Pulling the Plug? Investigating Firm-Level Drivers of Innovation Project Termination

Marek Vaculík, Annika Lorenz, A.H.W.M. Roijakkers, Wim Vanhaverbeke

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Firms need to innovate and develop dynamic capabilities to create a sustainable competitive advantage. Due to this pressure, firms in high-tech industries invest a high percentage of their revenues in innovation. Despite the vast number of innovation success stories, only one in five innovation projects reaches the market. It is important to understand the drivers of project termination as many firms make sizable investments in innovation and these drivers may have a significant impact on their innovation performance. Therefore, the earlier recognition of unfeasible projects would avoid continued investment and release resources that could be invested in more profitable projects. This paper investigates firm-level factors influencing the termination of innovation projects based on a sample of 4385 firms in the Czech Republic and Germany. We find that firm size, research and development activities, organizational agility, and the level of internationalization are positively associated with innovation project termination. Surprisingly, marketing innovation is also positively associated with project termination. Our results contribute to an improved understanding of why some firms are better at identifying unsuccessful projects (earlier) than others. Identifying generalizable factors provides complementary insights into project-level factors of project termination that can have a remarkable impact on the profitability and survival of firms.
Original languageEnglish
Pages (from-to)180-192
Number of pages13
JournalIeee Transactions on Engineering Management
Volume66
Issue number2
DOIs
Publication statusPublished - May 2019

Fingerprint

Innovation
Termination
Marketing
Profitability
Industry
Factors

Keywords

  • Technological innovation
  • Industries
  • Economics
  • Research and development
  • Investment
  • Commercialization
  • Plugs
  • organizational agility
  • PRODUCT DEVELOPMENT
  • RESEARCH-AND-DEVELOPMENT
  • CRITICAL SUCCESS FACTORS
  • PERFORMANCE
  • MARKET ORIENTATION
  • DYNAMIC CAPABILITIES
  • INTERNATIONAL DIVERSIFICATION
  • Dynamic capabilities
  • innovation project termination
  • innovation process
  • FINANCIAL CONSTRAINTS
  • TECHNOLOGICAL-INNOVATION
  • ABSORPTIVE-CAPACITY

Cite this

@article{327be1c122674ed2bb73f087f3f99cc1,
title = "Pulling the Plug? Investigating Firm-Level Drivers of Innovation Project Termination",
abstract = "Firms need to innovate and develop dynamic capabilities to create a sustainable competitive advantage. Due to this pressure, firms in high-tech industries invest a high percentage of their revenues in innovation. Despite the vast number of innovation success stories, only one in five innovation projects reaches the market. It is important to understand the drivers of project termination as many firms make sizable investments in innovation and these drivers may have a significant impact on their innovation performance. Therefore, the earlier recognition of unfeasible projects would avoid continued investment and release resources that could be invested in more profitable projects. This paper investigates firm-level factors influencing the termination of innovation projects based on a sample of 4385 firms in the Czech Republic and Germany. We find that firm size, research and development activities, organizational agility, and the level of internationalization are positively associated with innovation project termination. Surprisingly, marketing innovation is also positively associated with project termination. Our results contribute to an improved understanding of why some firms are better at identifying unsuccessful projects (earlier) than others. Identifying generalizable factors provides complementary insights into project-level factors of project termination that can have a remarkable impact on the profitability and survival of firms.",
keywords = "Technological innovation, Industries, Economics, Research and development, Investment, Commercialization, Plugs, organizational agility, PRODUCT DEVELOPMENT, RESEARCH-AND-DEVELOPMENT, CRITICAL SUCCESS FACTORS, PERFORMANCE, MARKET ORIENTATION, DYNAMIC CAPABILITIES, INTERNATIONAL DIVERSIFICATION, Dynamic capabilities, innovation project termination, innovation process, FINANCIAL CONSTRAINTS, TECHNOLOGICAL-INNOVATION, ABSORPTIVE-CAPACITY",
author = "Marek Vacul{\'i}k and Annika Lorenz and A.H.W.M. Roijakkers and Wim Vanhaverbeke",
year = "2019",
month = "5",
doi = "10.1109/TEM.2018.2798922",
language = "English",
volume = "66",
pages = "180--192",
journal = "Ieee Transactions on Engineering Management",
issn = "0018-9391",
publisher = "Institute of Electrical and Electronics Engineers Inc.",
number = "2",

}

Pulling the Plug? Investigating Firm-Level Drivers of Innovation Project Termination. / Vaculík, Marek ; Lorenz, Annika; Roijakkers, A.H.W.M.; Vanhaverbeke, Wim.

