Chapter 3 Linkages for Fostering Innovation Activities â Case ... - ERIA

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good infrastructure have also played role for Kontron to continue and expand itsmanufacturing and R & D (product development).3.5.2. Types of Innovation and Motivations for InnovationThrough its continuous/incremental research and development process, Kontronmain motivation for Innovation is to create major competitive advantage for customersthrough a significant reduction of time to market and costs. Most of the innovations areto both improving the existing products and developing new products for its globalcustomers. The product innovations include to access new markets for the firm. Processinnovations such as those adhering to the ROHS (EU standards for use of hazardousmaterials) have also helped in innovation involving new materials. Process innovationsinclude those to cut operation costs – developing new business processes.3.5.3. Key Drivers and Support For InnovationA significant driver for Innovation at Kontron is the support from within theorganisation a supportive CEO for R&D activities is attributed. Specific requirementsunique to its global customers and compliance to new regulatory systems (such asROHS) in counties are other important source. At the regional level, PSDC, the clusteruniversity USM and its involvement with Rozattanet organisation are key institutionsthat have helped in move up from manufacturing to design activities. Kontron has morethan 1000 engineers across its R&D centres around the world with varyingcompetencies offering in-house capabilities and this link to its group R&D facilitiesaround the world is another important support element. Global customers and localsuppliers in the cluster are significant source of information for new design ideas atKontron.3.5.4. Linkages or Collaborations117
Kontron has healthy inter firm linkages within the group companies located outsidethe Penang cluster. Design Engineers from other locations of Kontron visit Penangperiodically to share/contribute to new product ideas. Kontran also has strong firm tofirm linkages with its global customers both within and outside Penang cluster. Thoughthese customers do not invest in product innovation at Kontron, they participate in aco-development model in new product development and they are rewarded with aroyalty fees once the product is commercialized. At the regional institutional level thefirm has a strong link with PSDC which arranges suppliers from within the cluster. Thefirm also has strong linkages withRozattanet which helped it to build strong suppliernetwork within the cluster. Links with USM (the cluster university) appears to be weekas they occasionally provide few students as interns for a maximum of 6 monthsduration.Figure 7 Diagram of linkages for Kontron (Penang)3.5.5. Issues in Policies related to InnovationAvailability of surplus cash reserves made Kontron all its innovations self financed.118
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Page 27 and 28: Figure 5 Diagram of Firms Linkages
Page 29 and 30: 3.4.2. Key Drivers and Support For
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