Determinants of persistence in innovation: evidence from the case study of the ‘Eye Microsurgery’ Complex

Abstract

This study aims at determining the major factors supporting innovative persistence based on an in-depth analysis of the internal organizational processes of the state-owned medical institution, ‘Eye Microsurgery’ Complex in Moscow. I propose a systemic approach to the study of innovation activities, which incorporates aspects of evolutionary economics, institutional analysis and dynamic capabilities theory. The study explicitly incorporates the changing external environment as a factor shaping innovation dynamics. The findings suggest that at the earliest stage of the firm's development, the interaction between the nature of the technology and the nature of the demand, the presence of prolific innovators and a certain organizational structure that supports learning, effective knowledge production and accumulation are determinant of persistence in innovation. In later periods, the availability of resources (material, financial, specialized human capital), external collaborations, specific production techniques, well-organized technological diffusion, and motivational factors are the elements providing the basis for innovative persistence. Leadership plays a crucial role in supporting innovation and organizational transformation.

Keywords:

• innovation
• persistence
• case study
• internal organization
• health
• eye microsurgery
• organizational innovation
• organizational behavior
• Fyodorov
• entrepreneurship
• dynamic capabilities
• transition economies
• Russia
• state owned

Notes

1. Cabinets and wards represent subdivisions of the ‘Eye Microsurgery’ regional satellite centers. The functions of a cabinet include primary diagnostics, minimal ambulatory treatment and delayed rehabilitation. A ward is a more significant organizational entity in terms of its technological capacities, providing the same level of diagnostics, rehabilitation and some types of treatment as a regional center.

2. The work priority of the enterprise is to fulfill the state order, i.e. to perform a certain number of surgeries/treatments for which the government pays a predetermined rate. The Russian state holds the titular ownership of the firm, the land and the buildings, apart from surgical equipment. By means of a rental agreement, the State cedes the right to use the land and the buildings for a certain number of years. The government also allows the firm to retain its profits, after having fulfilled the state order. State ownership determines certain limitations in the economic activities of the firm. The State also retains the right to hire or to dismiss the general director of the firm.

3. A more strict definition would imply firm-level innovation in the same technology field in period t+1 conditional on the firm's innovation in period t (Latham and Le Bas 2006).

4. In this study, I attempt to partially control for the causality issue by establishing a chronological order of events as precisely as possible and by focusing on big one-time organizational changes.

5. The establishment of the research and technology complex in 1986 was part of the government's program aiming at developing advanced technologies and narrowing the technological gap between the Soviet Union and industrialized states. About 23 similar complexes were established in the mid-1980s in different technological fields.

6. Anecdotal evidence suggests that initially the only needles available for the use in microsurgical procedures were the ones used for stitching stomachs and intestines. Quite obviously that kind of instrument was not appropriate for the application in eye surgery (Fyodorova 2007) and the invention of modernized instruments was crucial for further advancements in the field.

7. For example, direct in-house application of inventions allowed better appropriation of the benefits of innovation.

8. In 1986, for instance, the Eye Microsurgery sold a 12-year license for the ‘Technology of production of collagen coverings and their use in ophthalmology’ to Bausch & Lomb, which contained two inventions and 10 foreign patents.

9. For example, the development of a yellow ultraviolet IOL model, as the result of collaboration with the Physics and Chemistry Institute, brought the state recognition in a form of a governmental prize.

10. According to Fyodorov, the adoption of a number of surgical conveyers by the Soviet clinics could bring the country close to solving the problem of the high rate of ocular disorders among the population.

11. Many of the Eye Microsurgery inventions and innovations issued as necessary complements to the already existing technologies, e.g. more subtle surgical interventions required the creation of special stitching materials and very thin needles.

12. For example, the Complex gained the right to keep and reinvest a substantial amount of its revenue in foreign currencies.

13. These strategies included, e.g. bundling of know-how transfers with licensing, patenting and the sale of software, training of foreign professionals, providing treatment and training onboard mobile operational and diagnostics units (i.e. operational buses) and operational ships.

14. For example, an effective system of diffusion channels introduced by Fyodorov facilitated and accelerated the spread of information about the enterprise and contributed to the recognition of their technologies worldwide, establishing new markets for their production and potential sources of revenue.

15. A few examples of prominent inventors that took part in the ‘Eye Microsurgery’ research and treatment activities include Egorova Eleonora Valentinovna, who received the title of the best woman-inventor by the WIPO, and Takhtaev Yury Viktororvich, named the best surgeon of the European Society of Cataract and Refractive Surgeons.

16. Dr Khristo Takhchidi is the full member of Laser Academy of Russia, the Academy of Practical Medicine and the Medical-Technical Academy. He is the Head of the Chair of Ocular Diseases of the Moscow State Medical Stomatologic University and the Chairman of the Ophthalmologists Society of Russia. He is a member of many international ophthalmic societies, including the European Society of Cataract and Refractive Surgeons, the European Vitreoretinal Society and the American Academy of Ophthalmologists.