The Role of Desorptive Capacity in the Relationship of Entrepreneurial Orientation - Open Innovation Performance: The Case of the Pharmaceutical Industry

Document Type : Research article

Authors

1 Department of Pharmacoeconomics and Pharmaceutical Management, Faculty of Pharmacy, Tehran University of Medical Sciences, Tehran, Iran.

2 Division of Industrial Management, Faculty of Management and Engineering, Linköping University, Linköping, Sweden.

3 Pharmaceutical Management and Economics Research Center, Faculty of Pharmacy, Tehran University of Medical Sciences, Tehran, Iran.

Abstract

Open innovation is a young arena in research that is fascinating the attention of a growing number of scholars. However, there are not enough studies that investigate open innovation performance. The pharmaceutical industry with the most Research and Development (R&D) intensity has been targeted by this new paradigm. This study explores the effect of entrepreneurial orientation on open innovation performance, considering the mediating role of desorptive capacity, which is defined as the firm’s capability to recognize outward technology transfer opportunities and to facilitate it. We use structural equation modeling to examine the hypotheses on a dataset from 100 Iranian pharmaceutical manufacturers in 2018. The results of the study support our conceptual model. Our findings indicate that a firm’s entrepreneurial orientation and desorptive capacity have a positive effect on its open innovation performance. Moreover, desorptive capacity has a mediating effect in the relation of entrepreneurial orientation and open innovation performance. This denotes that our new model contributes to the concept of desorptive capacity in the context of open innovation.

Graphical Abstract

The Role of Desorptive Capacity in the Relationship of Entrepreneurial Orientation - Open Innovation Performance: The Case of the Pharmaceutical Industry

