Avimanyu ( Avi ) Datta, Ph.D.

1. Avimanyu (Avi) Datta, Ph.D. Assistant Professor, College of Business, Illinois State University http://avimanyu.weebly.com

2. Presentation Overview • About me • Glance • Career Objectives • Research Focus • Research work • Origins of Radical Innovations • Motivation • Paper

3. About me: A Glance Avimanyu (Avi) Datta • B.Sc. Computing and Information Systems, University of London • M.S. Information Systems, Hawaii Pacific University • Ph.D., Washington State University (2011) • Assistant Professor of Management: Illinois State University (Fall 2011-Present) • Industry Analyst: Frost & Sullivan • Analyst, Market Sizing: Access Market International (AMI)-Partners • Enjoy Painting and Sketching: http://avimanyu.weebly.com/paintings-etc.html • Enjoying brewing Espressos

4. About me: Career Objectives • Develop and • test theories • Simplify the findings: Class room Teaching • Synthesize the findings: Prescriptive Recommendations

5. About me: Research Focus Capabilities Firm Boundaries IT Capabilities Radical Innovations Innovation Commercializations

6. About me: Research work • Published in • Journal of International Management • Information Systems Research (ISR) • Journal of Virtual Communities and Social network • American Journal of Business • Communications of AIS • Journal of Cases on Information Technology (JCIT) • Journal of Management and Strategy • Technology and Investment • International Journal of Strategic Information Technology and Applications • International Journal of Innovation in Digital Economy (IJIDE) • Journal of Business and Management • Journal of Knowledge Management • Presented in: • Strategic management Society (2011) • AMCIS (2008, 2009, 2010) • Academy of Management (AOM: 2010, 2012) • Southern Management Association (2008; 2012 ) • Atlanta Competitive Advantage Conference (ACAC: 2010) • Marketing Science Conference (2012) • INFORMS Conference on Marketing Sc. (2012) • Under Review • Organization Sc. • Technovation • R&D Management • Journal of Business venturing • Industrial Marketing Management • Decision Science Journal

7. A little bit more….

8. Combinatory effects of Exterior Sourcing and Technology Distinctness on Radical Innovations: A longitudinal look at Patents in the IT IndustryAvimanyu Datta

9. Motivation Radical Innovations Make a firm Long-Lived . Not all firms are capable of bringing radical innovations Radical Innovations are technologically “different” from a firms existing stock of innovations (patents) With age firms tend to look inwards (boundary and industry) to source innovations MOTIVATION Radicalness is often contingent upon access to technologies whose influence/application exceeds the territory of that technology’s definition (technology distinctness) and sourcing innovation outside a firm’s focal industry (exterior sourcing)

10. Constructs and Definitions Radical Innovations: Innovation that are original and forms the foundation for future innovation outcomes Exterior Sourcing: Degree to which an innovation is sourced outside a firm’s focal industry. Technology Distinctness : Degree of distinctness between an innovation’s definition and its application/influence.

11. Interplay among Constructs: Exterior Sourcing and Radicalness Positives: Tapping for sources of innovations outside the focal industry, stimulate intensive experimentation with new technological combinations, which furthers the possibility of creation of DIFFERENT Innovations (Ahuja & Lampert, 2001; Fleming, 2001; Phelps, 2010; Audia & Goncalo, 2007; Makri et al. 2010). Negatives: Sourcing innovations outside focal industry result in Costly, Expensive inconclusive innovations High Integration Cost Thus, we argue that while exterior sourcing may enable radical innovation, it also creates confusion which negatively affects the radicalness of innovation Thus, Hypothesis 1: There is a negative relationship between exterior sourcing and radicalness.

12. Interplay among Constructs: Technology Distinctness and Radicalness Access to technologies whose application and influence exceeds the definitional boundaries of prior technologies increases the set of possible technology combinations as well as the potential for highly novel and unique solutions (Fleming, 2001; Phelps, 2010) Access to distinctly different technologies stimulates intensive experimentation with new technological combinations, which should also lead to more radical innovation outcomes (Ahuja et al., 2001b). Access to more distinct technologies and experimentation with them not only helps in creation of novel and unique solutions leading to original innovation, but also increases the knowledge on how to productively put these technologies into use, thereby influencing the content and speed in developing future innovation. Thus, Hypothesis 2: There is a positive relationship between technological distinctness and radicalness

13. Interplay among Constructs: Interaction between exterior sourcing and technology distinctness Sourcing Innovations outside focal industry is expensive: when a high number of exterior sources are employed this creates dual problems: information overload arising from exterior sourcing and difficulty in grasping the knowledge relating to novel applications of technologies Getting access to distinct technology through minimal exterior links Cost optimizing solution Thus, Hypothesis 3: Exterior sourcing will negatively moderate the relationship between technology distinctness and radicalness. Hypothesis 4: Exterior sourcing and technology distinctness will interact in such a way that low exterior sourcing and high technology distinctness will result in the highest level of radicalness, and high exterior sourcing and low technology distinctness will result in the lowest level of radicalness.

14. Hypotheses H1 : There is a negative relationship between exterior sourcing and radicalness. Exterior Sourcing - H3 : Exterior sourcing will negatively moderate the relationship between technology distinctness and radicalness. Radicalness - + Technology Distinctness H2 : There is a positive relationship between technological distinctness and radicalness. H4: Exterior sourcing and technology distinctness will interact in such a way that low exterior sourcing and high technology distinctness will result in the highest level of radicalness, and high exterior sourcing and low technology distinctness will result in the lowest level of radicalness.

