Table of Content

Abstract…………………………………………………………………………….02

Table ofContents…………………………………………………………………...03

Acknowledgements………………………………………………………………...05

Chapter 1  Introduction…………….……………………………………………06

1.1 Background

1.2 Aim

1.3 Research Setting

1.3.1    Innovation and Entrepreneurship

            1.3.2   MassachusettsBiotech SMEs

1.4 Relevance of Research

            1.4.1    Policy Relevance           

            1.4.2    Industry Relevance

            1.4.3    Theoretical Relevance

1.5 Methodology Considerations

1.6 Organization of Dissertation

Chapter 2  Literature Review ……………………………………………………….

2.1 Introduction

2.2 Firm Performance

            2.2.1

            2.2.2

2.2 Entrepreneurial Orientation

2.3 Innovation

2.4 Innovation and EntrepreneurialOrientation

2.5 Summary

Chapter 3 Theoretical Frameworkand Research Model

3.1 Introduction

3.2 Theoretical Foundation

            3.2.1New Product Development Theory

            3.2.2

            3.2.3

3.3 Research Model

3.3.1Theoretical Assumptions or Limitations

3.3.2  Dimensions and Hypotheses

3.4 Summary of Research Model

Chapter 4  Methodology

Research Approach

Population of Interest

Research Design

4.3.1  Quantitative Survey

4.3.1.1 Operationalisation and Measurement

4.3.1.2 Data Collection

4.3.4  StatisticalAnalysis

4.4.1  Case Studies

     4.4.1.1 Case Selection

     4.4.1.2 Research

     4.4.1.3 Data Analysis

Chapter 5 Results and Analysis…………………………..

5.1  Introduction

5.2 Quantitative Survey

            5.2.1Sample

            5.2.2SEM Model

            5.2.3Testing Hypotheses

5.2.4Summary of Quantitative Analysis

 5.3 Case Studies

            5.3.1Case Interviews

            5.3.2

            5.3.3

Conclusion

Chapter 6  Discussion and Conclusion

6.1  Introduction

6.2  Summary and Discussion of Findings and itsContext

6.3  Implications of Research

6.4  Limitations of Research

6.5  Conclusion

Appendices

Appendix A      -   Survey

Appendix B      -   SEM Output

 Acknowledgements  

Chapter 1  Introduction

Background

Innovationis ‘A process through which economic or social value is extracted fromknowledge through the generation, development, and implementation of ideas toproduce new or improved products, processes and services’                                                                                         (Conference Board of Canada)

“Entrepreneurship, in its narrowest sense, involvescapturing ideas, converting them into products and, or services and thenbuilding a venture to take the product to market”                                                                      (Johnson, 2001 )

The key elements of entrepreneurship include risk taking,proactivity, and   innovation  

                 (Miller, 1983)

‘Innovation is the specific tool of entrepreneurship bywhich entrepreneurs exploit change as an opportunity for a different businessor service

(Schumpeter, 1934)

The EU Green Paper defines innovation as ‘the renewal andenlargement of the  range of product andservices and associated markets, the establishment of new methods ofproduction, supply and distribution and the introduction of changes inmanagement, work organization, and working conditions and skills of the workforce’                                                                          (EC 1995)

The various definitions serves to highlight thedifficulties faced in to distinguishing between innovation and entrepreneurshipand explains why they are largely studied separately. This study attempts to analyzethe relationship between innovation and entrepreneurship through their impacton firm performance. The basic premise in the research is that both innovationand entrepreneurship are essential for superior and sustainable firmperformance and that there is close nexus between innovation andentrepreneurship. Having a better understanding of the relationship betweeninnovation and entrepreneurship can help firms better synergize and strategizetheir internal processes. It is through strategizing and exploiting the nexusbetween innovation and entrepreneurial orientation that firms can achieve superiorsustainable competitive advantage.    

