Skip to main content
Search
Search
Quick Search anywhere
Quick Search anywhere
Quick Search anywhere
Quick Search anywhere
Quick Search anywhere
Quick Search anywhere
Advanced Search
Skip main navigation
No Access

Open innovation in financial services: what are the external drivers?

Published Online:July 18, 2014pp 530-548https://doi.org/10.1504/IJBEX.2014.063565

Abstract

Over the last decades, the financial services sector has been affected by drastic changes, resulting from multiple sources: (de-, re-) regulation; dominant role of information and communication technologies; shift to off balance sheet activities; service bundling; and changes in customer preferences. This has challenged financial institutions and induced stronger needs for innovation. However, empirical evidence on the actual drivers of innovation in this sector is scarce. Even less is known on the factors of open innovation. This research addresses this gap by empirically exploring drivers of innovation in financial services. Drawing upon four datasets, we found that several forms of innovation in financial services are relatively strongly and positively correlated with the following indicators: number of mobile cellular subscriptions, domestic market size index, and bank concentration. Meanwhile, there is a negative correlation between the rate of product developed mainly by other enterprises and quality of management schools in a given country.

Keywords

open innovation, financial services, external innovation drivers, open innovation factors, financial innovation

References

  • 1. Al-Sharieh, S. , Mention, A-L. , Ran, B. (2013). ‘Open innovation and intellectual property: relationships and challenges’. Contemporary Perspectives on Technological Innovation, Management and Policy. 2, Google Scholar
  • 2. Al-Sharieh, S. , Mention, A-L. , Torkkeli, M. (2012). ‘Open innovation in financial services and its means of protection’. in Proceedings of The XXIII ISPIM Conference 2012, ISPIM. Barcelona, Spain Google Scholar
  • 3. Anderloni, L. , Bongini, P. , Anderloni, L. Llewellyn, D.T. Schmidt, R.H. (2009). ‘Is financial innovation still a relevant issue?’. Financial Innovation in Retail and Corporate Banking. Cheltenham:Edward Elgar , 41-62 Google Scholar
  • 4. Barney, J.B. (1991). ‘Firm resources and sustained competitive advantage’. Journal of Management. 17, 1, 99-120 Google Scholar
  • 5. Batiz-Lazo, B. , Woldesenbet, K. (2006). ‘The dynamics of product and process innovation in UK banking’. International Journal of Financial Services Management. 1, 4, 400-421 Abstract, Google Scholar
  • 6. Casu, B. , Girardone, C. , Molyneux, P. (2004). ‘Productivity change in European banking: a comparison of parametric and non-parametric approaches’. Journal of Banking and Finance. 28, 10, 2521-2540 Google Scholar
  • 7. Ciciretti, R. , Hasan, I. , Zazzara, C. (2009). ‘Do internet activities add value? Evidence from the traditional banks’. Journal of Financial Services Research. 35, 1, 81-98 Google Scholar
  • 8. Consoli, D. (2008). ‘Systems of innovation and industry evolution: the case of retail banking in the UK’. Industry and Innovation. 15, 6, 579-600 Google Scholar
  • 9. de Brentani, U. (1989). ‘Success and failure in new industrial services’. Journal of Product Innovation Management. 6, 4, 239-258 Google Scholar
  • 10. de Brentani, U. (1991). ‘Success factors in developing new business services’. European Journal of Marketing. 25, 2, 33-59 Google Scholar
  • 11. de Brentani, U. (1993). ‘The new product process in financial services: strategy for success’. International Journal of Bank Marketing. 11, 3, 15-22 Google Scholar
