Strategic management and the search for collaborative opportunities

Ian Moran
Department of Industry, Innovation and Science

Renu Agarwal
University of Technology Sydney

Christopher Bajada
University of Technology Sydney

Paul James Brown
University of Technology Sydney

Abstract
Introduction and aim
Collaboration has become a central concern for Australian policymakers, as an array of metrics have highlighted limited interaction between Australian industry and research institutions. For example, Australia ranks poorly among OECD countries on: the number of innovation-active SMEs collaborating on innovation (29th), the portion of firms collaborating with suppliers (26th) and the percentage of R&D-active firms engaging in collaboration (27th).
The Australian government has a range of policies geared toward promoting collaboration. A recent stocktake of federal government policy counted over thirty programmes and sub programmes across ten different agencies targeting collaboration. And collaboration between industry and researchers formed one of four key pillars of the Australian Government’s National Innovation and Science Agenda — a commitment of 1.1 billion dollars over four years for 24 separate measures.
Despite these initiatives and evidence that collaboration benefits firms, many businesses are still failing to seek out collaborative opportunities including with the research sector.
We present new Australian research undertaken by the University of Technology Sydney and the Department of Industry, Innovation and Science that links strategic management practice in firms and the likelihood of businesses to seek out collaborative activity. The presentation will explore what this new evidence means for government, business and the research sector with respect to building engagement and collaboration.
Research methodology
In 2015, University of Technology Sydney (UTS), the Department of Industry, Innovation and Science (DIIS), the Australian Bureau of Statistics and Stanford University collaborated to develop a large scale survey of management capability in Australia. Data for the inaugural Management Capability Module of the Business Characteristics Survey was collected between October 2015 and March 2016, surveying more than 13,440 businesses of all sizes and across all sectors of the economy. This survey data, combined with several administrative datasets, was used to develop a classification of strategic management and examine its relationship with firm outcomes including how likely firms are to search for collaborative opportunities.
Results and implications
Around 58 per cent of firms are classed as having Low Engagement Management, with either no strategic plan or no monitoring of key performance indicators. At the other end of the spectrum, roughly 6 per cent of firms are classed as having Strategic Management, possessing a written strategic plan and monitoring three or more key performance indicators across two or more areas. The remaining 36 per cent of firms fall between these two extremes, classed as either Ad Hoc (23 per cent) or Narrow Focus (13 per cent).
Crucially, higher levels of strategic management are positively associated with search for collaborative opportunities. This may contribute to the higher levels of labour productivity observed among firms with higher levels of strategic management.
In terms of drivers of strategic management, education and foreign investment appear to be two drivers of management capability. More educated — particularly university educated — principal managers and foreign ownership are both associated with higher proportions (levels) of strategic management.
Conclusion
This paper is the first large-scale management study undertaken in Australia using linked survey and administrative data. It provides an initial overview of strategic management capability and its relationship with search for collaborative opportunities. The findings presented above, together with the existing literature in this area, highlight the potential role management capability can play in promoting collaboration between the research sector and industry.