Innovation processes: do they help or hinder new product development outcomes in Irish SMEs?

Variable	Mean (STD)	Levene’s test for equality of variances F-value (p)	t-test
	Percentage of revenues from new products/services
Innovation process
Informal (n = 134)	0.352 (0.278)	1.432 (p = 0.233)	0.029* p < 0.05
Formal (n = 39)	0.466 (0.308)
Size
Micro and small (n = 144)	0.392 (0.294)	2.694 (p = 0.103)	0.138
Medium (n = 29)	0.305 (0.248)
Sector
Non-service (n = 87)	0.355(0.278)	1.997 (p = 0.159)	0.300
Services (n = 86)	0.400 (0.297)
	Innovations the first of their kind to market
Innovation process
Informal (n = 110)	0.24 (0.427)	10.586 (p = 0.001)	0.000**** p < 0.001
Formal (n = 32)	0.56 (0.504)
Size
Micro and small (n = 120)	0.30 (0.460)	1.082 (p = 0.300)	0.556
Medium (n = 22)	0.36 (0.492)
Sector
Non-service (n = 75)	0.37(0.487)	12.125 (p = 0.001)	0.085
Services (n = 67)	(0.430)

Comparison of firms with formal and informal innovation processes – idea generation stage

Variable		Formal innovation process, n = 39 %	Informal innovation process, n = 134 %	Pearson chi-square F-value	p-value
In house idea generation
Our culture makes it hard for people to put	SA / A	13	21	6.277	0.043* p < 0.05
forward good ideas	–	8	22
	D / SD	79	57
People in our unit come up with lots of good	SA / A	72	57	3.571	0.168
ideas on their own	–	10	23
	D / SD	18	20
Cross pollination within business
Few of our projects involve team members	SA / A	21	30	7.667	0.022* p < 0.05
from different units or subsidiaries	–	15	31
	D / SD	64	39
Typically, our people collaborate on projects	SA / A	77	58	6.087	0.048* p < 0.05
internally, across units, businesses, or	–	5	20
subsidiaries	D / SD	18	22
External sourcing of ideas
Our people often exhibit a ‘not invented here’	SA / A	8	23	5.912	0.052
attitude – ideas from outside are not considered	–	16	22
	D / SD	24	19

Phases in the innovation process

Authors	Stage 1	Stage 2	Stage 3
Roper et al. (2008)	Knowledge Sourcing	Transformation	Exploitation
Hansen and Birkinshaw (2007)	Idea Generation	Idea conversion	Idea diffusion
Loewe and Chen (2007)	Discovery	Opportunity	Realisation
O’Connor and Ayers (2005)	Discovery	Incubation	Acceleration

The Innovation Value Chain

		Idea Generation		Conversion		Diffusion

	In-House	Cross- Pollination	External	Selection	Development	Spread
	Creation within a unit	Collaboration across units	Collaboration	Screening and initial funding	Movement from idea to first result	Dissemination across the organisation
Key Questions	Do people in our unit create good ideas on their own?	Do we create good ideas by working across the company?	Do we source enough good ideas from outside the firm?	Are we good at screening and funding new ideas?	Are we good at turning ideas into viable products, businesses and best practice?	Are we good at diffusing developed ideas across the company?
Key Performance Indicators	Number of high-quality ideas generated within a unit	Number of highquality ideas generated across units	Number of highquality ideas generated from outside the firm	Percentage of all ideas generated that end up being selected and funded	Percentage of funded ideas that lead to revenues; number of months to first sale	Percentage of penetration in desired markets, channels, customer groups: number of months to full diffusion

Comparison of firms with formal and informal innovation processes – diffusion stage

Variable		Formal innovation process, n = 39 %	Informal innovation process, n = 134 %	Pearson chi-square F-value	p-value
We’re slow to roll out new products	SA / A	23	43	5.332	0.070
	–	26	21
	D / SD	51	36
Competitors are slow to copy our product	SA / A	23	19	0.555	0.758
introductions	–	44	41
	D / SD	33	40
We don’t penetrate all possible channels,	SA / A	39	66	10.617	0.005** p < 0.01
customer groups, and regions with new	–	28	19
products	D / SD	33	15

Comparison of firms with formal and informal innovation processes – conversion stage

