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Fostering commercialisation of innovation in small high technology firms Jarkko Pellikka* Savonia University of Applied Science, P.O. Box 72, Haukisaarentie, Iisalmi FIN-74101, Finland Fax: +358-17-255-6644 E-mail: [email protected] *Corresponding author

Jari Lauronen Joensuu Science Park Ltd., Länsikatu 15, Joensuu FIN-80110, Finland Fax: +358-13-263-7280 E-mail: [email protected] Abstract: Based on their capability to commercialise innovations small technology-based firms serve as promoters of economical growth. However, to date the empirical research on the commercialisation process in small high-tech firms has been relatively limited. This study describes the activities and the different phases that small- and medium-sized healthcare technology firms have conducted during the commercialisation process of innovations. The results suggest that the balanced allocation of resources have a crucial role during the commercialisation process. In addition, the development of collaboration with resellers and the exploitation of the Innovation Support Services (ISS) are essential in order to improve the effectiveness of the commercialisation process of innovations. Intense collaboration may lead to shorter product life cycles and further enhances the firm’s capability to adapt to/adjust to the increasing dynamics of the business environment. Keywords: commercialisation process; innovation; small high technology firms; healthcare technology. Reference to this paper should be made as follows: Pellikka, J. and Lauronen, J. (2007) ‘Fostering commercialisation of innovation in small high technology firms’, Int. J. Technoentrepreneurship, Vol. 1, No. 1, pp.92–108. Biographical notes: Jarkko Pellikka is a Project Manager and a Researcher at the Savonia University of Applied Science and the University of Kuopio. The current research focuses on commercialisation process of innovation and innovation management in small high technology firms. He is mostly involved with healthcare technology and information technology industry. Among the papers written, issues related to interorganisational collaboration and development of innovation support services related to SMEs has also been in focus.

Copyright © 2007 Inderscience Enterprises Ltd.

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Jari Lauronen is a Managing Director of Joensuu Science Park Ltd. He has a DSc in Technology from the Technical University of Lappeenranta and a long experience both in business and in research. His current research interests are related to the development of innovation system of growth-oriented SMEs and their business models in dynamic business environment looked from the actors’ subjective perspective. He is especially interested to develop tools that are based on the applications of different system theories.

1

Introduction

Small technology firms are widely seen as promoters of economical growth both regionally, nationally and internationally (Heydebreck et al., 2000; Jones-Evans and Klofsten, 1997; Westhead and Storey, 1994). Growth-oriented small technology firms have a very positive effect on the employment situation and their capability to create, transfer and exploit innovations (Autio, 1994; Fontes, 1997; Storey, 1994). However, the small technology firms meet challenges during their commercialisation of innovations (see Jolly, 1997; Pellikka and Virtanen, 2004). The local service infrastructure should provide the nurturing environment for growth-oriented high technology firms in order to support and accelerate the commercialisation of innovation and further support the local economic growth (e.g. Autio and Klofsten, 1998; Blakely, 1994; Cooper, 1985; Heydebreck et al., 2000; Höyssä et al., 2004; Mian, 1996; Phillips, 2002). As a result, the number of service providers are increasing (Jones-Evans and Kirby, 1995; Kirby, 1990; Klofsten, 1995; Westhead and Storey, 1994). The support and development services are being criticised of not corresponding to the specific requirements of small high technology firms (Autio and Klofsten, 1998; Klofsten and Jones-Evans, 1996; Pellikka and Virtanen, 2004; Tidd et al., 2001). Small technology firms operate in a very dynamic business environment where the demands related to support services are changing continuously. Therefore, content and timing of the services provided for the each individual Small- and Medium-sized Enterprises (SME) during the commercialisation process is crucial (Blakely, 1994; Gibb, 1996). It is necessary to make local choices between industries in order to support efficiently the creation and development of small technology firms (Cohendet and Meyer-Krahmer, 2001). For example, Heydebreck et al. (2000) recommend that the service providers should support the process as an entity including the required actions, resources and decisions during the process phases. The previous studies have mainly concentrated on the commercialisation process in large firms (e.g. Andrew and Sirkin, 2003; Jolly, 1997; Nevens et al., 1990) whereas only a few studies have focused on small technology firms and particularly with the activities that the firms are doing during the process. For instance, small technology firms are confronted with challenges like a limited resource base regarding capital and know-how of the employees (e.g. Kaufmann and Tödling, 2002). In addition, small technology firms may have more difficulties in internationalisation (Pellikka and Virtanen, 2004; Westhead et al., 2001). This study aims to describe the activities and phases that small- and medium-sized healthcare technology firms have realised during their commercialisation processes of innovation. The healthcare sector has rapidly grown in Finland as well as in other