There are enormous risks associated with the hightechnology industry. It is inevitable that governments and high technologyindustries tend to focus on the R&D effort to be the first to achieve thescientific breakthroughs and the corresponding patent protection. Frequentlytop managers in high technology firms are also heavily biased towards technicaldisciplines such as science and engineering, Numerous reasons have beensuggested as to why certain industries or high technology firms perform betterthan others. These reasons range from local environment or ‘clusters’,management of technology, comparative and competitive advantage, internal capabilitiesof the firm, collaboration, government policies or simply market imperfections.Despitethe increase in investment in innovation capacity, many regions are learningthe expensive lesson that innovation is a necessary but insufficient conditionfor regional economic growth and that the ‘commercializing activities of localentrepreneurs are necessary to convert a region’s innovation assets intolong-term economic gain’ (SBA Office ofAdvocacy, 2005 #247) .  Thereis, however, consensus that entrepreneurial orientation and innovation plays acrucial role in generating and sustaining the growth of an industry or firm.Besides having the necessary knowledge and innovation capacities andcapabilities for new product development and patents, parallel efforts in theentrepreneurial orientation not only help to mitigate the risks but enhance thechances of creating and sustaining competitive advantages. This study arguesthat success of high technology firms requires a balanced approach, wherebesides innovation capacity; emphasis must also be placed in entrepreneurialorientation. This dissertation therefore studies the nexus between entrepreneurialorientation and innovative intensity and their effects on success in hightechnology firms in Boston.

Research Aim and Objectives

Separatelystudies have shown that entrepreneurship and innovation are critical toachieving and sustaining competitive advantage. They are widely acknowledged asa major engine of economic growth. Porter highlights that innovation,continuous improvement and change are the three cornerstones of globalcompetition and that ‘innovation and entrepreneurshipis at the heart of the national advantage’(Porter 1990). Entrepreneurialorientation drives decision-making and behavior toward creating new goods, newmethods of production, new markets, or the new organization of an industry (Stevenson & Jarillo 1990).  It is plausible to argue that there is a nexusbetween innovation and entrepreneurship and their consequent effect on firmperformance. 

Theoverall aim of the present research is to gain an understanding of therelationship between firm performance and innovation and entrepreneurship nexusamong technology-oriented biotechnology firms in Boston. This study taps on a wide range ofstudies on entrepreneurship and innovation at the firm levels to gain insightson the high technology industries in Boston. The study will analyze and compare thecausal relations between entrepreneurial orientation and innovation intensityon firm performance. Firstly, it will establish the various dimensions of thefactors and empirically analyze their impact on firm performance. Secondly,case study analyses will then be carried out to identify any characteristicsthat may be unique to selected high technology industry, and their correspondingimpact and outcomes. Where possible the results of the survey and case studieswill be compared with each other to explore if there is any convergentvalidity. To achieve the aim,the research is mindful that the study of innovation and entrepreneurshipinvolves an understanding of complex relationships, inter andintra-organisational and interpersonal ones, within the context of firmperformance.

The study will specifically attempt to answer the followingresearch questions:

1) What are the dimensions of entrepreneurship andinnovation and to what extent do they contribute to the high-tech biotechnologyfirm performance?

2) What evidenceis there of a nexus between the entrepreneurial orientation and innovation?

3) What evidenceis there that the nexus brings about superior firm performance?

1.3 Research Setting

Thesetting of the research is on the biotechnology firms within the context of thehigh-tech industries in Massachusetts.This section presents a background and the setting in which the presentresearch is undertaken. The concepts of innovative intensity andentrepreneurial orientation and its implications for firm performance arepresented. Since the research is conducted within the context of Massachusetts, a briefbackground is provided on its biotech industry.

1.3.1Innovation and Entrepreneurship    

Hightechnology industries are characterized by a great dependence on science andtechnology innovation that leads to new or improved products and services. Theygenerally have a substantial economic impact, fueled both by large research anddevelopment spending, and a higher than industry average sales growth. For thepurpose of this study the biotechnology sector which is envisaged to havesubstantial economic impacts on Massachusetts’seconomy is selected.

