Transcript (organizational innovations).

New Growth Potentials for the SMEs: Stronger Involvement in the
KIBS Economy)
(The Case of the Hungarian vs.Slovakian business service firms)
Makó, Csaba
Institute of Sociology
Hungarian Academy of
Sciences
Group of Sociology of
Organization and Work
„Virtual campus for SMEs
in a multicultural milieu”
Final Erasmus Project
Conference - BBS,
Budapest, 22nd March 2010.
Agenda
1.
Setting the Scene
- Six „Grand Challenges” facing Europe and the 2020 Agenda
- Asymetric (Unbalanced) Character of the Economic Development
CCE (Hungary)
in
2. Looking for the New Trajectories of the Economic Development: Service
Economy and the Critical Mass of Innovative Firms
- Historical shift in economic structure: from manufacturing to the service
economy, and increasing role of organizational-social innovations)
3. Source of Sustainable Competitivity of SMEs. Growing Role of
Organizational Innovation/Learning in the KIBS sector.
- Lessons from the comparison of the Hungarian vs. Slovakian KIBS
sector. (Comparing the diffusion of organizational innovation and
the
company knowledge development practice.)
4. Lessons and Discussion
1. Six „Grand Challenges” facing Europe (1)
•
1. Economic growth – restarting economic growth and ensuring long-term
sustainability and competitiveness for the future. (In 2009, GDP fell by roughly
by 4 % for both EU and euro zone. All member states have been effected, albeit
unevenly. The 2009 contraction ranges from roughly 2 % in France to 4.5 – 5.0 % in
Germany, Italy and the UK.)
•
2. Fighting unemployment – especially young unemployment and
generational worklesness. (The current unemployment rate accross Europe is 9.8
%. Between 2008 and 2009, the highest increase were registered in Latvia (9.1 % to
20.9 %) and Lithuania (4.8 % to 13.8 %). The highest unemployment rate are in
Latvia (20.9 %) and Spain (19.3 %). In October, the youth unemployment rate (under
-25s was 20.6 % in the euro area and 20.7 % in the EU-27). Netherlands has the
lowest rate of youth unemployment (7.2 %) and Spain (42.9 %) and Latvia (33.6 %)
have the highest.
•
•
3. Climate change – the Stern Review estimated that climate change could
cost between 5 % and 15 % of global per-capita consumption.Average
annual economic demages from 2000 to 2020 would be 18 trillion Euro.Major
changes requried in the following fields: sources of energy, new infrastructures,
working patterns, methods of production and distribution, new forms of interaction,
behaviour and beliefs.
4. Ageing population – by 2020, 25 % of the population will be over 60.
(The 80+ population is expected to double before 2050. This will mean a ratio of 2:1
workers to retirees. This will lead to an increase of costs linked to pension, social
security, health and long-term care by 4 – 8 % of GDP by 2025.)
1. Six „Grand Challenges” facing Europe (2)
5. Social exclusion – due to ageing, poverty and/or cultural diversity. New
solutions need to provide better access to services (health, care, housing and
education) and opportunities for learnaing and employment.
6. Public sector innovation – growing social needs, togetehr with budgetary
constraints, call for radically new and innovative public service methods.
Challenges at the same time represent „opportunities” too (e.g. IT have
created exciting possibilities for improving our ability to meet social needs,
such as „e-health care”, „virtual school in education”, etc.)
Several characteristics of the New Area of Innovation which differentiate
future innovation from the innovation of industrial area. Four drivers
which will change the way companies innovate:
(1) Co-creating values with customers and tapping knowledge about users;
(2) Global knowledge sourcing and collaborative networks;
(3) Global challenges as a driver of innovation;
(4) Public sector challenges as a driver of innovation.
1. Asymmetric Character of the Economic Modernization in Hungary (3)
Stylized facts of the industrial restructuring in the 1990s:
-
Great majority of the production facilities created in the country by the influx of FDI are
representing „low-quality economic activities” on „The Quality Index of Economic Activities”.
