BIS/221 Strategy and Positioning Analysis Part 1

Journal of Business Research 65 (2012) 198–206

Contents lists available at ScienceDirect

Journal of Business Research

From new-product development to commercialization through networks

Leena Aarikka-Stenroos ⁎, Birgitta Sandberg 1

Department of Marketing, Turku School of Economics, University of Turku, 20014 University of Turku, Finland

⁎ Corresponding author. Tel. +358 2 3339 229; fax: E-mail addresses: [email protected] (L. A

[email protected] (B. Sandberg). 1 Tel.: +3582 3339 230; fax: +3582 3338 900.

0148-2963/$ – see front matter © 2011 Elsevier Inc. Al doi:10.1016/j.jbusres.2011.05.023

a b s t r a c t

a r t i c l e i n f o

Article history: Received 1 July 2009 Received in revised form 1 September 2009 Accepted 1 November 2009

Keywords: Innovation networks Commercialization Launch Case study Network change Network competence

The research on research and development (R&D) networks is plentiful but network relations in commercialization of innovations attract surprisingly little attention. This study analyzes how firms combine resources and utilize their relations in order to ensure the success of their innovations. The theoretical basis combines literature on innovation, industrial networks, and innovation networks. The study includes two cases on commercialization networks. The results indicate that an innovating firm needs resources to engage in customer education, distribution, marketing communication, relationship mediation, and credibility building when moving from R&D tasks to commercialization tasks. To acquire these resources, the firm needs to experience changes in network relations. Accordingly, the innovating firm needs particular commercialization competence in terms of accessing, mobilizing, and organizing relational resources.

+358 2 3338 900. arikka-Stenroos),

l rights reserved.

© 2011 Elsevier Inc. All rights reserved.

1. Introduction

The tendency to develop innovations within research and develop- ment (R&D) networks is becoming stronger because of high costs and technological complexity (Biemans, 1991; Ritter & Gemünden, 2003). Diverse network actors such as customers, distributors, research institutions, and competitors can contribute to innovation development (Ritter, 1999; Ritter & Gemünden, 2003). The research on innovation networks concentrates mainly on resource combina- tions for product development (Ritter & Gemünden, 2003) and emphasizes how to get the technology ready for the market (Story, Hart, & O'Malley, 2009). Nevertheless, firms also need to mobilize the relational resources within their networks to ensure that the market accepts the product. Successful commercialization is crucial in transforming invention into innovation (Schumpeter, 1934). Even though a few studies of innovation network mention commercializa- tion or launch (Heikkinen, Mainela, Still, & Tähtinen, 2007; Millson & Wilemon, 2008; Partanen, Möller, Westerlund, Rajala, & Rajala, 2008), they do not focus on commercialization networks. Some research investigates how users and stakeholders can contribute to innovation diffusion (Troshani & Doolin, 2007) and launch (Biemans, 1991; Harrison & Waluszewski, 2008) but does not emphasize the network approach to commercialization in-depth. Hence, the purpose of this paper is to analyze network relations, actors, and resource require- ments for the commercialization of innovations.

The innovation process includes both development and marketing activities that may overlap. According to the linear view, the process begins with an idea, proceeds with product development, and ends when the product actually creates wealth, whereas an increasingly popular non-linear approach emphasizes interaction with partners on product development and marketing/commercialization activities (Pellikka & Virtanen, 2009). The term commercialization refers to the development of the product concept, its successful launch, and interaction with potential buyers (Jolly, 1997; Pellikka & Virtanen, 2009).

Bringing a new product to market requires new activities and resources related to the creation of demand, markets, and delivery channels (Harrison & Waluszewski, 2008; Woodside & Biemans, 2005), creating critical new challenges for innovating firms (Easingwood & Koustelos, 2000; Urban & Hauser, 1993). Firms that are technology- oriented and concentrate on product development tend to face problems in the acquisition of marketing resources, in communi- cating effectively with end-users, in building national and interna- tional distribution channels, and in accessing market and customer information (Harrison & Waluszewski, 2008; Pellikka & Virtanen, 2009). Additionally, customers and other actors in the business environment tend to resist new products (Christensen, 1997; Harrison & Waluszewski, 2008). Nevertheless, successful diffusion requires adoption among users, complementors, and intermediaries (Woodside & Biemans, 2005).

The basic premise of this study is that the resources of a single company are rarely sufficient to cover the commercialization of a new product, and therefore resource interaction with other actors in commercialization is crucial. The resources of diverse network actors facilitate not only the generation but also the commercialization of

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innovations. Customers and other actors external to the firm may have a role in commercialization by identifying potential users, demonstrating how the product works, assessing its market potential, and evaluating the extent to which it meets user needs (Biemans, 1991; Harrison & Waluszewski, 2008).

Small firms in particular may lack financial and competence resources and the legitimacy that enables them to reach potential customers. Additionally, innovating firms may create future demand and new markets by integrating their complementary resources, products, and channel relationships through networking (Möller & Rajala, 2007). In offering access to the resources of other firms (Håkansson & Snehota, 1995), network relations could provide manifold complementary resources for commercialization and thereby support diffusion and adoption of new products.

The emphasis in this study is on the role of network relations in both R&D and, specifically, commercialization activities. Because the innovating firm requires different resources for commercialization than for R&D, it needs to renew its existing relations or create completely new ones. Hence the first research question is: What kinds of actors and resources are able to contribute to commercialization activities, and how do the changing resource requirements change network relations?

