1. USING ANALYTIC HIERARCHY PROCESS TO EVALUATE ORGANIZATIONAL
INNOVATIVENESS IN HIGH-TECH INDUSTRY
Ming-Ten Tsai
Department of Business Administration and the Institute of International Business, National
Cheng-Kung University
No.1, University Rd., Tainan 701, Taiwan
mingtien@mail.ncku.edu.tw
886-6-2757575ext53321
Shuang-Shii Chuang
Department of Business Administration and the Institute of International Business, National
Cheng-Kung University
No.1, University Rd., Tainan 701, Taiwan
886-6-2757575ext53320
Wei-Ping Hsieh*
Department of Business Administration and the Institute of International Business, National
Cheng-Kung University
Department of Hotel and Restaurant Management, Chia Nan University of Pharmacy &
Science
15F.-18, No.539, Chin Ping Rd., Anping Distric, Tainan 708, Taiwan.
apple887@ms49.hinet.net
886-6-2935696
ABSTRACT
This study aims at discussing the analytical typology of organizational innovation in
high-tech industry, and using some methodology to construct organizational innovation
measurement model. To do so, some methodology based on the in-depth interviews, focus
group techniques, factor analysis, and analytic hierarchy process are applied. The results of
the study show the “technical innovation” is more important than “administrative innovation”
in high-tech industry.
Keywords: High-tech Industry, Innovation, Organizational Innovation (OI), Analytic
Hierarchy Process（AHP）
INTRODUCTION
The dimensions of organizational innovation are extremely complex. In order to formulate the
innovativeness of an organization, some scholars extended the dimensions of their studies to
technological capability measurement indicators, incorporated management capabilities and
the concept of learning organization[4][5][6][8][9][12][14]. They defined innovativeness as
the overall capability expressed by an individual or group, and the output and structure of an
organization during the process of knowledge renewal. The breadth of innovation includes
equipment, systems, policies, processes, products and services. The depth of innovation
includes importance, degree of influence and effects on long-term profitability. It attempts to
propose a typology and construct a multidimensional organizational innovation measurement
model. By adopting a rigorous study methodology, the organization innovation measurement
model was developed and used to establish the foundation of a more complete theory of
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2. organizational innovation. This article introduces a new typology with a view to obtaining a
better understanding of organizational innovation in High-tech industry.
A HIERARCHICAL MODEL FOR HIGH-TECH INDUSTRY ORGANIZATIONAL
INNOVATION MEASUREMENT INDICATORS
In the past, organizational innovation was usually measured by perceived questionnaires.
However, results from such an approach varied greatly because of the subjective perception
of the questionnaire respondents. Besides, the weighted relative importance of different
dimensions was not considered. Thus, this paper attempts to develop an empirically-based
typology of organizational innovation which would reflect the actual innovation dimensions
and their indicators.
A brief description of selection criteria and hierarchical structure construction process is as
follows. First, initiative measurement indicators were selected through reviewing the related
literature. The foundation of the OI measurement indicators developed in the present study is
mainly based on OI structure factors proposed by Daft [2], Kimberely and Evanisko [11],
Amabile [1], Damanpour and Even [5], Damanpour [3][4], Schumann, Prestwood, Tong and
Vanston [13], Wolfe [17], Tang [14], Djellal and Gallouj [7], Van der Aa and Elfring, [16],
Tidd [15], Hipp and Grupp [10]. Second, the preliminary measurement indicators was
modified through a study of in-depth interviews with domain experts, together with focus
group techniques (FGT) to compile the views and opinions on the measurement indicators for
the OI of high-tech industry.
Third, the preliminary measurement indicators was first designed in the form of a
questionnaire and sent to middle to higher managers in the high-tech industry. A total of 700
questionnaires were sent out, and 436 (62 per cent) valid returns were collected. Based on the
results of factors analysis, different dimensions were identified and named accordingly. The
results of factor analyses are shown in Table 1. The hierarchy and naming of the final
measurement structure obtained after factor analysis is shown in Figure 1. A total of two
system dimensions, seven major dimensions and fourteen secondary dimensions were
obtained. The construction of a hierarchical structure model was completed.
