University of Ljubljana
The Institute of Economics
FACU LTY OF
ECONOMICS
Zagreb
Competencies driving
innovative performance of
Slovenian and Croatian
manufacturing firms
Janez Prašnikar,
Tanja Rajkovič
Faculty of Economics, University of Ljubljana
Maja Vehovec
The Institute of Economics, Zagreb
GDN
Zagreb, 27th November 2008
University of Ljubljana
FACULTY OF
ECONOMICS
Presentation outline
 Theoretical background
 Competencies in R&D
 Operational model
 Survey design
 Clustering
Complete sample
Comparison between Slovenian and Croatian firms
 Conclusions
University of Ljubljana
Theoretical background
FACULTY OF
ECONOMICS
Competencies in R&D - NPD
NPD stages
Business/market
analysis
Technical
development stage
Product testing
Product
commercialization
Technological
competencies
Technical feasibility of
products
Engineering studies,
establishing product
designs, prototyping
Influencing
consumer tests
design and results
interpretation
Production plans and
ramp-up
Marketing
competencies
Evaluation of market
impacts of product
feature options
Facilitating product
feature decisions
Sample selection,
testing, analysis
Marketing plans,
product promotion,
distribution
Alignment of
technological and
marketing
knowledge
Translating testing
results in design
modifications
Coordination of
production planning
and demand
management
activities
Competencies
Complementary Aligning new product
(integrative/
integration/
combinative)
competencies
features with potential
customers’ needs,
assessment of needed
investment and risks
Adapted after Swing & Song (2007), Fowler et al. (2000), Coates & McDermott (2002).
University of Ljubljana
FACULTY OF
ECONOMICS
Theoretical background
Competencies in R&D
COMPETENCIES
 Source of competitive advantage
(Competence based theory, (Hamel & Heene, 1994))
 Sustainable and synchronized utilization of resources
 Spread across multiple products, markets, functions
 Network of capabilities
 Unlike capabilities not product and industry specific
Cross industry comparisons
University of Ljubljana
FACULTY OF
ECONOMICS
Operational model
Environmental
turbulence
Technological
competencies
Marketing
competencies
Complementary
competencies
Innovative
performance
Non-financial measures of
NPD process outcomes
Business
performance
University of Ljubljana
FACULTY OF
ECONOMICS
Survey design
 Target segment:
 Manufacturing companies: CPA 2002 classification - products under code
D (manufactured products) without product related industrial services
 Medium size, large companies
 Active during 2002-2006
 Population: NSLO = 382, NCRO = 512
Preliminary results – valid responses:
 SLO: 50 firms, 65 product lines
 CRO: 36 firms, 40 product lines
 Questionnaire:
 Initially tested in 12 companies
 Mailed by post
 Targeted at R&D management
 Questionnaire structure:
 Self-assessment questions on competencies, innovative
performance and NPD relative to main competitors (5-point scale)
 Environmental turbulence (5-point Likert scale)
University of Ljubljana
FACULTY OF
ECONOMICS
Operational model - variables
Technological
competencies
Variables:
Advancement of R&D
Number of quality technological capabilities inside
the firm or through STP
Marketing
competencies
Complementary
competencies
Variables:
Prediction of technological trends
Variables:
Obtaining information about changes of customer
Good
transfer
of technological
and marketing
preferences
and
needs
knowledge among business units
Acquisition of real time information about
The
intensity, quality and extent of R&D
competitors
knowledge transfer in co-operation with strategic
partners
Establishing and managing long-term customer
relations
Cost efficiency of product development
Establishing and managing long-term relations
Clearly
defined activities of business units in the
with suppliers
corporate strategy of our firm
University of Ljubljana
FACULTY OF
ECONOMICS
Operational model - variables
Baseline model:
Technological
competencies
Number of modified, improved and
completely new products in period
2004-2006
Quality of products
Marketing
competencies
Innovative
performance
New product development
variables:
Time needed to develop an
improved product (incremental
innovation)
Complementary
competencies
Time needed to develop a new
generation product (radical
innovation)
Contribution of the firm to
industry trends (trend setting)
Innovation VS imitation strategy
University of Ljubljana
FACULTY OF
ECONOMICS
Clustering

Identified 3 clusters of product lines by using:

Hierarchical clustering (Ward’s procedure, Squared Euclidian distance)

Segments compared using ANOVA (post hoc Duncan test, P<0,05)