Certain periods and events induce particular changes in networks (Håkansson & Snehota, 1995; Halinen, Salmi, & Havila, 1999). The commencement of commercialization activities presumably leads to changes in resource requirements and thus changes in network relations. However, knowledge about change in innovation networks is still deficient, and empirical studies are few in number (Heikkinen et al., 2007).

Network competence is essential in the R&D phase (Ritter, 1999; Ritter & Gemünden, 2003), but also in commercialization, firms need the ability to access and mobilize the necessary relational resources (Story et al., 2009). Commercialization, particularly, sets up substantial challenges in managing network relations. For example, Heikkinen et al. (2007) show how a new-product-development network disintegrated during the commercialization phase because of actors' diverging goals. The second research question is thus: What kinds of network competence facilitate the management of resources during commercialization?

This paper aims to enhance the theoretical understanding of the network approach to commercialization by identifying the necessary resources and actors, providing descriptions of network change during the innovation process and analyzing network competence in managing relations related to commercialization activities. A commercialization network refers to a group of actors involved formally or informally in the commercialization of an innovation. The literature suggests manifold definitions of the term innovation (Garcia & Calantone, 2002). This study concentrates on product innovations, and employs the term innovation to mean a successfully developed and launched new or improved product (Trott, 2002).

The structure of the article is as follows. The next section focuses on commercialization activities and resources, changes in network relations, and the management of relations. The subsequent empirical study describes two cases of innovation commercialization. A case analysis and discussion about network relations in commercialization follow. The final section discusses the theoretical conclusions, the potential contributions, and the managerial implications.

2. Moving toward networks for commercialization

2.1. Commercialization activities and the necessary resources

New activities emerge when a firm begins commercialization of an innovation. The imperative is no longer to combine resources in order to create a new product, but to overcome the resistance of end-users, intermediaries, and complementaries, and to share knowledge about

the benefits and potential use (Harrison & Waluszewski, 2008; Woodside & Biemans, 2005). The firm needs to focus on marketing activities such as demonstrations of the product, advertising, brand development, promotional events, and organizing distribution (Biemans, 1991; Harrison & Waluszewski, 2008; Partanen et al., 2008).

The necessary resources and activities depend on the features of the innovation including its complexity, trialability, relative advan- tage, observability, and compatibility (Rogers, 1983). Ease of use of the innovation facilitates its diffusion and speeds-up its adoption. Running trials reduces customer uncertainty and reinforces positive attitudes, and thus eases adoption (Robertson, 1971). Customers evaluate the relative advantage and therefore need to be convinced about the potential benefits (Rogers, 1983). The more observable such benefits are and the more compatible the innovation is with existing values, experiences, and needs, the faster the adoption tends to be. Hence, awareness-building, customer education and trial opportuni- ties improve innovation success (Easingwood & Koustelos, 2000; Eng & Quaia, 2009). Communicative activities, such as synergetic marketing communication and supporting brands (Chen, Shen, & Chiu, 2007), and word-of-mouth communication (Hoeffler, 2003), weaken resistance toward adoption. Intermediaries, whose resistance can negatively affect commercial success, need educating and convincing of the value of the innovation for their customers (Parthasarathy, Sohi, & Hampton, 1994; Woodside & Biemans, 2005).

Diverse actors provide resources for commercialization. Actors in R&D networks may include competitors, distributors, buyers, consul- tants, suppliers, research institutes and universities, government agencies, and industry associations (Biemans, 1991; Möller, Rajala, & Svahn, 2005; Ritter & Gemünden, 2003). Presumably, commerciali- zation networks also comprise similar organizational and personal actors. Vertically related actors provide distribution resources, and horizontally or diagonally related competitors or partners beyond the traditional supply chain facilitate bringing innovations to market by pushing/pulling the new product through or creating new markets (Möller & Rajala, 2007; Story et al., 2009). Intermediaries are crucial in the case of consumer products because they make the product available to users (Parthasarathy et al., 1994; Woodside & Biemans, 2005).

Public organizations and educational institutions may support diffusion by articulating optimistic visions of the use of the innovation in society, but due to a lack of power they often take a wait-and-see stance (Troshani & Doolin, 2007). Users contribute by demonstrating the use of products and acting as references (Biemans, 1991; Harrison & Waluszewski, 2008). Local municipalities and universities establish trust and expertise and foster relations with political authorities that could facilitate the development of new business (Möller & Svahn, 2009; Partanen et al., 2008). New ventures in particular need high-profile partners in order to establish credibility (Zott & Huy, 2007), given that the credibility of reputable companies tends to spread to their partners (Anderson, Håkansson, & Johanson, 1994).

The literature on adoption and diffusion highlights the role of individuals in innovation success. For example, lead users, mavens, expert opinion leaders and hub persons impact on opinion formation/ change and thus accelerate or block the adoption of the product (Goldenberg, Han, Lehmann, & Hong, 2009; Harrison & Waluszewski, 2008; Woodside & Biemans, 2005). Such key persons provide publicity, give advice and function as lead-teachers, demonstrate the new product, and explain its unique benefits over what is currently available (Harrison & Waluszewski, 2008; Woodside & Biemans, 2005).