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countries in Europe. Research in areas of agro-biotechnology, manufacturing of medical devices and eco-sciences has opened up opportunities for new breakthroughs and business. Furthermore, the convergence with information technology has been leveraged to enhance, for example, the quality and cost-effectiveness of healthcare and medical services. The rapid appearance of new markets as well as the management of the short product and market life cycles have been recognised as a major challenge in high technology industry (see e.g. McGrath, 2001) and particularly in the healthcare technology sector (Ginter et al., 1998; Hartman and Crow, 2002). Section 2 reviews previous literature regarding innovation studies and the commercialisation process. Section 3 introduces the research methodology. In Section 4, the research data and the results of analysis are presented. Finally, this paper provides concluding notes as well as propositions for further studies.

2

Innovation studies and commercialisation process

The concept of ‘innovation’ is defined in many different ways in academic literature. According to some definitions, ‘innovation’ is understood as a new and creative improvement or a solution that might solve a specific problem by the new product, service or delivery system (see Bridge et al., 1998; Burgelman et al., 2001; Dosi, 1982; Nelson and Winter, 1982; Rosenberg, 1982). Further, it is argued that the value of innovation can be realised only through the firm-based activities that are a part of the commercialisation process of innovation (e.g. Ford and Saren, 2001; Jolly, 1997). In this study, the term ‘commercialisation of innovation’ is perceived as a process of turning ideas into market-competent products in order to create economical value (Jolly, 1997; Nevens et al., 1990; Pavitt, 1984). In addition, we view the firms as generators of innovations. In previous literature, the commercialisation process is noticed as a complex entity (see Rosenberg, 1994) that commences when the prospects for a technical breakthrough are combined with a potentially attractive market opportunity (Jolly, 1997; Nevens et al., 1990). The process continues via design, development, manufacturing and marketing including the later efforts to improve the product quality (e.g. Cooper, 2000; Jolly, 1997; Nevens et al., 1990; Phaal et al., 2001). Several innovation studies agree that commercialisation process requires common features such as 1

understanding the market and the customer needs

2

customer’s early involvement in the development of products

3

launching the product in an attractive market (see e.g. Jolly, 1997; Mohr et al., 2001).

However, the small technology firms often confront challenges that are for example related to lack of resources or timing of the market launch (Andrew and Sirkin, 2003; Pellikka, 2006; Pellikka and Virtanen, 2004). Particularly, in a dynamic business environment characterised by the internationalisation of the market (Ritter and Gemünden, 2003) the timing and effectiveness of activities in commercialisation are essential factors. Faced with increased pressure to reduce the product cycle-time and yet to improve their product-based success, particularly the large high technology

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firms have developed systematic processes, blueprints or roadmaps (Cooper, 2000). These operations are targeted to progress the new product development projects through various stages and complex steps from idea to launch (Cooper, 2000). While commercialisation is often depicted as a linear process, the firms with a strong commercialisation capability see it as a series of overlapping phases that simultaneously integrate the different business activities such as R&D, marketing and manufacturing (Biemans, 1992; Jolly, 1997; Nevens et al., 1990). From this perspective, we believe that it would be very beneficial to approach the issue of commercialisation simultaneously with the activity and the process-based point of views.

