevents the diffusion of innovation into the market place. Second generation of R&D management attempts to correct these problems by linking R&D to commercial needs on a project by project basis, through measurement of R&D results in financial terms, such as net present value, ROI, and payback ratio. The second/third generation of R&D management improves on the first generation through the combination of emphasis on financial control as well as the separation of centralized and decentralized model of R&D management.

The late 1990s saw the emergence of the fourth-generation R&D management. This generation gave rise to the introduction of knowledge of the end-users and the suppliers as well as even competitors and other companies with other competencies. Knowledge produces in the Universities as well as government research labs were positively explored and utilised. The feedback system within R&D management became streamlined and more complex to manage, with the development of technological alliances. The frontiers of the corporation became more porous, as intellectual property (IP) emanating from technical partnerships is partially shared with external agents.

The conventional R&D management methods soon became obsolete and new routines emerged to cope with the new activities, new knowledge directions and new calibre of employees. In the new business atmosphere, nimble-footedness is the key characteristics of the emerging model of R&D. Through strategic alliances, corporations look for key complementary assets (in technology, marketing knowledge and financing) through the combination of internal and external resources (Niosi, 1999).

Sofo (2008), Hara, Blomqvist, Koivuniemi & Aijo (2004) presented a framework describing the five generations of R&D management. In summary, the new paradigm tends to limit the efficiency of the previous models of R&D management (Niosi, 1999).

Research Methodology

There has been little empirical work done in examining the different generations of R&D management. This is mainly due to the difficulty in recognizing and making sense of the inconspicuous, multiple, open-ended and dynamic variables. Thus Exploratory case studies has been used in this research to absorb this complexity by directing the focus on mechanisms, i.e. what was done and how, instead of how many, how much and the frequency (Holt et al, 2009). Yin (2003) argued that multiple cases studies offer greater range of evidence as well as providing a single set of "cross-case" conclusions.

This research mainly focus on understanding the parameter behind changes in R&D management, thus explore more recent R&D management practices leading to the sixth generation of R&D management.

The following are the outline of this research resulting in aspects of this paper:

• Step one involves an evaluation of the core literature on R&D management, of database searches.
• Step two involves extensive read up on journals from the database searches. The author started with a systematic search of all the articles related to R&D management. The key words and phrases such as research and development, R&D, new product development and innovation. The next step was to read through all relevant articles in order to gain understanding of the topic. Due to the large number of journals available on topic related to R&D, the author had to limit the journals to be included in this study in order to concentrate on those that are specific to R&D management (Candelin-Palmqvist, Sandberg and Mylly, 2012).

The various results and findings from all the literature are then compiled to form the conclusion of this research; hence it may be assumed that the extensive read up and consultation with various findings and conclusions have increased the trustworthiness of the findings of this research.

Case Studies and Discussions

The main goal of R&D management routines is to reduce lead times, improve just-in-time deliveries of new products, minimize the number of unsuccessful R&D projects, improve efficiency, and cut research cost (Niosi, 1999).

Nobelius (2004) argued that a generation in R&D management is the totality of the different types of approaches and the evolutions through various R&D eras - all with a single aim of assisting institutions in improving their R&D efficiencies while developing a lingua-franca for researchers and institutions to work with....