In summary, commercialization requires resources such as techni- cal competence, experience of the industry, customer and market knowledge, the ability to identify the optimal functionality of the product, communication, distribution, and close relationships with key actors. Interconnectedness among actors provides indirect relationships through direct relations, considerably increasing the resources available and producing access effects (Håkansson & Snehota, 1995; Ritter, 2000). The actors and their resources contribute

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to the main commercialization activities, which are trust creation, credibility establishment, awareness building, customer education, distribution, trial opportunities, and provision of complementary offerings. Changes in activities and resource requirements lead to network change in the move from R&D to commercialization. This change is the subject of the next section.

2.2. Changes in network relations

Diverse situations and events trigger changes in network relations. Such changes may originate from internal and endogenous factors (e.g., when the firm learns how to utilize new combinations of resources in relationships) or exogenous factors (e.g., economic or political changes in the business environment affect several network actors simultaneously) (Håkansson & Snehota, 1995; Halinen et al., 1999).

The change may be incremental, that is, the character of the relationship alters, or radical, as a relationship between two actors breaks down or a new actor initiates a new relationship (Halinen et al., 1999). Some periods may be particularly prone to radical change in individual dyads (Halinen et al., 1999), such as when resource requirements change at the commencement of commercialization.

The change that takes place in dyads could eventually spread to other relationships in the network. For example, an incremental dyadic change may lead to a radical network change if other actors consider it important, and may consequently provoke strong responses (Halinen et al., 1999). Thus, the changes reflect how the other actors discover, interpret and act on new connections through relationship develop- ment (Håkansson & Snehota, 1995).

Håkansson and Waluszewski (2002) discuss how path depen- dence restricts and facilitates changes in interaction in the network. Development and adaptation of technical solutions do not occur independently. At some point, new ways of combining actors, resources, and activities emerge on account of the multifaceted nature of resources and their various physical, social, and economic dimensions. Such new configurations provide both opportunities and challenges in terms of commercialization. Existing interaction

Resources needed to put a new idea into a physical and psychological entity

Network competence: Ability to • identify and involve

resources for R&D • manage the network for

technological development

Change in networ relations

Innovation p

Change in activitie and resource requirements

R&D network

Fig. 1. Moving from R&D to commercialization: changes in activitie

can assume new dimensions, or novel interaction may emerge from completely new resource combinations. However, creating new resource combinations requires the deformation of earlier conven- tions (Håkansson & Waluszewski, 2002).

2.3. The management of network relations for commercializing innovations

The literature on manageability of networks expresses two opposite views. According to the resource-based view, large firms are able to intentionally create and control the network, whereas the industrial marketing and purchasing (IMP) approach posits that business networks are not under the control of an individual firm but are within the sphere of influence of all actors through direct and indirect relationships (Håkansson & Snehota, 1995; Möller et al., 2005; Ritter, Wilkinson, & Johnston, 2004). This study rests on the premise that even if a network is not completely manageable, cooperation for commercialization requires coordination of relations. Innovating firms need network competence that is a company- specific ability to build relationships with important partners, or to identify new areas of cooperation in existing relationships so that they all complement each other and fit together (Ritter & Gemünden, 2003). Consequently, in order to succeed in commercialization, a firm needs the ability to access, mobilize, and organize relational resources. Fig. 1 illustrates how resource requirements change due to new commercialization activities. This causes change in network relations and requires commercialization competence.

A firm pursuing new relationships needs to identify potential partners, and to motivate them to integrate their resources by revealing the resources it has and indicating the potential benefits of collaboration (Ritter, 1999). Access to others' resources tends to be easier if antecedents of trust exist rather than being absent. Antecedents of trust include pre-existing social relations originating in R&D and other business relations, reputational knowledge (Jarillo, 1988; Larson, 1992; Partanen et al., 2008), and organizational achievements such as awards and references (Zott & Huy, 2007).

Motivating network actors to engage in commercialization might be challenginggiven that it is easier to avoid risks by being a follower rather

Commercialization network

k

Resources needed for trust creation, credibility establishment, awareness building, customer education, trial opportunities, distribution, and complementary offerings.

Network competence: Ability to • access resources for the

commercialization through social relations and trust building

• mobilize resources for the commercialization through motivating and providing resource trade-offs

• organize resources for the commercialization and accommodate interconnectedness, reciprocity, and goal coherence

rocess

s

s, resource requirements, relations, and network competence.

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than an innovator. Engaging network actors in commercialization includes the question of who dares to be an innovative intermediary or user (cf., Harrison & Waluszewski, 2008; Parthasarathy et al., 1994). Several reasons can motivate actors to cooperate in the field of innovations. Actors may share mutual goals and collaborate for gaining negotiation power. Cooperation may also provide growth and profit, facilitate access to a new market, enhance reputation, or advance learning and idea generation. Some firms seek support from other actors because of the complexity of the product (Bullinger, Auernhammer, & Gomeringer, 2004; Harrison & Waluszewski, 2008; Ritter & Gemünden, 2003; Ritter et al., 2004). An innovating firm may possess a creative reputation or growth potential which may make it a particularly attractive partner (Partanen et al., 2008).

Advantages of networking may, however, turn into disadvantages for innovating firms. Among these disadvantages are coordination difficulties that result from increased capabilities and ideas, and generation of new competitors in newly created markets (Millson & Wilemon, 2008). If companies lack a common history—and therefore lack trust—collaboration on innovations is particularly challenging (Story et al., 2009). Trust building becomes pertinent when parties aim to avoid opportunism and competition. Trust emerges through choosing partners with similar values. Similarity in strategies, technologies, products, markets, or cultures facilitates knowledge transfer and predicts cooperation success (Dhanaraj & Parkhe, 2006; Jarillo, 1988). Problems easily arise when partners in the innovation process belong to different systems (Biemans, 1991). However, dissimilarity may also be a predictor of success: weak ties with dissimilar actors bring in new and different insights and innovation potential (Granovetter, 1973; Möller & Rajala, 2007).

