Novelty and scope of process innovation: The role of related and unrelated manufacturing experience

Abstract

The accumulation of experience that occurs with production is likely to impact an organization's ability to develop manufacturing process innovations. However, how different types of manufacturing experience relate to the characteristics of an organization's process innovation output is an open question. In this study, we investigate how a firm's accumulated related and unrelated manufacturing experiences are associated with this firm's ability to innovate its production methods. To characterize firms' process innovation output, we observe their portfolios of patented manufacturing inventions, which we qualitatively evaluate over time, through a unique collaboration with expert patent attorneys, along two critical dimensions: novelty and scope. We argue that related manufacturing experience leads to a better understanding of parts of the focal product's technological landscape that will allow the development of inventions of broader scope. However, it may also contribute to inertia in that it might restrict the firm's innovative activity to more familiar regions of the landscape, thereby limiting inventions' novelty. Conversely, manufacturing experience with products that are unrelated to the focal product is expected to stimulate and support a broader search that includes more distant regions of the focal product's technological landscape, which would lead to more novel manufacturing inventions. Yet, the application of this unrelated experience to the production of the focal product is likely to require additional exploratory effort in a not-well-understood region of the focal product's landscape, likely resulting in inventions of limited scope. In line with our hypotheses, we find that related (unrelated) manufacturing experience is positively (negatively) associated with inventions' scope, and negatively (positively) associated with inventions' novelty. In addition to supporting the relevance of a multidimensional evaluation of innovations, our findings provide practical guidance regarding the strategic implications of a firm's knowledge management.