3

Research methodology and data

Commercialisation of innovation in the small technology firms is an uncharted research area. Only fragmented and limited empirical research on this subject can be found. In addition, the process-based examination that aims to elaborate the activities and phases related to commercialisation is missing. The selection of suitable research methodology was based on following expectations: 1

the logic of commercialisation process in the small technology firms is similar to the large technology firms (Nevens et al., 1990)

2

lack of resources and know-how related to commercialisation are futile (see Biemans, 1992) and

3

similar organisations have similar ways to realise innovation through commercialisation (Pellikka and Virtanen, 2004).

The case study methodology was selected because it made possible to study the present phenomenon in a context where causality is unclear (Yin, 1989) between commercialisation and a small technology firm. In order to increase reliability triangulated research strategy was selected (Patton, 2002). The research data were gathered from annual reports and interviews (see also Denzin, 1978; Gummesson, 1991; Stake, 1995). The research data were collected from 12 small- and medium-sized healthcare technology firms which are located in the North Savo region in Eastern Finland. These firms have many characteristics that are typical for small technology firms such as strong research and technology orientation. It is still important to note that the healthcare technology industry has some differences to the other technology sectors (e.g. time-consuming clinical test and international standards). The selection of the case firms was executed via purposive sampling (Miles and Huberman, 1984; Patton, 1990) in order to choose the different kind of firms in terms of performance (see Appendix). In addition, this study used the key informants approach to collect data from the case firms (Miles and Huberman, 1984). The Chief Executive Officers (CEOs) from each case firm were selected because they were assumed to provide the best overall knowledge and insight into commercialisation. In the firms, the CEOs were also expected to see the implications of specific findings during the research (see also Borg and Gall, 1989). Encompassing diversified entity properly the data has been obtained from different healthcare technology firms (see Appendix) using the multiple-case approach (see Yin, 1989). An intervention technique (‘probes’) was used in order to improve the interviewees’ responses (Easterby-Smith et al., 1991, p.80). The theme-based open

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questions were asked to approach the firm-related activities from different and versatile perspectives. In this aspect, the previous studies of the commercialisation processes in large firms offered models for the questions posed during the interviews. All the questions were first reviewed by three other academics and were pretested by conducting in-depth pilot-interviews with two managers responsible for new product launches and commercialisation. Participants were asked to comment the questions that needed developing. Based on the feedback, the final list of questions was organised. Initial contacts with the case firms were made over the telephone. Participants were interviewed during May and June of 2004 by means of a personally administered semi-structured theme interview. The interview checklist had two groups of questions: 1

the background data and history of the interviewee and the firm

2

a description of the commercialisation process of innovation.

An average interview lasted from one and a half to two hours. In the very beginning of each interview, the respondents were asked to base their answers on the technology-based product that they had recently commercialised. After that, the respondents were requested to share a detailed description of the activities that they had done during the commercialisation process. One additional aim was to find out how they have executed these activities. The interviews were digitally recorded and organised into a usable form. Finally, the data were coded for the data analysis, where the notified activities and recognised phases were categorised into a time-ordered matrix. In addition, the annual reports and other additional material (e.g. process-charts) were used to offer additional information of the commercialisation process. The descriptions of the interviewees and the firm-related case information are presented in Appendix.

4

Data analysis

The research was conducted using the basic principles of abductive reasoning and theory-bonded data analysis. A few previous studies (e.g. Andrew and Sirkin, 2003; Heydebreck et al., 2000; Jolly, 1997; Nevens et al., 1990; Pellikka and Virtanen, 2004) provide some indicative results of the commercialisation of innovation. In this study, an abductive reasoning is understood as a process of reasoning to the best explanations of the activities and phases that the small technology firms realised during the commercialisation of innovation. The data analysis was executed via three-pronged analysis (Miles and Huberman, 1984) using both quantitative and qualitative data in order to construct a coherent and informative entity of the commercialisation (see Strauss and Corbin, 1990). The analysis included three main phases: 1

reducing coded interview data

2

clustering of data and

3

abstracting of data.

Firstly, we structured the current activities considering the commercialisation process in the time-ordered matrix, starting from the very beginning of the process when the idea was noticed and ending to the sustaining or quitting the manufacturing of the product.