Organizing and planning are also relevant in the management of relations for commercialization. Actors seeking new resource combi- nations in the context of commercializing a product should be able to generate ideas and focus on the best ones. However, if the concept is very new and vague it may be difficult to discuss the details of the cooperation clearly (Möller & Svahn, 2009). Highly centralized innovation networks usually have a hub firm orchestrating the interaction, but in the absence of a dominant player, the actors must agree upon the means of organizing the interaction. From the innovating firm's perspective, the management of interconnections among relationships involves planning, staffing, and controlling the network relations (Ritter, 1999; Ritter et al., 2004). On a more general level, organizing requires communication, compatible planning and decision making, and control and selection systems (Grandori & Soda, 1995). Apparently, reciprocity, trust, and coherence in goals are more important than formal agreements (Dhanaraj & Parkhe, 2006; Larson, 1992).

Nevertheless, enactments of power embedded in interaction create dependencies among networked actors whereby a more dependent firm often becomes a follower that adapts to the wishes of a more powerful firm. Consequently, a more powerful firm becomes highly effective in gaining network support for the operations this firm advocates for the network (Ritter et al., 2004).

Interconnectedness and network effects facilitate the use of resources within the network but also constrain further networking through lock-ins (Anderson et al., 1994; Håkansson & Snehota, 1995; Ritter & Gemünden, 2003); they bias change and further interaction. Actors aiming to commercialize innovations may thus find themselves locked into cooperating with each other and locked out of opportu- nities to cooperate with others.

3. Methods

This study on network relations in commercialization of in- novations follows a strategy that balances the inductive and deductive approaches. Dubois and Gadde (2002) support this kind of procedure and suggest modifying a framework derived from the literature with

empirical data, thereby allowing new insights to emerge. Case study research facilitates holistic understanding of complex phenomena that do not separate easily from their contexts (Halinen & Törnroos, 2005; Yin, 1989) and allows the researcher to focus on “understanding the dynamics present within single settings” (Eisenhardt, 1989, p. 534). Case study research maximizes the realism of the context at the expense of precision and generalizability (McGrath, 1982). The unit of analysis in this study is a network of organizations developing and commercializing a particular innovation. The cases are instrumental (Stake, 1995) and aim to enhance understanding about the utilization of network relations during commercialization. The study here incorporates two cases in order to allow rich description and comparison (Halinen & Törnroos, 2005; Miles & Huberman, 1994).

The case selection rested on literal replication logic (Yin, 1989), with the intention of finding two cases that were as similar as possible. However, given the complexity of the phenomenon, finding two cases that are directly comparable is next to impossible (Halinen & Törnroos, 2005). The cases concern the commercialization of Nordic Walkers (poles for fitness walking) and the Bone Health Exercise Monitor (a device for monitoring bone exercise). In both cases the context is the fitness industry, and Finnish firms developed the innovations for international consumer markets. The Nordic Walkers case originated in a previous research project that highlighted the importance of network relations throughout the innovation-development process. The researchers noticed the Bone Health Exercise Monitor later in a newspaper article when looking for a comparable case.

The study of network change is inherently longitudinal (Halinen & Törnroos, 2005), so this study relies mainly on several years' worth of retrospective data. The commercialization of Nordic Walkers dates back to early 1997, and the data collection took place in 2002–2009. The commercialization of Bone Health Exercise Monitor started in late 2005 and the data relate to 2007–2009.

The main data collection method was semi-structured interviewing, which provides the formality for analyzing complex phenomena, and allows the emergence of unexpected issues (Wengraf, 2001). The main questions were the same for all respondents, but there were separate questions on the specific roles of the respondent, and follow-up questions on the emergent issues. All interviews covered the following aspects: 1) the characteristics of the innovation; 2) the actors, activities, and resources involved in the R&D; 3) the actors, activities, and resources involved in the commercialization; 4) the nature of and reasons for the cooperation at different stages; and 5) the current state of the innovation.

The researchers found the key informants through newspaper articles and snowball sampling, and conducted ten face-to-face interviews (four in the Nordic Walkers case and six in the Bone Health Exercise Monitor case). The interviewees included CEOs, managing directors, directors, and project coordinators representing the firms and other organizations involved in the R&D and commercialization activities. Researchers did not gain access to those actors who rejected cooperation invitations, but the interviewees reasoned their possible motives for opting out of the collaboration.

Interviewees that take part in retrospective studies may have difficulties recalling events they did not recognize as important at the time of the original event. Data triangulation in the present study enhances the trustworthiness of the findings; numerous telephone discussions, email correspondence, and secondary data (118 news- paper articles and 81 Internet pages in the Nordic Walkers case, and 33 newspaper articles and 22 Internet pages in the Bone Health Exercise Monitor case) supplement the interview data.

