Fax:++49 (0) 40 42878-2867 www. tu-harburg. de/tim www. global-innovation. net Barriers to Innovation in SMES:
+49 (0) 40 428 78 3776, Fax:++49 (0) 40 428 78 2867 rajnish. tiwari@tuhh. de, stephan. buse@tuhh. de ABSTRACT Technological advancements, especially in Information and Communication Technologies
23 6-Implications and Research Outlook...23 7-Summary...25 LIST OF ANNEXES References BARRIERS TO INNOVATION IN SMES:
Challenges associated with the chances of global innovation are discussed in Chapter 5. Chapter 6 entails general implications and research outlook.
Recent calculations by the authors of this paper, based on Germany's official statistics portal data, show that the high percentage of SMES amongst all enterprises continues to remain high.
2 These data exemplarily demonstrate the key-role which SMES play in Germany's economy.
The rest was rejected because of containing incomplete and/or contradictory data. Figure 3 shows the representation of the industry sectors in the sample.
confirm, or extend the data base with experts from the selected industries like firm representatives, representatives of industry associations and cluster managers.
BITKOM, Germany's industry association for Information technology (IT), reports a shortage of 40,000 IT professionals (BITKOM, 2007a.
Google Inc. cited troubles in obtaining work visas for its prospective employees as a reason to set up its first engineering research and development centre outside the US in Bangalore in India (The Hindu,
whereby the data is transmitted electronically from one centre to next. Such a step could be of crucial importance for time-critical projects,
According to a Mckinsey study, a software developer costs 60 USD an hour in USA. A software developer with similar skill costs only one-tenth of this amount in India (MGI, 2003.
The starting salary of a software developer working for the German software firm SAP in India was reported at 8, 000 euros per annum in 2004,
while the salary for a similarly qualified person at the headquarters in Germany was reported 5-times higher at 40,000 euros (Müller, 2004).
furthermore, is validated itself also by the fact that over 6 million new mobile phone subscribers are added per month in India (TRAI,
) Many firms, including as reputed names as Google and Infosys, are complaining of a shortage of suitable candidates.
For instance, Hirschfeld (2005) reports several incidences of intercultural nuisances in Indo-German software development work.
and Research Outlook As the discussion above has demonstrated, global innovation activities, especially, the internationalization of R&d, may lead to a mitigation of the effects of innovation barriers faced by SMES in their home country.
o To protect their individual core competences o To share the intellectual property generated by such a joint venture,
Managing Innovation, in Asia Pacific Tech Monitor,(22:3), pp. 30-33. DBR (2005: India Rising:
OECD Science, Technology and Industry Outlook 2006, Organisation for Economic Co-operation and Development, Paris. Preuß, R. 2007:
Google to set up R&d centre in Bangalore, in: The Hindu, 13.12.2003. Tiwari, R. 2007: The Early Phases of Innovation:
Asia Pacific Tech Monitor, Vol. 24, No. 1, New delhi, pp. 32-37. Tiwari, R.,Buse, S,
Telephone subscriber maintains growth: 6. 57 million Wireless Subscribers added in May 2007, Telecom Regulatory authority of India, Press release no. 61/2007.
UNCTAD (2005a: Globalization of R&d and Developing Countries, in: Proceedings of the Expert Meeting, United nations Conference on Trade and Development, Geneva.
While the most obvious example is provided by rapidly declining product life cycles in the information technology field
Clausen, et Kamairah Ismail is the Director of Technology Entrepreneurship Center, Universiti Teknologi Malaysia (UTMTEC), Johor Bahru, Johor, Malaysia (phone:+
A team of 20 specially trained enumerators was engaged to collect the data. The questionnaire was developed for the study
%scientific activities (12%),computer and electronics (16%)and the rest were distributed in the others miscellaneous activities.
'Innovation in SMES'aims at creating a bridge between the core of the framework programme-support to research,
/index en. htm 7 http://ec. europa. eu/research/participants/data/ref/h2020/wp/2014 2015/main/h2020-wp1415-sme en. pdf 8
Horizon 2020‘Innovation in SMES'is a bridge between the core of the framework programme, the provision of support to research, development and innovation projects,
Applicants are invited therefore to explore potentials for synergies with the relevant Managing Authorities in charge of the ESIF programmes in their territory1 A novelty in Horizon 2020 is the Open Research Data Pilot
and reuse of research data generated by projects. While certain Work Programme parts and areas have been identified explicitly as participating in the Pilot on Open Research Data
individual actions funded under the other Horizon 2020 parts and areas can choose to participate in the Pilot on a voluntary basis. The use of a Data Management 1 http://ec. europa. eu/regional policy/indexes/in your country en. cfm HORIZON 2020 WORK PROGRAMME
2014-2015 Innovation in SMES PART 7-Page 5 of 37 Plan is required for projects participating in the Open Research Data Pilot.