Key driver of FDI: cost instead of knowledge efficiency. (Washington consensus ideology and an
outdated „techno-economic paradigm”) biased innovation policy orientation. (Kattel-ReinertSuurna (2009).
-
Outcome: low innovation activity and unbalanced presence of „innovative-learning” work
organization in Hungary. (International Comparison: European Working Conditions Survey2005). Source: www.eurofound.europa.eu, Valeyre et. al. (2009) Vezetéstudomány,
(Management Science) October and November Issues, pp.2-15, and pp. 36-51.)
Product/process innovation
1991-2002
Product/process innovation
2004-2005
100% Hungarian-owned
13,4%
17,3%
100% Foreign-owned
17,6%
30,1%
Mixed ownership
31,6%
30,5%
Ownership of the firm
1. Share of Models of Work Organization in EU-27: over or near to the EU
average: EU-15 vs. NMS+2 (EWCS-2005) (4) (Közgazdasági Szemle, 2008)
Models of work
organization
NMS+2
EU-15
Discretionary learning
organization
(innovative)
Hungary, Estonia,
Cyprus
Sweden, Denmark,
the Netherland,
Finland
Lean organization
(Neo-fordist work
organization)
Slovakia, Czech
Republic, Romania
U.K., Ireland, Spain
Tayori/fordist work
organization (least
innovative)
Bulgaria, Malta,
Slovakia, Romania,
Hungary
Greece, Portugal.
Italy
Traditional or noncoded work
organization
Lithuania, Poland,
Latvia
Greece, Portugal,
Italy.
1.The Danish Example: Influence of company networking/ ownership on
the organizational changes. A Danish example.(Nielsen, 2006) (5)
company
group
membership
and
ownership.
Firms’ sample
Organizational
changes:
In 1993-95 and
1998-2000.
Organizational
changes:
In 1993-1995
or 1998-2000
No
organizational
changes
Danish
company
group:
39,6 %
33,7 %
26,6 %
169
Foreign
company
group:
63,2 %
23,6 %
13,2 %
106
Single firm
21,5 %
32,0 %
46,5 %
228
Total:
36,4 %
30,8 %
32,8 %
503
2.
Creating New Path of Economic Development in Hungary: The
Growing Importance of the KIBS Sector.(6)
Historical shift in the economic structure
• Global trend: Increasing share of the service sector
(especially the fast growing KIBS at the expense of
agriculture and manufacturing)
• In the current financial crisis and economic slow-down
particular attention is paid to the economic activities
having strong employment generating capacity. (EU 2020 Strategy on smart/green economy.9
• Hungary: between 1995-2006, the service sector
generated 90 % of the new jobs and within the (very
heterogenous service) sector, every second job (57 %)
was created by the KIBS firms, where the great majority
of firms belongs into the SME segment of the economy.
2.
Demand Side Perspective: The Share of the „IT” and „BPO” services.
(Sako, 2009:7) and www.neoit.com) (7)
Country
IT- service
BPO
Ireland
$ 2.2 bn
-
Czech Republic
$ 60 M
$ 40 M
Poland
$ 110 M
$ 70 M
China
$ 700 M
$ 300 M
India
$ 12.2 Bn
$ 5.2 Bn
Romania
$ 30 M
$ 25 M
Hungary
$ 50 M
$ 25 M
$ 550
$ 25 M
Russia
2. Supply side perspective: Average Salaries in Selected Offshore
Destination Countries. (Sako, 2009:5 and www.neoit.com) ) (8)
Countries
IT service
BPO
Slovakia
$ 17 395
$ 13 481
Romania
$ 15 743
$ 12 692
Mexico
$ 22 484
$ 17 899
Poland
$ 29 393
$ 24 874
India
$ 9 896
$ 7 779
Russia
$ 21 018
$ 16 313
Vietnam
$ 6 131
$ 5 188
Singapore
$ 41 512
$ 34 295
China
$ 10 095
$ 7 634
Canada
$ 43 841
$ 34 462
Czech Republic
$ 22 174
$ 17 438
Hungary
$ 25 174
$ 21 553
2. Need for Critical Mass of the „Innovative/Learning” SMEs. Some
features of innovation in the KIBS firms. (9)
• 1. Importance of the highly skilled employees in creating
new services.