This studyextends research on studies that explored the impact of entrepreneurial and innovationon high technology industry and organizations. It examines the determinants ofinnovation in Porter’s study on innovative capacities, Clayton Christensen’sdisruptive innovation as well as several resource-based and new productdevelopment approaches. The focus of this study is at the firm levels. Asnoted, the industry of interest selected is high technology industries in Massachusetts. 

To explore and measure the effect of entrepreneurialorientation at the firm level the study taps into prior research of (Miller, 1983; Morris and Paul, 1987; Covin andSlevin, 1989; Davis, Morris and Allen, 1991), Lumpkin and Dess (1996)  and Lumpkin (1998) that identified a set offive distinct dimensions: product/service innovativeness, a tendency to supportcreativity and experimentation in introducing new products/services; process innovativeness,a willingness to support novelty and technological research in developing new processes;risk taking, a willingness to take bold actions with uncertain outcomes;proactiveness, a forward-looking perspective involving acting in anticipationof future demand or change; and competitive aggressiveness, a tendency to beforceful and combative in efforts to outperform industry rivals.

To explore andmeasure the effects of innovative intensities at the firm level the study tapsinto prior research of Community Innovation Survey (Kleinknecht 1996;Crepon et al. 1998; Loof & Heshmati 2001; Mairesse & Mohnen 2001;Cooper & Kleinschmidt 1987; Johne & Snelson 1998) and the new productdevelopment studies (Cooper & Kleinschmidt 1987; (Montoya-Weiss &Calantone 1994); Johne & Snelson 1998;). Using data from the Community Innovation Surveyof countries of the European Union studies have been able to analyze the causalrelationship between innovation and firm performance. In addition, the studieshave also suggested causal relationships between the general characteristics offirms, their environment and their innovative intensity.  The new product development studies, besidescomplementing areas covered by the Community Innovation Survey studies, providegreater resolution of firm characteristics and the internal firm processes.

1.3.2    Massachusetts Biotechnology SMEs

There are over 400 biotechnologycompanies located in the state, of which 235 are developing therapeutic drugs.Roughly 42,917 biotechnology employees in Massachusetts are responsible for over $5billion of in-state payroll. Biotech employment grew by 25.6 percent between2001 and 2005, adding over 8,000 jobs.

Over the years, Massachusetts-basedbiopharmaceutical companies have already developed 50 large molecule drugscovering a range of illnesses, including areas such as cancer, infectious andneurological diseases. There are nearly 1,769 drugs being developed in Massachusetts,representing over 7 percent of the global drug pipeline. Massachusettsis home to the top five National Institutes of Health funded hospitals,including Beth IsraelDeaconess MedicalCenter, Brigham and Women's Hospital,Children's Hospital Boston, Dana-Farber Cancer Institute, and Massachusetts General Hospital.

1.4 Relevance of Research

In terms ofvalue creation, biotechnology has the potential to out performance otherindustries. This is good for innovators, good for countries, good forcompanies, and good for the people working for these companies. As countrieshave limited resources, they need to maximize the returns on every dollarspent. Establishing high technology enterprises is an expensive business. Itrequires extensive investments in basic research, specialized skills,sophisticated research and production facilities. Maintaining such industriesrequires long-term investments. Governments and corporations have become activeparticipants in the development of biotechnology industries.  This raises a number of critical issues: Howcan countries determine an appropriate mix of strategies, factors andcapabilities to support the growth of firms in such industries? 

            1.4.1    PolicyRelevance           

            1.4.2    Industry Relevance

            1.4.3    Theoretical Relevance

Methodology

Data for thestudy will be obtained through a face-to-face questionnaire survey. Thepopulation of interest will be the relevant staff of the biotech firms in Massachusetts. Thequestionnaire is adapted from various studies including entrepreneurialorientations, Community of Innovation Survey (CIS-III)and relevant constructs from the new product development studies. 

