Technological innovation capability, knowledge sourcing and collaborative innovation in Gulf Cooperation Council countries.

Author:Tseng, Chun-Yao

Innovation is defined as the creation of new knowledge and ideas to facilitate business outcomes, processes and structures and creates new products and services (Du Plessis, 2007). Technological innovation refers to be a kind of improvements and modifications of existing technologies, and creating of new technologies. It is driven by the creation of knowledge and knowledge creation is perceived as one of major assets (Pei, 2008). Through creating and using knowledge effectively, an organization is able to innovate faster and more successfully (Cavusgil, Calantone, & Zhao, 2003). Innovation management allows organizations to respond to an external or internal opportunity, and use its creative efforts to introduce new ideas, processes or products (Kelly & Kranzburg, 1978). Innovation is not only inertial, but also is influenced by external might be collaborations and knowledge spillover effect, therefore connecting with other countries, different industries or inter-firms is important for a firm to enhance performance (Dodgson, Mathews, & Kastelle, 2006).

Literature of innovation management is also broadly divided by the emphasis on the importance of exploiting internal knowledge which has been existed in the organization and exploring external knowledge which is acquired from outside the organization to precede innovation. Lichtenthaler (2011) has indicated prior studies have focused on intra-firm innovation, external knowledge acquisition has been neglected. The importance of external sources of knowledge for innovation has been increasingly highlighted in the theories of organizational learning, open innovation and knowledge spillover (Branstetter, 2006; Cefis & Marsili, 2005; Chesbrough, 2006; Leiponen & Helfat, 2011; Ronde & Hussler, 2005). Many scholars have acknowledged the possible important impact of knowledge externalities on the innovation processes (Arrow, 1962; Scherer, 1982). This study focuses on investigating the effect of external knowledge sources on technological innovation capability.

Knowledge associates organizational resources and generates new ones, including new products, services, technologies, or managerial systems (Bell, 1973; Machlup, 1980); this ensures that organizations would have competitive sources for creating wealth and sustaining growth continually (Pei, 2008). Competitive advantage in the knowledge economy is largely dependent on innovation, where external collaboration often leads to innovation. External knowledge sources brought about by collaborative innovation, as complementary resources, have proven to be helpful for enhancing innovation performance in high-technological industry (Cassiman & Veugelers, 2006; de Man & Duysters, 2005). A review of collaborative innovation literature demonstrates there is a positive and significant relationship between collaborative innovation and innovation performance (Mohamed & Rickards, 1996). In order for the outcome of collaborative innovation to be as expected without being exploited by the collaborative partners, the problem of 'collaborating with whom' is a critical issue to investigate (Faria, Lima, & Santos, 2010). Types of collaborative innovation could be distinguished as intra-national collaborative innovation and international collaborative innovation.

To enhance economies of Arab states and promote to unity within Arab states, a political and economic union of the Arab states bordering the Persian Gulf and located on or near the Arabian Peninsula (Gulf Cooperation Council--GCC) has been established. GCC is a newly developed economic region in the world, being established by six countries in 1981, including the United Arab Emirates, Kingdom of Bahrain, Kingdom of Saudi Arabia, Sultanate of Oman, State of Qatar and Kuwait. Oil or gas were not always reliable sources of wealth, especially while energy prices were falling, GCC budgets were in deficit with their debt increasing. Therefore, GCC countries have attempted to diversify their competencies away from oil and have been investing in education, research and innovation (Schwab, 2011). GCC countries have devoted themselves to becoming an innovation hub in a global environment to meet the demands of increasing globalization. According to the rankings of The Global Competitiveness Report 2011-2012 (Schwab, 2011), which is a valuable benchmarking tool to facilitate public-private dialog, whereby policymakers, business leaders and other stakeholders can evaluate progress on a continual basis, INSEAD and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations), the six main GCC countries have great innovation potential and superior ranking scope, with Qatar 14th, Saudi Arabia 17th, United Arab Emirates 27th, Oman 32nd, Kuwait 34th and Bahrain 37th.

The economic development of GCC countries has deeply depended on their plentiful natural resources, especially petroleum and gas. Nevertheless, natural resources endowment is not a sufficient basis for economic growth; it must be accompanied by investments in technological innovation. Firms should employ external ideas as well as internal ideas, and innovating with openness is the major path to capture internal and external knowledge, making contributions to the firm's competitiveness (Chesbrough, Vanhaverbeke, & West, 2006). Spaeth, Stuermer, and von Krogh (2010) advocated that firms not only benefit from existing internal knowledge or knowledge creation with other partners, but also take advantage of available external knowledge to improve competitiveness, such as licensing in intellectual property or integrating the knowledge of suppliers. GCC countries should seek knowledge that can facilitate technological innovation for sustainable development. Thus, it is important to understand technological innovation and knowledge sources in a nations economy. To keep pace with advanced countries, international collaborative innovation--which means that innovation is created with different countries--is a helpful way to enhance technological innovation capability for the newly developed countries. Consequently, this study conducts comprehensive research into technological innovation, knowledge sources and collaboration innovation in GCC countries. Specifically, the objectives of this study are to:

1) Investigate aggregative technological innovation capability in GCC countries as well as comparison of technological capability across six countries, and compare innovation strengths of GCC countries in different technological fields.

2) Demonstrate the knowledge sources of innovation in GCC; moreover, manifest the different taxonomies of knowledge sources and examine the effects of different knowledge sources on technological innovation capability in GCC based on the basic knowledge (BK) and applied knowledge (AK) model and technological distance mode.

3) Explore which types of collaborative innovation can enhance innovation performance and determine which countries are major partners of international collaborative innovation in GCC.

Technological innovation capability in GCC Several measurement indicators of technological innovation have been proposed (Griliches, 1979; Pakes and Griliches, 1984), including R&D, patents and new products. This study chooses patents as a major measure to elucidate technological innovation in accordance with previous studies for the following reasons (Ernst, 2001; Tseng, 2009a). First, patent data are easily accessible via the database, and are not subject to problems of imprecise definition and lack of comparability between firms that beset R&D data. Second, patent data are accurately recorded and easily manipulated for more detailed analysis by technological field, patent inventors and assignees. Third, patents are an objective measure of technological innovation, since patents are examined and eventually granted by a single national patent office. Fourth, in comparison with other sources, patents are often the only timely measure of rapid technological change, particularly in the context of global competition. Finally, a patent is usually built on the basis of previous patents. Patent analysis is helpful to clarify the cross relationship among different patents.

The patent data set used in this study consists of all patents granted by the US Patents and Trademark Office (USPTO) and European Patent Office (EPO) to inventors residing in six GCC countries from 1976 to 2010. This section is organized as follows. First, this study investigates technological innovation capability of GCC countries from 1976 to 2010. Finally, innovation strengths of six countries in different technological fields are compared.


Technological innovation capability of GCC countries

Patents actual granted are assigned a higher value than mere patent applications because patents are only granted when they contain technological innovations which exceed a certain level of newness (Sherry & Teece, 2004). This study uses granted patent count to measure technological innovation capability. Figure 1 displays annual patent count of GCC from USPTO and EPO during 1976-2010. GCC had less patents before the 1995 year. GCC had increased incrementally over time after 2001, peaking in 2010 in both USPTO and EPO. Generally, GCC granted patents from USPTO more than from EPO, and the patents from USPTO were nearly two times those from EPO in 2010. The patent...

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