The Effect of Global and National Value Chains on Environmental Innovation and Research and Development: An Analysis of Ibovespa Companies.
| Autor | Ferreira, Lucas Benedito Gomes Rocha |
1 Introduction
Research on value chain and innovation topics is developed from different perspectives and may include supplier selection processes and control mechanisms (Lou et al., 2022). It is also noteworthy that some innovation efforts allow for the achievement of environmental sustainability and minimization of negative societal impacts (Munten et al., 2021). These themes consider seminal studies from the 1990s, which dealt with these issues by discussing how innovation occurred (De Toni et al.,1998) and how more integrated management of the value chain could promote more innovations (De Meyer, 1998).
Value chain and innovation are constructs linked to performance. De Meyer (1998) recommended that European industries form partnerships with customers and suppliers to become more competitive in the industrial environment. We note that, more than twenty years later, this idea of linking the value chain and innovation to performance persists (Chen et al., 2020). But for a company to remain competitive in the market, it needs to be aware of the opportunities available for innovation (Theyel, 2013). Thus, managing innovations is relevant for an organization's survival, whether for a significant improvement or creating a new product or process (Baskaran & Mehta, 2016).
On the one hand, the value chain is related to innovation (Chen et al., 2020). On the other hand, it is connected to inter-organizational relations (IORs) (Sedita et al., 2021). IORs are fundamental for companies' financial performance since they provide resources in a complementary way, effectively increasing their business competitiveness (Palmatier et al., 2007). IORs also expand the firm's technological capabilities and offer the possibility of efficient knowledge transfer (Belussi et al., 2010). Sedita et al. (2021) presented an example of this transfer in the wine industry in northeastern Italy.
When researching value chain and innovation through the theoretical lens of open innovation, Ambos et al. (2021) mentioned that these two variables propose an idea of creating and applying some novelty at any stage of the value chain, such as changes in the offer or design of new products or services. In the same understanding, according to Buciuni and Pisano (2021), the innovation capabilities of leading companies and the product innovation cycle are directly linked by the specific structure of the value chain in which they operate.
However, when analyzing the exchange of resources between companies, this can be expanded or restricted, even if the chain is within the same territory (Sedita et al., 2021). Discussing how companies can benefit from participating in IORs according to regional configurations has yielded the literature on the global value chain (GVC) (Humphrey et al., 2020). In this sense, the knowledge dissemination that can lead to innovation does not occur uniformly since it depends on the exchanged knowledge (Sedita et al., 2021) and on the process of regional configuration of the value chain (Humphrey et al., 2020).
Although IORs are recognized as positive for organizations, research on the subject cannot determine the difference in the impact on innovation of a company that is limited to maintaining national supplier-customer relationships (national value chain--NVC), from one that, in addition to this local connection, also holds IORs with companies from other countries (GVC). Thus, by considering the regional dimensions in the value chain classification, this study seeks to answer the following research question: what is the effect of global and national value chains on environmental innovation and research and development (R&D)?
This study selects Brazilian companies listed on the Ibovespa to answer this question. We chose the Ibovespa index because it reflects the portfolio of assets listed on the Brasil, Bolsa, Balcao stock exchange, which is the most representative of the Brazilian stock market. To achieve the objective, we operationalized a multiple linear regression. As the originality of this study consists in considering the regional dimensions in classifying the value chain, we illustrated the existing relationships between the Ibovespa companies in the NVC.
This research contributes by systematically pointing out the difference in the impact on innovation of a company that is limited to maintaining supplier-customer relationships in the same country (NVC) compared to one that, in addition to these local connections, maintains relationships with companies from other countries (GVC). The second contribution is to highlight the positive relationship between global and national value chains and innovation capacity. Lastly, the study advances the IOR literature by highlighting evidence on the range and effects of open innovation practices and opportunities in different value chain scenarios.
The structure of this study consists of five sections. The first comprises this introduction, while the second presents the literature review where we discuss the value chain and innovation topics. The third section shows the methodological structure used for constructing this research. The data analysis and discussion of the findings feature in the fourth section. In the last section, we present the study conclusions along with limitations and proposals for future research.
2 Literature review and hypothesis development
We can understand innovation as the implementation of a new or improved product or process (Organisation for Economic Cooperation and Development, 2018), which is a reduction of the concept presented by Schumpeter (1934), who defined it as the creation of new services or raw materials, markets, and organizations. The definition provided by Knox (2002) sees innovation as the generation of value since the author defines it as a unique way of delivering better value or quality.
The literature also discusses open innovation in line with the traditional innovation concept. Chesbrough (2003) conceptualizes open innovation as a process that crosses the company's boundaries. Therefore, this concept reveals that companies rely on their internal innovation capabilities and use several external actors and resources to advance their innovation process or access new markets (Chabbouh & Boujelbene, 2020). Open innovation contributes to reconfiguring business models and establishing IORs to generate innovation among the partners distributed along the supply chain (Caetano & Amaral, 2011).
Thus, open innovation has become an increasingly relevant instrument for managing innovation (Torchia & Calabro, 2019). This relevance is related to its metric with three dimensions: (i) the inbound dimension that aims to internalize external resources to innovate; (ii) the outbound dimension, which is related to practices that aim to externalize the company's internal resources to open up new markets; and (iii) the coupling dimension that combines inbound and outbound practices (Chabbouh & Boujelbene, 2020). Hence, open innovation leads to a change in the management paradigm (Bogers et al., 2018) and, consequently, to improvements in companies' innovative efforts.
Moreover, other studies have shown a positive link between open innovation and the R&D process (Belussi et al., 2010; Paula & Silva, 2018; Chabbouh & Boujelbene, 2020). These studies show that, by allowing the use of an external knowledge network, organizations absorb new knowledge from this environment, attracting partners and exploring opportunities for collaboration.
Open innovation practices allow benefits that stimulate connectivity, reputation, and awareness of innovation opportunities in companies (Theyel, 2013). This greater stimulus for innovation and higher R&D investments are also associated with the ability of organizations to promote environmental innovation (Scarpellini et al., 2018; Varyash et al., 2020). Some studies are analyzing managers' concerns with eco-innovation, as it reflects on an organization's ability to reduce costs and environmental charges and thereby create market opportunities (Carrion-Flores & Innes, 2010; Sahin et al., 2021).
The relationship between the value chain and innovation proposes creating and applying some novelty at any stage of this chain (Ambos et al., 2021), which can thus connect to changes in the supply or design of new products or services. In this context, the innovation capacity of companies directly links to the structure of the value chain in which they operate (Buciuni & Pisano, 2021).
According to the findings of Shang et al. (2022), many companies, mainly in the coal-fired power generation sector, are finding solutions for their processes through environmental innovation, where, in addition to reducing emissions, they can reduce production costs. In this context, the scale of environmental and social challenges faced by the world requires large and small companies to develop sustainable innovative solutions that are economically, environmentally, and socially viable (Dasgupta, 2021).
Environmental innovation or eco-innovation has collaborated in advancing competitiveness in the market, promoting the sustainability of the company and the environment in which it operates, and promoting a positive effect on the environment (Journeault, 2016). Thus, eco-innovations differ from other technological innovations mainly due to their relevant impact on clean production, regional development, and infrastructure (Aldieri et al., 2019).
In the context of organizations, it is necessary to resort to studies that deal with cooperation between companies that work with similar objectives to achieve a greater volume of innovation, as well as better organizational performance (Groot & Merchant, 2000). One way to raise these indicators is for organizations to carry out IORs, thus enabling cost reductions, higher support in human resources, and access to new markets in search of opportunities and technological resources (Chenhall, 2003).
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