 1.6      Organisation

The thesis structure will followthat suggested by Perry (1994), namely:

Introduction

Literature Review

Methodology

Data Analysis

Conclusions and Implications

Chapter 2

Chapter 3

Chapter 4

Chapter 5

2.         Literature Review

2.1Industry and Firm Performance – A Theoretical Review

According to Porter, globalization, technological changeand comparable factor endowment have ‘nullified, or reduced, the importance ofcertain factors of production that once loomed large’(Porter 1990). Besides factor costs, he notes that ‘differences innational economic structures, values, culture, institutions, and historiescontribute profoundly to competitive success’.

More recently, several resource-based theories have emergedto suggest an endogenous explanation for a firm’s performance.  These suggest that elements within the firmhelp explain such performance. The concept of ‘dynamic capabilities’ hasreceived much attention. It suggest that ‘the competitive advantage of firms isseen as resting on distinctive processes (ways of coordinating and combining),shaped by the firm’s specific assets positions (such as the firm’s portfolio ofdifficult-to-trade knowledge assets and complementary assets), and theevolution path(s) it has adopted or inherited’ (Teece et al. 1997). The endogenous approach suggests that wealth creationdepends largely on honing technological, organizational, and managerialprocesses inside the firm.  Christensenand Michael Overdorf suggest that any ‘inabilities’ to take advantage ofopportunities may reside within the firms (Christensen & Overdorf 2000).

Seminal efforts in the 1970s ((Cooper 1979); (Myer et al. 1969); (Rothwell et al. 1974) have been conducted to identify critical factors thatinfluence new product(innovation) success. The SAPPHO Project by Rothwell  et. al. compared 43 successful and failedendeavors in chemical and instrument companies and found 41 determinants,ranging from attention to market to senior leadership. A more recentinvestigation(Cooper & Kleinschmidt 1995) identified 48 drivers, such as research and development(R&D)budget and new product aimed at familiar markets, of which 26 drivers discriminatedbetween solid and weak performers. Further refinements of the model insubsequent studies identified 13 drivers as listed in model below(Cooper & Kleinschmidt 2000).

The model postulates that new product success is determinedby the competitive advantage of the new product, which in turn is affected bythe innovation process (execution), the company internal environment and themarketplace opportunities(Cooper & Kleinschmidt 2000).

Meta analysis by Montoya-Weiss and Calantone (1994)parsimoniously grouped the numerous and varied factors in NPD studies asstrategic/organizational, NPD process and market environment. Subin Im et al.(2003) postulated that strategic/organizational drivers affect new productdevelopment (NPD) process which in turn influences the new product performance.Deriving a focused group of constructs, namely customer orientation,cross-functional integration, NPD team proficiency, NPD initiation andimplementation, they were able to demonstrate the relationship between newproduct development and performance for Korean and Japanese firms. The modeldeveloped is illustrated below.

Figure 2:Conceptual Framework Model -(Subin Im et al. 2003)

Khalil and Ezzat argue that ‘proper management oftechnology is what creates wealth’. They advocate that ‘for developing countries to avoid being marginalized,they must formulate strong public policy, and companies must improve the way they manage technology and innovation’(Khalil & Ezzat 2001). This approach emphasizes the importance of public policyin providing the necessary environment for growth and the need to strike anintegrating balance between the economic, technology and trade systems. Theyadd: ‘Effectively managing both the macro aspects and the micro aspects ofthese three system is essential for sustainable growth’(Khalil & Ezzat 2001).

David Yoffie suggests that while comparative andcompetitive advantages are important for national and industry performance, thedynamics of the global and national environment must be fully understood. Thisinclude factors like the ‘structure of global industry, level and style ofgovernment intervention, characteristics of leading firms and the inertia ofhistory’(Yoffie 1993). Firms and governments must identify the nature of theircompetitiveness, be it comparative advantage, political, oligopolistic orregulated, and adapt to the shifting industry and political environments.