Further guidance on the Open Research Data Pilot is made available on the Participant Portal. Mainstreaming SME support especially through a dedicated instrument SME participation is encouraged throughout this work programme and in particular in the priorities Industrial Leadership and Societal Challenges.
SME support will be targeted with the dedicated SME instrument which is a novel approach to support SMES'innovation activities.
Europe in a changing world inclusive, innovative and reflective Societies4 INSO-9-2015 Innovative mobile e-government applications by SMES 4. 00 INSO-10
The coaches will be recruited from a central database managed by the Commission and have fulfilled all stringent criteria with regards to business experience and competencies.
Where appropriate, a Panel Review will be organised remotely. Applicants can provide during the electronic proposal submission up to three names of persons that should not act as an evaluator in the evaluation of their proposal for potential competitive reasons9. 7 The Director-General responsible may decide to open the call up
trainings, website and other actions developed by the helpdesk will be owned by the Commission and will be shared with other EU-funded IPR support measures.
2. the professional consultants were prepared better to deal with SME specific challenges 3. cross-border information about IPR issues would be easily available on the internet
The future beneficiary consortium should take care of the joint website www. innovaccess. eu. Upgraded or new services and trainings for the target group will be provided by the national IP offices to be implemented either by the NIPOS themselves or by the business support providers.
like the common website (innovaccess), and new IP generated is managed effectively and is available free of charge to the Commission
'Social media and other web-based services challenge these existing approaches and ask for their revision. The british‘connect'platform is the first publicly financed innovation platform on the web that creates a protected space for companies to display their competences, interest and skills,
to reach out to a large number of peers, to make them personal contacts and to engage them in initial cooperation.
Commercial offers like‘linked in'or various crowdsourcing platforms offer important elements while not regarding themselves as innovation platforms for SMES.
and potential partners (assistance to online collaboration for innovation) So far staff in innovation agencies has hardly skills to assist their clients to establish collaborations on web platforms
Commercial offers by crowdsourcing platforms remain effectively unaffordable for SMES or face difficulties to scale up their offers
Service designs and qualification profiles shall be formulated independently from a particular collaboration or social media platform.
The nature of the topic online collaboration suggests that the training modules are established as web-based self
For an entrepreneur comprehensive data and performance indicators would allow drawing conclusions whether open innovation is productive
-Collection and analysis of information and data on the application of open innovation in SMES, taking into account different situations in Member States and in specific market segments.
and data accumulated through the coaching engagement. It should also act as a single reference pool
and develop the joint website. For the evaluation of first-stage proposals under a two-stage submission procedure, only the criteria‘excellence'and‘impact'will be evaluated.
The detailed list of coordinators and maximum grant amounts is provided on the Enterprise Europe Network website (http://een. ec. europa. eu). Timeframe:
The core of the IMP rove platform is a benchmarking database for‘innovation management performance'with more than 3500 quality checked datasets.
and the services‘enhancing the innovation management capacity of SMES'Furthermore the support provided would secure the quality of the benchmarking by accelerating the inflow of new data sets allowing to replace the oldest data collected in 2008/09.
and innovation processes are getting more diverse by the integration of advanced IT and internet.
Particular attention will be paid to the analysis of the main characteristics of the Eurostars-1 projects in terms of geographical coverage,
2015budget EUR million Experts (expert evaluators, experts groups, monitors) 0. 92 of which 0. 10 from 02.040203 and 0. 82 from 08.020203 1. 14 of which 0
and both more data and more evaluation and assessment of initiatives taken are needed. The local dimension must be taken into account.
Developing such a base will require strengthening the existing empirical foundation, in terms of data and statistics,
data are very scarce, but estimates indicate that there are more than 10 million self-employed women in Europe (both European union countries and others).