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This approach provided information of the process-based activities (see e.g. Jolly, 1997; Nevens et al., 1990). Secondly, the data were clustered to constitute the main groups of the firms’ actions made during the commercialisation. Every detailed activity that the firm had done was coded into a time-ordered matrix (see Miles and Huberman, 1984) which enabled us to search and locate the activities the firms had done in each phase of the process. After that, the mentioned activities were further categorised in order to find similarities among the groups of clustered activities. The differences in activities among the case firms were also noticed and coded. Finally, the data were abstracted and quantified into a form that enabled describing of the particular activity based on the number of the identified mentions. The data analysis was also executed by using two interpreters to control the subjectivity of the interpretations of the interviews.

5

Results

In general, majority (73%) of the case firms can be defined as microfirms when using the definition of the European Commission (European Commission rec., 2003) (see Appendix). Compared to the earlier studies (see e.g. Storey, 1994) the small technology firms seem to suffer more from the challenges associated with growth than the other small firms. This might reflect the typical challenges that small technology firms face during the commercialisation process (see Pellikka and Virtanen, 2004). Commercialisation of innovation is seen in the case firms as a process that realises the inputs that have been invested into research and development. The respondents emphasised that an innovation or a product idea can be exploited only through the commercialisation process that realises the value of the innovation. Parallel results have been found elsewhere (see Andrew and Sirkin, 2003; Ford and Saren, 2001). The CEOs see the commercialisation as an essential part of their business. “Commercialization should be seen as a central element of developing and securing the company’s competitiveness. It is an inseparable part of everyday business” (M46, see Appendix ‘interviewee’).

The firms have several differences during the commercialisation process in terms of level of documentation and process planning. According to the study, half of the case firms are performing more or less intuitively without any actual documentation or plan of commercialisation. In contrast, only two of the case firms rely on the commercialisation process model that is self-constructed or purchased from other organisations. In addition, one of the case firms uses a model that reaches from the R&D activities to the product launching and sustaining activities. Interestingly the commercialisation of innovation is still seen as an important objective among all the case firms. It is important to note that the documentation related to market screening, market launch and the estimation of the market potential is exceptional in the studied case firms. The following section will describe the activities and phases that were recognised to be a part of the case firms’ commercialisation processes. Activities are first categorised into phases noticed earlier in previous studies (e.g. Jolly, 1997; Nevens et al., 1990; Sumath and Sumanth, 1996). Secondly, we analyse the supplemented model and finally give descriptive names for each phase of the process based on the activities mentioned.

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5.1 Idea development In this paper, the phase ‘idea development’ is understood to start when the idea of innovation is conceived for the first time. It may involve activities such as technology and market scanning. Furthermore, it provides results for the decision-makers for rapid actions (Julien, 1998). The idea development phase ends with a structured view of the further requirements including profitability calculations. Most innovations in the case firms have been based on the firms’ own scientific research and R&D activities. In many cases the requirements of the key customers play a crucial role in the very beginning of the commercialisation. Thus finding solutions for the customers’ needs have often required a very intense collaboration with the potential customers and R&D partners. “New innovations are often strongly based on our customers’ needs and demands that we are constantly trying to satisfy as well as we can” (M56).

Quite often the intense collaboration in the beginning of the commercialisation is done through the case firm-managed ‘pilot project’. During these pilot projects the innovation is pretested in the real environment. Close cooperation is vital in order to gain valuable information (e.g. usability and reliability of the product) that can rapidly be exploited in the commercialisation process. For example, the case firms had been seeking R&D partners (universities, other research organisations, science parks, etc.) as well as other business partners (e.g. resellers and distributors) to share expenses during the pilot projects and product development. A few case firms had also outsourced the market analysis and other market search activities so that they could estimate the market attractiveness. However, because of the high costs of these services, most case firms had used their own resources to estimate the market demand and development trends in their target market. International conferences had been an important channel for the case firms to gather information. All of these activities had been aimed to analyse and respond to the demands of the market. This seemed to be the driving force when commencing the commercialisation process of innovation. “In the very beginning of the process, solving the market demand and the customer orientation was our starting point” (M38).