Keywords


(1)        Chesbrough H. Open innovation: a new paradigm for understanding industrial innovation. Open innovation: Researching a new paradigm. (2006) 400: 0-19.
(2)        Randhawa K, Wilden R, and Hohberger J. A bibliometric review of open innovation: Setting a research agenda. J. Prod. Innov. Manag. (2016) 33: 750-72.
(3)        Huizingh EK. Open innovation: State of the art and future perspectives. Technovation. (2011) 31: 2-9.
(4)        Laursen K and Salter A. Open for innovation: the role of openness in explaining innovation performance among UK manufacturing firms. Strateg. Manag. J. (2006) 27: 131-50.
(5)        Cheng CC and Huizingh EK. When is open innovation beneficial? The role of strategic orientation. J. Prod. Innov. Manag. (2014) 31: 1235-53.
(6)        Bengtsson L, Lakemond N, Lazzarotti V, Manzini R, Pellegrini L, and Tell F. Open to a select few? Matching partners and knowledge content for open innovation performance. Creativity Innov. Manag. (2015) 24: 72-86.
(7)        Lichtenthaler U and Lichtenthaler E. Technology transfer across organizational boundaries: absorptive capacity and desorptive capacity. Calif. Manag. Rev. (2010) 53: 154-70.
(8)        Lichtenthaler U. A note on outbound open innovation and firm performance. R D Manag. (2015) 45: 606-8.
(9)        Lumpkin GT and Dess GG. Clarifying the entrepreneurial orientation construct and linking it to performance. Acad. Manage. Rev. (1996) 21: 135-72.
(10)      Lumpkin GT and Dess GG. Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle. J. Bus. Ventur. (2001) 16: 429-51.
(11)      Wang CL. Entrepreneurial orientation, learning orientation, and firm performance. Entrep. Theory Pract. (2008) 32: 635-57.
(12)      Wiklund J. The sustainability of the entrepreneurial orientation—performance relationship. Entrep. Theory Pract. (1999) 24: 37-48.
(13)      Wiklund J and Shepherd D. Knowledge‐based resources, entrepreneurial orientation, and the performance of small and medium‐sized businesses. Strateg. Manag. J. (2003) 24: 1307-14.
(14)      Wiklund J and Shepherd D. Entrepreneurial orientation and small business performance: a configurational approach. J. Bus. Ventur. (2005) 20: 71-91.
(15)      Rauch A, Wiklund J, Lumpkin G, and Frese M. Entrepreneurial orientation and business performance: Cumulative empirical evidence. (2009)
(16)      Mehralian G, Nazari JA, and Ghasemzadeh P. The effects of knowledge creation process on organizational performance using the BSC approach: the mediating role of intellectual capital. J. Knowl. Manag. (2018) 22: 802-23.
(17)      Shabaninejad H, Mehralian G, Rashidian A, Baratimarnani A, and Rasekh HR. Identifying and prioritizing industry-level competitiveness factors: evidence from pharmaceutical market. Daru. (2014) 22: 35.
(18)      Schuhmacher A, Germann P-G, Trill H, and Gassmann O. Models for open innovation in the pharmaceutical industry. Drug Discov. Today. (2013) 18: 1133-7.
(19)      Gassmann O, Reepmeyer G, and Von Zedtwitz M. Leading pharmaceutical innovation. 1st ed. Springer, Berlin/Heidelberg (2008) 1-11.
(20)      Lichtenthaler U and Lichtenthaler E. A capability‐based framework for open innovation: Complementing absorptive capacity. J. Manag. Stud. (2009) 46: 1315-38.
(21)      Müller‐Seitz G. Absorptive and desorptive capacity‐related practices at the network level–the case of SEMATECH. R D Manag. (2012) 42: 90-9.
(22)      Ziegler N, Ruether F, Bader MA, and Gassmann O. Creating value through external intellectual property commercialization: a desorptive capacity view. J. Technol. Transf. (2013) 38: 930-49.
(23)      Braun A, Mueller E, Adelhelm S, and Vladova G. Knowledge flow at the fuzzy front-end of inter-firm R&D collaborations–insights into SMEs in the pharmaceutical industry. Int. J. Enterpren. Innovat. Manag. (2012) 15: 29-46.
(24)      Miller D and Friesen PH. Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strateg. Manag. J. (1982) 3: 1-25.
(25)      Li Y-H, Huang J-W, and Tsai M-T. Entrepreneurial orientation and firm performance: The role of knowledge creation process. Ind. Mark. Manag. (2009) 38: 440-9.
(26)      Madhoushi M, Sadati A, Delavari H, Mehdivand M, and Mihandost R. Entrepreneurial orientation and innovation performance: The mediating role of knowledge management. Asian J. Bus. Manag. (2011) 3: 310-6.
(27)      Wales WJ, Parida V, and Patel PC. Too much of a good thing? Absorptive capacity, firm performance, and the moderating role of entrepreneurial orientation. Strateg. Manag. J. (2013) 34: 622-33.
(28)      Hu Y, McNamara P, and McLoughlin D. Outbound open innovation in bio-pharmaceutical out-licensing. Technovation. (2015) 35: 46-58.
(29)      Henard DH and Szymanski DM. Why some new products are more successful than others. J Mark Res. (2001) 38: 362-75.
(30)      Montoya-Weiss MM and Calantone R. Determinants of new product performance: A review and meta-analysis. J Prod Innov Manage. (1994) 11: 397-417.
(31)      Fosfuri A and Tribó JA. Exploring the antecedents of potential absorptive capacity and its impact on innovation performance. Omega. (2008) 36: 173-87.
(32)      Inauen M and Schenker-Wicki A. The impact of outside-in open innovation on innovation performance. Eur. J. Innov. Manag. (2011) 14: 496-520.
(33)      Parida V, Westerberg M, and Frishammar J. Inbound open innovation activities in high‐tech SMEs: the impact on innovation performance. J. Small Bus. Manag. (2012) 50: 283-309.
(34)      Zeng SX, Xie X, and Tam CM. Relationship between cooperation networks and innovation performance of SMEs. Technovation. (2010) 30: 181-94.
(35)      Chiang YH and Hung KP. Exploring open search strategies and perceived innovation performance from the perspective of inter‐organizational knowledge flows. R D Manag. (2010) 40: 292-9.
(36)      Hameed WU, Basheer MF, Iqbal J, Anwar A, and Ahmad HK. Determinants of Firm’s open innovation performance and the role of R & D department: an empirical evidence from Malaysian SME’s. J. Glob. Entrep. Res. (2018) 8: 29.