United nations Economic commission for europe, Gender Statistic Database.%%50 45 40 35 30 25 20 15 1050 Austriabelgiumbulgaria Czech Republicfinlandgreecehungary Icelandireland Italypolandromania Russian Federationsloveniaturkey United kingdom Selected European countries, 2000 Source:
AND INNOVATIVE SMES IN A GLOBAL ECONOMY OECD 2004 15 The empirical basis for informed policy design needs to be improved Reliable data
Definitional issues complicate data collection, and some national systems prohibit statistics at the individual level, making gender-specific analyses impossible.
Even in those few countries where such data are available important information on development over time (panel data) and for the whole population are lacking.
As regards analysis, longitudinal studies are needed to understand survival and growth among entrepreneurs (men and women),
even if both the scope and the breadth of available data have improved during the last few years
and meetings and/or providing web-based information to those wanting to start and grow a business.
OECD Venture capital Database, 2003.0.80 0. 70 0. 60 0. 50 0. 40 0. 30 0. 20 0. 100 Israel Expansion
Subject new regulations which could adversely affect the provision of risk finance to cost-benefit tests of their likely effect before implementation and monitor their subsequent impact.
measure, and report intangible assets (ICT skills, organisation, software and networks, intellectual property rights) so that new and small firm assets can be managed more effectively
This is especially true for new technology-based firms that are not only more numerous than in the past (especially in areas such as nanotechnology, biotechnology, software and new materials) but also play an increasingly important role as innovation agents.
Important issues include registration of rights, their commercial exploitation, the use of patent databases, the valuation of intellectual property assets and enforcement.
copyright and related rights, plant varieties and nonoriginal databases. Strengthen the teaching of intellectual property rights at universities and training institutions for entrepreneurs
While data are scarce, the broad picture for many OECD and some nonmember economies is that of a low,
In the business-to-consumer context the Internet provides an effective tool for communication, often providing customers with better service
As with all new technologies, small businesses have been slower to adopt information technology than large ones (Figure 4). In many cases this reflects the lack of applicability in sectors where SMES are represented heavily
and to foster business environments that facilitate e-business and the use of more complex applications of information technology.
Public financial assistance to expand coverage for under-served groups and remote areas could complement private investment where appropriate,
Figure 4. Internet penetration by size class, 2001 or latest available year Percentage of businesses using the Internet1 1. In European countries, only enterprises in the business sector,
The source for these data is the Eurostat Community Survey on enterprise use of ICT.
For Mexico, Businesses with 21 or more employees, 21-100 employees instead of 10-49,101-250 instead of 50-249,151-1000 instead of 250 or more. 3. Internet and other computer-mediated networks.
OECD, ICT database and Eurostat, Community Survey on ICT usage in enterprises 2002, May 2003.100 90 80 70 60 50 Finland 10-49
The rapid growth of software and business method patenting also increases small business costs and the likelihood of infringement.
complement private investment with public financial assistance to expand coverage for under-served groups and remote areas.
and any necessary data collection should begin as soon as is feasible. It is also advantageous to formulate an evaluation methodology.
Common target definitions should be encouraged across countries, data formats and procedures, notably as regards statistical observation units
and size classes. the OECD should continue to act as a forum that promotes best practices in statistical data collection,
so that data from different sources can be matched. It also requires that policy makers address those barriers, often legal,
that prevent national statistical authorities to have access to administrative data, such as tax offices and chambers of commerce.
Promote data linking to make better use of existing data and reduce respondent burden on SMES.
Databases with linked data can strengthen the information base for policy-relevant research, but require that statistical authorities arrange access
Given these basic problems, it is perhaps unsurprising that detailed subsets of such data and analysis of them, for example women's entrepreneurship,
Some actions, notably the development of integrated business statistical registers, the introduction of single identification numbers for enterprises and their use to link data more efficiently,
and greater use of administrative sources of data (e g. tax, chamber of commerce), can only be taken in capitals
and movement from resolving these problems to collection of useful data comparable on a cross-country basis will take even longer.
BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 December 2008 We would like to thank the Mediocredito-Capitalia research department for having kindly supplied firm level data for this project.
We then apply the model to data on Italian SMES from the"Survey on Manufacturing Firms"conducted by Mediocredito-Capitalia covering the period 1995-2003.
According to the latest available data from the Census, more than 99 per cent of active firms (out of 4 million) have fewer than 250 employees (95 per cent have fewer than 10 employees,
along with a description of the data used in this analysis; Section 4 concludes with a discussion of the results
The model is designed specifically to work well with innovation survey data, from which it is possible to directly measure other aspects of innovation in addition to R&d expenditures.
