Configuration of alliance portfolio for firm’s innovation in Eco-friendly car industry

-HYUNDAI and TOYOTA

Hyeonjoo Jeong, Youngju Ko

UST KIRCT CampusKOREA

Parallel Session 1.5: Accelerating Cluster Growth in Asian Countries

Background1

Method2

Result3

Discussion4

Research limitation & Further study5

Contents

Background

Bioplastic

Fusion of Bio & Chemical Technology

• Solution for cli-mate change is-sues

Eco-friendly auto-mobile material

The strategic al-liance is important for securing original technologies

1 2

3 4

1 Fusion of Bio & Chemical Tech. Bioplastic is polymer that is made by

bio-processing with biomass

2 Solution for climate change issue Reduce CO2 that is a major form of

global warming by using bio-based renewable resources

3 Using for eco-friendly automobile material TOYOTA actively use bioplastic for pro-

duction eco-friendly cars

4 Securing original technologies through strategic alliance TOYOTA took over PLA production fac-

tory from SHIMADZU through a strate-gic alliance

• Response the in-ternational envi-ronmental regu-lation

Alliance portfo-lio size

• No. of partners + No. of alliances • Firms that have many partners obtain diverse technologies and knowledges

from supplier through a synergy effect(Shan et al. 1994; Mouri et al. 2012)• A central firm that has more partners is in a good position to secure resources

and knowledges. Because a central firm’s centrality increases in the network by their partners (Goerzen 2007)

Structural di-mension of al-liance portfolio

• Strength of ties between the central enterprises and partners• The strong tie which is confidence between a central firm and its partners have

less conflict and promote the exchange of complex knowledges(Ulrich Wassmer 2010; Changsu Kim et al 2007)

• The weak tie is likely to expand cooperation capability with various partners to increase the flexibility of network and has an advantage on getting state-of-the-art information about new market(Capaldo 2007)

Partner dimen-sion of alliance

portfolio

• Technology similarity & Type of partners• Firms sharing similar knowledge and technology with their partners will have

an easier working time but, when alliance partners are too similar, they cannot effectively obtain new knowledge(Lan et al. 1998; Frankort et al. 2011)

• Various partner types have a rich resource pool and a large choice possibility but, the cooperation costs may be increased by the conflict and complexity with partners(Baum et al. 2000; Anna S. et al. 2012; Olerlemans et al. 2013)

Literature Review

Research question

1 What kind of alliance portfolio of TOYOTA that preoccupied eco-friendly car market?

2 Did TOYOTA gain any kind of business performance through strategic alliances?

3 What is the difference of the configuration of alliance portfolio between TOYOTA and HYUNDAI in bioplastic industry for making eco-friendly car?

• A comparison of the configuration of alliance portfolio in TOYOTA and HYUNDAI• I expect to draw a proper configuration of alliance portfolio for achieving business

performance in eco-friendly car industry

Method

Joint patent Configuration of alliance portfolio

Joint patents are assigned to and jointly owned by more than one inventor

Bioplastics patents of HYUNDAI and TOYOTA

Alliance portfolio size

Structural dimension of alliance portfolio

Partner dimension of al-liance portfolio

No. of partners No. of alliances

The proportion of re-peated partners

Technology similarity Type of partners

HYUNDAI TOYOTA

50223

11155

No. of bioplastic patentsNo. of total patents No. of joint patents

Result-Alliance portfolio size

1. Alliance portfolio size of HYUNDAI 2. Alliance portfolio size of TOYOTA

Number of partners: 1 (in 2007)→ 6 (in 2011) Number of alliance : 1 count of alliance with 1

partner (in 2007) → 11 counts of alliance with 6 partners (in 2011)

In early stage, TOYOTA had few partners but in ac-tive R&D collaboration

Numerical increment of partners & a steady decline in the number of alliances (after 2008)

The portfolio size has changed to an expanded form of increase in both the number of partners and al-liances

Result-Structural dimension of alliance portfolio

HYUNDAI’s Partnership continuity

The inflow of new partners is reduced partnership continuity of HYUNDAI The network flexibility is increased through the inflow of new partners (in 2011) HYUNDAI have the alliance portfolio that consists of the high proportion of weak ties

Result-Structural dimension of alliance portfolio

TOYOTA’s partnership continuity

Cyclically repeated strong ties and weak ties

Most of the strong tie is with SHIMADZU

TOYOTA took over bioplastic production factory from SHIMADZU in 2002

Result-Partner dimension of alliance portfolio-HYUNDAI

HYUNDAI and their partners’ technology similarity = 25%

Cooperation with large firms at the rate of 70% and with universities at the rate of 30% (as of 2011)

Result-Partner dimension of alliance portfolio-TOYOTA

TOYOTA and their partners’ technology similarity = 31%

Mostly cooperate with large firms, other partner types occupy small portion in alliance portfolio

Since 2008, for the first time, the universities participated in TOYOTA’s alliance portfolio and they gradually have increased their portion in the network

Discussion

HYUNDAIAlliance portfolio size was expanded by the increment of partners and alliances

Large alliance configuration size with a number of part-ners and alliances

partnership continuity declined in 20%

partnership continuity cyclically increase and decrease

In 2009, cooperation with new partners for production interior material (that made by PLA) of eco-friendly hybrid cars

• Focus on the cooperation with existing partners until TOYOTA obtain the necessary know-how and technologies

• When TOYOTA need new knowledge and technology, they form new partnership with new partners

• technology similarity = 25%• cooperation with large firm

= 70%

constantly cooperate with KIA that have a same goal with HYUNDAI for the production of eco-friendly car

• technology similarity = 31%• high rate of cooperation with

large firm but, TOYOTA also co-operates with other partner types

• An increment in the coopera-tion with universities

• Also other new partner types can join in the network because of TOYOTA have the stable structure of alliance portfolio

Alliance portfolio size Structural dimension Partner dimension

TOYOTA

1• TOYOTA have secured the original technology by cooperation with SHIMADZU

that are bioplastic production company

• HYUNDAI cooperate with KIA that are automobile manufacturer like HYUNDAI Like in the case of TOYOTA, HYUNDAI have to form the strong ties with chemical

companies that produce bioplastic for securing bioplastic original technologies

2• HYUNDAI have to do R&D collaboration not only with large firms but with small-

medium firms, universities, research institutes

By the same strategy, TOYOTA have secured bioplastic original technologies and has enjoyed the dominant position in world bioplastic market

3• As suggested in our findings, The result of analysis of a market leader’s alliance

portfolio can be utilized as a model in the industry fields needing innovation

In case of using this model, a firm can reduce the cost for network construction and operation

Research implication

Research limitations and further study

Limitations

• Patent data can only reveal one aspect of firm innovation

• The result of this research doesn’t clearly show whether patents lead to a business in-novation

Further study

analyze diverse outcomes of business innova-tion(such as the increased production of new products or the increased sale of new prod-ucts etc.)

carry out a survey or interview targeting experts in each company

• Joint patent is one of a result of R&D collab-oration

• These findings do not contain a character of partners(unique properties about knowl-edge and technology, the cultural differences etc.)

cover the alliance portfolio size, the structural and partner dimension of alliance portfolio as well as other various factors to show that these factors lead to a business innovation

Thank youIf you have any questions or comments about

my findings, please contact me at:

hjjeong@krict.re.kr