The interviews lasted between one and two hours. The researchers recorded and transcribed them and crosschecked the data to eliminate possible errors. Data analysis involved two steps including within-case analysis and cross-case analysis (Eisenhardt, 1989; Miles & Huberman, 1994). In the within-case analysis, the researchers classified the data chronologically by listing the order of events and

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then identified critical incidents occurring during both R&D and commercialization. The subsequent interpretation phase involved the organization of the data into themes related to the theoretical framework: the key actors (their goals and characteristics), the resources, and activities involved in R&D and commercialization.

The analysis of network change involved drawing old and new networks and comparing them. The interviewees had the opportunity to review the case descriptions and to correct factual errors. The cross-case analysis allowed comparison of the similarities and differences between the cases in terms of the key actors, resources, and activities in both R&D and commercialization. The concepts from the theoretical framework facilitated characterization of the cases and their framing in terms of specific theoretical and contextual aspects (Ragin, 1992).

4. Cases

The following two cases illustrate how companies apply a network approach and combine resources in the commercialization of new products. The emphasis is on the focal actors, the change in resources and activities, and ways of managing commercialization relations.

4.1. Nordic Walkers

Network relations played a crucial role during commercialization of the Nordic Walkers poles by the Finnish firm. Exel specializes in designing, manufacturing, and marketing composite sports equip- ment and industrial applications. Its market share grew during the 1980s, but in the 1990s the market for cross-country skiing equipment began to decline. Global warming, the increasing amount of leisure time, and the growing numbers of senior citizens created new potential target groups and pushed idea generation towards the creation of special poles that everyone could use throughout the year in walking. In 1995 three actors ideated a new sport, Nordic Walking, and thus formed the R&D network. They were Exel, the Sports Institute of Finland (henceforth the Sports Institute), and the Central Association for Recreational Sports and Outdoor Activities (hence- forth the Central Association). The Sports Institute is a science-based center of education for leisure and sports activities that also develops and markets training, exercise, and educational services for sports instructors, top-level sports organizations, and the personnel of various firms. The Central Association is a non-profit organization that encourages people to take an interest in outdoor activities. The resources of the focal actors were complementary. Exel had pole- manufacturing know-how and a widely known sports brand, and could provide equipment for the new sport. The Central Association had knowledge of outdoor sports and the Sports Institute had sports- related scientific knowledge about different training methods. The sport innovation would benefit each of them, since despite their different backgrounds and business logics they shared the common goal to change end-user attitudes towards sport.

Following the development of the product and the concept during 1995–1997, Exel started its commercialization activities, but problems started to arise. The first production run was only a couple of thousand pairs, and it met resistance from the distributors. The trade did not believe in the product and the retailers were not keen to take it onto their shelves.

We introduced this to Finnish store executives saying that walking with poles could become something big, and how about if we start taking this further together. They practically laughed in our faces; they thought nobody would start walking with poles! (Senior Vice President, Exel)

The three actors realized the need to combine their resources for the commercialization of the product and concept to make the sport

attractive. Exel was the prime mover in the network. Strong social links, trust, and commitment already existed due to the R&D network which motivated the actors to co-promote the innovation.

The commercialization began in the fall of 1997 when the Central Association started to organize Pole Walking Nights and other mass events at which people had the opportunity to try the sport and to learn to use the poles. Exel provided walking poles for loan on these occasions. The biggest challenge was getting people to walk with poles. Building awareness was easier since the media eagerly showed people practicing “the new strange sport” and thus provided a massive amount of publicity. The actors started to actively employ their existing relations and to forge new ones with diverse actors such as national sports and health associations, experts, instructors, community fitness centers, and sports clubs, all of which expanded the commercialization network.

The actors took care of diverse commercialization tasks. All three core actors with the media, health associations, and doctors built awareness. Non-profit expert actors in particular generated trust and credibility since health associations (such as the Rheumatism Association) and doctors publicly highlighted the health benefits of the sport. The Sports Institute of Finland, the Central Association, and various sports associations offered trial opportunities and provided education. Complementary offerings started to emerge from sports- apparel manufacturers and fitness clubs. In addition, the actors decided to build a sports-instructor network. They started cooperation with sports and health associations in finding instructors, educating them about the new sport, and providing them with training material and poles, in which the Central Association played a pivotal role. The Sports Institute introduced the sport to its visitors. Lead-users became lead-teachers by giving instruction on the use of poles, communicating benefits, and consequently accelerating the diffusion of the innovation. This multidimensional expanding commercialization network finally brought about the new-product breakthrough:

They had people coming in their store going, “Have you got any Nordic walking poles?” and at first, many offered them hiking poles and the like, but it worked out pretty well when people started insisting that, “They have to be Exel Nordic Walkers”. And then the store managers started calling us that, “We've got some people here who want to buy those Nordic walking poles of yours, would you mind sending some, please.” (Senior Vice President, Exel)

Demand started to grow in winter 1997. Nordic Walkers achieved commercial success quickly, and Exel started to export them to almost 30 countries. Exel has used basically the same kind of tactics in each country.