  • 12. de Brentani, U. , Cooper, R. (1992). ‘Developing successful new financial services for businesses’. Industrial Marketing Management. 21, 3, 231-241 Google Scholar
  • 13. Edgett, S. , Jones, S. (1991). ‘New product development in the financial service industry: a case study’. Journal of Marketing Management. 7, 3, 271-284 Google Scholar
  • 14. Eurostat (2011). Statistics. (accessed 17 November 2011), [online] http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database Google Scholar
  • 15. Eurostat (2012). Results of the Community Innovation Survey 2008 (CIS 2008). (accessed 1 October 2012), [online] http://www.epp.eurostat.ec.europa.eu/portal/page/portal/science_technology_innovation/data/database Google Scholar
  • 16. Eurostat (2013). Education and Training. (accessed 12 March 2013), [online] http://epp.eurostat.ec.europa.eu/portal/page/portal/education/data/database Google Scholar
  • 17. Fasnacht, D. (2009). Open Innovation in the Financial Services. Berlin:Springer-Verlag Google Scholar
  • 18. Flier, B. , van den Bosch, F.A.J. , Volderba, H.W. , Carnevale, C.A. , Tomkin, N. , Melin, L. , Quélin, B.V. , Kriger, M.P. (2001). ‘The changing landscape of the European financial services sector’. Long Range Planning. 34, 2, 179-207 Google Scholar
  • 19. Frame, W.S. , White, L.J. (2004). ‘Empirical studies of financial innovation: lots of talk, little action?’. Journal of Economic Literature. 42, 1, 116-144 Google Scholar
  • 20. Goddard, J. , Molyneux, P. , Wilson, J.O.S. , Tavakoli, M. (2007). ‘European banking: an overview’. Journal of Banking & Finance. 31, 7, 1911-1935 Google Scholar
  • 21. Heffernan, S.A. , Fu, X. , Fu, M. (2008). ‘Financial innovation in the UK’. (accessed 15 February 2013), [online] http://www.ssrn.com/abstract=1266125 Google Scholar
  • 22. Howcroft, B. , Ataullah, A. (2006). ‘Total factor productivity change: an examination of the commercial banking industry in India and Pakistan’. The Service Industries Journal. 26, 2, 189-202 Google Scholar
  • 23. Lerner, J. (2006). ‘The new new financial thing: the origins of financial innovations’. Journal of Financial Economics. 79, 2, 223-255 Google Scholar
  • 24. Lerner, J. (2010). ‘The litigation of financial innovations’. Journal of Law and Economics. 53, 4, 807-831 Google Scholar
  • 25. Lerner, J. , Tufano, P. (2011). The Consequences of Financial Innovation: A Counterfactual Research Agenda. (accessed 9 October 2012), NBER Working Paper No. 16780, [online] http://www.nber.org/papers/w16780 Google Scholar
  • 26. Martovoy, A. , Dos Santos, J. (2012). ‘Co-creation and co-profiting in financial services’. International Journal of Entrepreneurship and Innovation Management. 16, 1/2, 114-135 Abstract, Google Scholar
  • 27. Mention, A-L. (2011). ‘Co-operation and co-opetition as open innovation practices in the service sector: which influence on innovation novelty?’. Technovation. 31, 1, 44-53 Google Scholar
  • 28. Mention, A.L. , Torkkeli, M. (2012). ‘Drivers, processes and consequences of financial innovation: a research agenda’. International Journal of Entrepreneurship and Innovation Management. 16, 1–2, 5-29 Abstract, Google Scholar
  • 29. Merton, R. (1995). ‘A functional perspective on financial intermediation’. Financial Management. 24, 2, 23-41 Google Scholar
  • 30. Meyers, L.S. , Gamst, G. , Guarino, A.J. (2006). Applied Multivariate Research: Design and Interpretation. Thousand Oaks:Sage Google Scholar
  • 31. Miller, M.H. (1986). ‘Financial innovation: the last twenty years and the next’. Journal of Finance and Quantitative Analysis. 21, 4, 459-471 Google Scholar
  • 32. Molyneux, P. , Shamroukh, N. (1996). ‘Diffusion of financial innovations: the case of junk bonds and note issuance facilities’. Journal of Money, Credit and Banking. 28, 3, 502-523 Google Scholar
