The effect of switching governance form on innovation performance: The mediating role of heterogeneity in resource acquisition. Evidence from the manufacturing industry in India.
Master thesis
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https://hdl.handle.net/11250/3018555Utgivelsesdato
2022Metadata
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Sammendrag
Outsourcing most of the time is the choice of governance form by managers when it comes tomanufacturing or other value-adding activities. One of the primary reasons to do that is costsaving. However, in recent years switching governance form to insourcing from outsourcinghas picked up significant attention from researchers in strategic management. Many firms havestarted to bring back some of the activities in-house in order to have better control overinformation and knowledge or any kind of trade secrets. Even though there has been someresearch on this topic, especially outlining the factors that influence the decision to changegovernance form to insource, the performance outcomes from such changes have not beenquantified. In this thesis, we examine this from the perspective of innovation performance. Wealso tried to understand what kind of role the resources of the firm play in achieving the desiredperformance from this decision.
We started by conducting a set of descriptive analyses to understand the importantcharacteristics of the variable. We selected the variables that represent resources used forinnovation activity and used the combination as a mediator. We later performed linearregression and applied the Sobel test to test for mediation and confirm our hypothesis. Fromour analyses, we confirmed that the heterogeneity of the acquired resources partially mediatesthe causal relationship between changing governance form to insource and innovationperformance. We also used firm size, level of export, the status of the number of skilledemployees, and being part of a bigger firm as control variables to test the significance of thechange in governance when explaining the percentage of sales from the main innovativeproduct as innovation performance.
Next, we delved into the composition of the resource portfolio of the firm and examined howdifferent types of resources influence innovation performance in different ways. We used linearregression to test the effect of internal R&D, equipment and machinery, and patent andknowledge-based products as resource acquisition on the percentage of sales from the maininnovative product as innovation performance. We found that patent and knowledge-basedproducts give 5 times more performance increases compared to the other two types of firmresources.