Maneuvering through Hostile Environments: How Firms Leverage Product and Process Innovativeness

Abstract

Is focusing on innovativeness the appropriate organizational response in hostile environments? This study addresses four distinct forms of hostile environments: market decline, restrictiveness, competition, and resource scarcity. The research draws on contingency theory to explain how these forms of hostility affect product innovativeness, process innovativeness, and firm performance. While the extant literature has investigated the effects of hostile environments on performance, little has been done to distinguish between different forms of hostility and, in turn, their potential effect on product and process innovativeness. We argue that investments in product and process innovativeness are either fostered or hindered, contingent on the form of hostile pressures from the external operating environment. These firm responses should in turn suppress the negative effects of hostility on performance. A survey using newly developed measurement scales for hostile environments was used to collect data from 148 small and medium‐sized manufacturing plants. The results provide evidence that generally supports our hypotheses. More specifically, the direct effects of the four forms of hostile environments impact product and process innovativeness differently. Likewise, the suppression and consistent mediation effects of product and process innovativeness differ depending upon the type of hostile environment, suggesting that manufacturers consider applying these capabilities contingent upon the type of hostile climate they face. Therefore, to understand how firms leverage product and process innovativeness, hostile environments are best differentiated into categories rather than being aggregated.

The Impact of Supplier Sustainability Risk on Shareholder Value

“…For our purposes, and following prior studies (e.g., Kach, Busse, Azadegan & Wagner, 2016;Klassen & Vereecke, 2012;Wagner & Bode, 2014), we labeled these issues as process-related risks (see Table 1). As a type of SSRs, process risks arise from suppliers' ethical/moral violations of worker's rights.…”

Cross‐Functional Influence and the Supplier Selection Decision in Competitive Environments: Who Makes the Call?

“…; Kach et al. ; Kim and Kim ). A rich stream of research has investigated the impacts of competitive environments on firm and functional strategies and actions, particular production and innovation areas (see, e.g., Sabherwal and King ; Ward et al.…”

“…In particular, competitive environments that are “hostile” can add great difficulty and complexity to decision‐making processes (Bstieler ; Kach et al. ). Hostile environments are those characterized by shrinking markets, high levels of regulation, intense competition, limited resources (including labor and raw materials), significant and frequent economic swings, and high levels of uncertainty (Miller and Friesen ; Calantone et al.…”

“…As supplier selection decisions are externally focused, they are often strongly affected by the competitive business environment. In particular, competitive environments that are "hostile" can add great difficulty and complexity to decision-making processes (Bstieler 2005;Kach et al 2016). Hostile environments are those characterized by shrinking markets, high levels of regulation, intense competition, limited resources (including labor and raw materials), significant and frequent economic swings, and high levels of uncertainty (Miller and Friesen 1983;Calantone et al 1997;Gonz alez-Benito et al 2010;Kach et al 2016;Kim and Kim 2016).…”

“…In particular, competitive environments that are "hostile" can add great difficulty and complexity to decision-making processes (Bstieler 2005;Kach et al 2016). Hostile environments are those characterized by shrinking markets, high levels of regulation, intense competition, limited resources (including labor and raw materials), significant and frequent economic swings, and high levels of uncertainty (Miller and Friesen 1983;Calantone et al 1997;Gonz alez-Benito et al 2010;Kach et al 2016;Kim and Kim 2016). A rich stream of research has investigated the impacts of competitive environments on firm and functional strategies and actions, particular production and innovation areas (see, e.g., Sabherwal and King 1992;Ward et al 1995;Calantone et al 1997;Amoako-Gyampah and Boye 2001;Koufteros et al 2005;Das and Joshi 2012).…”