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The purpose of this paper is to investigate how firms in developing countries finance innovation. Notably, the study seeks to investigate whether innovative firms exhibit financing patterns different from those of non-innovative ones. It also examines the effect of financing sources on firm’s probability to innovate.

The study utilizes firm-level data from the World Bank Enterprise Survey. From 28 African countries, 11,173 firms have been included in the sample. A statistical t-test is used for two independent samples and logistic regression models.

The results show that innovative firms, specifically innovative small- and medium-size firms exhibit financing patterns different from non-innovative peers. Further analysis indicates that there is no statistically significant difference between the financing patterns of innovative and non-innovative large firms. In Africa, innovation is mostly financed using internal sources and bank finance. Equity finance and bank finance have shown a higher effect followed by internal finance, finance from non-bank financial institutions and trade credit finance on firms’ probability to innovate.

The management of innovative firms should reduce dependency on short-term and retained earning financing and increase the use of long-term instruments improve innovation performance.

A pending policy task for African leaders is to design and evaluate reforms to create a strong financial sector that willing to support the innovation process.

This study contributes to the existent literature on finance of innovation by examining how firms finance innovation activities in developing countries. This study provides evidence on how innovative firms exhibit financing patterns different from non-innovative ones from developing countries.

Family businesses are essential for economic growth and development through new business start-ups (entrepreneurship) and growth of existing ones. As competition is fierce, the ability of a company to buoy up its business practices and exceed its own – and its competition’s – expectations through innovation – is critical to survival. In managing family businesses (mostly small and medium-sized enterprises [SMEs]) in the current globally competitive landscape, entrepreneurs must be creative and behave in ways that galvanize workers to be innovative. This study attempts to ascertain the strategies management adopt to heighten innovation in family businesses.

Both qualitative and quantitative techniques were used for gathering and analysing data based upon which conclusions were drawn.

The study revealed that seven factors should be assessed by SMEs that are family firms to determine the innovative ideas that are promising to be pursued, which are the uniqueness of the idea, its market potential, cost, expert advice, the impact of both current and future environmental forces, availability of raw materials and supplies and the idea’s future appeal.

This is perhaps the first detailed study of strategies that could be adopted by entrepreneurs and/or managers to heighten innovation in small and medium family firms, which also points out the factors/criteria used to determine which initiatives have higher chances of success – hence deserving to be pursued.

This work aims to investigate the current financial structure of Italian agri-food micro, small and medium enterprises (MSMEs) to understand how MSMEs face innovation challenges, which are also required to support sustainable development.

To reach the goal, an empirical longitudinal analysis is performed on a sample of Italian agri-food firms. In detail, to highlight the changes in the use of financial sources between 2013 and 2019, a descriptive ratio analysis is carried out on the data extracted by the AIDA database. In addition, statistical analyses were performed, including t-tests and U Mann–Whitney. Finally, a fixed-effects model is created to analyse the panel data. To ensure homogeneity, the sub-sectors of production and transformation are separately considered.

The financial structure analysis shows an increase in the equity percentage in the funding sources, attributable to an attempt to compensate for the reduction of banks' funding. However, even though this change has not compromised firms' profitability, the undercapitalisation of companies is still present. Therefore, more equity investments are required to support the innovation process.

The value of the present research is to highlight the choice of using new alternative financing sources instead of traditional banks' credit to implement sustainable and innovative development Italian agri-food sector (AFS). This choice is forced by reducing finance from banks and other financial institutions because of the credit crunch. This issue is even more relevant, considering that MSMEs have structural financial problems but have to fulfil the mission of pursuing innovation in the same way as large companies. Therefore, this paper expands the literature on agri-food, delving into an issue typical of MSMEs and combining agri-food with the need for innovation.

Openness to external knowledge has recently gained popularity as a means for firms to complement and leverage internal knowledge in the pursuit of innovation outcomes. However, conflicting evidence exists regarding the role of openness in external knowledge acquisition. This paper aims to propose that openness to external knowledge has a nonlinear effect on innovation performance and that this nonlinear relationship is contingent on an ambidextrous knowledge search strategy.

Based on original large-scale survey of 246 interfirm collaborations in the high-technology industry, it is found that the impact of openness to external knowledge on innovation performance exhibits an inverted-U shape and that this relationship is affected by an ambidextrous knowledge search strategy.

The results indicate that an ambidextrous knowledge strategy that addresses the depth and breadth of external knowledge significantly influences a firm’s ability to derive benefits from increased openness to external knowledge. Empirically, the authors provide an original contribution to high-technology firms by exploring how and why an ambidextrous knowledge strategy can be a critical catalyst spurring innovation performance.

The research scope is limited to a single industry. Further research could extend the theoretical framework to multiple industries, which may increase the likelihood of innovation theory development.

The results suggest that firms opening up the boundaries of their innovation activity to engage in external knowledge are able to leverage their in-house innovation to enhance their innovation performance. The authors advocate that in innovation management domains, greater emphasis is needed on how openness to external knowledge has more positive impacts not only on innovation performance but also on innovation implemented management.

This study is among the first to investigate the ambidextrous knowledge search effect on the external knowledge of high-technology firms. This paper contributes to the theoretical and practical literature concerning openness innovation and knowledge management by reflecting on the ambidextrous knowledge search strategy.

Innovation is a process that enables organizations to sustain and prosper in a competitive business environment. This study aims to understand the key drivers of innovation within organizations from the lens of employees.

This study uses a grounded theory approach based on semi-structured in-depth interviews of 20 professionals working in information technology (IT) firms. Judgmental sampling was adopted to select the respondents. Open coding, inductive analysis was conducted on the interview transcripts to generate relevant themes.