In: Ieee Transactions on Engineering Management, Vol. 66, No. 2, 05.2019, p. 180-192.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

T1 - Pulling the Plug? Investigating Firm-Level Drivers of Innovation Project Termination

AU - Vaculík, Marek

AU - Lorenz, Annika

AU - Roijakkers, A.H.W.M.

AU - Vanhaverbeke, Wim

PY - 2019/5

Y1 - 2019/5

N2 - Firms need to innovate and develop dynamic capabilities to create a sustainable competitive advantage. Due to this pressure, firms in high-tech industries invest a high percentage of their revenues in innovation. Despite the vast number of innovation success stories, only one in five innovation projects reaches the market. It is important to understand the drivers of project termination as many firms make sizable investments in innovation and these drivers may have a significant impact on their innovation performance. Therefore, the earlier recognition of unfeasible projects would avoid continued investment and release resources that could be invested in more profitable projects. This paper investigates firm-level factors influencing the termination of innovation projects based on a sample of 4385 firms in the Czech Republic and Germany. We find that firm size, research and development activities, organizational agility, and the level of internationalization are positively associated with innovation project termination. Surprisingly, marketing innovation is also positively associated with project termination. Our results contribute to an improved understanding of why some firms are better at identifying unsuccessful projects (earlier) than others. Identifying generalizable factors provides complementary insights into project-level factors of project termination that can have a remarkable impact on the profitability and survival of firms.

AB - Firms need to innovate and develop dynamic capabilities to create a sustainable competitive advantage. Due to this pressure, firms in high-tech industries invest a high percentage of their revenues in innovation. Despite the vast number of innovation success stories, only one in five innovation projects reaches the market. It is important to understand the drivers of project termination as many firms make sizable investments in innovation and these drivers may have a significant impact on their innovation performance. Therefore, the earlier recognition of unfeasible projects would avoid continued investment and release resources that could be invested in more profitable projects. This paper investigates firm-level factors influencing the termination of innovation projects based on a sample of 4385 firms in the Czech Republic and Germany. We find that firm size, research and development activities, organizational agility, and the level of internationalization are positively associated with innovation project termination. Surprisingly, marketing innovation is also positively associated with project termination. Our results contribute to an improved understanding of why some firms are better at identifying unsuccessful projects (earlier) than others. Identifying generalizable factors provides complementary insights into project-level factors of project termination that can have a remarkable impact on the profitability and survival of firms.

KW - Technological innovation

KW - Industries

KW - Economics

KW - Research and development

KW - Investment

KW - Commercialization

KW - Plugs

KW - organizational agility

KW - PRODUCT DEVELOPMENT

KW - RESEARCH-AND-DEVELOPMENT

KW - CRITICAL SUCCESS FACTORS

KW - PERFORMANCE

KW - MARKET ORIENTATION

KW - DYNAMIC CAPABILITIES

KW - INTERNATIONAL DIVERSIFICATION

KW - Dynamic capabilities

KW - innovation project termination

KW - innovation process

KW - FINANCIAL CONSTRAINTS

KW - TECHNOLOGICAL-INNOVATION

KW - ABSORPTIVE-CAPACITY

U2 - 10.1109/TEM.2018.2798922

DO - 10.1109/TEM.2018.2798922

M3 - Article

VL - 66

SP - 180

EP - 192

JO - Ieee Transactions on Engineering Management

JF - Ieee Transactions on Engineering Management

SN - 0018-9391

IS - 2

ER -