Using Value Chains to Enhance Innovation

Abstract

Past research (along with our experience) suggests that a firm's supply chain (i.e., value chain) plays an integral role in its ability to not only reduce cost via process innovation, but also in its ability to develop new products and services. Evidence suggests the value chain is playing an ever‐more‐important role, with greater prevalence of distributed product development (spanning geographic, organizational, or firm boundaries) and open innovation (performed outside the firm). We discuss some of the trends with regard to supplier and customer involvement in the innovation process, and summarize some of the research exploring the rationale behind those trends and the research offering advice on how firms can use external resources to further improve their innovation performance. We present a number of examples that illustrate some best practices.

The Knowledge Value Chain: An Operational Perspective

“…In some cases, performance gaps exist simultaneously for multiple, non-competing firms, each serving as an element of a large manufacturing supply chain. In these situations, supply chain partners may improve performance by developing new knowledge collaboratively (Bellamy et al 2014, Lee andSchmidt 2017).…”

“…In these situations, supply chain partners may improve performance by developing new knowledge collaboratively (Bellamy et al. 2014, Lee and Schmidt 2017).…”

“…Collaboration, when executed poorly, can be counterproductive to all partners. Famously, Boeing's new business model for the 787 Dreamliner, including distributed design and manufacturing, created a plethora of challenges with severe and long‐term economic consequences for Boeing and its partners (Chen and Lee 2017, Lee and Schmidt 2017, McDonald and Kotha 2015). As we discuss in Section 3, partnership‐based KVCs require contractual alignment and monitoring in much the same way incentive alignment is important in physical supply chains.…”

The Role of Inclusive Innovation in Promoting Social Sustainability

“…They identify decision variables as being related to sequencing process stages (Bhattacharya et al 1998), point of differentiation (Moorthy and Png 1992), project management (Mihm 2010, and supplier selection (Ulrich and Ellison 1999). Similarly, Lee and Schmidt (2017) view successful product/service innovation as a process that involves the following phases: (i) ideation, (ii) concept evaluation, (iii) design and development, (iv) testing and validation, (v) launch and ramp-up, (vi) maintenance, and (vii) end of life.…”

Does Confucian management exist in Chinese companies? An examination of the intersection between cultural influence and business practice in China

“…There is evidence that many practices in Chinese businesses are converging with those of internationally competitive companies in other countries, and that increased exposure to non-Chinese businesses accelerates this process of convergence (Pan 2009). Businesses that are embedded in global supply chains, such as those around the Pearl River Delta, have taken on the supply chain and management practices of the OEMs that purchase from them (Lee and Schmidt 2017). There are also Chinese enterprises and industries that have imported business models that were developed in other countries; especially (but not only) the US.…”