Given the increased diffusion of this type of micro data across countries and among scholars, many empirical explorations of the impact of innovation on productivity have relied on the CDM framework. 2 In particular
the panel used by Parisi, Schiantarelli and Sembenelli is tilted towards medium and large firms much more than the original Mediocredito-Capitalia sample.
and Griffith, Huergo, Mairesse and Peters (2006) on four European countries. 3 Although the Mediocredito-Capitalia survey is not a panel itself,
See Section 3 of this paper for further information on the data. 6 CDM model specification allowing our model to separate the impact of different kinds of innovation (product
and process) on firms'productivity. 3. Data and Methodology The data we use come from the 7th,
We merged the data from these three surveys excluding firms with incomplete information or with extreme observations for the variables of interest. 4 We focus on SMES,
we end up with an unbalanced panel of 9, 674 observations on 7, 375 firms, of which only 361 are present in all three waves.
Table 1 contains some descriptive statistics, for both the unbalanced and the balanced panel. Not surprisingly, in both cases, the firm size distribution is skewed to the right for both groups of firms, with an average of around 50 and 53 employees respectively.
office accounting & computer machinery; radio, TV & telecommunication instruments; medical, precision & optical instruments; electrical machinery and apparatus, n e c.;
machinery & equipment; railroad & transport equipment, n e c.).) Low-tech industries: encompasses low and medium-low technology industries (rubber
out of 361 firms in our balanced panel, 34%invest in R&d in every period under examination.
Their model-specifically tailored for innovation survey data and built to take into account the econometric issues that arise in this context-is made up by three blocks,
since the effect of R&d on productivity can vary a lot with the technological content of an industry (see Verspagen, 1995 for a cross country, cross sector study and, more recently, an analysis based on micro data by Potters et al, 2008).
Because of the way our data and innovation survey data in general is collected, the analysis here is essentially cross-sectional.
fewer than 5 per cent of the firms and about 10 per cent of the observations are balanced in the panel).
In addition, the innovation data are collected retrospectively (innovating over the past three years), and the income statement data is mostly contemporaneous.
As a robustness check we estimated the same 3 equation model using R&d intensity lagged one year instead of contemporaneous R&d intensity
and Baldwin and Gu, 2004, for an exploration using Canadian data), and this effect is particularly strong for high-tech firms,
When investment is included not in the regression, process innovation displays a sizeable and positive impact on productivity for all the categories of firms under exam, column (1),
In the bottom panel of the table, we report an alternative specification of the productivity equation without investment.
However, in our data we also have a measure of capital available, constructed from investment using the usual declining balance method with a depreciation rate of 5 per cent
we built building a slightly different sample of firms from our data that removed firms with fewer than 20 employees
Table 6 shows results from Griffith et al. 2006 for the four countries and for a variation of our model applied to these data for Italy. 14 The last column
Thus it appears to be difficult to find strong evidence of innovation underperformance in these data,
and we hope to explore the question further in the future using these data. Acknowledgements We would like to thank the Mediocredito-Capitalia (now Unicredit) research department for having kindly supplied firm level data for this project.
We thank also Susanto Basu, Ernie Berndt, Piergiuseppe Morone, Stéphane Robin, Mike Scherer, Enrico Santarelli
Evidence from a Panel of British Manufacturing Firms, Institute for Fiscal Studies, working paper N. W93/19.
Evidence from a Panel of Manufacturing Firms in France, Germany, and Italy, International Journal of Industrial Organization, Vol. 24 (5), pp. 971-993.
a Sensitivity analysis, Economics of Innovation and New Technology. Vol. 15 (4/5), pp. 317-344.
New Evidence using Linked R&d-LRD Data, Economic Inquiry, Vol. 29 (2), pp. 203-228.
a Germany-Italy Comparison Using the CIS Database, Empirica, Vol. 28, pp. 293-317. Lööf, H,
A Reassessment Using French Survey Data, The Journal of Technology Transfer, special issue in memory of Edwin Mansfield, Vol. 30 (1-2), pp. 183-197.
Testing Sectoral Peculiarities using Micro Data, IZA Discussion Paper N. 3338. Rajan, R. G, . and L. Zingales (2003), Banks and Markets:
1995-2003 High tech firms Low tech firms Number of observations (firms) 2, 870 (2, 165) 6, 804 (5,
Dependent variable, R&d intensity R&d Expenditure per employee All firms High tech Low Tech (in logarithms) D (Large firm competitors) 0. 062 0. 197-0. 028
Data are from the third Community Innovation Survey (CIS 3) for France, Germany, Spain, and the U k. Results for Italy come from Tables 3-5 of this paper.
a) This column shows data for all 3 periods in Italy (1995-1997,1998-2000,2001-2003). 29 Figure 1 Value added per employee.
