THESIS ON SOCIAL SCIENCES (Economics) INTERIM-MANAGEMENT-DEPLOYMENTS IN AN INNOVATION- CONTEXT JÜRGEN BRUNS TUT PRESS School of Economics and Business Administration Department of Business Administration TALLINN UNIVERSITY OF TECHNOLOGY Dissertation was accepted for the commencement of the degree of Doctor of Philosophy on Social Sciences (Economics) on August 26, 2005 Supervisor: Prof. Maksim Saat, School of Economics and Business Administration Opponents: Prof. Wolfgang Weber, Paderborn University, Germany, Prof. Juhan Teder, Tallinn University of Technology, Estonia Commencement: September 9, 2005 Declaration of Honor: Hereby I declare that I wrote this doctoral thesis without help from third parties. I did not use any other sources and help than what I declared in the footnotes and the appendix. This thesis has never before, neither in this nor in a similar way, been presented to any other examination administration. Copyright Jürgen Bruns 2005 ISSN 1406-4790 ISBN 9985-59-565-3 TALLINNA TEHNIKAÜLIKOOL AJUTISE JUHTIMISE EFEKTIIVNE RAKENDAMINE INNOVATSIOONI JUHTIMISE KONTEKSTIS JÜRGEN BRUNS Tallinn 2006 Majandusteaduskond Ärikorralduse Instituut TALLINNA TEHNIKAÜLIKOOL Dissertatioon on lubatud kaitsmisele Filosoofiadoktori teaduskraadi taotlemiseks Sotsiaalteadustes (Majandus) ... aug. 2006 Juhendaja: Prof. Maksim Saat, majandusteaduskond Opponendid: Prof. Wofgang Weber, Paderborni Ülikool, Saksamaa Prof. Juhan Teder, Tallinna Tehnikaülikool, Eesti Kaitsmine: ..... September, 2006 Deklaratsioon: deklareerin, et olen koostanud doktoritöö iseseisvalt ja seda ei ole esitatud teiste teaduskraadide taotlemiseks. Kõik töö koostamisel kasutatud teiste autorite tööd, olulised seisukohad, kirjandusallikatest ja mujalt pärinevad andmed on viidatud. Autoriõigus Jürgen Bruns, 2006 ISSN 1406-4790 ISBN 9985-59-565-3 OVERVIEW OF CONTENT 1. Introduction 11 2. Interim-Management – Subject to Analysis 24 3. Approaching Potential Interim-Management-Deployments in the Context of Innovation 36 4. Empirical Methodology 55 5. Interim-Management-Deployments in the Context of Innovation – a Conceptual Model 68 6. Interim-Management in a European Innovation Context 118 7. Conclusion 163 5 Table of Contents 1. Introduction 11 1.1 Innovation as an Elementary Task of Enterprises 12 1.2 Interim-Management as a Flexible Form of Work 16 1.3 Objective of the Thesis and Thematic Boundaries 20 1.4 Concept of the Thesis 21 2. Interim-Management – Subject to Analysis 24 2.1 Linguistic; Institutional, Functional and Legal Classification of Interim-Management 24 2.1.1 Linguistic Classification 24 2.1.2 Institutional Classification 24 2.1.3 Functional Classification 25 2.1.4 Legal Classification 25 2.2 Distinction of Interim-Managers from Other Groups of Persons 29 2.2.1 Distinction of the Interim-Manager from the Permanent Manager 29 2.2.2 Distinction of the Interim-Manager from the Management Consultant 31 2.2.3 Definition of Interim-Management 34 2.3 History of Interim-Management in Germany 35 3. Approaching Potential Interim-Management-Deployments in the Context of Innovation 36 3.1. Successfulness of the Leadership-Structure in Innovation-Processes 36 3.2 Characterization of typical Management-Bottlenecks in the Innovation-Process 39 3.2.1 Quantitative Management-Bottleneck 40 3.2.2 Qualitative Management-Bottleneck 41 3.3 Methodical Aspects for the Evaluation of the Practicability of Interim-Management-Deployments 42 3.3.1 Variations of Eliminating Bottlenecks 42 3.3.2 Efficiency-Criteria for the Evaluation of the Variations 42 6 3.3.2.1 Time-Criterion 43 3.3.2.2 Cost-Criterion 43 3.3.2.3 Quality-Criterion 43 3.3.3 Optimisation-Problem 44 3.3.4 Measuring-Problem 44 3.4 Personnel Options (Solutions) for Overcoming Innovations-Barriers 45 3.4.1 Mobilizing the Internal Management-Potential 45 3.4.2 Recruiting New Management-Potential 47 3.4.3 Engaging External Management Consultants 47 3.4.4 Engaging External Interim-Management 48 3.4.5 Advantages and Disadvantages of Interim-Management 49 3.5 Interim-Management as Integral Part of Innovation-Networks 51 4. Empirical Methodology 55 4.1. Research Approach 55 4.1.1 Objective of the Empirical Investigation 55 4.1.2 Explorative Research Approach 55 4.1.3 Structure of the Investigation 58 4.2 Description of the Research Field 60 4.3 Conceptual Frame and Key-Findings of the Empirical Analysis 61 4.3.1 Objectives 61 4.3.2 Measures 63 5. Interim-Management-Deployments in the Context of Innovation – a Conceptual Model 68 5.1 Phases of the Interim-Management-Process 70 5.1.1 Phase of Identification 71 5.1.2 Phase of Planning 71 5.1.3 Phase of Implementation 73 5.1.4 Phase of Control 75 5.2 Leadership, Motivation, Organization and Ethics in the Interim-Management-Process 77 5.2.1 Selecting a Suitable Leadership-Style 77 5.2.2 Motivation of Employees 79 7 5.2.3 Form of Organization 82 5.2.4 Ethical Aspects 86 5.3 New Orientation of the Enterprise-Strategy 89 5.3.1 Production of New and Improved Products 91 5.3.1.1 Investments into Research and Development 91 5.3.1.2 