Clustering performed on innovative performance variables

Clusters identified:
I. Technology followers with weak competencies
(Nproduct lines=43, Nfirms=39)
II. Technology followers with strong competencies
(Nproduct lines=30, Nfirms=23)
III. Technology leaders
(Nproduct lines=36, Nfirms=34)
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared
Segments
Variables
Innovative performance
Number of modified, improved and completely new
products in period 2004-2006
Quality of products
Weak
followers
Strong
followers
Leaders
2,79
+
2,88
+
2,93
+
4,33
++
4,25
++
4,22
++
2,81
+
2,65
+
2,62
+
2,14
+
3,23
++
3,10
++
2,77
+
2,57
++
3,72
+++
3,94
+++
3,47
++
3,23
+++
New product development
Time needed to develop an improved product
Time needed to develop a completely new product
Contribution of the firm to industry trends
Imitation VS innovation strategy
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared
Weak
followers
Strong
followers
Leaders
2,65
+
2,81
+
2,70
+
2,86
+
3,30
++
3,07
++
3,65
++
3,92
+++
3,92
+++
2,74
+
2,93
+
3,14
+
3,21
+
3,23
++
3,07
+
3,67
++
3,67
++
3,86
+++
3,56
++
4,11
+++
4,00
++
Technological competencies
Advancement of R&D
Number of quality technological capabilities inside the
firm or through strategic partnerships
Prediction of technological trends
Marketing competencies
Obtaining information about changes of customer
preferences and needs
Acquiring real time information about competitors
Establishing and managing long-term customer
relations
Establishing and managing long-term relations with
suppliers
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared
Complementary competencies
Good transfer of technological and marketing
knowledge among business units
The intensity, quality and extent of R&D knowledge
transfer in co-operation with strategic partners
Cost efficiency of product development
Clearly defined activities of business units in the
corporate strategy of the firm
Other
Added value of new products
Cost efficiency of the firm
Weak
followers
Strong
followers
Leaders
2,79
+
2,69
+
2,53
+
2,86
+
3,47
++
3,10
++
2,97
++
3,43
++
3,56
++
3,58
+++
3,42
+++
3,78
+++
2,55
+
2,81
+
3,20
++
3,37
++
3,53
+++
3,78
+++
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared –
Environmental turbulence
Environmental
turbulence
Technological
competencies
Marketing
competencies
Complementary
competencies
Innovative
performance
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared –
Environmental turbulence
Technological turbulence:
Rapidly changing technology in the industry
High impact of new technologies on business operations
and competition and bring about big opportunities
Difficulty of predicting tech. changes in the next 2 to 3 years
Smaller technological changes represent tech. advances
Environmental
turbulence
Market turbulence:
Extremely high market uncertainty
Almost impossible to predict accurately the rapidly changing
tastes and demands of consumers
Unpredictability of activities of major competitors
Intensity of the competition in the industry
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared –
Environmental turbulence
Technological turbulence:
Rapidly changing technology in the industry
High impact of new technologies on business operations
and competition and bring about big opportunities
Difficulty of predicting tech. changes in the next 2 to 3 years
Weak
Strongrepresent tech. advances
Smaller technological
changes
Leaders
Environmental
turbulence
followers
followers
3,35
3,47
4,11
+
+
++
Market turbulence:
Extremely high market uncertainty
Almost impossible to predict accurately the rapidly changing
tastes and demands of consumers
Unpredictability of activities of major competitors
Intensity of the competition in the industry
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared –
Slovenian VS Croatian firms
Weak
followers
No. of product lines
No. of different companies
Technological competencies
Advancement of R&D
Strong
followers
Leaders
SLO
CRO
SLO
CRO
SLO
CRO
24
18
19
9
22
13
22
17
16
7
21
13
2,79
2,47
3,16
++
2,12
+
3,86
++
3,18
+
3,00
2,89
3,16
2,89
2,88
+
3,67
++
3,58
4,11
3,27
+
3,68
+
4,00
++
4,54
++
2,46
+
2,75
3,00
++
2,28
3,00
3,33
3,55
3,69
3,37
++
2,56
+
3,59
3,23
Marketing competencies
Acquiring real time information about competitors
Establishing and managing long-term relations with
suppliers
Complementary competencies
The intensity, quality and extent of research and
development knowledge transfer in STP
Cost efficiency of product development
University of Ljubljana
FACULTY OF
ECONOMICS
Clusters compared –
Slovenian VS Croatian firms
Weak
followers
No. of product lines
No. of different companies
New product development
Time needed to develop a completely new product
Contribution of the firm to industry trends
Strong
followers
Leaders
SLO
CRO
SLO
CRO
SLO
CRO
24
18
19
9
22
13
22
17
16
7
21
13
2,42
+
2,33
+
3,00
++
3,00
++
2,63
+
2,47
+
4,22
++
3,33
++
3,73
4,23
3,32
3,77
2,54
+
3,11
++
3,26
3,44
3,68
3,92
Other
Cost efficiency of the firm
University of Ljubljana
FACULTY OF
ECONOMICS
Conclusions
Three distinct segments of firms/product lines
Significant differences in competencies
Minor effect of environmental turbulence
Technological, marketing and complementary competencies are
simultaneously developed by most innovative firms
Strong marketing and complementary competencies can compensate
for weaker technological competencies
Croatian technology followers with weak competencies are comparably
better in making use of external sources of knowledge than their
Slovenian counterparts
University of Ljubljana
FACULTY OF
ECONOMICS
Conclusions
The Lisbon strategy agenda
For technology follower countries technological competencies may be
costly/time consuming to acquire  marketing and complementary
competencies as a mean of catching up via incremental innovation
Imitation as a strategy for gradually developing technological
competencies
Encouraging R&D cooperation through STP
Encouraging innovations based on good market expertise