(Census data)% of firms with innovation (CIS survey on firms with more than 10 employees) 31 Appendix Variable Definitions R&d engagement:
office accounting & computer machinery; radio, TV & telecommunication instruments; medical, precision & optical instruments; electrical machinery and apparatus, n e c.;
machinery & equipment; railroad & transport equipment, n e c.).) Low-tech firms: encompasses low and medium-low technology industries (rubber & plastic products;
Data are from the third Community Innovation Survey (CIS 3) for France, Germany, Spain, and the UK.
Data for Italy are from the Mediocredito Surveys. Among the several variables included in the original table,
we selected only those comparable to our data. Data are weighted not population. a) This figure encompasses all the subsidies, regardless their source.
b) This column shows data for all 3 periods in Italy (1995-1997,1998-2000,2001-2003.
Units are logs of euros (2000) per employee. 34 Table A2 A nonparametric selectivity test Dependent variable Prob (R&d>0) R&d expend. per employee D (Large firms
22 3. 8 Role of Information technology (IT) in Product-Related Service Innovation...24 3. 9 Do Manufacturing
We also identified five mini-cases of SMES that developed compelling new business models that were accompanied by the creative use of information technology
and proprietary databases to help customers use their products more effectively. Changes in organization structure and culture are required almost always to do this effectively.
Similarly, textile, lumber, wood and paper mills, printing and publishing, and construction firms rely heavily on equipment suppliers for process innovation (Pavitt, 1984).
In contrast, computers and electronics have high product obsolescence rates; which means higher and more continuous investment in incremental innovation (March-Chorda et al.
and thereby allow them to concentrate 7 on their core competencies (Quinn et al.,1990). ) In contrast, their SME suppliers are not scaleintensive,
electronics and software. SMES that focus on the middle or end of the life cycle may be specialized equipment suppliers. 2. 3 SME Strengths and Weaknesses and Required Capabilities for Innovation Yap et al.
and engineering tools (CAD), prototypes, customization, etc. Further, SMES often have an inadequate knowledge of their competitors and their products.
Many SMES don't recognize the value of data, have minimal archives and don't learn from experience (Woodcock et al.,
They differ from core competencies (Prahalad and Hamel, 1990) in that they need not be rare or inimitable.
Core competencies rely on leverage across NPD projects within a single firm for competitive advantage, but conditions may change too rapidly for this to happen.
and eventually the entire car interior including door panels and dashboards. These companies now have much more leverage over their customers, the automobile companies.
on the other hand, are forcing them to focus on their core competencies and turn to outsourcing to provide many of the functions that were performed once in-house.
and protect the core product businesses of an SME. Services can differentiate a company from competitors
Advances in information technology increasingly may remove the person-to-person interaction as a service is provided. Examples of this are the ubiquitous deployment of ATMS
one of Hewlett-packard's installed bases is printers. Although Hewlett-packard's servicing is in terms of a product (i e.,
, the ink cartridge), the model still stands. The company sells a product that is its main source of revenue (i e.,
, the printer), and then sells a service to keep the product running (i e.,, the ink cartridge, albeit a product.
but needs), such as installation, operation, upgrades, maintenance, spare parts, decommission, etc.,requires some sort of service (Oliva and Kallenberg, 2003.
The OEM collects data at the sale and has reduced costs associated with acquiring new customers.
Adapted from Oliva and Kallenberg, 2003 and Monitor Group, 2004. Table 3. 1 Service Opportunities for Manufacturers 17 Figure 3. 1 Share of Service Sales/Spending Volume by Type Figure 3. 2 Market
Additionally the data accumulated from having a greater knowledge of customers'behavior enables the company to continually add value
The importance of acquiring and building databases as tools for adding value and defending against competitors is returned to later).
It built a new web application and became an (Internet-enabled company. Although Greif subcontracts out most support functions,
it captures the value in the supply chain and builds long-lasting client relationships. Moreover it buys support services in volume,
and its database of trip costing enables the company to accurately quote on trips and to provide customized and traceable service.
This requires GF's computer systems to seamlessly integrate with car plants exchanging data in real-time.