15. Sampling Strategy Get Total Patents from 1994-2009 of all 69 firms including their subsidiaries and Spinouts Filtration of 500 firms S&P 500 Firms 69 IT Firms • Select the firms from IT Verticals. There are initially 82. Of which 69 had patents 69 Firms 500 FIRMS 192070 patents 2.6 million Citations FINAL SAMPLE IT FIRMS

16. METHODVariables • Exterior Sources (EC): [B-(I+P)]/B • Where B=all backward citations • I = backward self citation • P= Backward partner • When a patent application cites another patent from the firm itself, we considered that an internal citation. • When a patent application cites members of the S&P-500 IT or other IT firms, we considered that as a ‘partner’ citation. • To make sure that a non-S&P firm was belonged to the IT vertical we compared it’s SIC code with corresponding codes that collectively represents Information Technology Industry. Those SIC codes are: 4510 (software & services), 4520 (technology hardware & equipment), 4530 (telecommunication services)

17. METHODVariables • Technology Distinctness: degree of distinctness between an innovation’s definition and its application/influence. • From the standpoint of patents we look at itstechnological class and subclasses to see to assess its definition and its field of search to determine its application/influence.) • Technology Class: Technological classes and subclasses for a patent define its technological domain. • Field of search: Field of search shows the application of an invention which may or may not exceed the technological domain restricted by its class. • technology distinctness = 1-[technology class ∩ field of search]

18. METHODVariables • Radicalness • Log(((1+FC)*F/(1+BC)*B)/N) • where FC=Forward citation and f=forward class match; BC=Backward citation and b=backward class match; N= number of years passed since the patent was announced. • We divided by N because older patents have more forward citations making them artificially more Radical than younger ones. • We too log value to have a normal distribution (a) Distribution of Radical Scores, Controlled for year (b)Distribution after Log Transformation

19. METHODControl variables Tests and Equations • Control Variables: R&D Spending, Firm Size, Age of Firm, No of patents and Patent Age. • Statistical Test • Using an Ordinary Least Squares Regression (OLS) Model we tested Hypotheses 1, 2, and 3. The basic equation for this analysis was • Yi, (t’-t) = β0+ β1Ri, t-1 + β2Si, t-1+ β3Ai, t+ β4Pi, t+ β5PAi, (t ‘-t) + β6ESi, t + β7TDi, t+ β8 (ES×TD)i, t+ e, • For Hypothesis 4, the interaction between technology distinctness and exterior sourcing will be graphically depicted by categorizing Exterior Sourcing and Technology Distinctness as high (>0.5) or low (<0.5) External Sources Technology Distinctness High (ES>0.5) High (E>0.5) Low (E ≤ 0.5) Low (E ≤ 0.5)

20. Hypotheses Test n=192,070. Standardized coefficients are reported with standard errors in parenthesis. Dummy variables were included in analysis but not reported here. **p<.001

21. Hypothesis, 1,2,3: Supported Model 4 is the best model with highest variance accounted for, lowest in terms of Information Criterion.

22. Hypothesis 4: Killer Combination Hypothesis 4: Supported Killer Combination: Sourcing the Highest possible Distinct Technologies with minimal Exterior Sources.

23. Implications: Theoretical Deeper investigation and enhance prior research on exterior sourcing and technology complementariness by linking it with radicalness. 2. Further research on radical innovations by including perspectives on exterior sourcing and technology distinctness. 3. Logical understanding on the boundary conditions for which the relationships among the constructs will hold true. 4. Selection capabilities of partners, are crucial not only to develop radical innovation but also for long term performance 5. Future research can use radicalness as context to see how relative absorptive capacity gets affected when technologies are distinct and the entities involved in the network are from different industries

24. Implications: Practical 1. Managers are not only expected to grasp new technologies, comprehend fresh knowledge, but also deal with information overload arising from different industry 2. Commitment exterior sources should be made only when there are enough incentives to get past the frictions and frustrations of dealing with information overload, integration problems, and of comprehending technology that is drastically different from managers’ current stock of expertise. 3. Create incentive programs for managers for identifying (a) technologies with future potential and create radical markets, and (b) potential partners outside the industry for getting access to such technologies.

25. Limitations and Future Research Future research should try to replicate this work with different industries like biotechnology, pharmaceuticals, automobiles, aerospace & defense, and so forth. 2. Relevance of this study may just be restricted to industries where patents are meaningful indicators of innovations 3. Radicalness of patents only partially captures the radicalness of innovation. Future research should be geared towards looking at the novelty of commercialized products and looking at the technology architecture to judge distinctness from the firm’s current portfolio.

26. Conclusions • Parsimonious two-variable predictor of radicalness: Exterior sourcing and technology distinctness. • Before taking such risks of initiating product development, our findings can help firms at two stages: • When the patent is announced, a look at the exterior sources and technological distinctness combination can help in predicting the possibility of radicalness. • Three to five years later the firm can actually see if the patent met with the prediction of radicalness using our scores. • If a firm ventures outside its technology domain, and/or partners with firms outside its industry, that will increase the chances that any discovery will be radical. However, risks are high

27. Conclusions (Lighter Note) is it not enough that I need distinctive technologies…I also need to know who to get it from? Yes. You need to know who to source it from and also at what frequency. And how would I know that? I am sorry, but that is a relevant question. Relevance does not interest us. No wonder you are in academia.

28. Sum up Questions