The entrepreneurshipliterature suggests that a set of organizational attitudes and behaviors characterizesentrepreneurial firms (Miller 1983a); (Stevenson & Jarillo 1990); (Covin & Slevin 1991.); (Covin & Miles 1999);(Lumpkin & Dess 1996); (Lyon et al. 2000); (Lee et al. 2001). Historically, the literature pointed toinnovativeness, risk taking, and proactiveness ((Miller 1983a); (Morris & Paul 1987); (Covin & Slevin 1989); (Davis et al. (1991)) Subsequently Lumpkin (1996) included thedimensions of product/service and process innovativeness. Entrepreneurialorientation drives decision-making and behavior toward creating new goods, newmethods of production, new markets, or the new organization of an industry (Stevenson & Jarillo 1990). As Lumpkin and Dess (1996: 136) observe, “…newentry explains what entrepreneurship consists of, and entrepreneurialorientation describes how new entry is undertaken.” Entrepreneurialorientation can this be defined as a firm-level predisposition to engage inbehaviors that lead to change in the organization or marketplace.

   The literaturesuggests that industry or firm performance is dependent on a dynamic interplaybetween a diverse range of internal and external factors. Any studies onindustry and the firm’s success should, therefore, consider the effects ofthese factors.  However, the common themethat runs through these theoretical frameworks is that firms must continue toadapt or innovate to sustain their competitive advantage. This underpins theimportance of innovation for a country’s development.

2,2 Entrepreneurial Orientation andFirm Success

Past research havesuggested that there is no characteristic, predisposition, or set of traits atthe individual entrepreneur level of analysis that consistently"predicts" entrepreneurial activity. Miller argued that an entrepreneurial firm“engages in product-market innovation, undertakes somewhat risky ventures andis first to come up with ‘proactive’ innovations, beating competitors to thepunch”; suggesting the dimensions of  innovativeness,risk-taking, and proactiveness, respectively(Miller 1983b). Lumpkin and Dess(1998) proposed twoadditional dimensions critical to the entrepreneurial orientation concept: competitiveaggressiveness and autonomy. Collectively, these fivedimensions—innovativeness, proactiveness, risk-taking, competitiveaggressiveness, and autonomy—permeate the decision-making styles and practicesof a firm’s members. Entrepreneurial orientation provides a strategicframework for researching the practices, processes and organizational mindsetof firms engaged in managing firms and/or pursuing new ventures ((Lyon et al. 2000).

Autonomyrefers to a willingness to act independently and be self directed in thepursuit of goals (Lumpkin & Dess 1996). It is envisaged that employees with highautonomy tend to have the drive to carry projects through to completion withoutrelying on the support or approval of management.

Proactivenessrefers to a forward-looking, opportunity-seeking perspective (Miller 1983a); (Venkataraman 1989). It suggests both vision and leadership inlaunching business ventures or developing new strategic initiatives since itimplies an ability to anticipate changes in demand or other trends thatindicate emerging opportunities. Risk Taking refers to making decisions andtaking action under conditions of uncertainty ((Brockhaus 1980.).

CompetitiveAggressiveness refers to the intensity of a firm’s efforts to compete withindustry rivals (Lumpkin and Dess, 2001). It often involves a combativeresponse or an offensive aimed at enhancing performance and/or improving marketshare (Venkatraman, 1989) with an overall objective of defending previous gainsand maintaining a strong presence in the marketplace.

Figure 3: Conceptual model of theentrepreneurial orientation-performance relationship( Lumpkin & Dess, 1996)

Studies havefound that several of these five components were significant predictors ofsales growth and/or profitability. Proactiveness and risk taking weresignificant predictors of average annual sales growth, while innovation,autonomy and aggressiveness were significant predictors of both net worth andchanges in net worth. Several measures of sales growth strategy were alsosignificant predictors of firm performance.

2.3 Innovation

The EU Green Paper defines innovation as ‘the renewal andenlargement of the range of product and services and associated markets, theestablishment of new methods of production, supply and distribution and theintroduction of changes in management, work organization, and workingconditions and skills of the work force’(EC 1995).

