Understanding the External Firm Factors Impacting Innovation in the Hardwood Veneer Industry

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Virginia Tech


Innovation research in the wood products industry has historically focused on factors that the firm can influence or control, as opposed to factors external to the firm. The purpose of this research is to understand how the external factors of the firm (i.e., social, technological, economic, ecological, and political or STEEP factors) impact Schumpeter's five-factors of innovation (i.e., sources of supply, methods of production, markets, products and services, and business models) in decorative hardwood veneer producing firms. Case studies of hardwood veneer firms in Austria and the United States were conducted to understand these impacts from individual firms' perspectives. Innovation strategies of the companies were identified based on their use of innovation resources, leverage of those resources and capabilities to serve customers and markets, and deliberateness or emergence. Interviews of experts in each of the environmental areas from both geographic regions also were conducted to qualify and validate the impacts. An online survey was conducted with hardwood veneer companies in Austria, Germany and the United States to quantify the impacts in these regions, and results were analyzed via cluster analysis to better understand the environmental impacts to innovation and the strategies firms were employing to innovate.

The results of the study identified American firms as being most impacted by economic environmental factors and Austrian firms most impacted by social factors. Austrian/German and US firms both made more deliberate than emergent attempts to innovate. US firms most attempted to innovate their business models, while Austrian and German firms most attempted source of supply and product and service innovations. The major implications of this research are the awareness firms in the hardwood veneer industry can gain from understanding the innovation strategies their firms employ, how the environment they function within impacts their innovation, and what they can do about it. By helping this niche industry create sustainable competitive advantages, the industry can overcome the adversities of the mature industry lifecycle phase, including competitive threats from substitute products and increased competition from foreign log buyers, and shift back into a growth phase of the lifecycle.



business strategy, hardwood veneer, innovation