4.2. Bone Health Exercise Monitor

Newtest is a small company specializing in the development and manufacture of human-performance-testing high-tech products. It invented the Newtest Bone Exercise Monitor, which is a small monitor with a patented accelerometer estimating whether the amount and quality of daily exercise are adequate to develop bone density. The R&D network consisted of Oulu University and the VTT Technical Research Centre of Finland. The idea behind the invention was to prevent osteoporosis, which is becoming a serious health threat, and thus it was fairly easy to arouse interest in the device. Nevertheless, commercialization was difficult in that Newtest had to create a new concept, “bone exercise for bone strengthening”:

There is a market out there! It's a challenge that the need remains unrecognized. We should create the demand for bone exercise and then break through with the monitor. But we don't have the money to do that. We'd need to have an extensive network to succeed. (CEO)

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The R&D network actors and their resources were not utilized in commercialization. Instead, Newtest started to build a commercial- ization network from scratch. It knew of the successful Nordic Walkers case and wanted to apply a similar type of networking. Newtest's potential customer in Japan also suggested testing the idea in Finland with a view to later replication in Japan. The basis for such networking seemed solid in that markets related to wellness and health are expanding, and the growing markets offer a large diversity of products and services.

In 2006 Newtest started a project in order to build a network that would create a market for products and services related to bone health. Through networking, firms could better raise awareness of the concept and create new synergistic offerings. Newtest recruited a project manager who started to look for actors from diverse industries associated with bone health.

In fact, the project had originally focused on bone exercise, but soon broadened to include bone health in general. This meant that food companies, for example, were suitable actors because milk products containing calcium contribute to bone health. The aim was to set up a multi-industry network and combine “electronics and the food industry,” as the CEO of Newtest noted. The CEO and the project manager contacted the market leaders in each bone-health-related industry, including providers of osteoporosis diagnosis equipment, private health clinics, sports and health associations, sports clubs, food manufacturers, pharmacy chains, pharmaceutical-industry actors such as manufacturers of calcium and vitamin D, and insurance companies. They also contacted non-profit organizations (e.g., national osteopo- rosis foundations) that could provide more credibility, as well as actors with established relations to doctors, trainers, and the media.

Given Newtest's objective to penetrate international markets, it strived to involve global firms in the network. Food company D, the global leader in fresh dairy products, was the first international company to show an interest, and this motivated others to make a commitment. However, company D withdrew from the negotiations later because its marketing goals concentrated on low-fat attributes of the products rather than on bone-health attributes, which reduced the synergy potential.

The plan was that awareness building about bone health would be the responsibility of the key actors and the media, together with the health associations and doctors, who would also generate trust and establish the credibility of the monitor. Pharmacies, sports-equipment retailers, department stores, and providers of equipment-rental and other complementary services (e.g., fitness clubs and health care) organized trial opportunities, and handled education and distribution. For example, an orthopedic hospital was willing to rent out equipment and to teach people how to use it.

Combining resources for commercializing the product and creating markets for bone health proved difficult because the idea was remarkably novel, and the initiator firm Newtest was small and relatively unknown. The contacted firms wanted to know who the other actors would be, and it became clear that it would be impossible to involve competitors in the collaboration. Thus, if an actor from a certain industry engaged in cooperation, there was no attempt to approach other companies within the same industry. The vague line between competition and cooperation inhibited networking in this case:

The main principle has been not to involve competitors in the network, but what actually is a competitor and where? It's difficult to define (CEO of one of the recruited firms).

Most of the contacted actors expressed their interest but were not willing to enter into formal cooperation. Even though these actors dealt with bone health, their target groups varied from teenagers to elderly people, which complicated potential common activities. Besides, only smaller-scale actors were interested. Some were only

looking for short-term paybacks and clear private trade-offs; they were not willing to commit to common strategic cooperation for bone-health promotion.

Some actors did understand the potential, however. For example, a device rental company was willing to engage in cooperation because it could utilize the market potential of the monitor by selling and renting it to customers. The company also proposed that other network members, such as a certain private health clinic, might be useful partners in the future.

Following negotiations, there was a meeting in March 2007 to formalize the cooperation as the Bone Health Association. The committed actors were Newtest, a provider of products and services related to medical testing, a distributor of health-care technologies, a private health-care service company, an insurance company, a provider of products and services related to prostheses and aids, a hospital specialized in treating fractures, a nutrient wholesaler, and the local municipality. Newtest was willing to give the leader role over to one of the big actors, but none of them wanted to take on more responsibility.

This new type of networking with blurred goals left the actors confused about their roles and how they should proceed. The opinions on future interaction and modes of organizing differed, and as an example, one informant expressed that the network should remain a small group of committed and socially interactive actors and the network should not pursue aggressive resource-recruitment strate- gies. As a consequence of dissents and unclear modes of cooperation, formal cooperation for bone health ceased. Newtest introduced its product to the market in 2005, and in spite of its recognized potential, the product launch was not particularly successful.

5. Discussion

In both cases, the innovating firm attempted to commercialize a completely new kind of product. Neither product was complex, but both called for new patterns of behavior and attitudes among prospective customers and business partners. Nordic Walkers represents an extreme case (cf., Parthasarathy et al., 1994) in that the intermediaries did not adopt the product and the innovating firm had to circumvent them in order to ensure the success of the innovation.

The cases illustrate how collaboration for commercialization can vary from pursuing strategic long-term goals to implementing marketing practices in the short term. The Nordic Walkers commer- cialization network was an extension of the R&D innovation network and the cooperation was strategic for all actors. The Bone Health Exercise Monitor commercialization network, on the other hand, was not an extension of the original R&D network, and rather resembled innovative networking for promoting new value (to enhance bone health), which was strategic only for some actors.

For Nordic Walkers, a variety of actors made a contribution to each of the commercialization tasks, and the dissimilarity of the actors and the multidimensional structure of the network facilitated the promotion. Awareness building was not, in fact, a problem in either case, as the media tended to be interested in innovations. Whereas expert opinion leaders and non-profit organizations would have made an important contribution in both cases, only Exel succeeded in integrating its resources with both profit and non-profit organizations.