TABLE 1 Factor Analysis and Reliability Test of Research Constructs
Varlance Item to
Main Factor
Secondary Dimensions & indicators Loading
Eigenvalue explained total α
Dimensions (%) correlation
Product Product innovativeness profitability 4.879 60.986 0.9191
Innovation 1.widely application of new product or new
0.836 0.7761
technology
2.widely commercialization of new product or new
0.835 0.8128
technology (3 years)
3.famous in product innovation 0.783 0.7343
4.product always lead the industry (3 years) 0.851 0.8199
5.awards for product innovation (3 years) 0.824 0.8151
Product innovativeness diversity 1.089 13.616 0.8026
6.master customer demand and market trend 0.752 0.5429
7.new idea for product 0.820 0.7396
8.diversification of product 0.843 0.6793
Process Degree of process innovativeness 2.793 69.825 0.8559
Innovation 1.new technology for improve process 0.840 0.7030
2.new method for improve process 0.876 0.7594
3.adjust production in a short time 0.791 0.6386
4.fast adjust for customer demand 0.833 0.6958
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3. TABLE 1 Factor Analysis and Reliability Test of Research Constructs(continue)
Varlance Item to
Main Factor
Secondary Dimensions & indicators Loading
Eigenvalue explained total α
Dimensions (%) correlation
Creative Work The support of supervisory 0.9077 47.773 0.9006
Environment 1.culture for break through and innovation 0.738 0.6671
2.culture for different opinion 0.726 0.7214
3.support creative program 0.796 0.7684
4.incentive creative idea 0.810 0.7586
5.encourage new problem-solving method 0.798 0.7454
6.encourage creative program 0.725 0.7203
The support of work team 2.106 11.085 0.8506
7.“new concept” to solve “old problem” 0.716 0.6992
8.attention employee’s opinion 0.786 0.7171
9.emphasis brainstorming 0.878 0.7505
The support of work team 1.408 7.411 0.9122
10.express employee’s opinion 0.638 0.7327
11.team discuss and create new idea 0.666 0.7772
12.effective team discuss 0.811 0.7905
13.open communication climate 0.699 0.8029
14.respect other’s opinion 0.833 0.7194
15.imagine and freedom of speech 0.717 0.7184
Challenge of work 1.127 5.933 0.8794
16.accept challenges 0.796 0.7664
17.flexible thinking 0.791 0.8142
18.autonomy to decide how to implementation 0.739 0.7310
19.widely application new technology/method 0.693 0.6596
Marketing Marketing process innovation 4.089 51.117 0.9063
Innovation 1.famous innovative advertisement 0.843 0.7857
2.creative promotion activities 0.886 0.7833
3.marketing activity lead industry development 0.875 0.7670
4.innovative marketing activities 0.885 0.8281
5.awards for innovative advertisement 0.733 0.6754
Customer relationship orientation 2.010 25.119 0.8683
6.change service model base on customer demand 0.870 0.7304
7new and effective project on customer’s complaint 0.880 0.7585
8.emphasis on customer relationship management 0.887 0.7637
Organizational The degree of organizational characteristic
4.861 69.439 0.9261
Characteristic innovation
Innovation 1.specialization 0.783 0.7063
2.empowerment 0.833 0.7690
3.participative working environment 0.839 0.7739
4.new technology knowledge 0.835 0.7673
5.administrative support 0.839 0.7757
6.external relationship 0.803 0.7309
7.open communication environment/channel 0.896 0.8465
Organizational The degree of management system innovation 3.941 65.686 0.9069
System 1.innovative selection system 0.844 0.8142
Innovation
2.performance method 0.843 0.7873
3.compensation system 0.914 0.8456
4.welfare system 0.794 0.7278
The degree of organization system flexible 1.037 17.283 0.8990
5.adjust employee’s work 0.916 0.8186
6.professional division 0.914 0.8186
Strategic Organizational change and slack resource 3.739 62.320 0.880
Innovation 1.master market chance 0.838 0.7394
2.master customer and their demand 0.891 0.8305
3..master competitor’s strategy 0.838 0.7534
4.slack resource 0.787 0.7076
The degree of organization internationalize 1.143 19.050 0.9291
5.international channel capability 0.932 0.8678
6.international brand capability 0.937 0.8678
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4. FIGURE 1 Hierarchical Structure and Dimensions Being Studied
【Target】 【System Dimensions】 【Main Dimensions】 【Secondary Dimensions】
Product innovativeness
profitability
Product Innovation
Technical Product innovativeness diversity
Innovation
Process Innovation Degree of process innovativeness
The support of supervisory
Creative work
The support of work team
environment
The support of work team
OI
Challenge of work
Marketing process innovation
Marketing innovation
Customer relationship orientation