5.2 Business concept design According to our study of the case firms the business concept design phase started when the case firm had decided to continue the R&D activities but they were also focused more on the business activities such as searching distributors and other business partners. In the end of the business concept design phase, the case firm had a pretested prototype tested with a customer and a prepared business plan for further commercialisation. The case firms often built a prototype and further piloted it in order to obtain relevant information particularly concerning usability. “We managed to test our new innovation in the environment of our customers. It gave us very valuable information from the usability and the different attributes of our innovation” (M47).

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Based on the feedback of the piloting, the case firms had been modified and developed innovation in order to respond better to the customers’ needs. Moreover, the case firms had estimated the time-frame and capital that was needed for instance for the manufacturing of the sample plot. The case firms had attempted to highlight more the competitive qualities of the innovation during the concept design phase. This had been an essential factor, for example, in acquiring venture capital (see Pellikka and Virtanen, 2004). The case firms had been trying to solve this challenge with intense collaboration with distributors and resellers (also abroad) that had been conscious of the market situations and the trends of the future development. However, in some cases the case firms had confronted challenges when seeking the international contacts. “Finding partners took much more time than we thought. We had to search agents from different branches in different countries, which was very challenging” (F42).

In order to overcome these challenges, firms had used several public support services and development services (e.g. partner searching and consultancy for international start-up activities).

5.3

Market launch

The phase named ‘market launch’ had started when the firms had attempted to seek distribution channels for their innovation. In addition, a central objective among the case firms had been to focus on increasing the international awareness of innovation. In this phase, some case firms had a business concept including feasibility studies and market research. The recognised activities related to the market launch of innovation had been quite rare among the case firms (see Table 1). Most activities had still been strongly technology-oriented in the most case firms although the interviewees announced to focus more on market-related activities (e.g. cooperation with resellers and distributors). Small technology firms had previously been criticised for their excessive orientation of technology development (see e.g. Jones-Evans, 1997). Thus, the overloaded resource allocation for technological development might have caused the shortages of necessary resources that are essential for market launch (Jones-Evans, 1997). The case firms had started their demonstration of innovation by building global distribution and reselling channels. Distributors had a key role in defining the potential customers and estimating market demand. In addition, the expertise of public as well as private service providers had been used to gather market information. International scientific conferences and exhibitions had played an increasing role in the market launch of innovation. “The experts that also have expert knowledge in our innovation play a crucial role in the market acceptance. In many cases their role as the lead users is vital” (M54).

A few case firms had commenced internationalisation by direct export and export promotion (e.g. OEM-contracts). The limited resources for internationalisation had driven the case firms to actively use the support and development services (e.g. the country intelligence services, trade fair consulting and the counselling of the international law).

100 Table 1 Firm

J. Pellikka and J. Lauronen Activities during the commercialisation process of innovation in small healthcare technology firms Idea generation

Business concept design

(A)

+

+

(B)

+

+

(C)

+

+

+

(D)

+

+

(E)

+

+

(F)

+

(G)

+

+

(H)

+

+

(I)

+

+

(J)

+

(K)

+

+

(L)

+

+

Performance − Analysing market Jolly (1997) demand and Abetti (1986) technological Bolton requirements (1997) in the pilot-projects Nevens et al. (1990) − Starting a pilot-project Phaal et al. with R&D (2001) partners Andrew and Sirkin (2003) − Visualising preliminary Blakely vision for (1994) innovation Sumath and Sumanth (1996)

Market launch

Business development

Maintaining +

+

+

+

+

+

+

+

+

+

+

+ + + +

+

+ + +

− Searching for − Launch of − Enhancing − Modifying and protecting cooperatio the finance and existing commercial n with other distributors innovations version of resources and innovation − No-go decisions − Crafting a resellers − Searching product − Starting new − Acquiring for the platform R&D projects extra suitable − General resources − Gaining adequate global market return on for largedistributors screening investment made scale and in innovation for − Manufacturing resellers promotion commercialising a sample lot the firm − Starting it growth − Testing the direct prowess of export and − innovation Exploitatio export n of promotion innovation − Raising to generate awareness profit of the new innovation

Note: + = Identified phase-related performance.

