Innovation persistence and employment dynamics

This paper examines the effect of persistence in product and process innovations on the employment dynamics of a representative sample of Spanish manufacturing firms observed over more than 20 years. We build a conceptual framework that links innovation, its persistence, and different trajectories of employment growth. This framework suggests that firms might show different responses in terms of their employment growth and its persistence depending on the degree of persistence in their product and process innovations. We construct a synthetic indicator of innovation persistence at the firm-level and link this indicator to different employment trajectories. We find that persistence in product innovation affects both employment growth and the sustain ability of job creation over time significantly, whilst persistence in process innovation does not play any relevant role. Also, the positive effect of persistence in product innovation is particularly strong for SMEs. The evidence we provide supports the notion that product innovation is more effective in spurring sustained employment growth when carried out systematically.

Seeking methods for improving sustainability in the extractive sector

Farnaz Eslamishoar

Extractive resources are indisputably a necessary component of international sustainable development. Despite current advancements in the circular economy, world production needs for raw materials are ever increasing, and still a long way remains for it to become rather independent from mineral resources. At the same time, mining has too many negative stories in news headlines about its trade-offs for the environment and human health, which hinders sustainable growth. This thesis deals with this integral dilemma in three chapters. In Chapter 1, I have made an extensive effort to understand the socio-political aspects of the mining business, both internationally and specifically in the context of a developing country, and on the issue of the corporate social responsibility the company requires. I then continued with gathering my primary sources of data for answering my first question: What are the primary social variables contributing to mining sustainability issues? I derived theories from Economic Growth in the Political Economy and Institutional Void from Management Science, trying to place my findings in a broader context. I concluded this chapter with underlying sociopolitical factors interfering with sustainable mining practices. This has led to the shaping of the second chapter of my thesis. Chapter 2 builds on the given that throughout the model of Economic Growth, technological change can happen within a shorter timeline and that new technologies lead to more efficiency in the Process Innovation. The mining industry is no exception. Yet, my quick review at the time revealed that this industry is lagging incumbent mainstream businesses in technological adoption. I therefore made my aim here to discuss conditions for transitions towards a more technologically innovative mining business. I surveyed mining firms internationally and noted the critical criteria for responsible practices. I then made what had been to my knowledge and ability, an exhaustive grouping of innovative technologies for the different sectors of mining firms. These tools granted me the ability to perform different multivariate analyses and decide on the best method for benchmarking different technology groups based on these criteria. In the later part of my thesis (Chapter 3), having these findings in hand and all experiences and observations in place with my assumptions, I decided to take one step back to ask whether the criteria I have for measuring mining sustainability are the correct measures by looking through the question using emerging data science tools. Are the sustainability scopes commonly discussed in the mining community the most crucial sustainability problems of this sector? Having the sustainability reports of all major international mining firms in hand, I evaluated around 3500 documents containing 8 million words discussing current sustainability matters pertaining to mining firms. Through implementing appropriate algorithms of Topic Modeling, I introduced five new main scopes for mining sustainability used to examine the discourse and groupings through this framework to observe any possible differences among the conventional and the generated lists. The results of my thesis are my two conceptual frameworks, technological benchmarking assessment tools, and a data-driven sustainability domains list, as well as the innovation policy recommendations for the mining community.

