STI Policy Review

Science & Technology Policy Institute (과학기술정책연구원)
권호 표지
DOI QR코드

DOI QR Code

Exploration of Optimal Product Innovation Strategy Using Decision Tree Analysis: A Data-mining Approach

  • Cho, Insu (Department of Industrial & Management Engineering, Sun Moon University)
  • Published : 2017.12.14
Download PDF
⟨ Previous Next ⟩

Abstract

Recently, global competition in the manufacturing sector is driving firms in the manufacturing sector to conduct product innovation projects to maintain their competitive edge. The key points of product innovation projects are 1) what the purpose of the project is and 2) what expected results in the target market can be achieved by implementing the innovation. Therefore, this study focuses on the performance of innovation projects with a business viewpoint. In this respect, this study proposes the "achievement rate" of product innovation projects as a measurement of project performance. Then, this study finds the best strategies from various innovation activities to optimize the achievement rate of product innovation projects. There are three major innovation activities for the projects, including three types of R&D activities: Internal, joint and external R&D, and five types of non-R&D activities - acquisition of machines, equipment and software, purchasing external knowledge, job education and training, market research and design. This study applies decision tree modeling, a kind of data-mining methodology, to explore effective innovation activities. This study employs the data from the 'Korean Innovation Survey (KIS) 2014: Manufacturing Sector.' The KIS 2014 gathered information about innovation activities in the manufacturing sector over three years (2011-2013). This study gives some practical implication for managing the activities. First, innovation activities that increased the achievement rate of product diversification projects included a combination of market research, new product design, and job training. Second, our results show that a combination of internal R&D, job training and training, and market research increases the project achievement most for the replacement of outdated products. Third, new market creation or extension of market share indicates that launching replacement products and continuously upgrading products are most important.