Variable		Formal innovation process, n = 39 %	Informal innovation process, n = 134 %	Pearson chi-square F-value	p-value
Selection
We have tough rules for investment in new	SA / A	20.5	29	3.318	0.190
projects making it hard to get ideas funded	–	20.5	29
in most cases	D / SD	59	42
We have a risk-taking attitude toward	SA / A	67	38	10.105	0.006** p < 0.01
investing in novel ideas	–	13	30
	D / SD	20	32
Development
New-product-development projects often	SA / A	46	58	8.156	0.017
from different units or don’t finish on time	–	19	27
	D / SD	35	15
Managers receive lots of support	SA / A	79	40	17.820	0.000*** p < 0.001
developing new ideas	–	10.5	33
	D / SD	10.5	27

Percentage of revenues from new products/services – univariate ANOVA

Variable			N	Mean (%)	Standard error	Mean difference	Standard error	p-value	95% Confidence interval for differencea Adjustment for multiple comparisons: least significant difference (equivalent to no adjustments)

Size	Sector	Innovation process							Lower bound	Upper bound
Micro and small	Non-service	Informal	55	33.745	3.820	−11.588	8.252	0.162	−27.881	4.705
		Formal	15	45.333	7.315
	Services	Informal	55	37.545	3.820	−17.349* p < 0.05	7.539	0.023* p < 0.05	−32.234	−2.464
		Formal	19	54.895	6.499

Medium	Non-service	Informal	14	33.571	7.571	6.905	18.024	0.702	−28.682	42.492
		Formal	3	26.667	16.356
	Services	Informal	10	32.000	8.959	25.000	21.944	0.256	−18.328	68.328
		Formal	2	7.000	20.032

Descriptive statistics for product innovation – active firms

Variable	N	Mean	SD	Min	Max
Formal innovation process (0: No; 1: Yes)	173	0.23	0.419	0	1
Size (0: Micro and Small; 1: Medium)	173	0.17	0.375	0	1
Sector (0: Other; 1: Services)	173	0.50	0.501	0	1
Innovation performance
% revenue from new products and services	173	37.7	28.8	0	100
Were your new product or service innovations the first of their kind to the market? (0: No; 1: Yes)	142	0.31	0.464	0	1
Idea generation stage
In-house idea generation
Our culture makes it hard for people to put forward good ideas	171	1.57	0.796	1	0
People in our unit come up with lots of good ideas on their own	171	2.40	0.801	1	3
Cross-pollination within business
Few of our projects involve team members from different units or subsidiaries	171	2.18	0.836	1	3
Typically, our people collaborate on projects internally, across units, businesses or subsidiaries	172	2.41	0.815	1	3
External sourcing of ideas
Our people often exhibit a ‘not invented here’ attitude – ideas from outside are not considered as valuable as those invented within	171	2.41	0.795	1	3
Lots of good ideas for new products and businesses come from outside the company	171	1.65	0.793	1	3
Conversion stage
Selection
We have tough rules for investment in new projects making it hard to get ideas funded in most cases	171	2.19	0.835	1	3
We have a risk-taking attitude toward investing in novel ideas	172	2.15	0.847	1	3
Development
New-product-development projects often don’t finish on time	169	1.63	0.784	1	3
Managers receive lots of support developing new ideas	170	1.74	0.809	1	3
Diffusion stage
We’re slow to roll out new products	173	2.01	0.886	1	3
Competitors are slow to copy our product introductions	173	2.18	0.745	1	3
We don’t penetrate all possible channels, customer groups, and regions with new products	173	1.59	0.792	1	3

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Innovation processes: do they help or hinder new product development outcomes in Irish SMEs?

Article Category: Research Article

Published Online: Aug 23, 2016

Page range: 88 - 103

DOI: https://doi.org/10.1515/ijm-2016-0006

Keywordsinnovation, innovation audit, Ireland, IVC, NPD, SME

© 2016 Peter Robbins, Colm O’Gorman, published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Comparison of firm outputs

Comparison of firms with formal and informal innovation processes – idea generation stage

Phases in the innovation process

The Innovation Value Chain

Comparison of firms with formal and informal innovation processes – diffusion stage

Comparison of firms with formal and informal innovation processes – conversion stage

Percentage of revenues from new products/services – univariate ANOVA

Descriptive statistics for product innovation – active firms

Keywords
innovation, innovation audit, Ireland, IVC, NPD, SME