The major challenge during the market launch phase had been to gather detailed information about the market, customers and distributors for decision making. After that the critical decisions related to the timing of the innovation launch could be done. “The timing of the innovation launch is very important. We continuously carry out market screening and try to define the right moment for demonstration. It seems to be a good strategy to follow the market leader and be the second actor in the market. This is important in order to gain market acceptance” (M46).

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5.4 Business development Business development had been started when the firms focus on searching for new market or new application for the innovation. The case firms had attempted to enhance the market position of the innovation by the supply of complementary products or services (see also Jolly, 1997). In some case firms these activities had led to higher sale rates and the growth of turnover. However, the assertion of the innovation in the market had often been much more time-consuming than assumed. In addition, investments had required developing distribution channels. Interestingly, some case firms had faced obstacles that were related to the poor reputation of similar products in the same market. During the business development phase, some of the firms had looked for new partnerships or gathered venture capital in order to accelerate the growth of the firm. Gaining a successful market position had required a certain market share and further had called for extra financial resources. The case firms had faced a major challenge in finding motivated and committed partners that had been able to provide an adequate visibility for the innovation. “There are all kinds of distributors in the market. We have noticed that a large distributor is suitable for us even though there are still some problems with a wide variety of products” (M55).

In some cases, the smaller partner had been considered a better choice. They had been more agile and motivated to operate with the innovation, which could be provided competitive advantages.

5.5 Maintaining In the end of the commercialisation process, the case firms had wished to reduce the costs of manufacturing and further developed the qualities of the innovation. This is when the maintaining phase started. The case firms had prepared to increase the competition in the market by allocating more resources for the research and development activities. The maintaining phase had ended when the case firms had made the decisions that would concluded the manufacturing or the exploitation of the innovation. Here the timing had been essential for gaining the full potential benefits from the product. “We are continuously developing our product family in order to keep up with our competitors in the changing market” (M34).

In some cases, maintaining the innovation competitive had often required new investments in the R&D activities. These activities had quite the same content as in the beginning of the commercialisation. For example, many case firms had started to seek new R&D partners again and reactivate the cooperation with universities and other research institutions. Moreover, the customer feedback had been gathered, analysed and exploited more actively in order to make decisions concerning the maintaining activities for the further development of innovation (see Pellikka et al., 2006). When making these strategic decisions many case firms had used an expertise of the advisory board. “During the sustaining phase our product was evaluated by several experts. This new information and knowledge was then used when developing new innovation and improving the older ones” (M54).

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Summarising the results

The research data are summarised in the Table 1. It illustrates the activities that the case firms implemented during the commercialisation process of the innovation.

7

Conclusions and discussion

This study elaborates on the phases and activities that the case firms had during the commercialisation processes of the innovation in the healthcare technology industry. The case firms in this study had sustained their competitiveness by focusing on the R&D activities and particularly on the activities closely related to the product development (see Table 1). All the case firms had carried out activities such as prototype planning, starting pilot-projects and idea testing. By contrast, the activities such as market analysis, collaboration with the distributors and screening international contacts had been notably rare among these case firms. Compared to the earlier studies among large firms (e.g. Jolly, 1997; Nevens et al., 1990) the case firms seem to carry out fewer activities related to market and business issues during their commercialisation process. Table 1 gives that the activities such as defining the potentiality of different markets, searching for suitable global distributors/resellers and planning the international market launch seems to have gained much less attention among the case firms albeit the need for searching customers internationally is underlined in many interviews. “Some international exhibitions have an essential role in the healthcare technology branch in acquiring customer information, seeking distributors and selling products” (M27).

This could be explained by the following factors: firstly, the intense technology orientation of small technology firms (see e.g. Jones-Evans, 1997), secondly, the lack of resources needed particularly for internationalisation, marketing and financing (Pellikka and Virtanen, 2004; Van de Ven, 1995) and finally, the challenges in integration and exploitation of resources during commercialisation (Julien, 1998; Laranga, 1998; Rothwell, 1990). As one interviewee emphasised: “Since the beginning of the commercialization, we allocate too much resources at the product development…”. “We suffered from the cost overruns and delays in the market launch, which was possibly caused by the neglected marketing and selling efforts” (M43).