The innovation seemed more credible when two kinds of opinion leaders—both medical doctors and actors in the sphere of sport, fitness and wellness such as trainers and health associations—convinced the customers of the benefits of the innovation. Opinion leaders and non- profit organizations also provided their divergent direct relations in order to reach new actors or end-users. In addition, key issues were equipment distribution and the availability of supporting comple- mentary offerings. Lead users grew into lead teachers via educating new users about the benefits and usage. Thus, the lead user-to-teacher

:rotinoMesicrexEhtlaeHenoB:sreklaWcidroN

Commercialization network

Commercialization network

R&D network

R&D network

Exel

Central Association…

Sports Institute of

Finland Media

Trainers Sports Associations

Doctors

Health Associations

Newtest

Oulu University Doctors

Health Associations

Trainers

VTT Technical Research Centre of Finland

Media

Distributors and

complementors

Distributors and

complementors

Fig. 2. The actors in the R&D and commercialization networks.

204 L. Aarikka-Stenroos, B. Sandberg / Journal of Business Research 65 (2012) 198–206

transformation played a major role for successful market entry for Nordic Walkers, but not for the Bone Health Exercise Monitor.

Fig. 2 depicts the actors and the changes in networks relations throughout the innovation process. Comparison of the two cases demonstrates how Exel benefited in commercialization from the established relations it forged during product development, and how it achieved a radical network change. Its interaction with R&D actors changed incrementally, but as all the involved actors forged new relations representing radical dyadic changes, the whole network changed radically. The utilization of established existing relations facilitated the transition from the R&D to the commercialization network which expanded as the need for new kinds of resources emerged. Thus, in the case of Nordic Walkers, the main actors were committed, they trusted each other, and they were willing to share relations while they all benefited from the success of the innovation. Newtest, on the other hand, aimed at radical network change through the integration of diverse, unfamiliar actors on the basis of a common value-creating issue. The company managed to form relations with some local actors with which it had prior social relations, but failed to do so with global actors, the most advantageous ones seeing no value in this new cross-industry networking. As new relations did not rest on previous organizational or social relations, and the benefits of cooperation were not clear, only a few radical dyadic changes emerged and no radical network change occurred. This illustrates how radical network change is easier to realize gradually, starting with incremental changes and proceeding towards more radical dyadic changes, rather than attempting discrete radical change.

The potential actors and resources were easy to identify, but difficult to motivate and mobilize on account of the diversity in strategic orientation, size, industry, and markets. In the Nordic Walkers case, the actors set out the common goal “to get people to exercise” and committed themselves to achieving it already during the R&D activities, which made it easier to mobilize the required resources for commercialization. For the Bone Health Exercise Monitor, the goal “to get people to take care of their bone heath” emerged during commercialization. Pursuing such a goal through cross-industry cooperation was too radical and blurred for most of the potential actors, as the statement from a municipal non-profit actor illustrates:

Is this trade policy, social policy, or public-health policy or what? It's like pioneering.

The results indicate that the more heterogeneous the actors and the more “path-dependence-cracking” new resource combinations

are, the more difficult it may be to prove the potential of resource interaction and trade-offs and to recognize the actors' own roles in the commercialization. The intended actors for the Bone Health Exercise Monitor varied in size and market (local SMEs vs. global enterprises), type (business vs. municipality), and industry (food, high-tech, and services). Such diversity offers not only opportunities but also management challenges. Large firms may be reluctant to form horizontal networks with smaller-scale actors that do not offer a clear resource trade-off, for example. Consequently, Newtest was on its own in attempting to identify and motivate more actors to create markets for bone-health offerings, and thereby, also in commercial- izing the monitor. The challenges in mobilizing and organizing resources for commercialization originate from diverging individual goals, uncertain resource trade-offs, lack of trust and the fear that cooperation will turn into competition, differences in strategic relevance, and disagreement about the organizing systems.

Table 1 summarizes the actors and resources involved in the two commercialization networks in question, the change in network relations, and the abilities required to manage relations constituting network competence.

6. Conclusions and implications

6.1. Theoretical contribution

This study enhances the understanding of how firms use network relations and combine resources in the commercialization of new products. The contribution of the study lies in the exploration of previously neglected commercialization networks within the innova- tion process, and in the analysis of the manifold actors and resources that contribute to the commercialization activities. Research on innovation networks focuses so far on R&D and only seldom refers explicitly to commercialization networks (e.g., Heikkinen et al., 2007; Möller & Svahn, 2009).

Commercializing a product appears to be more complicated than the literature depicts. This study shows how various actors with diverse resources execute crucial commercialization tasks and thereby reduce resistance to newness (see Fig. 3). In the ideal situation, the commercialization network is versatile, including both horizontal and vertical dimensions. It should combine the comple- mentary resources of non-profit organizations and of service and product providers from distinct but related industries. Therefore, the innovating firm needs to forge relations not only with users (Harrison & Waluszewski, 2008) but also with opinion leaders and lead partners, such as distributors and complementaries, who are able to

Table 1 The main findings on commercialization networks.

