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Decision making in innovation projects: the case of the construction industry: the influence of decision making on the innovation performance in the construction industry

Wolbers, M.C. (2012) Decision making in innovation projects: the case of the construction industry: the influence of decision making on the innovation performance in the construction industry.

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Abstract:Introduction Successful innovations can offer firms various competitive advantages: lowering of the production costs, improving of the quality of products, entering of new markets or increasing the share in existing markets. These competitive advantages might lead to an improved position of the firm compared to its competitors and also Ballast Nedam is aiming to improve its position. However, before an innovation becomes successful a process of development and implementation activities precedes. In this process of development and implementation various decisions are made about the product, but also about the cooperation between organizations that are involved in the innovation process. It is likely that these decisions influence the results of the innovation process and the innovation performance. This research aims to understand the decision making in innovation projects and the effect of the decision making on the innovation performance. Research design Ballast Nedam wishes to improve its innovation management by creating a better understanding of the decision making in its innovation projects and the effect of the decision making on the innovation performance. The aim of this thesis is to obtain insight in the decision making in innovation projects of Ballast Nedam and the effect of the decision making on the innovation performance. This leads to the following research question: How does the decision making in an innovation project affect the performance of a systemic product innovation of Ballast Nedam? Methodology This thesis required a theoretical and a practical research: a theoretical research is conducted to determine the characteristics of a decision-making process, to establish the decisions in an innovation projects and the variables to determine the innovation performance of a systemic product innovation. The practical research is conducted in the form of a multiple case study. Three innovation projects of Ballast Nedam are selected as cases for this research. For each case first the data is collected and analyzed. Second, the within case analyses are compared to each other in a cross case analysis to determine similarities and differences between the three cases. Finally, the results of the cross case analysis leads to conclusions and recommendations. Theory The theoretical research is conducted to determine the performance of a product innovation, the characteristics of a decision-making process and the decisions in an innovation project. The definition of an innovation that is used in this research is as follows: “an innovation is an idea, practice or object that is perceived as new by an individual or other unit of adoption”. The type of innovation that is studied in this research is a systemic product innovation, which means that there is a complete configuration of components and interfaces of the product. The performance of the innovation and the innovation project is measured on four dimensions: technical performance, project performance, market performance and rate of satisfaction. In the innovation process of a systemic product innovation four phases can be distinguished: (1) idea generation and selection, (2) pilot project, (3) development and testing and (4) implementation and Master Thesis Construction Management & Engineering Page ii Michiel Wolbers BSc. diffusion. However, in the construction industry a true pilot project is not distinguished, because an innovation is mostly tested and implemented at the same time. The reason for the absence of a true pilot project is because the construction industry described as a complex products and systems industry, which is an industry in which products are developed that have an architectural structure and are produced in small batches. In the open innovation paradigm multiple organizations can be involved in innovation projects. Strategic alliances between the organizations are formed to have access to external knowledge that is used to develop innovations and external paths to expand the markets. There is a wide range of motives to form a strategic alliance. The motives are related to risk sharing, economies of scale, knowledge and skills transfer, shaping of the competition, access to new markets and consolidating of the market position. The strategic alliance can differ on the structure of the strategic alliance and the type of alliance partner, which depends on the relation between the organizations. The structure and the selection of the type of alliance partner determine partly the success of the strategic alliance and ultimately the success of the innovation. During the innovation process various decisions are made that are related to the development of the innovation. The decisions in innovation projects differ in level and in type. This research focuses on strategic decisions, which are decisions that are complex, political and uncertain and important for the innovation project. The different types of decisions that can be distinguished are organizations decisions, operations decisions, product decisions and marketing decisions. The decision-making process of a decision consists of four phases and seven routines. However, it is not necessary that all phases and routines are completed in