Knowledge as a Critical Resource in Innovation among Small Furniture Companies in Indonesia: An Exploration

Abstract

The furniture industry makes a significant contribution to the Indonesian economy but is exposed to an intensifying competitive environment and to emerging shortages of raw material. These circumstances have prompted small furniture manufacturers in the district of Jepara to undertake several types of innovation. It appears that of all first ranked innovations, product innovation is the largest category. In the overall pattern of innovations, market innovation and logistics innovation are also important, a situation that can be explained by the typical character and current circumstances of the furniture industry in this area. The innovation process concerned mainly relies on traditional knowledge sources, namely in-house learning-by-doing and experimentation, and buyers (customers). However, the manufacturers show willingness to use other knowledge sources in the near future, particularly more formal and globally oriented ones, such as exhibitions, research institutions, and the Internet. What tends to hamper such progress is that the manufacturers’ capability to access these knowledge sources is limited by financial obstacles and to a smaller extent by complexity and language obstacles. The paper concludes with a few policy recommendations and potential directions of future research. One of the policy recommendations aims at a combination of the traditional way of knowledge generation through in-house learning-by-doing and experimentation with knowledge from modern and formal sources.

The Effect of Knowledge Sources on Innovation Capabilities Among Restaurants and Café Businesses in Indonesia

“…This finding corroborates previous similar studies on innovation among furniture and software firms in Indonesia (e.g. van Geenhuizen and Indarti, 2005;Indarti, 2010).…”

“…The use of specific sources of knowledge is important for paticular innovations (Van Geenhuizen and Indarti, 2005). However, '... it was not sufficient to look independently at the various sources of information because the development and improvement of products and processes cannot depend only on one source of information, but they must rely on recourse to a variety of sources of information' (Amara and Landry, 2005:250).…”

“…Rogers (2003) defined radical innovation as major changes that are often presented in a new paradigm; while incremental innovation is similar to a modification, development, consolidation and/or improvement (Gaynor, 2002). Changes or improvement in organisational practices, process, and structure Source: Neely et al (2001); Avermaete et al (2003);van Geenhuizen and Indarti (2005); Birkinshaw et al (2008) Radical and incremental innovations are related to exploration and exploitation (see Benner and Tushman, 2003). March (1991:71) explained that exploration includes things captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, innovation.…”

Effect of networks on product innovation: empirical evidence from Indonesian SMEs

“…These parties are plausible sources of knowledge which we expect to enhance a firm's innovativeness. For Indonesia, Van Geenhuizen and Indarti (2005) found that the degree of interaction between SMEs and various external parties might not be sufficiently developed, while the possible advantages of these relations have to date not been properly explored. External interaction entails a broader access to relevant know-how, possibilities to perform benchmarking activities, as well as opening new markets.…”

The impact of environmental dynamism on knowledge absorptive capacity-innovation performance relationship amongst manufacturing SMEs in Malaysia

“…While the analysis of the performance impact of absorptive capacity is largely confirmed in the context of radical innovation (Pennings & Harianto, 1992;Corkburn & Henderson, 1998;Ahuja & Katila, 2001;Tsai, 2001) its relationship in the context of incremental innovation has not been given much attention in existing research. While there is no exact study which support of a positive relationship between absorptive capacity and incremental innovation performance in smaller firms, other studies (Bashkaran, 2006;van Geenhuizen & Nurul, 2005) found support for knowledge per se which impacts on incremental innovation in small firms. Therefore, to draw a differentiated picture of the innovation performance impact of absorptive capacity, this study tests the performance implications in terms of incremental innovation amongst Small-Medium Enterprises (SMEs) in Malaysia.…”