Nordic Walkers Bone Health Exercise Monitor

The commercialization network: actors, tasks, structure, and features Required actors and their tasks Sports and health-related business and non-profit actors providing

awareness, teaching and learning, benefit illustrations, events, and demonstrations

Diverse bone-health-related business actors providing marketing communication, branding, and information

The structure Horizontal, multidimensional network relations that were strategic for all actors

Horizontal, multidimensional network relations that had strategic relevance only for some actors

Features Continuation of the R&D network A new “value innovation” network

The change from R&D to commercialization The change trigger Resistant distributors Need to commercialize the product and identification of “bone health”

markets Initiator No need for an initiator since the commercialization continued

from R&D The innovator

Features of change Gradual radical change: Incremental dyadic changes as interaction within existing relations changed, and radical changes as new relations emerged

Discrete radical change: Forging new relationships on the basis of new value arguments, pursuing new relations without histories, isolated R&D and commercialization relations

Managing network relations in the commercialization Accessing resources through Social and R&D relations Cold calls, some social ties Mobilizing resources through The common goal: to get ordinary people to exercise outdoors The common goal: to get people to take care of their bone health

Resource trade-offs: clear Resource trade-offs: blurred Commitment: originating from the R&D network and involvement in the issue

Commitment: not forthcoming

Organizing resources through Informal interactive management, evolutionary planning, and consequent evolvement of task and actor requirements

Informal discussion and formal management through association, semiformed selection systems and task planning, and common staff (project manager)

205L. Aarikka-Stenroos, B. Sandberg / Journal of Business Research 65 (2012) 198–206

accelerate diffusion, adaptation, and market creation. If the actors are dissimilar and carry out different tasks in a multidimensional network, they are more likely to complement each other.

The analysis of how radical network changes emerge throughout the innovation process is an additional contribution. Overcoming path dependence (Håkansson & Waluszewski, 2002) and inducing changes that produce radically new combinations of resources among actors who have not previously cooperated is quite a challenge. The existing relations and resources of the actors in the R&D network are also influential in enabling change in the commercialization in terms of building trust, credibility, and commitment. Research should focus attention to the linkages between R&D and commercialization networks. This focus would allow consideration of the commercial- ization partners' and the users' needs in the R&D activities as well as involving lead partners and users to actively promote the innovation in the commercialization activities.

Technical resources

Innovator firm

Knowledge

resources

Distributors Complementaries E

B D

R&D: the network aims to combine technology and knowledge resources to create a product

Fig. 3. The emergence of new activities and the contr

The findings support the perspective that commercialization demands a new kind of network competence including the ability to identify and access the required resources, to mobilize and organize resource combinations, and to manage the change of network relations. Actors in R&D networks combine resources for product development, but in the commercialization phase they easily face challenges related to blurred goals and problems with trust. Similarity in goals, but dissimilarity in resources and complementarity in offerings, facilitate resource interaction for commercialization.

Commercialization likely benefits from inter-organizational coop- eration across industry borders and radical combinations of resources, but actor diversity and dissimilarity might also complicate managing commercialization activities. Potential partners need clear resource trade-offs as motivators to integrate resources, and will commit to the commercialization only if it fits in with their activities, strategy, and business model. Due to blurred activities and expectations,

Awareness builders

Credibility builders

ducators enefit illustrators emonstrators

Commercialization: the network aims to commercialize the product or to create markets for innovations to survive: experts, users, distributors, and providers of complementary offerings

- build awareness - establish credibility

and trust - communicate

usability and benefits

- organize distribution and trials

- produce supporting offerings

- give negotiation power

- provide access to internationalization

ibution of the commercialization network actors.

206 L. Aarikka-Stenroos, B. Sandberg / Journal of Business Research 65 (2012) 198–206

problems with trust easily emerge, and the unclear distinction between competitors and cooperators may hinder both the building of commercialization relations and interaction among relevant actors.

6.2. Managerial implications

The findings inform managerial implications for successful com- mercialization and the effective management of network relations within the innovation process. From this research, two strategies emerge for applying the network approach to the commercialization of new products. Firms can use a portfolio of inter-organizational relationships (cf., Ritter & Gemünden, 2003) and thus offer clear benefits and resource trade-offs to actors who are able to make a contribution. Alternatively, innovating firms can collaborate in a strategic way and use their network relations to create markets and new business fields (cf., Möller et al., 2005), although this kind of network should focus on innovative issues and new business models rather than particular innovations.

Managers in innovating firms should acknowledge the links between R&D and commercialization and should purposefully create relations with diverse actors who are either of direct use in the commercialization activities or have relations with other relevant actors. Managers should consider the potential contribution of non- profit organizations. In the context of risky innovations, firms should employ the trust-creation effect of their R&D network actors, utilize existing network relations when extending their relationship base, and be cautious about pursuing discrete radical changes.

6.3. Evaluation and avenues for future research

As each network is context-specific, the generalizability of the results is limited. The two cases do not represent all industries or firms, and studies on other industries may give different answers. In this research, the end-users of the innovations were consumers who accentuate the role of intermediary actors. Nevertheless, most new knowledge on commercialization networks is likely to be applicable to business markets. Future research on inter-organizational networks should take commercialization aspects into account more explicitly and investigate commercialization and market-creation networks in different industries and for different types of innovation.

Acknowledgements

The authors gratefully acknowledge the contributions from the anonymous reviewers and the editor, the commentors at the IMP2007, IMP2009 and GBATA2008 conferences, Aino Halinen-Kaila, and Jaana Tähtinen. The authors are also grateful to the Foundation for Economic Education for providing a grant for this research.

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