  • 33. OECD (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data. Paris:OECD Google Scholar
  • 34. Oliveira, P. , von Hippel, E. (2011). ‘Users as service innovators: the case of banking services’. Research Policy. 40, 6, 806-818 Google Scholar
  • 35. Pennings, J.M. , Harianto, F. (1992). ‘The diffusion of technological innovation in the commercial banking industry’. Strategic Management Journal. 13, 1, 29-46 Google Scholar
  • 36. Peteraf, M.A. (1993). ‘The cornerstones of competitive advantage: a resource-based view’. Strategic Management Journal. 14, 3, 179-191 Google Scholar
  • 37. Porter, M.E. , Schwab, K. (2008). The Global Competitiveness Report 2008–2009. Geneva:World Economic Forum Google Scholar
  • 38. Rajagopal, A. (2011). ‘Shifts in organisational design, culture and structural paradigms in financial organisations during economic recession’. International Journal of Business Excellence. 4, 4, 385-398 Abstract, Google Scholar
  • 39. Rossignoli, B. , Arnaboldi, F. (2009). ‘Financial innovation: theoretical issues and empirical evidence in Italy and in the UK’. International Review of Economics. 56, 3, 275-301 Google Scholar
  • 40. Salampasis, D. , Mention, A-L. , Torkkeli, M. (2014). ‘Open innovation and collaboration in the financial services sector: exploring the role of trust’. International Journal of Business Innovation and Research. forthcoming Google Scholar
  • 41. Sarma, P.R.S. , Subramanyam, M. , Pramod, V.R. (2013). ‘ICT and banking-is it a rejuvenating combination? A diagnostic analysis’. International Journal of Business Excellence. 6, 2, 231-249 Abstract, Google Scholar
  • 42. Sharma, S. , Gupta, S. (2010). ‘Malmquist productivity and efficiency analysis for banking industry in India’. International Journal of Business Excellence. 3, 1, 65-76 Abstract, Google Scholar
  • 43. Storey, C. , Easingwood, C. (1993). ‘The impact of the new product development project on the success of financial services’. The Service Industries Journal. 13, 3, 40-54 Google Scholar
  • 44. Storey, C. , Easingwood, C.J. (1996). ‘Determinants of new product performance: a study in the financial services sectors’. International Journal of Service Industry Management. 7, 1, 32-55 Google Scholar
  • 45. Sufian, F. (2012). ‘Determinants of banks’ total factor productivity: the post Asian financial crisis experience of the Philippines’. International Journal of Business Excellence. 5, 1/2, 77-100 Abstract, Google Scholar
  • 46. Thwaites, D. (1992). ‘Organizational influences on the new product development process in financial services’. Journal of Product Innovation Management. 9, 4, 303-313 Google Scholar
  • 47. Vence, X. , Trigo, A. (2009). ‘Diversity of innovation patterns in services’. Service Industries Journal. 29, 12, 1635-1657 Google Scholar
  • 48. Vermeulen, P. (2004). ‘Managing product innovation in financial services firms’. European Management Journal. 22, 1, 43-50 Google Scholar
  • 49. Vermeulen, P. , Dankbaar, B. (2002). ‘The organisation of product innovation in the financial sector’. Service Industries Journal. 22, 3, 77-98 Google Scholar
  • 50. Wernerfelt, B. (1984). ‘A resource-based view of the firm’. Strategic Management Journal. 5, 2, 171-180 Google Scholar
  • 51. World Bank (2012). World DataBank: The Explore. Create. Share – Development Data. (accessed 1 October 2012), [online] http://databank.worldbank.org/data/home.aspx Google Scholar
  • 52. Yildirim, H.S. , Philippatos, G.C. (2007). ‘Restructuring, consolidation and competition in Latin American banking markets’. Journal of Banking and Finance. 31, 3, 629-639 Google Scholar
Previous article