The latest information technology standards and infrastructure can be used to provide services that were conceived not even by customers until their providers innovate.
For example, using advanced data collection and data mining tools, coupled with real-time data collection over the Internet may provide a whole new level of product and service reliability.
The third mini-case provides an example. Mini-Case Example#3: Taprogge Gmbh,(www. taprogge. com) a family owned business headquartered in Germany,
The latest equipment has a number of embedded sensors that monitor the performance and relay the data over the Internet back to a central office.
Analysis of these data enable the company to predict possible performance deterioration and ship parts followed,
The company's most valuable asset is a complex database covering all operating parameters of every installation.
These data enable Taprogge to a) predict the behavior of a system in most if not all locations
Again we see the power of using information technology innovatively to create added-value for customers while building barriers to competitors.
There are some noticeable exceptions, such as IBM and GE of course. But even these large companies have struggled with making the transition.
For example, software service providers may offer homogeneous products that are produced not or consumed simultaneously, and manufacturers increasingly offer products that are accompanied by services, such as repair and maintenance (de Jong et al.,
Services such as transportation, telecommunications and courier mail require systems that are designed developed, and optimized for performance
The database analyzed was the ISI Web of Knowledge (ISI, 2006) using the social science sub-set of indexed publications.
Service innovation research is targeted heavily at specific market sectors such as financial, telecommunications and transportation. Our review of this literature indicates that,
2002) 3. 8 Role of Information technology (IT) in Product-Related Service Innovation We saw in the three mini-cases, Greif Packaging, Taprogge,
The fall in the price of computers and data storage devices coupled with the rise of the Internet, have made the use of digital information as a competitive weapon no longer just the domain of larger companies.
Start-up companies can now harvest information technology to provide their customers with greater value and to create subtle barriers to competition.
Indeed, this new low-cost digital freedom may even provide smaller companies advantages over larger firms which are encumbered by legacy data systems
Amazon and ebay that created on-line bookstores and auctions rather than Barnes & noble and Sotheby's. Here are some categories for use of IT in business model innovations.
Data Acquisition and Mining: Capturing data on customer requirements and using it to create unique services
or products can be a powerful way of adding value and keeping out competitors. Netflix has changed the way that consumers rent movies.
but the ability to mine the data obtained by combining information from ALL customers nationwide.
by getting instant feedback from their database (customers provide long lists of future wants and rate past rents),
something not 25 possible to do on a local basis. Using this novel database structure, Netflix is able to provide its customers with a convenient personalized service,
The following mini-case shows how, in a business-to-business market, acquisition of data, and its subsequent analysis or mining can provide a powerful service model for a manufacturer.
The proprietary data that the company collects on its clients'unique situations are a major competitive advantage,
and customized services supported with proprietary information systems. Source: Warren and Susman, 2004. Customer Lock in: Information can be shared between customers
A business model based on information sharing can provide high barriers against competitors as the costs involved in integrating compatible data
and computer systems can be prohibitive. On the other hand, the SME must be aware of becoming too dependent on one supplier
A sound business model using data lock in will have multiple partners so that the dependence on one partner is reduced.
Entirely new forms of business can be created by employing data acquisition and mining to lock in customers, suppliers and partners.
and coded database of proprietary cleaning formulas for specific customer needs, whether to clean eggpacking equipment or the floors of a car assembly plant.
In exchange, the franchisee gets access to the database on demand when a customer need is defined.
In the event that there is no solution in the database for a customer's new problem,
then the franchise agreement commits them to submit it to the central database, where it becomes available to all franchises
In this way, the franchise model is enhanced by the continual building of a proprietary database of customer solutions adding greater value to both the franchisor and franchisees.
Whatever problems are solved at a franchisee's location are fed into the software package which has been devised by Chemstation
and the new solution now becomes an integral part of the Chemstation database. The sharing of such information by the franchisees with the HQ is mandated by a written agreement between Chemstation and its franchisees.
The database is a key asset for Chemstation and it has the necessary software and framework in place to interpret the results
and distribute the data. The database also builds barriers against competition. For example, Chemstation solved a cleaning problem at a Harley davidson plant within its shock absorbers manufacturing division
which resulted in using one cleaning solution on one line and another solution for the adjacent sister line.
