Linkage between organisational innovation capability, product platform development and performance

Abstract

This study examines the relationship between organisational innovation capability, product platform development and performance in pharmaceutical small and medium enterprises (SMEs) in Iran, an area which has remained unexplored. The intensive literature review has led us to suggest an empirically tested conceptual model consisting of innovation capability, product platform and performance as well as factors/enablers shaping innovation capability in the pharmaceutical firms. Combinations of quantitative and qualitative methods were used for data collection and analysis. Eight Active Pharmaceutical Ingredients (API) companies that produce about 80% of local manufactured API were studied. The results show that the Iranian firms have chosen an imitative strategy in technology and product development. The common pattern for technology sourcing was external. However, although all companies purchased technologies from well-known suppliers, they demonstrated significant differences in the variety of products produced and performance. The failure firms lacked sound absorptive capability. Furthermore, the firms with high performance used a combination of internal and external sources for technology and product development. The empirical analysis showed a positive relationship between innovation capabilities, technology platform, product platform and performance. The pre-requisite to this relationship was found to be effective innovation management and strength/abilities in strategy, organisational structure, learning, processes and linkage (relationship) with the customers, suppliers and alliances.

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