EPFL2021

The sources of process innovation in user firms

Marcellus Bogers

Previous research has shown that innovation can have various sources and different forms. Innovation can thus be developed by different types of organizations or individuals for several reasons, and it can be related to product or process technologies. One particular stream of research has explored the role of users as a source of innovation. Examples of user innovations can be found in a variety of fields and settings such as mountain biking, snowboarding, open source software, scientific instruments, oil refining, semiconductor manufacturing, and even the World Wide Web. What these innovations have in common is that they were all initially developed by people or organizations that wanted to solve a specific need and benefited from using their innovation rather than selling it. A particular type of user innovator is a "user firm" which develops new or improved production technology for its own internal use. Such process innovation is characterized by determinants and outcomes, which are fundamentally different from for example product innovation. In particular, process innovation may be driven by learning-by-doing, which is a form of problem-solving or experimentation that takes place on the production floor rather than in research and development (R&D). However, the exact drivers and consequences of process innovation in general and learning-by-doing in particular are not yet fully explored. Therefore, the objective of this thesis is to increase the understanding of the antecedents and impact of process innovation in user firms by exploring the role of non-R&D activities and learning-by-doing. This thesis consists of four parts. Each of them addresses a specific aspect related to the sources of process innovation in user firms. The first paper particularly argues that process innovation relies on different learning mechanisms than product innovation. Using data from the Swiss Innovation Survey of the Swiss Institute of Business Cycle Research (KOF) at ETH Zürich, the paper shows which are the external and internal knowledge sources (related to R&D, manufacturing and marketing) that lead to innovation. The second paper further investigates R&D and non-R&D activities as sources of innovation and develops two measures to quantify the magnitude of non-R&D innovation. The results show that a substantial part of the firms develop innovations without R&D and that non-R&D process innovation has a very large impact on the overall cost reductions in the Swiss economy. In order to better understand the sources and attributes of process innovation in user firms, a questionnaire was conducted in a sample of Swiss manufacturing firms. Based on the results, the third paper shows the pervasiveness of major and especially minor process innovation. It also explores the sources of process innovation within the firms and identifies the practices related to the accounting, protection, appropriation, and monitoring of process innovation, which are often of an informal nature. The fourth paper investigates in more detail how such practices drive learning-by-doing and process innovation. The findings firstly show which complementary systems of practices are implemented in user firms to promote the innovative contribution of production floor workers and secondly how these practices drive learning-by-doing for either major or minor process innovation.

EPFL2009

The shaping effects of innovation and technology: from micro business model evolution to macro environment sustainability

Qinli Lu

Innovation is a prerequisite guarantee for the development of a country in this new era. It is an important driver not just for corporate growth but also for national social and economic transformation. Considering the strategic supporting role of innovation in the modern economic system, this thesis approaches the shaping effects of innovation and technology mainly from two important micro and macro perspectives, business model evolution and national sustainable development. The first essay takes business model innovation (BMI) in China as an entry point to investigate how novel elements can shape business models. There is a widespread perception that Chinese companies, compared to their Western counterparts, are not good at creating novel products and services. But in the arenas of e-commerce and other digital businesses, Chinese companies have become highly successful. This has led some observers to hypothesize that while Chinese firms may not excel at developing new-to-the-world products and services, they may be good in inventing new-to-the-world business models. To explore this phenomenon, I analyzed 137 suggested innovative business models in detail to investigate new-to-the-world features, yielding an overview of BMI in China. Based on these cases, a theoretical framework was proposed to investigate how innovative features can prompt successful BMI. I summarize the reasons behind BMI in China. The second essay explores the support from open innovation (OI) for BMI based on literature review and some inspiration from the first essay. Theoretical underpinnings are often cited as a necessity to advance the research of BMI. The study proposes that the development of OI and BMI keeps pace within a dynamic innovation process. To develop a consistent body of knowledge about BMI and OI, this conceptual paper sheds light on the relationships between OI and BMI by providing a framework and discussing its implications. The main investigations are as follows: 1) Why OI has strong impacts on BM development; 2) How OI can shape BMs; 3) What support OI can provide for BMI. The third essay analyzes the shaping effects of technology on environmental issues by carrying out an empirical study of tracing the imbalance of carbon emissions embodied in trade. The technological differences among developing and developed nations are tremendous, which have kept having strong impacts not only on economic and societal development but also on environmental sustainability. Thus, this study provides a new and critical perspective to reconsider the imbalance of carbon emissions regionally and globally, revealing essential policy implications for region-specific sustainable development strategies. The thesis makes several important contributions. For micro business model evolution, the thesis develops a theoretical framework to show how the values are delivered in a business model system and how innovative features can further prompt successful business model innovations, as well as a comprehensive analysis of the theoretical underpinning from open innovation for business model advance. For macro environmental sustainability, the thesis presents a comprehensive spatio-temporal analysis of carbon emissions embodied in trades of nations within and beyond BRI, contributing to methodological advances of measuring the impacts of technological differences on carbon footprints and emissions leakage, which is largely underexplored in current studies.

EPFL2020