In several case firms, the allocation of resources which enable the enhancement of internationalisation and marketing activities somehow failed. It can be seen as a biased activity towards R&D orientation (Table 1). This was seen among the case firms as budget exceeding and time-consuming commercialisation. Interestingly, only three of the case firms used the documented plan of the commercialisation process, which possibly was very beneficial, for example, in estimating the resources needed during the commercialisation. This would also accelerate the negotiations of international selling permits, which are highly regulated in the healthcare technology field by the international standards (Altenstetter, 1996). Normally, this permission requires a good documentation of the activities done during the clinical tests or the pilot projects, etc. (Altenstetter, 1996).

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Compared to large technology firms, the case firms attempted to closely cooperate with their distributors and resellers throughout the commercialisation process in order to gain first hand knowledge about the changing requirements of the market as well as to rapidly exploit this information in R&D activities (see also Mohr et al., 2001). “Actually we see our final customers occasionally. We mostly rely on our distributors abilities to anticipate the market changes” (M55).

In general, the case firms seem to outsource relatively much on their marketing and selling activities. This might possibly explain the low number of marketing and selling activities during the business concept development and maintaining phases (see Table 1). However, we still believe that the distributors and resellers should have been better informed on the characteristics of the innovation immediately afterwards the start of the commercialisation process in order to gather information, for example, from the potential customers of the market. Finally, the commercialisation process of innovation in small technology firms seemed to be more assimilated into firms business than in larger firms. Larger firms commercialise innovations by product-oriented activities (Andrew and Sirkin, 2003; Nevens et al., 1990). In contrast, in small firms the commercialisation is more dependent on all the activities as well as resources of the firm.

8

Limitations

The results presented in this study may not be transferable to other industries, although some similarities can be found from other high technology branches. There are some industry-related characteristics in healthcare technology branch such as standardisation (Altenstetter, 1996) and the medical devices related risks (Worning, 1994) that may have influence on the actions during the commercialisation process. In addition, this research examined the commercialisation processes at a regional level. However, it is important to note that North Savo is defined as a peripheral area (Pasanen, 2003), which might possibly affect the internationalisation rate and the requirements related to the collaboration with the international business partners such as distributors, agents and resellers.

9

Future research

The contributions of this study can be exploited from two perspectives compared to the previous literature. Among the small technology firms, the results of the study can be used to provide new insights into the development of the local Innovation Support Services (ISS). On the grounds of the results introduced earlier, there is a further need to examine the commercialisation processes of small technology firms in different industries with a comparative approach. We believe that some of the challenges (e.g. resource-related issues) related to the commercialisation can be solved by efficient ISS. However, we need more empirical evidence of the firms’ needs in regard to both the type of service and quality of delivery (see Pellikka, 2006). Thus, it would be valuable to answer what kind of ISS small healthcare technology firms need during the

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commercialisation process of innovation, how these services should be delivered and how the ISS should be developed in order to react to the actual needs of small technology firms.

Acknowledgements The authors are grateful to the Foundation for Economic Education, the Foundation of Small Business Center and the Finnish Foundation for Economic and Technology Sciences (KAUTE). Thanks are also due to the Editor and two anonymous reviewers for their excellent advice and comments.

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Appendix Table A1

Background information of the interviewees and the firms. Variables (1–3) ‘sex and age’, ‘business experience’ and ‘business experience of the current firm’ describes the background information of the interviewees. Variables (4–7) ‘year of establishment’, ‘number of personnel’, ‘level of turnover’ and ‘performance’ presents the basic information of the firms

5. Number 1. Sex and age 2. Level of 3. Business 4. Year of of business experience establishment M = male personnel experience of the firm F = female (2003) (years) (years)

6. Level of 7. Performance turnover (2002)

M27

1–3

1–3

2003

1–3

0.05 Healthcare million € > software manufacturer 0.06–0.2 Healthcare million € instrument manufacturer 0.05 Healthcare million € > devices manufacturer 0.–0.5 Healthcare test million € manufacturer

M38

10