Innovation Performance of Selected Cases

As discussed in section 2.8, the combination of qualitative and quantitative measurements represents the most appropriate method to assess a firm’s innovation performance. Specifically, this section will present the quantitative results first and then the qualitative results to support the findings of the quantitative methods. Quantitative Measurement Results

The number of patents and new products introduced as well as the number of new markets entered are the widely recognised indices for innovation performance. Therefore, this research will focus on the data of these three indexes.

Table 5.1: Quantitative Measurement

Company JV3 JV1 JV2 ICM[4]

No. of Patent Files Registered[1]

147 6 25 15928

No. of New Products[2] _{14 1 0 28}

No. of New Market[3] _{0 1 0 2}

[1]: The numbers shown are the number of patents that are registered in the Patent Search and Analysis of SIPO (PSS, a government department), available online at http://www.pss-system.gov.cn/. [2]: The numbers shown are the total new car models that are ever introduced independently by the company (joint venture companies). [3]: ICM entered the hybrid car market and fully electrical car market, while JV1 entered the hybrid car market. [4]: ICM focuses on more than one business area, and the numbers in the table only reflect the patents relevant to the automotive industry.

As the table shows, ICM’s number of patent files is considerably greater than any of the three joint venture companies. Despite this, JV3 has seemingly shown better performance in making inventions than the other two joint venture companies. The numbers of patents for JV1 and JV2 are fairly limited compared to the other two companies. Additionally, JV1 only introduced one new product since the establishment of the joint venture company in 2003, whereas JV2 has achieved none

despite being established in 2005. ICM has totally developed 28 independent car models, whereas JV3 has managed half of ICM’s performance. Yet, ICM’s newly introduced products include hybrid vehicles and fully electrical vehicles, whereas the new products introduced by JV3 only covers conventional engine cars. It should be also highlighted that the only new product developed by JV1 is a hybrid vehicle, yet it is reported to be predominantly based only on the effort of the foreign partner (JV1F), which will be presented and discussed later in JV1’s data analysis section. Therefore, as a conclusion, the quantitative data seems to suggest that ICM’s innovation performance is far superior than the three IJV companies. Nevertheless, this research recognises that not all the innovation results are actually registered in the PSS (patent department of the Chinese government). The number of patents can indicate the innovativeness of a company, yet it does not truly reflect all the innovation performance a firm. Therefore, this research also considers the qualitative measures of innovation performance as it can supplement and verify the conclusions drawn from the quantitative measures. This will be presented in the following section.

Qualitative Measurement Results

First, in looking at ICM’s automotive technological development, most of the existing research tends to use words such as ‘leapfrogging’ or ‘leaping forward’ to describe the rapid technological development and innovation capacity of ICM, especially the hybrid vehicle development. ICM is currently recognised as a world-class innovator due to its innovation and technological capability, especially in new energy vehicles (NEVs). In fact, it was recognised as one of the top 10 most innovative firms in 2010. Its innovativeness is also commented on by an independent industrial expert, who was interviewed for this research and coded interviewee IIE2 (Table 5.2):

‘ICM’s innovation ability is widely recognised by the people in the industry. For example, China’s first wet multi-plate dual clutch transmission, the highly efficient hybrid power trim system. Company X (A highly technological capable European automotive company, company name hidden for ethical reasons) came to form a R&D collaboration with ICM.’

ICM’s innovation results include the development of new technology and products. This can explain the large number of patents. In contrast, the innovation performance of JV3 can be seen as both incremental innovation and architectural innovations. Other than the incremental changes made to JV3F’s existing model, JV3 has totally introduced 14 new car models based on existing technology and components of JV3F. It seems that JV3 mainly considers the development of new products as the achievements of the R&D and innovation activities. In fact, the evolution of the JV3F models in China greatly differs from that in Europe as Figure 5.1 below demonstrates. Figure 5.1: Comparison of Evolution Trees

Notes: Model names hidden for ethical reasons.

JV3 develops new products that evolve from the previous generation of car models. The important contributors of such a special evolution tree can include the understandings of local customer’s needs and the technology of JV3F. The development of new products based on the re-combination of existing technology is classified as architectural innovation, which delivers more value than incremental changes to existing products. Lastly, there only seem to be incremental innovation results that are achieved by both JV1 and JV2. For example, the locally produced JV1F Model X (model name hidden for ethical reasons) is made with a longer wheel base as having additional space in the back seats is one of the major considerations of Chinese consumers. These locally produced models are also made with different interior and exterior designs to suit the local consumers’ tastes. Other than the incremental changes, there is no other evidence to suggest innovation results that involve technological development, especially at a radical level.

To conclude, both qualitative and quantitative measurement results show that ICM has indeed delivered far superior innovation performance, especially in terms of technological innovation. Though JV3 has achieved better innovation performance due to the delivery of architectural innovation results, the innovation performance of three IJV cases, compared to the ICM case, are limited. This is especially true considering the innovation results of these three IJV case does not concern the improvement of existing technology or introduction to new technology. Therefore, from the perspective of innovation performance, the IJV cases and the case of ICM are polar-type in nature.