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Jiepang in China Faculty of Education and Economic Studies Department of Business and Economic Studies Innovation and its influence in LBS industry: Jiepang in China Yang OU Zijian LI Second Cycle Supervisor: Maria Fregidou-Malama Acknowledgement We would like to express our sincere appreciation to our supervisor, Maria Fregidou-Marlma, for her patient guidance and valuable support and suggestions to our thesis. We also need to express our gratitude for our examiner Aihie Osarenkhoe. We would like to thank the Co-founder of Jiepang, without his help we could not finish the thesis. Thank you! Last but not least, thanks to our families who have been supporting us all the way. We love you all. Gävle, June 2012 Yang OU & Zijian LI Abstract Title: Innovation and its influence of LBS company: Jiepang in China Level: Final assignment for Master of Business Administration Author: Yang OU, Zijian LI Supervisor: Maria. Fregidou-Malama Date: 2012-June Aim: Chinese firms desire to win the market, and they should consider innovation. The aim of the study is to explore the effects of innovation for LBS firm to gain success in China. Method: The main research method is case study. Jiepang as our case company is a LBS firm in China. And we interview two persons from different department, and one is its co-founder. Result & Conclusions: Innovative action and behavior must cover whole organization, all employees should be participant. In China, LBS is a rising industry, but LBS firms face to many threats from competitors and substitutes too. Thereby in order to survive in the market and gain success, innovation is a very important strategy for LBS firm, but not the unique method. Suggestions for future research: Open innovation process is becoming a hot topic currently, so how to innovate with customer or user, how to cooperate with them? And if the data collection can take from multi-cases, it would be make research result more convincing. Contribution of the thesis: In this study, we introduce and popularize a new industry, LBS in China. And we give a deeper understanding of the importance of innovation and how innovation can improve the competitiveness of the company in this industry. Key words: Location-based Services, Innovation, service innovation, China. List of abbreviations API: Application Program Interface GPS: Global Position System HTML5: Hypertext Markup Language 5 version IO: Industry Organization IT: Information Technology IP: Internet Protocol KPCB: Kleiner Perkins Caufield & Byers LBS: Location-Based Service O2O: On-line to Off-line OECD: Organization for Economic and Co-operative Development R&D: Research and Development SCP: Structure-Conduct-Performance SNS: Social Network Site SoLoMo: Social+ Local + Mobile VPN: Virtual Private Network List of Professional terms Android: an operating system for mobile devices, developed by Open Handset Alliance, led by Google and other companies iOS: Apple Inc.’s mobile operating system Renren: similar with Facebook Sina Weibo: micro-blog, similar with Twitter Symbian: a mobile operating system widely used on Nokia phones CONTENTS 1.Introduction .................................................................................................................................... 1 1.1 Background .......................................................................................................................... 1 1.2 Problem Discussion ............................................................................................................. 3 1.3 Aim and limitation ............................................................................................................... 4 1.4 Disposition ........................................................................................................................... 4 2.Theoretical Framework .................................................................................................................. 5 2.1 Innovation ............................................................................................................................ 5 2.1.1 Definition of innovation ........................................................................................... 5 2.1.2 Innovation of Service firm ........................................................................................ 7 2.2 Industry Competition ......................................................................................................... 11 2.2.1 Michael Porter’s Five Forces Framework .............................................................. 12 2.2.2 Location-based Services (LBS) Industry ............................................................ 16 2.3 Reflections of theories ....................................................................................................... 16 3.Methodology ................................................................................................................................. 19 3.1 Qualitative research ........................................................................................................... 19 3.2 Case study .......................................................................................................................... 20 3.3 Literature review ............................................................................................................... 22 3.4 Interview ............................................................................................................................ 24 3.5 Reliability and Validity ..................................................................................................... 28 4.Empirical Findings ....................................................................................................................... 29 4.1 How does Jiepang work? ................................................................................................... 29 4.2 How does Jiepang innovate? ............................................................................................. 31 4.3 How innovation effect Jiepang in the competitive environment? ..................................... 34 5.Analysis ........................................................................................................................................ 36 5.1 Benefit of LBS industry ..................................................................................................... 36 5.2 Innovation of LBS industry ............................................................................................... 38 5.3 Porter’s five forces analysis in LBS Industry in China ..................................................... 42 6.Conclusions .................................................................................................................................. 46 6.1 Summary of this study ....................................................................................................... 46 6.2 Reflection and Implication ................................................................................................ 48 6.3 Limitation and Suggestions for future studies ................................................................... 49 References ....................................................................................................................................... 50 Appendix1 ....................................................................................................................................... 56 Appendix 2 ...................................................................................................................................... 57 List of Figures Figure 1: 4Pa innovation model.........................................................................................................6 Figure 2: Five Forces Framework....................................................................................................13 Figure 3: Innovation model for LBS firm........................................................................................17 1.Introduction This chapter presents the background of this study, which will introduce innovation and LBS industry. Next we will discuss what problem we find in this topic, and explain our motivation of this study. And then the aim of this paper and research questions also are stressed in this chapter. Besides, limitation and disposition discuss below. 1.1 Background Life is just like boating up stream, you are setting back if not moving up, so does the business. Innovate or die, which was first forward by Peter Drucker (1999), the master of modern management, has pointed out the importance of innovation. The “Godfather” of innovation studies who is Joseph Schumpeter, his view of innovation is competition from the new commodity, the new technology, the new source of supply, the new type of organization (Schumpeter, 1950). As Peng (2009) states innovation is at the heart of an entrepreneurial mindset. But innovation and competitive success are not simply about entrepreneur or high-technology manufactures, it also growth in service (Tidd and Bessant, 2009).It’s obviously that there is a positive correlation between innovation and superior profitability. Tidd and Bessant, (2009) stress innovation is the most significant characteristic associated with success; and it is not only at the level of the individual organization but also increasingly as the source for notational economic growth. Hence, what is innovation? Tidd and Bessant (2009) define as “innovation is a process
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