a decision-making process. Further, the decision can be made in different phases of the innovation process and also the decision makers can differ, especially if multiple organizations are involved in the innovation project. Game theory is the study of mathematical models that can be applied to describe the decisionmaking processes in innovation projects in which multiple decision makers are involved. The basic assumptions of game theory are that decision makers are rational and think strategically. This means that the decision makers are taking into account the knowledge and expectations of other decision makers. Three game types can be distinguished that can be applied in innovation projects. The first type is the strategic game, which is a non-cooperative game and decision makers make their decision independently of each other. The second game type is an extensive game with imperfect information, which is also a non-cooperative game, but in this game the decision makers take into account the decisions of other decision makers. The third type is a coalitional game, which is a cooperative game and decisions are made in a coalition of decision makers. Data collection and analysis A multiple case study is chosen as a research strategy to collect and analyze the data in this research. In this multiple case study three innovation projects are selected as cases: Duurzaam Speelbad, ModuPark® and iQwoning®. The first two projects are market-pull innovation projects, while the latter is a technology-push innovation project. The data in this research is collected through document study, questionnaires and semi-structured interviews. Questionnaires are used to collect the data about the innovation performance, while the Summary Michiel Wolbers BSc. Page iii document study and the semi-structured interviews are used to collect supporting data about the innovation project and the decision making in the innovation project. The collected data is analyzed in a two-step analysis. Firstly, the data about the decision making and the innovation performance is analyzed in a within case analysis, which concerns the separately analysis of the innovation projects. Secondly, a cross case analysis is conducted to compare the three cases on the decision making and the innovation performance. Also the effect of the decision making on the innovation performance is analyzed in the cross case analysis. Conclusion All three innovation projects are described as successful innovation projects, although the projects score differently on the four dimensions of innovation performance. Based on the definition of ‘innovation’ in this research, the measurement market performance is chosen to compare the innovation projects on their success. This measurement measures the success of the implementation and the diffusion of the innovation. Based on this performance measurement the innovation project iQwoning® is determined as the most successful innovation of the three, followed by the innovation project ModuPark®. The innovation project Duurzaam Speelbad is the last in row; however, this innovation is in the middle of its diffusion and adoption process. In the three innovation projects four types of decisions are distinguished: organizations decisions, operations decisions, product decisions and marketing decisions. The organizations decisions are made in all four phases of the innovation process, although the most decisions of this type are made in the internal-oriented phases ‘idea generation and selection’ and ‘development and testing’. Operations decisions are also mainly made in these two phases, although some decisions of this type are also made during the pilot project. Decisions about the product are made in the phases ‘idea generation and selection’, ‘development and testing’ and ‘implementation and diffusion’. Marketing decisions are mainly made in the external-oriented phases: ‘pilot project’ and ‘implementation and diffusion’. Three game types are distinguished in the innovation projects that are studied: strategic games, extensive games with imperfect information and coalitional games. Strategic games are not played in the first phase, but this game type is played in the other three phases. The other two game types are observed in all four phases of the innovation process. An explanation that these two game types are present in all phases is that in most of the cases an extensive game with imperfect information is followed by a game of the same type or a coalitional game, or the other way around. The effect of the decision making on the innovation performance is descriptive determined. If the most successful innovation projects are perceived based on its characteristics differences are noticed regarding the distribution of decisions and the games that are played. In the technology-push innovation project iQwoning® a large percentage of operations decisions are determined, while in the market-pull innovation project ModuPark® the product decisions represent the largest share of the decisions. With respect to the games that are played in the two innovation projects there is a difference between the number of decision makers in the decision-making processes. In the innovation project iQwoning® in most of the decision-making process multiple decision makers are involved, while in the project ModuPark® a third of the decisions is made by a single decision maker.
Item Type:Essay (Master)
Clients:
Ballast Nedam
Faculty:ET: Engineering Technology
Subject:85 business administration, organizational science
Programme:Construction Management and Engineering MSc (60337)
Link to this item:http://purl.utwente.nl/essays/62116
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