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TCI 2015 Configuration of alliance portfolio for firm’s innovation in Eco-friendly car industry

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Configuration of alliance portfolio for firms innovation in Eco-friendly car industry

-HYUNDAI and TOYOTAHyeonjoo Jeong, Youngju KoUST KIRCT CampusKOREA

Parallel Session 1.5: Accelerating Cluster Growth in Asian Countries

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Background1Method2Result3Discussion4 Research limitation & Further study5 Contents

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Background

Bioplastic

Fusion of Bio & Chemical Technology

Solution for climate change issues

Eco-friendly automobile material

The strategic alliance is important for securing original technologies12341Fusion of Bio & Chemical Tech.Bioplastic is polymer that is made by bio-processing with biomass2Solution for climate change issueReduce CO2 that is a major form of global warming by using bio-based renewable resources 3Using for eco-friendly automobile materialTOYOTA actively use bioplastic for production eco-friendly cars4Securing original technologies through strategic alliance TOYOTA took over PLA production factory from SHIMADZU through a strategic alliance1Response the international environmental regulation

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Alliance portfolio sizeNo. of partners + No. of alliances

Firms that have many partners obtain diverse technologies and knowledges from supplier through a synergy effect(Shan et al. 1994; Mouri et al. 2012)

A central firm that has more partners is in a good position to secure resources and knowledges. Because a central firms centrality increases in the network by their partners (Goerzen 2007)Structural dimension of alliance portfolioStrength of ties between the central enterprises and partners

The strong tie which is confidence between a central firm and its partners have less conflict and promote the exchange of complex knowledges(Ulrich Wassmer 2010; Changsu Kim et al 2007)

The weak tie is likely to expand cooperation capability with various partners to increase the flexibility of network and has an advantage on getting state-of-the-art information about new market(Capaldo 2007)Partner dimension of alliance portfolioTechnology similarity & Type of partners

Firms sharing similar knowledge and technology with their partners will have an easier working time but, when alliance partners are too similar, they cannot effectively obtain new knowledge(Lan et al. 1998; Frankort et al. 2011)

Various partner types have a rich resource pool and a large choice possibility but, the cooperation costs may be increased by the conflict and complexity with partners(Baum et al. 2000; Anna S. et al. 2012; Olerlemans et al. 2013) Literature Review

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Research question

1What kind of alliance portfolio of TOYOTA that preoccupied eco-friendly car market?2Did TOYOTA gain any kind of business performance through strategic alliances?3What is the difference of the configuration of alliance portfolio between TOYOTA and HYUNDAI in bioplastic industry for making eco-friendly car?

A comparison of the configuration of alliance portfolio in TOYOTA and HYUNDAI

I expect to draw a proper configuration of alliance portfolio for achieving business performance in eco-friendly car industry

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Method

Joint patent Configuration of alliance portfolioJoint patents are assigned to and jointly owned by more than one inventorBioplastics patents of HYUNDAI and TOYOTA Alliance portfolio sizeStructural dimension of alliance portfolioPartner dimension of alliance portfolio No. of partners No. of alliancesThe proportion of repeated partners Technology similarity Type of partners

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Result-Alliance portfolio size

1. Alliance portfolio size of HYUNDAI

2. Alliance portfolio size of TOYOTANumber of partners: 1 (in 2007) 6 (in 2011)

Number of alliance : 1 count of alliance with 1 partner (in 2007) 11 counts of alliance with 6 partners (in 2011)In early stage, TOYOTA had few partners but in active R&D collaboration

Numerical increment of partners & a steady decline in the number of alliances (after 2008)The portfolio size has changed to an expanded form of increase in both the number of partners and alliances

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Result-Structural dimension of alliance portfolio

HYUNDAIs Partnership continuityThe inflow of new partners is reduced partnership continuity of HYUNDAI

The network flexibility is increased through the inflow of new partners (in 2011)

HYUNDAI have the alliance portfolio that consists of the high proportion of weak ties

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Result-Structural dimension of alliance portfolio

TOYOTAs partnership continuityCyclically repeated strong ties and weak ties

Most of the strong tie is with SHIMADZU

TOYOTA took over bioplastic production factory from SHIMADZU in 2002

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Result-Partner dimension of alliance portfolio-HYUNDAI

HYUNDAI and their partners technology similarity = 25%

Cooperation with large firms at the rate of 70% and with universities at the rate of 30% (as of 2011)

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Result-Partner dimension of alliance portfolio-TOYOTA

TOYOTA and their partners technology similarity = 31% Mostly cooperate with large firms, other partner types occupy small portion in alliance portfolio

Since 2008, for the first time, the universities participated in TOYOTAs alliance portfolio and they gradually have increased their portion in the network

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Discussion

HYUNDAIAlliance portfolio size was expanded by the increment of partners and alliancesLarge alliance configuration size with a number of partners and alliances partnership continuity declined in 20%partnership continuity cyclically increase and decreaseIn 2009, cooperation with new partners for production interior material (that made by PLA) of eco-friendly hybrid carsFocus on the cooperation with existing partners until TOYOTA obtain the necessary know-how and technologies

When TOYOTA need new knowledge and technology, they form new partnership with new partnerstechnology similarity = 25%cooperation with large firm = 70%constantly cooperate with KIA that have a same goal with HYUNDAI for the production of eco-friendly cartechnology similarity = 31%high rate of cooperation with large firm but, TOYOTA also cooperates with other partner typesAn increment in the cooperation with universities

Also other new partner types can join in the network because of TOYOTA have the stable structure of alliance portfolioAlliance portfolio sizeStructural dimensionPartner dimensionTOYOTA

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1TOYOTA have secured the original technology by cooperation with SHIMADZU that are bioplastic production companyHYUNDAI cooperate with KIA that are automobile manufacturer like HYUNDAILike in the case of TOYOTA, HYUNDAI have to form the strong ties with chemical companies that produce bioplastic for securing bioplastic original technologies 2HYUNDAI have to do R&D collaboration not only with large firms but with small-medium firms, universities, research institutesBy the same strategy, TOYOTA have secured bioplastic original technologies and has enjoyed the dominant position in world bioplastic market 3As suggested in our findings, The result of analysis of a market leaders alliance portfolio can be utilized as a model in the industry fields needing innovationIn case of using this model, a firm can reduce the cost for network construction and operation Research implication

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Research limitations and further study

LimitationsPatent data can only reveal one aspect of firm innovation

The result of this research doesnt clearly show whether patents lead to a business innovation

Further studyanalyze diverse outcomes of business innovation(such as the increased production of new products or the increased sale of new products etc.)

carry out a survey or interview targeting experts in each company Joint patent is one of a result of R&D collaboration

These findings do not contain a character of partners(unique properties about knowledge and technology, the cultural differences etc.)

cover the alliance portfolio size, the structural and partner dimension of alliance portfolio as well as other various factors to show that these factors lead to a business innovation

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Thank you

If you have any questions or comments about my findings, please contact me at:

[email protected]

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