CHAPTER V CONCLUSION AND DISCUSSION
5.2 Discussion
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brand loyalty occurs and allows the firm to maintain their sales, including increasing sales in case of the number of patients in each disease has increased. The results of this study are consistent with previous research’s result.
From the past research findings, firms engage in proactiveness activities involving new ideas and new products by pursuing and identifying new opportunities, raising the opportunity to explore the attractive niche market, which is positively relate to increasing an opportunities to sell both existing and new products (Lumpkin
& Dess, 2006). Hughes and Morgan (2007) found that proactiveness has a positive influence on business performance in young high-technology firms. Lumpkin and Dess (2001) suggested that proactiveness is a firm response to opportunities, (Chen and Hambrick, 2018) further suggested that firms proactive and responsive when they face a challenging in technology, innovation, competition, customers change.
Second, this research found that knowledge ACAP diminishes a positive relationship between proactiveness and firm performance. For theoretical evidences, there are two reasons to explain on the diminishing effect of knowledge ACAP on the relationship between proactiveness and firm performance. First, medical device firm might lack of existing knowledge related to new knowledge so, firm unable to apply new knowledge. Based on survey data, 60 percent of Thai manufacturing medical device firm data have been invested in research and development less than 0.2 percent per years. Hence, it shows that the ability to utilize the commercial benefits might limit. The extent to which prior knowledge facilitates the subsequent development of ACAP and the lack of early investment in knowledge ACAP make it more costly to develop a given level of it in the subsequent period. Cohen and Levinthal (1990a)
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argued that firms cannot maximize the benefit of knowledge ACAP for two possible causes. First, the ability to exploit the external knowledge element of innovative capabilities is largely a function of the level of prior related knowledge. Second, not invent here syndrome (NIH) in which firms resist accepting innovative ideas from the environment, may also reflect what we call lockout at times. Such ideas may be too distant from the firm’s existing knowledge base—its absorptive capacity to be either appreciated or accessed. In this particular setting, NIH may be pathological behavior only in retrospect. The firm need not act irrationally in the development of capabilities that yield the NIH syndrome.
Hence, this finding contradicts with past research results which highlighting the effectiveness of knowledge ACAP on entrepreneurial processes in terms of new products and service development and, finally, firm performance increase (Cohen and Levinthal, 1990a; Lane et al., 2001; Zhao, Li, Lee, and Chen, 2011). Moreover, Caloghirou et al. (2004) found that seeking new ideas from scientific or business journals have a positive relationship with innovation under medical device firm. They argued that publications in journals constitute a mechanism of knowledge diffusion.
Additionally, knowledge ACAP enhances commercialization success when firms know how to diffuse new knowledge through their actions. This research argues from the past theoretical evidences and the case study results.
Third, too much knowledge ACAP is harmful to financial outcomes because a cost to develop new knowledge until firm can utilize the commercial benefits is challenging. This study found that low level of knowledge ACAP strengthens the relationship between proactiveness and the firm performance better than high level of
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knowledge ACAP. This finding is supported by the study of Wales et al. (2013), who found that too much knowledge ACAP is harmful to financial outcomes. They indicated that a lower level of ACAP appears to produce the strongest returns to financial performance. They also highlight the importance of the cost of developed knowledge ACAP; they also posited that firms must continuously emphasize investment on knowledge. In the literature, the cost-associated knowledge ACAP has diminished firm performance because the benefits of knowledge ACAP to firm performance occur when firms can utilize knowledge ACAP to commercial ends.
Volberda, Foss, and Lyles (2010) suggested that ACAP is a capability that requires firm investment. Hence, firms encounter financial risk if firms cannot utilize new external knowledge in terms of commercial benefits.
From the case study results, medical device manufacturing firms can better recognize and exploit new information relevant to their particular products by developing knowledge ACAP; for example, multifaceted ideas of scientists, engineers, clinicians, and patients allow beneficial technologies to reach the market more quickly in an evidence-focused way (Davey, Brennan, Meenan, & Mcadam, 2010). However, not every firm can exploit commercial benefits from new external knowledge. Scholars highlight the importance of path dependence and NIH, which might inhibit a firm’s utilization of new knowledge, as medical device firms have to recognize varying types of knowledge. Hence, a firm’s prior knowledge and path dependence act as a precondition to capture a variety of knowledge and exploit commercial benefits. As a result, persistent development of knowledge accumulation within the firm or the ability to absorb knowledge is a necessary condition for
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successful exploitation of external knowledge (Mowery et al., 1996). In other words, the ability to exploit external knowledge is largely a function of the level of prior related knowledge.
Moreover, this study argues here that early investment in knowledge ACAP makes it more costly to develop a given level of it in the subsequent period.
Therefore, firms should build a stock of related knowledge within their own operations (Cohen and Levinthal, 1990a). Prior related knowledge comes from experience, called potential absorptive capacity, and inside people, called tacit knowledge (Nonaka, Toyama, and Hirata, 2008). Collective of individual prior- related knowledge represent the firm-prior related knowledge (Cohen and Levinthal, 1990a). The similarities between a firm’s prior related knowledge and external knowledge acquisition contribute to the successful acquisition of external knowledge.
Assimilate and then transform external knowledge to create innovativeness and apply it to commercial end.
In addition, to avoid the NIH syndrome, firms must increase their stock of prior related knowledge until their prior related knowledge and new external knowledge are relevant. Then, firms can recognize, assimilate, and exploit the commercial benefits from external knowledge.
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