Financing Investments into Research and Development 96 5.3.2 Introducing New and Improved Production-Methods 99 5.3.3 Accessing New and Improved Sales Opportunities 102 5.3.4 Accessing New and Improved Procurement Opportunities 104 5.4 New Orientation of the Enterprise Organization 108 5.4.1 Structure 110 5.4.2 Process 111 5.4.3 Systems 113 5.4.4 Personnel 115 5.5 Conclusion 116 6. Interim-Management Deployments in a European Innovation Context 118 6.1 Convergence and Divergence of New Management Practises 119 6.1.1 US Institutionalism – Economic Forces-driven Convergence 121 6.1.2 EU Institutionalism – Institution-driven Convergence 123 6.1.3 Conclusions for the adoption of New Management Practises in the EU 124 6.2 Interim-Management-Deployments in Europe – Evidence of Convergence? 124 6.2.1 Evolution and Diffusion of Interim-Management in Europe – or why institutional factors matter 125 6.2.1.1 Technological factors 126 6.2.1.2 Economical factors 127 6.2.1.3 Institutional factors 128 6.2.1.3.1 European NBS-approach 128 6.2.1.3.2 U.S.-approach 131 6.2.2 Institutional Convergence in the EU – the Estonian Innovation example 134 6.2.2.1 European Innovation Scoreboard 2002 135 6.2.2.2 Institutional-driven Interim-Management- Deployments in Estonia 139 8 6.3 Transferring research results on Interim-Management-Deployments from Germany to Estonia 146 6.3.1 Transferability of research result 146 6.3.2 Analysis of innovation-barriers in Estonian enterprises 147 6.3.2.1 Selected Results of the Study concerning the Expanded Innovation Ability in Estonian Enterprises 147 6.3.2.2 Selected Results of the Study concerning Innovation-Barriers in Estonian Enterprises 149 6.3.3 Recommendations for selected Interim-Management-Deployments measures in Estonian Enterprises 150 6.3.3.1 Selected measures for the Strategic Field 151 6.3.3.2 Selected measures for the Organizational Area 157 7. Conclusion 163 7.1 Summary 163 7.2 Limitations 168 7.3 Outlook 168 8. Autoreferaat 171 8.1 I peatükk 171 8.2 II peatükk 172 8.3 III peatükk 174 8.4 IV peatükk 176 8.5 V peatükk 183 8.6 VI peatükk 186 8.7 VII peatükk 191 9. Järeldused 194 9.1 Kokkuvõte 194 9.2 Piirangud 197 9.3 Väljavaated 198 List of Literature References 200 List of Acronyms and Abbrevations 214 Curriculum Vitae 216 9 List of figures Figure 1: M.E. Porter’s 4-Steps-Model of the National Competition Development Figure 2: Concept of the thesis Figure 3: Content of Interim-Management Contract Figure 4: Main Focus of Tasks of the Classic Management Consultation and of Interim-Management Figure 5: Criteria of Distinction Figure 6: Magical Triangle of process-optimization Figure 7: Advantages of Interim-Management Figure 8: Reservations against Interim-Management Figure 9: Actors in the Innovation-Network Figure 10: Conceptual model Figure 11: Pioneer Companies Interim-Management Europe Figure 12: Estonia at the European Innovation Scoreboard 2002 Figure 13: Interim-Management-Deployments in the Baltic States by SES Figure 14: Interim-Management-Deployments by the EBRD Figure 15: Financing of Interim-Management-Deployments of the EBRD in Estonia Figure 16: Evaluation of Interim-Management-Deployments by the EBRD in Estonia Figure 17: Profile of Innovative Estonian Enterprises Figure 18: Innovation Barriers in Estonian Enterprises 10 1. Introduction Management models, which were promoted during the last century, did not always aim for innovation as a core task of enterprises, but other topics suppressed them. For example, during the fifties and sixties smooth processes and productivity dominated. Later, long-term planning and control of uncertainties were added. Only since access to global markets has become a decisive bottleneck, and the hyper-competition makes survival difficult, innovation has been resurrected again. Thus, besides the abilities and skills of the management - prepared through the focus on business culture, human capital and empowerment - new forms of management come to the forefront, and there should not be a hesitation in applying them to the whole organization of enterprises. Schumpeter tells us that innovation must not be restricted to the occasional stimulus given for new products.1 Due to these challenges the requests on enterprises continuously grow, if they want to successfully operate in the highly developed industrialized nations, and if they want to succeed in global competition. The transition from a production- to a consumer market leads to additional competition of ousting. Enterprises can only realize the demands of consumers for innovative products at competitive prices if the factors time, costs, and quality are optimized.2 Thus the complexity of the process of performance increases with mutual effects on the different levels of the chain to add value and the resulting problem in optimizing time, costs, and quality, the entrepreneurial innovative task cannot be accomplished with only internal management resources and know-how within an acceptable time and without violating especially the criterion of costs.