Innovative intensity at the firm level is defined as the demonstratedcommitment of innovation inputs and throughputs. It can be measured by thecommitment to research and development (R&D) expenditure, Science andEngineering(S&E) expertise, collaboration with research institutions orother firms and the organization and processes supporting innovation.   

The terms ‘innovative ability’, ‘innovativecapability’, ‘innovative competence’ and ‘absorptive capacity’ are often usedinterchangeably and for the purpose of this study refers to innovativecapacity. The concept of innovativecapacity is the potential of a firm, region or nation to generateinnovative output (Porter & Stern2002).

The phenomena of innovation can be described usingthe terms innovation inputs, processes (innovation throughputs) and products(innovation outputs). Innovationinputs refer to resources that support innovative activities (for example,research, training and skilled workers). Innovation throughput refers toactivities that support the innovation process (for examplecollaboration).  Innovation output refersto the outcome new products as a result of the innovation inputs, throughputsand activities within the firm.

2.4 Innovative and Performance

Innovation varies considerably across countries. Inthe past, the primary indicators for innovativeness were the expenditure onR&D and the number of employees dedicated to R&D. It was presumed thatR&D expenditure will give rise to new knowledge and in turn lead to productinnovation. Today, more sophisticated measures are used.  Thus, Porter and Stern have built aninnovation index called ‘National innovation capacity’ (Porter & Stern2002).  This measure combines factors derived fromthree major areas of research on innovation - ideas-driven endogenous growththeory (Romer, 1990), cluster-based theory (Porter, 1990) and the nationalsystem of innovation concept (Nelson, 1993). The index, based on macroeconomicand political variables, predicts the ‘economy's potential to produce a streamof commercially relevant innovation’ and explains differences in patentingrates among countries. Based on the ‘ideas-driven endogenous growth’ and‘national innovation system’ models, Furman et al found that the stock ofknowledge (GDP per capita or stockof patent), resources devoted to innovation (full time S&E personal orR&D expenditures), political institutions or policies (IP, openness ofmarket) are important determinants of innovation. Based on cluster theory, theyfound that private R&D funding, R&D performed by universities and thelinkages between institutions and industrial clusters central variables alsoaffect the capacity to innovate(Furman et al. 2002). Their study suggests that Singaporeis ranked 13 according to the national capacity index. A limitation of thenational capacity index is that it does not directly measure economic output.The innovation output is based on international patenting that may not betranslated into new a product.  A furtherlimitation of the index is that it does not take into account the simultaneityeffect of innovation inputs and throughputs.

While the macro level policies and institutions areessential for innovation, it is ultimately firms that introduce andcommercialize innovations. Firms must develop an internal innovation capabilityto generate and develop novel ideas into innovative products or processes. Itis the collective firms' innovation capability that will shape the overallcountry innovative performance. The introduction of the Community InnovationSurvey (CIS) by the European Union in 1993 greatly facilitated the studying ofrelationships between innovation and firm performance.

Based on the new product development , (Subin Im et al. 2003) identified a limited butfocused number of new product development factors to examine the success of newproducts or innovations. Customer orientation was determined as a sufficientrepresentation of market orientation(Gatignon et al. 1997).  The significance of cross-functionalintegration to NPD is well documented (Song et al. 2000). Montoya- Weiss and Calantonehave established the relationship  betweenNPD Team proficiency  and new productoutcomes(Montoya-Weiss &Calantone 1994).Studies by Troy et al  and Zaltman et al,have achieved consensus on simplifying NPD process to initiation andimplementation(Troy et al. 2001;Zaltman et al. 1973).The study was able to demonstrate significant relationships between theseconstructs and the success of new product development.

The construct ofinnovation intensity will thus be analysed base on adapted model depicted infigure 4 below. 

