MIKE B&E MSc. in Innovation, Knowledge and Entrepreneurial/Economic Dynamics TAKE OFF IN INNOVATION – CASE STUDY OF AALBORG AIRPORT Master thesis January 2021 Dorottya Hrabovszki Supervisor: Jacob Rubæk Holm, Ph.D TABLE OF CONTENTS ABSTRACT .................................................................................................................................................. IV ACKNOWLEDGEMENTS ......................................................................................................................... IV 1. INTRODUCTION ................................................................................................................................ 1 1.1. RELEVANCE OF THE SUBJECT ......................................................................................................... 1 1.2. PROBLEM STATEMENT AND RESEARCH QUESTION .......................................................................... 6 1.2.1. Innovation management at airports ......................................................................................... 6 1.2.2. Research question ................................................................................................................... 11 1.3. SHORT OVERVIEW OF AALBORG AIRPORT.................................................................................... 12 2. METHODOLOGY ............................................................................................................................. 17 2.1. PHILOSOPHY OF SCIENCE.............................................................................................................. 17 2.2. DATA GATHERING ........................................................................................................................ 19 2.3. METHODS ..................................................................................................................................... 19 2.3.1. Research design ...................................................................................................................... 20 2.3.2. Overview of qualitative methods ............................................................................................ 23 2.3.3. Overview of quantitative methods .......................................................................................... 24 2.3.4. Gravity model ......................................................................................................................... 26 2.3.5. Estimation ............................................................................................................................... 29 2.4. VALIDITY AND RELIABILITY ......................................................................................................... 30 3. LITERATURE REVIEW .................................................................................................................. 32 3.1. INNOVATION MANAGEMENT......................................................................................................... 32 3.1.1. Innovation ............................................................................................................................... 33 3.1.2. Innovation activities ............................................................................................................... 34 3.1.3. Innovators ............................................................................................................................... 36 3.1.4. Innovation management theories............................................................................................ 37 3.1.5. Appropriability regimes .......................................................................................................... 43 3.1.6. Open innovation ..................................................................................................................... 44 3.2. DEMAND FORECASTING BY AIRLINES ........................................................................................... 45 3.2.1. Five freedoms of the air .......................................................................................................... 45 3.2.2. Demand forecasting................................................................................................................ 46 3.2.3. Commonly used variables considered .................................................................................... 49 4. DATA GATHERING, RESULTS AND ANALYSIS ...................................................................... 51 4.1. QUANTITATIVE ............................................................................................................................ 51 4.1.1. Data gathering and cleaning .................................................................................................. 52 4.1.2. Descriptive statistics and excluded variables ......................................................................... 56 4.1.3. Regression & Analysis ............................................................................................................ 59 4.2. QUALITATIVE ............................................................................................................................... 61 4.2.1. Data gathering – conducting interviews ................................................................................. 61 4.2.2. Analysis .................................................................................................................................. 62 5. DISCUSSION ...................................................................................................................................... 70 5.1. INNOVATION MANAGEMENT AT AALBORG AIRPORT .................................................................... 71 5.2. INNOVATION PERFORMANCE MEASUREMENT AT AALBORG AIRPORT .......................................... 78 5.2.1. Does the model fit the guiding principles? ............................................................................. 78 5.2.2. Strengths and weaknesses ....................................................................................................... 81 5.2.3. Results .................................................................................................................................... 82 6. CONCLUSION ................................................................................................................................... 83 7. REFERENCES ................................................................................................................................... 85 APPENDIX .................................................................................................................................................... II APPENDIX A ............................................................................................................................................... III APPENDIX B ............................................................................................................................................ XVI APPENDIX C ........................................................................................................................................... XVII ii TABLE OF FIGURES AND TABLES Figure 1 Revenue structure of an average airport ................................................................. 1 Figure 2 Cost distribution at airports .................................................................................... 5 Figure 3 Number of passengers annually at Aalborg Airport (2005-2019) ....................... 12 Figure 4 Airport preference/catchment area within Jutland, DK ....................................... 13 Figure 5 Catchment area of Aalborg Airport ...................................................................... 14 Figure 6 Research design .................................................................................................... 20 Figure 7 Conceptual framework of the thesis ..................................................................... 22 Figure 8 The stages of the innovation process ................................................................... 35 Figure 9 Closed and open innovation principles ................................................................ 44 Figure 10 Correlation matrix for all considered variables ............................................... XVI Figure 11 Normal P-P Plot pf regression standardized residual ..................................... XVII Figure 12 Histogram of regression standardized residual and frequency ...................... XVII Figure 13 Standardized residual and predicated value scatter plot .............................. XVIII Figure 14 Linearity matrix ............................................................................................ XVIII Table 1 Interview questions sorted by focus ...................................................................... 23 Table 2 Properties of selected previously estimated gravity models within aviation ........ 25 Table 3 Differences between exploitative and exploratory business.................................. 39 Table 4 Strategies of the firm ............................................................................................. 40 Table 5 Description of all considered variables ................................................................. 53 Table 6 Descriptive statistics .............................................................................................. 56 Table 7 Correlation matrix