• 2. Need to develop and maintain „knowledge
management” (KM) systems to support new and
innovative solutions.
• 3. Central role of customers both in defining problems
and develop efficient solutions in supplying services.
• 4. Strong involement in the company network and
developing strategic (or high value added) cooperation
with the external knowledge sources.
• 5. Increased role of the new managerial and
organizational practices (organizational innovations).
(Salter-Tether, 2006:17):
3. An Example: Comparing the Hungarian vs. Slovak KIBS Sector. Structural
Features of the Firms Surveyed in 2008/2009 (10)
Characteristics of the Firms
1. Age of the firms
2. Type of dominant ownership
3. Firms’size
4. Market structure
Hungary
Slovakia
Dominance of the de novo firms (est. after 1990’s)
National/Domestic
Foreign
Dominance of the SMEs
National/Domestic
market
International market
5. Share of the high-value
added services
High
6. Share of the „Customer
tailored solution”
High
7. Company group membership
(„networking”)
Dominance of the
„single” (isolated) firms
Dominance of the in
the international
networking
3. Distribution of structrual (radical) organisational innovations (11)
Project-based
work
Interdisciplinary
workgroups
Flat organisation
34,8%
13,4%
10,7%
69,1%
Hungary
36,1%
Slovakia
13,4%
13
3. Distribution of procedural (incremental)organisational innovations (12)
Teamwork
41,7%
89,6%
Benchmarking
37,3%
21,6%
Quality circles
23,7%
14,4%
Hungary
Slovakia
Collecting
proposals
Quality control
system
Job rotation
49,7%
21,9%
9,7%
41,2%
33,0%
28,9%
14
3. Company Practice of Knowledge Development: „learning by acquisition” and
„learning by participation” (13)
Forms of knowledge development
Hungary
Slovakia
- Educational/training institutions courses
45.5 %
< 60.4 %
- Company required training in
training/educational institutions
64.3 %
< 68.6 %
80.3 % >
75.5 %
74.1 %
70.3 %
67.5 % >
44.3 %
62.6 %
63.3 %
- Job rotation
31.1 %
< 40.1 %
- Team work
57.1 %
< 74.0 %
I. Formal training courses
II. Competence development
- Consultation with colleagues and
managers
- On-the-Job training (OJT)
- Participation in professional
fairs/exposition
- Supporting cooperation with various
units within organization
III. Development of social skills (softskills)
Some Lessons (14)
1. The fast emerging „service economy” in Hungary is opening a new
growth potential for the Hungarian SMEs having „dynamic” capablity of
innovation.
2. The sustainable competitiveness of the SMEs in the KIBS sector is
strongly related to the collective (networking/clustering) learning
capacity of the firms. The learning capacity anables the firms to produce
higher value added (more knowledge content) products and services in the
Value Chain in general and in the Global Value Chain (GVC) in particular.
3. Role of organizational and workplace innovations are increasing in the
knowledge development and transfer. Technological innovation alone is not
sufficient source of the sustainable competitivness of the SMEs. (e.g.
Innovation Policy Workshop on „Social Innovation – Mobilizing Resources
and People” – Bureau of Europe Policy Advisors, Brussels, 25th – 26th
March, 2010.)
Some Lessons (15)
4.
5.
In renewing the National Innovation System in Hungary, there is a need
to construct a „map” of innovative organization of the firms (by
sectors, regions) to identify the innovative/learning segment of the
SMEs.
Urgent need for Strategic” or „high-value added” partnership between
business’, educational-research communities and the government
(„Triple-Helix model”) to design and implement the new trajectory of
the economic modernization in Hungary.
Thank you very much!
Contact: [email protected]
Web: www.sow.hu