A two-stage examination of business innovation decision-making: evidence from Ireland
This paper sheds light on how businesses make decisions regarding product and process innovation by comparing the power of one-stage and two-stage models to explain business-level innovation decision-making. The first, a one-stage model, represents the business as making a one-off choice between four discrete alternatives. These are not to innovate, to product innovate only, to process innovate only or to both product and process innovate. The second model, a two-stage model, represents the business as making an initial decision on whether or not to innovate. This approach facilitates analysis of business innovation as simultaneous and sequential processes and identification of the model which best explains innovation decision-making. The paper uses original business-level survey data from over 400 small and medium-sized enterprises in Ireland. The results suggest that a two-stage model of the innovation decision has a statistically significant advantage in predicting the innovation output, indicating that there is a need to incorporate the incidence and type of innovation into future empirical studies utilising a knowledge production function. The results suggest that the use of a two-stage model provides a better understanding of the impact of different knowledge sources on different types of innovation. However, the paper also discusses whether the two-stage model is a useful way of understanding how businesses make decisions on innovation in practice.
Customer and supplier interaction , Innovation management , Decision-making , Sources of innovation , Innovation decisions , Small and medium-sized enterprises , SMEs , Knowledge sources , Innovation models , Modelling
Bourke, J., Jordan, D. (2015) 'A two-stage examination of business innovation decision-making: evidence from Ireland', International Journal of Business Innovation and Research, 9 (6), pp. 663-681. doi: 10.1504/IJBIR.2015.072489