Emerging themes indicate that innovation within organizations can be triggered as a response to client requirements or the employees’ inherent urge to innovate. Certain factors such as user engagement, formal organizational processes and practices, informal collaborative practices, the role played by experts and leaders and upskilling were seen to enable innovative outcomes within organizations.

Findings from this study will allow leaders to activate the identified drivers by designing suitable organizational processes and strategies to nurture a successful innovation culture within their teams.

This grounded theory-based study looks at drivers of innovation within IT organizations from the perspective of employees.

Failure to resolve Ghana's infrastructure deficit, coupled with inability of traditional financing methods to meet current infrastructure demand, have triggered recent studies to explore strategic issues underpinning innovative financing (IF) of infrastructure. The purpose of this study is to explore potential impediments inherent in IF tools available to Ghana.

The empirical aspect of the investigation used structured interviews and a survey questionnaire to gather data from project implementation agencies with experience of infrastructure IF. Factor analysis (principal component analysis) established which variables measured aspects of the same underlying dimensions.

A total of three key challenges were identified, and explained in terms of: investment capacity; implementation and revenue mobilization. Findings provide an early failure signal when implementing IF.

Conclusions and recommendations are of benefit to various international development partners and governmental and non‐governmental organizations that develop and/or implement infrastructure projects. Further research will seek to explore strategic, innovative solutions to on‐going challenges.

Knowledge of the critical challenges facing implementation of IF remain scant and incomplete.

The purpose of this paper is to investigate why firms engaged in R&D investment and international diversification produce different results in innovation performance.

This study is based on a sample of 283 Taiwanese manufacturing firms in the information technology industry.

The findings showed that in the top management teams (TMTs) with greater tenure diversity there was a stronger relationship between R&D investment and innovation performance. In addition, the TMTs with greater educational diversity enhanced the relationship between international diversification and innovation performance.

This study stresses the vital role of TMT diversity in resource allocation and information processing during the process of innovation. The authors examined the critical role of TMT educational diversity in bringing a wider range of network resources and the role of TMT tenure diversity in the allocation of firm-specific resources. The TMT diversity causes firms to experience different innovation results during the innovation process.

The purpose of this paper is to examine the extent to which institutional norms determine attributes of internal audit practices and how institutional changes explain the development of these practices.

The authors employed a qualitative research approach based on archival analysis and interview evidence.

Findings indicate that regulation‐based institutional norms explain the adoption of internal audit and the function's characteristics in Ethiopian organizations. Furthermore, innovative introduction of internal audit practices originate within individual organizations and eventually get institutionalized through diffusion. Such innovations are associated with organizational size, top management characteristics, internal audit advancement in technology, and exogenous input from the external environment. Widely accepted internal audit practices, as institutional norms, are not always taken‐for‐granted at the level of individual organizations. The institutional change perspective enables explaining how new internal audit approaches are introduced to supplant old ones.

This study theorizes the development of internal audit practices from an institutional change perspective. Being the first study to do so, it contributes to the understanding of key drivers of institutional change that initiate new institutional norms that foster the development of internal audit through introduction and diffusion of new audit practices as old ones are deinstitutionalized.

As an important driving factor of digital innovation, distributed innovation has received extensive attention from academia and business circles in recent years. However, extant works lack a discussion on the influence of distributed innovation on digital innovation performance. Drawing on the opportunity perspective, the study constructs a moderated mediating model to address how distributed innovation directly affects enterprises' digital innovation performance. Particularly, it investigates the moderating and mediating effects of IT-enabled capabilities and digital entrepreneurial opportunities on the above correlation.

With a survey data set of 399 Chinese science and technology enterprises, the study conducts hierarchical linear modeling (HLM) and bootstrap to test the study’s hypotheses.

Results demonstrate that (1) distributed innovation positively enhances enterprises' digital innovation performance; (2) digital entrepreneurial opportunities partially mediate the positive relationship between distributed innovation and digital innovation performance; (3) IT-enabled capabilities positively moderate the relationship between distributed innovation and digital entrepreneurial opportunities; (4) IT-enabled capabilities positively moderate the mediating role of digital entrepreneurial opportunities in the relationship between distributed innovation and digital innovation performance.

This is an empirical study on the impact mechanism of IT-enabled capabilities and digital entrepreneurial opportunities on the relationship between distributed innovation and digital innovation performance in China. It advances theories related to distributed innovation, digital innovation and digital entrepreneurial opportunities, and provides decision-making references for the enhancement of digital innovation capabilities of science and technology enterprises.

After studying this case, students should be able to: explain how strategic management relates to the areas of innovation, operations, technology, entrepreneurship and emerging markets; analyse strategy implementation and execution at the operational level, in contrast to strategy formulation at the strategic mission, values and vision level; discuss innovation, entrepreneurship and new technologies in emerging markets; and assess the impact of technology-driven entrepreneurship on significant socio-economic change that is on transformational entrepreneurship, in emerging markets.

This case outlines key global challenges facing higher education in the African context. It discusses the African Leadership University (ALU) as an innovative higher education institution, including its origins, establishment, strategy and purpose, curriculum, technology and operations, student support network and funding. It also describes ALU’s ongoing challenges and future prospects. ALU was launched in 2015 by Fred Swaniker, founder and chief executive officer and Khurram Masood, co-founder and chief operating officer. ALU’s vision was to transform Africa by developing and connecting three million high-calibre, ethical and entrepreneurial leaders by 2035. In August 2019, Swaniker and Masood considered how to ensure ALU’s sustainability and its vision. They had already changed ALU’s operational strategy by establishing micro-campuses instead of universities to scale rapidly and avoid regulatory barriers. However, would that be enough to uphold ALU’s vision for 2035?

This case is appropriate for postgraduate-level academic programmes and executive education programmes in management.

Teaching Notes are available for educators only.

CSS 11: Strategy.