Chapter 3 Theoretical Frameworkand Research Model

3.1 Introduction

3.2 Theoretical Foundation

            3.2.1 New Product Development Theory

            3.2.2

            3.2.3

3.4 Summary of Research Model

The proposed framework for the testing of the varioushypotheses will be based on the model at Figure 5. The model will attempted toanalyse the effects of entrepreneurial orientation and innovation intensity onfirm performance and includes constructs from entrepreneurial orientation studiescommunity innovation survey studies and the new product development studies. Theliterature review identified that the various approaches complemented eachother. While the community innovation survey’s strength lies in the aggregateddimensions (e.g. R&D, S&E personnel), the new product developmentapproach provides better resolution on the internal processes of the firm(e.g., marketing, customer orientation and implementation process). Theentrepreneurial orientation studies strengths lies in providing perspectiveslargely not addressed in the innovation studies. 

The study will test the relationship between,entrepreneurial, orientation, innovation intensity and firm performance. A twopart questionnaire survey will administered to selected biotechnology companieslocated in Massachusetts.The survey will be administered in December 2008/January 2009

The questionnaire survey will be accompanied by in-depthinterviews of four selected high technology firm case studies. The case studieswill seek qualitative insights on the impact of the internal processes of thefirms. The control variable of these case studies will be firm size andbusiness type, that is, manufacturing or service.

3.3.1 Theoretical Assumptionsor Limitations

TBA

The main limitation of the study is it limited externalvalidity.  It is a single-country studyand focus on the high technology sector. Therefore the findings cannot be generalized to all industries or othercountries.

3.3.2  Dimensions and Hypotheses

It can beposited that a firm’s entrepreneurial orientation will affect its performance.Using the five measures – autonomy, innovativeness, proactiveness, risk takingand competitive aggressiveness gives rise to the following five testablehypotheses that will be applied to the high technology industry:

Hypothesis 1:  The greater the proportion of a firm’sautonomy, the greater that firm’s potential for success.

Hypothesis 2: The greater thedegree of proactiveness of a firm, the greater the firm’s potential forsuccess.

Hypothesis 3: The greater thedegree of risk taking by the firm, the greater its potential for success.

Hypothesis 4: The greater thedegree of competitive aggressiveness of a firm, the greater that firm’spotential for success.

Hypothesis 5: The greaterinnovativeness of the firm, the greater the firm’s potential for success.

It can beposited that a firm’s innovation intensity through inputs and processes willaffect its performance. Using the EU survey, innovation intensity can beoperationalised using four measures – R&D expenditure, S&E personnel’s,inter-firm collaboration and collaboration with research institutions. Thisgives rise to the following four testable hypotheses that will be applied tothe biotechnology industry:

            Hypothesis 6:  The greater the proportion of a firm’s totalexpenditure on R&D, the greater that firm’s performance.

            Hypothesis 7: The greater theproportion of Science and Engineering personnel employed by a firm, the greaterthat firm’s performance.

            Hypothesis 8: The greater the degreeof collaborative intensity between firms, the greater the performance of thosecollaborating firms.

Hypothesis9: The greater the degree of collaborative intensity with universities/researchinstitutions by a firm, the greater that firm’s performance.

A major purposeof this study is the way in which industry performance of firms, with differentinternal characteristics and processes, varies according to the innovationintensity in those firms. Hypotheses 6 to 9 are based on constructs from thenew product development literature.

            Hypothesis 10: The greater a firm’scustomer orientation, the greater its performance.  

            Hypothesis11 The better the firm’s NPD process( initiation and implementation), thegreater its performance

Chapter 4  Methodology

ResearchApproach

TBA

Population ofInterest

The populations of interest are biotechnology companiesresiding in Massachusetts.The four case studies companies will be selected based on theirsuccessful track record in new product development, industry market share,performance in the past three years and size. Two of the companies will be biotechnology manufacturers while theother two will be in the biotechnology service industry.

Research Design

For the firm level analysis, a questionnaire survey withrelevant constructs from the entrepreneurial orientation, EU CommunityInnovation Survey-III (CIS-III) and  newproduct development literature will be used to measure the relationship betweenentrepreneurial orientation,  innovationand firm performance.