Organizational characteristic The degree of organizational
innovation characteristic innovation
Administrative
Innovation
The degree of management
system innovation
Organizational system
innovation The degree of organization system
flexible
Organizational change and slack
Strategic innovation resource
The degree of organization
internationalize
AHP APPROACH IN THIS STUDY
Calculate Dimensions and Indicator Weights and Ranking
According to the ten experts who were consulted, Taiwan’s high-tech enterprise OI system
dimensions in the order of importance were TI (0.524) and then AI (0.476); the ranking of
main dimensions was: product innovation (0.337), process innovation (0.187), strategic
innovation (0.160), organizational system innovation (0.086), organizational characteristic
innovation (0.081), creative work environment (0.076), and marketing innovation (0.073). A
C.R. value of 0.02 was obtained, indicating that the consistency was acceptable. From these
results, it can be concluded that the display of product innovation, process innovation and
strategic innovation are the most important dimensions in evaluating the organizational
innovative capability of an enterprise.
Establishing Mathematical Formula for Measuring the OI of High-tech Industry
For establishing dimension and indicator weightings for the OI of Taiwan’s high-tech
industry, the fifty-eight indicators were normalized to obtain a standardized value (Z).After
individual indicators were weighted and dimensions of different hierarchical layers were
obtained by AHP, the OI measurement model for Taiwan’s high-tech industry was
constructed using a linear combination approach through the above mentioned simple
additive weight (SAW) treatment. The detailed algorithm for establishing the model and
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5. score calculation is as follows:
n
(1)
A ijk
= ∑W
l =1
ijkl
× Z ijkl
Where Zijkl : the ijk th secondary dimension, with the standardized value of the l th indicator.
Wijkl : the ijk th secondary dimension, with the relative weight of the l th indicator.
Aijk : score of the ijk th secondary dimension.
m
(2)
A ij
= × ∑W
k =1
ijk A ijk
Where Aijk : the ij th main dimension, with standard value of the k th secondary dimension.
Wijk : the ij th main dimension, with the relative weight of the k th secondary
dimension.
Aij : score of the ij th main dimension.
2
(3)
A = i
× ∑W
j =1
ij A ij
Where Aij : the i th main dimension, with standard value of the j th main dimension.
Wij : the i th main dimension, with the relative weight of the j th main dimension.
Ai : score of the i th system dimension.
2
E = ∑W × (4)
i =1
i A i
Where Ai : the standard value of the i th system dimension.
Wi : the relative weight of the i th system dimension.
E : OI score of the high-tech industry in Taiwan.
CONCLUSIONS
Theoretical Implication
An OI evaluation model for high-tech industry in Taiwan has been established by using a
rigorous method. It is a challenging task and the model needs to be continuously modified.
The method employed orientation towards organizational innovativeness. The study
employed multiple viewpoints to define OI, and the definition was in agreement with many
contemporary researchers’ views with an attempt to incorporate TI and AI into the definition
of OI.
Since the present model incorporates the views and opinions from numerous experts and
literature, it displays general agreement with past studies. The major theoretical contribution
of the present study is its being supplemental to existing OI theories. The present study
proposes dimensions and indicators for evaluating high-tech industry OI. They not only
explain the context of OI, but also form a platform for studying OI measuring models and
applications. In practical terms, results from the present study should be useful guidelines and
reference for corporations seeking to improve organization innovation capabilities.
Practical Implications
The above results showed that for an enterprise, the importance of TI appears to be greater
than AI. However, it must be stressed that the activities of AI and TI can mutually enhance
the adaptability of an enterprise to environmental changes. Namely, they have synergistic
effects on the adaptability of an enterprise. Therefore, the present measurement model should
be helpful for an enterprise in understanding its current OI status, providing strategic
recommendations, and serving as guidelines when it aims at improving its OI activities and
enhancing its competitiveness.
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