This subtle know-how becomes a part of Chemstation's data bank. Such captured knowledge helps to lock in customers
and prevents competitors gaining the account. Since its founding, Chemstation captured, in less than ten years,
In addition to using information technology (IT) to enable creative business models, SMES can, of course, derive benefits from the use of IT in their operations.
if there are quantitative preference data (e g.,, from surveys. Tools such as cluster analysis have been used successfully for this purpose.
Generate and Assemble Ideas. Once the target segment and its core needs are identified, the next task is to generate ideas to address these needs.
Sometimes a product is the answer, sometimes a service is the answer, and sometimes a product/service combination is the answer.
A firm that is interested in developing a new cell phone, for example, can break down the cell phone into the following components--receiving signals from tower,
transform voice to signals, human input/output interface (screen, keypad, etc), and send signals to towers.
The firm can decide to generate new ideas for a human input device by searching for all possible human input devices used in other (non-cell phone) products
and it is critical to vet the input data carefully;(2) the business analysis should only serve as guidelines,
compared to the hard data (e g.,, projected market share, net present value. They are (1) strategy fit;(
I obtain data from many different sources; we listen to suggestions from suppliers; we use consultants in focused roles Support The degree to
service may now include upgrades and refurbishing. One major challenge is to assure that the installed base is not more widely dispersed geographically than the firm can reach easily.
but supplement these services elsewhere with a 24/7 help desk and self-diagnostic software where applicable.
and the firm's willingness to invest in data capture and storage. The move to Phase III should not be made until the firm has mastered thoroughly selling services with current sales
if captured, may help create a proprietary database that can give the firm a competitive advantage over its rivals.
and Taprogge used IT to capture data about their products'performance in different contexts and developed proprietary databases that allowed them to customize use of their product to meet specific customer needs.
All five cases required 51 their work force to be trained extensively in activities that their customers could not do as well as they could.
we analyzed the MEP database of past success stories coupled with selective interviews. We reviewed a total of 689 success stories from 2002 to 2005 that were posted on the NIST MEP website.
All these stories were divided into four broad categories based on the type of consulting services provided by MEP Operational, Marketing, Funding,
less than 3%of the total support activities. 53 Following this analysis, we conducted random phone interviews with four of the MEP center directors.
Consultants rarely refer to the success stories posted on the website for information and insight.
A further shortcoming is the static nature of the case histories that reside within the MEP database.
We found this database rather difficult to use. However, the more important issues are concerned with both content and format.
The current MEP database may not fulfill the purpose for which it was created, either in content or in user value.
Recommendation 1-Leverage the existing skills between MEP centers We recommend augmenting the current database with a dynamic knowledge network.
Recommendation 3-Analyze use of the current MEP database We recommend a web-survey of existing MEP centers to determine:
The current use and value of the database Research to determine features and expectations of the knowledge portal Market research for the proposed training courses and content Recommendation 4-Develop a research agenda As reported in section 3,
Within this category are the case histories that reside in the MEP database. They are rather sterile reports that are built around standard terms, categories and data,
and do not really convey any of the actual touchy-feely attributes which are much more important in this case.
Explicit-to-explicit is the simplest transfer challenge exemplified best by web-publishing such as the MEP database.
Tacit-to-explicit has been the Holy grail for many years spawning the field of expert systems. The aim has been to somehow capture the subtleties of tacit knowledge
and use computer systems to codify and interpret them for particular future instances replacing the cheese taster above with a computer program.
Apart from very limited domains, this approach has been largely unfruitful. Tacit-to-tacit is still the most powerful method of knowledge transfer using such techniques as storytelling.
Fortunately, now that the Internet has developed, we can deploy systems that allow tacit knowledge application without the necessity for direct one-on-one contact.
Over the last few years there have been some developments based on the evolution of the Internet that are successful at overcoming the inherent shortcomings of static knowledge management. These are referred generically to as dynamic KM systems.
Challengers create a web-request which is responded then to, based on the knowledge and experience of the network.
Bios and contact information for the consultants. 59 The aim of these tools and support data is to prime the outreach function at the MEP offices on
and thereby become part of an ongoing and active database for future projects as the links can be used to tie in the experts for future cases. 60 7. 0 REFERENCES Agarwal, R. and J. Prasad (1997)."
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Monitor Group (2004. Industrial services strategies: The quest for faster growth and higher margins. Provides an in depth discussion of industrial services.
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Analysis of data from the U s. Bureau of Economic Analysis. A. Warren, Personal Correspondence. Ratio of 82.5 is taken at Q1 in 2005.
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