The relevant constructs from the entrepreneurialorientation seeks to identify the perceived effects of autonomy, proactiveness,competitive aggressiveness, risk taking and innovativeness on firm performance

The relevant constructs from the Community InnovationSurvey seeks to identify the overall demographics of the high technologyindustry. It includes R&D personnels; R&D expenditures; sources ofinformation; technology transfer and acquisition; technical cooperation;government support and perception of factors promoting or hinderinginnovation..  A sampling of the potentialmeasures and their characteristics is attached at Appendix A

4.3.1  Quantitative Survey

4.3.1.1 Operationalisation and Measurement

4.3.1.2 Data Collection

4.3.4  StatisticalAnalysis

4.4.1  Case Studies

     4.4.1.1 Case Selection

     4.4.1.2 Research

     4.4.1.3 Data Analysis

The new product development portion of the surveywill explore the impact of customer orientation, NPD cross-functionalintegration, NPD team proficiency on NPD initiation and NPD implementation. Inturn, the impact of NPD initiation and implementation on new productperformance will be determined. A sample of the measures is at Appendix B.

To test the various hypotheses, the study will usethe structural equation modeling method, and case studies analysis. Structuralequation modeling (SEM) is theprimary method used to analyze the data and to estimate the significance andstrength of the relationships between the different elements in the model.Using Amos 5.0 (Arbuckle, 2003,Arbuckle and Wothke, 1999)or LISREL,  the study will follow thetwo-step analysis procedure recommended by Anderson and Gerbing (1988). In the first step, wevalidate the measurement models for each individual latent construct usingconfirmatory factor analysis (CFA). In the second step, we estimate thecomplete structural model. For both the CFA and SEManalyses, the goodness-of-fit parameters to be reported (RMSEA, SRMR, GFI,AGFI, NNFI, NFI, CFI, Delta2, and normed chi-square) reflect currentstandard practices in structural equation modeling (Hair et al., 1998, Huand Bentler, 1998, Hu and Bentler, 1999, Kline, 1998, MacCallum and Austin,2000, Schumacker and Lomax, 1996, Shook et al., 2004).

.

The method of analyzing the case studies is in linewith the ‘pattern matching’ method suggested by (Campbell 1975) and (Yin 1994), where information from thefour case studies shall be match with prior assumptions. In the context of theproposed study, the assumption is that innovation intensity in the high technologyfirms will positively impact on firm performance.

Based on the data collected the firm characteristics andperformance in the biotechnology industry will be analyzed.

Chapter 5 Results and Analysis…………………………..

5.1  Introduction

5.2 Quantitative Survey

            5.2.1Sample

            5.2.2SEM Model

            5.2.3Testing Hypotheses

5.2.4Summary of Quantitative Analysis

 5.3 Case Studies

            5.3.1Case Interviews

            5.3.2

            5.3.3

Conclusion

Chapter 6  Discussion and Conclusion

6.1  Introduction

6.2  Summary and Discussion of Findings and itsContext

6.3  Implications of Research

6.4  Limitations of Research

6.5  Conclusion

3.5 Ethical Considerations

Permission will be obtained from the University’s EthicsCommittee and each organization included in the survey prior to commencing thecollection of the data. All data collected will be kept in a secured cupboardand password protected on the disk. Assess to the data will be limited to theresearcher and the supervisor. 

3.7 Confidentiality and Intellectual Property

Thequestionnaire survey does include the entry of commercially sensitiveinformation. Assurance will be given to all survey respondents that the datawill only be used in a consolidated form and the individuals’ personal datawill be held securely and not released to unauthorized parties.

4. Timetable

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APPENDIX A

 Sampling of the type of data that will becollated by the Questionnaire Survey –

Adapted from Community Innovation Survey

Adaptedfrom the Entrepreneurial Orientation Survey

Samplingof the type of data that will be collated by the Questionnaire Survey –Adoptedfrom New Product Development study of (SubinIm et al. 2003)