Keywords

References

  1. Ahuja, G. (2000). The duality of collaboration: Inducements and opportunities in the formation of interfirm linkages. Strategic Management Journal, 21(3), 317-343. https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<317::AID-SMJ90>3.0.CO;2-B
  2. Aleson, M. R., & Escuer, M. E. (2002). The impact of product diversification strategy on the corporate performance of large Spanish firms. Spanish Economic Review, 4(2), 119-137. https://doi.org/10.1007/s101080200042
  3. Bala, J., De Jong, K., Huang, J., Vafaie, H., & Wechsler, H. (1996). Using learning to facilitate the evolution of features for recognizing visual concepts. Evolutionary Computation, 4(3), 297-311. https://doi.org/10.1162/evco.1996.4.3.297
  4. Balachandra, R., & Friar, J. H. (1997). Factors for success in R&D projects and new product innovation: A contextual framework. IEEE Transactions on Engineering Management, 44(3), 276-287. https://doi.org/10.1109/17.618169
  5. Berchicci, L. (2013). Towards an open R&D system: Internal R&D investment, external knowledge acquisition and innovative performance. Research Policy, 42(1), 117-127. https://doi.org/10.1016/j.respol.2012.04.017
  6. Berry, M., & Linoff, G. (2000). Mastering data mining: The art and science of customer. NY: John Willey and Sons.
  7. Breiman, L., Friedman, J., Stone, C. J., & Olshen, R. A. (1984). Classification and regression trees. Belmont, CA: Wadsworth.
  8. Brown, S. L., & Eisenhardt, K. M. (1995). Product development: Past research, present findings, and future directions. Academy of Management Review, 20(2), 343-378. https://doi.org/10.5465/amr.1995.9507312922
  9. Burns, T. E., & Stalker, G. M. (1961). The management of innovation. London: Tavistock Publication; Champaign IL: University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship
  10. Cassiman, B., & Veugelers, R. (2006). In search of complementarity in innovation strategy: Internal R&D and external knowledge acquisition. Management Science, 52(1), 68-82. https://doi.org/10.1287/mnsc.1050.0470
  11. Cho, I., Park, H., & Kim, J. K. (2012). The moderating effect of innovation protection mechanisms on the competitiveness of service firms. Service Business, 6(3), 369-386. https://doi.org/10.1007/s11628-012-0140-3
  12. Ciarapica, F. E., Bevilacqua, M., & Mazzuto, G. (2016). Performance analysis of new product development projects: An approach based on value stream mapping. International Journal of Productivity and Performance Management, 65(2), 177-206. https://doi.org/10.1108/IJPPM-06-2014-0087
  13. Cohen, W. M. (1995). CH. 4: Fifty years of empirical studies of innovative activity and performance. In P. Stoneman (Ed.), Handbook of the economics of innovation and technological change (pp. 129-213). Oxford: Blackwell.
  14. Cooper, R. G., & Kleinschmidt, E. J. (1995). Benchmarking the firm's critical success factors in new product development. Journal of Product Innovation Management, 12(5), 374-391. https://doi.org/10.1016/0737-6782(95)00059-3
  15. Danneels, E. (2002). The dynamics of product innovation and firm competences. Strategic Management Journal, 23(12), 1095-1121. https://doi.org/10.1002/smj.275
  16. Hagedoorn, J., & Cloodt, M. (2003). Measuring innovative performance: Is there an advantage in using multiple indicators? Research Policy, 32(8), 1365-1379. https://doi.org/10.1016/S0048-7333(02)00137-3
  17. Hauschildt, J. (1992). External acquisition of knowledge for innovations-a research agenda. R&D Management, 22(2), 105-110. https://doi.org/10.1111/j.1467-9310.1992.tb00800.x
  18. Hunt, K. (1993). Classification by induction: Application to modelling and control of non-linear dynamical systems. Intelligent Systems Engineering, 2(4), 231-245. https://doi.org/10.1049/ise.1993.0020
  19. Jin, H. J., & Yong, K. B. (2011). Analysis for consumers' opinion regarding domestic wheat bread. Journal of Consumer Policy Studies, 40, 205-222.
  20. Kass, G. V. (1980). An exploratory technique for investigating large quantities of categorical data. Applied Statistics, 29(2), 119-127. https://doi.org/10.2307/2986296
  21. Kessler, E. H., & Chakrabarti, A. K. (1996). Innovation speed: A conceptual model of context, antecedents, and outcomes. Academy of Management Review, 21(4), 1143-1191. https://doi.org/10.5465/amr.1996.9704071866
  22. Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383-397. https://doi.org/10.1287/orsc.3.3.383
  23. Lau, C. M., & Ngo, H. Y. (2004). The HR system, organizational culture, and product innovation. International Business Review, 13(6), 685-703. doi: http://dx.doi.org/10.1016/j.ibusrev.2004.08.001
  24. Lee, C., Lee, K., & Pennings, J. M. (2001). Internal capabilities, external networks, and performance: A study on technologybased ventures. Strategic Management Journal, 22(6-7), 615-640. https://doi.org/10.1002/smj.181
  25. Lettice, F., Roth, N., & Forstenlechner, I. (2006). Measuring knowledge in the new product development process. International Journal of Productivity and Performance Management, 55(3/4), 217-241. https://doi.org/10.1108/17410400610653200
  26. Loch, C., Stein, L., & Terwiesch, C. (1996). Measuring development performance in the electronics industry. Journal of Product Innovation Management, 13(1), 3-20. https://doi.org/10.1016/0737-6782(95)00089-5
  27. Luo, Y. (2002). Product diversification in international joint ventures: Performance implications in an emerging market. Strategic Management Journal, 23(1), 1-20. https://doi.org/10.1002/smj.203
  28. Nieto, M. J., & Santamaria, L. (2007). The importance of diverse collaborative networks for the novelty of product innovation. Technovation, 27(6), 367-377. https://doi.org/10.1016/j.technovation.2006.10.001
  29. O'Connor, G. C., & Rice, M. P. (2013). New market creation for breakthrough innovations: Enabling and constraining mechanisms. Journal of Product Innovation Management, 30(2), 209-227. https://doi.org/10.1111/j.1540-5885.2012.00996.x
  30. Parida, V., Westerberg, M., & Frishammar, J. (2012). Inbound open innovation activities in high-tech SMEs: The impact on innovation performance. Journal of Small Business Management, 50(2), 283-309. https://doi.org/10.1111/j.1540-627X.2012.00354.x
  31. Quinlan, J. R. (2014). C4. 5: Programs for machine learning. San Francisco: Morgan Kaufmann.
  32. Ramezani, F., & Lu, J. (2014). An intelligent group decision-support system and its application for project performance evaluation. Journal of Enterprise Information Management, 27(3), 278-291. https://doi.org/10.1108/JEIM-12-2013-0096
  33. Relich, M., & Bzdyra, K. (2014). Estimating new product success with the use of intelligent systems. Foundations of Management, 6(2), 7-20.
  34. Tatikonda, M. V., & Rosenthal, S. R. (2000). Technology novelty, project complexity, and product development project execution success: A deeper look at task uncertainty in product innovation. IEEE Transactions on Engineering Management, 47(1), 74-87. https://doi.org/10.1109/17.820727
  35. Teimoury, E., Fesharaki, M., & Bazyar, A. (2011). The relationship between governance and NPD performance and the mediating role of tie strength. International Journal of Productivity and Performance Management, 60(6), 622-641. https://doi.org/10.1108/17410401111150788
  36. Thomas, E. H., & Galambos, N. (2004). What satisfies students? Mining student-opinion data with regression and decision tree analysis. Research in Higher Education, 45(3), 251-269. https://doi.org/10.1023/B:RIHE.0000019589.79439.6e
  37. Utterback, J. M., & Abernathy, W. J. (1975). A dynamic model of process and product innovation. Omega, 3(6), 639-656. https://doi.org/10.1016/0305-0483(75)90068-7
  38. Verworn, B., Herstatt, C., & Nagahira, A. (2008). The fuzzy front end of Japanese new product development projects: Impact on success and differences between incremental and radical projects. R&D Management, 38(1), 1-19.
  39. White, M. A., & Bruton, G. D. (2010). The management of technology and innovation: A strategic approach: Cengage Learning (2nd Edition). Mason OH: Cengage learning.
  40. Zhou, K. Z., Yim, C. K., & Tse, D. K. (2005). The effects of strategic orientations on technology-and market-based breakthrough innovations. Journal of Marketing, 69(2), 42-60. https://doi.org/10.1509/jmkg.69.2.42.60756