(37)      Saeedi MR, Pluripotent Dynamic Capabilities in the Internationalization of Firms: Focus on Learning, Innovating and Networking in SMEs from Sweden. [dissertation], Linköping University Electronic Press (2017).
(38)      Lane PJ and Lubatkin M. Relative absorptive capacity and interorganizational learning. Strateg. Manag. J.. (1998) 19: 461-77.
(39)      Avlonitis GJ and Salavou HE. Entrepreneurial orientation of SMEs, product innovativeness, and performance. J. Bus. Res. (2007) 60: 566-75.
(40)      Salavou H and Lioukas S. Radical product innovations in SMEs: the dominance of entrepreneurial orientation. Creativity Innov. Manag. (2003) 12: 94-108.
(41)      Alegre J and Chiva R. Assessing the impact of organizational learning capability on product innovation performance: An empirical test. Technovation. (2008) 28: 315-26.
(42)      Singh SK and Gaur SS. Entrepreneurship and innovation management in emerging economies. Manag. Decis. (2018) 56: 2-5.
(43)      Engelen A, Kube H, Schmidt S, and Flatten TC. Entrepreneurial orientation in turbulent environments: The moderating role of absorptive capacity. Res. Policy (2014) 43: 1353-69.
(44)      Ju P-H, Chen D-N, Yu Y-C, and Wei H-L. Relationships among open innovation processes, entrepreneurial orientation, and organizational performance of SMEs: The moderating role of technological turbulence. in International Conference on Business Informatics Research, Springer, Warsaw (2013).
(45)      Carvalho EG and Sugano JY. Entrepreneurial orientation as driver for open innovation. Revista Espacious. (2016) 37 (5).
(46)      Roldán Bravo MI, Ruiz Moreno A, and Llorens-Montes FJ. Supply network-enabled innovations. An analysis based on dependence and complementarity of capabilities. Int. J. Supply Chain Manag. (2016) 21: 642-60.
(47)      Alegre J, Lapiedra R, and Chiva R. A measurement scale for product innovation performance. Eur. J. Innov. Manag. (2006) 9: 333-46.
(48)      Yektadoost A, Ebrahimi F, Mashouf M, Hadidi N, Koopaei NN, and Kebriaeezadeh A. Trend analysis of medicine consumption based on therapeutic categories in Iran: 2000–2016. J Res Pharm Pract. (2018) 7: 95.
(49)      Dadfar H, Dahlgaard JJ, Brege S, and Alamirhoor A. Linkage between organisational innovation capability, product platform development and performance: The case of pharmaceutical small and medium enterprises in Iran. Total. Qual. Manag. Bus. Excell. (2013) 24: 819-34.
(50)      Mahboudi F, Hamedifar H, and Aghajani H. Medical biotechnology trends and achievements in Iran. Avicenna J. Med. Biotechnol. (2012) 4: 200.
(51)      Mahboudi M and Ananthan B. Effective Factors in Technology Transfer in the Pharmaceutical Industries of Iran: A Case Study. J. Knowl. Manag. (2010) 8:
(52)      Nassiri-Koopaei N, Majdzadeh R, Kebriaeezadeh A, Rashidian A, Yazdi MT, Nedjat S, and Nikfar S. Commercialization of biopharmaceutical knowledge in Iran; challenges and solutions. Daru. (2014) 22: 29.
(53)      Salim A, Razavi MR, and Afshari-Mofrad M. Foreign direct investment and technology spillover in Iran: The role of technological capabilities of subsidiaries. Technol Forecast Soc Change. (2017) 122: 207-14.
(54)      Chin WW. The partial least squares approach to structural equation modeling. Modern methods for business research. (1998) 295: 295-336.
(55)      Gefen D, Rigdon EE, and Straub D. Editor's comments: an update and extension to SEM guidelines for administrative and social science research. MIS Q. (2011) iii-xiv.
(56)      Organisation for Economic Co-operation and Development (OECD), SME and Entrepreneurship Outlook, 2005 Available from URL: https://www.oecd.org/cfe/smes/oecdsmeandentrepreneurshipoutlook-2005edition.htm
(57)      Hulland J. Use of partial least squares (PLS) in strategic management research: a review of four recent studies. Strateg. Manag. J. (1999) 20: 195-204.
(58)      Carmines EG and Zeller RA, Reliability and validity assessment. Vol. 17: Sage publications. London (1979)
(59)      Rivard S and Huff SL. Factors of success for end-user computing. Commun ACM. (1988) 31: 552-61.
(60)      Santos JRA. Cronbach’s alpha: A tool for assessing the reliability of scales. J. Ext.. (1999) 37: 1-5.
(61)      Esposito Vinzi V, Chin WW, Henseler J, and Wang H, Handbook of partial least squares: Concepts, methods and applications. 2010: Heidelberg, Dordrecht, London, New York: Springer.
(62)      Hair JF, Ringle CM, and Sarstedt M. PLS-SEM: Indeed a silver bullet. J. Mark. Theory Pract. (2011) 19: 139-52.
(63)      Henseler J, Ringle CM, and Sarstedt M. A new criterion for assessing discriminant validity in variance-based structural equation modeling. J. Acad. Mark. Sci. (2015) 43: 115-35.
(64)      Fornell C and Larcker DF, Structural equation models with unobservable variables and measurement error: Algebra and statistics. SAGE Publications, Los Angeles, CA (1981).
(65)      Barclay D, Higgins C, and Thompson R, The partial least squares (PLS) approach to casual modeling: personal computer adoption ans use as an Illustration. JOTS.I (1995) 2: 285-309.
(66)      Hair JF, Sarstedt M, Ringle CM, and Mena JA. An assessment of the use of partial least squares structural equation modeling in marketing research. J. Acad. Mark. Sci. (2012) 40: 414-33.
(67)      Henseler J, Ringle CM, and Sinkovics RR, The use of partial least squares path modeling in international marketing, in New challenges to international marketing. Adv. Int. Mark. (2009) 277-319.
(68)      Cohen J, Statistical power analysis for the behavioral sciences. The New York Academy of Sciences, New York (2013).
(69)      Tenenhaus M, Vinzi VE, Chatelin Y-M, and Lauro C. PLS path modeling. Comput Stat Data Anal. (2005) 48: 159-205.
(70)      Wetzels M, Odekerken-Schröder G, and Van Oppen C. Using PLS path modeling for assessing hierarchical construct models: Guidelines and empirical illustration. MIS Q. (2009) 177-95.
(71)      Henseler J, Hubona G, and Ray PA. Using PLS path modeling in new technology research: updated guidelines. Ind. Manag. Data Syst. (2016) 116: 2-20.
(72)      Zhao X, Lynch Jr JG, and Chen Q. Reconsidering Baron and Kenny: Myths and truths about mediation analysis. J. Consum. Res. (2010) 37: 197-206.