Maintain Long Run Competitive Advantage Commerce Essay


To maintain long run competitive advantage and transform into a knowledge-based economy, organizations need to continually investigate new opportunities and develop new knowledge [1]. The knowledge-based economy (KBE) was first introduced by the Organization for Economic Development and Co-operation OECD, as an economy which is directly based on the production, distribution and use of knowledge and information [2]. Later, the Asia-Pacific Economic Co-operation APEC defines KBE as an economy in which the production, distribution and use of knowledge is the main driver of growth, wealth creation and employment across all industries [3],[4]. It is common to find various combinations of information, knowledge, learning, innovation, entrepreneurship, networks, information and communication technologies (ICTs) to denote a particular version of a KBE popular at a particular time and place [5]; these terms consider as drivers of long-term growth. Hence, the effective use of human skills and knowledge is gradually overcoming the creation of wealth obtained through natural resources [6].

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Technological innovation, one of drivers toward KBE, is vital for business to survive and growth in today's highly competitive world [7]. Innovation is a combination of invention as a front end and commercialization or implementation as an operation end. In other words, innovation means executing all those processes and administrative inventions that benefit the organization's stakeholders and then bringing the new products and services to the marketplace [8]. Innovation as defined by Schumpeterian is new products, services, connections, processes, business models, markets or sources of supply that provide a competitive advantage to an organization [9]. Innovation, on the other hand, is something that everyone seems to desire, but it is not clear how it can best be encouraged [10].

"Innovation" is a very important issue of technology management, according to the result after observing the journals which were published after 1980, including Research Policy, Technovation, IJTM, IJIM [11]. The technology management defined as a:

"linking engineering, science, and management disciplines to plan, develop, and implement technological capabilities to shape and accomplish the strategic and operational goals of an organization" [12 395]

Technology could render competitive advantage to innovators [13]. Therefore, many products in today use were derived from the technological breakthroughs [14]. In the long run, standards of living can be largely enhanced by technological innovation.

This study will contribute to the existing literature by providing strategy to promote technological innovation within organizations. Hence, the literature subject aims to discuss three points. The first point, investigating the factors that lead to increase the capacity of the technological innovation within organizations. The second point, exploring  the barriers and challenges of the diffusion of technological innovation within organization. The third point, providing a brief description of the strategic management of the technological innovation.

Success factors to increase the capacity of technological innovation

Innovation can indeed work as the engine to increase the company's performance and for economic growth [15], even in difficult times. Much of earlier work has focused in identifying the relationship between such factors and innovation and performance of the organization. Chian and Hsu [16] have argued that the domain knowledge and intrinsic motivation mediate the relationship between high performance work system and workers' creativity performance. On the other hand, other research [17], has proved that the firm performance in Technology Service Firms is positively related to process innovativeness with the moderating role of external environmental conditions and internal organizational factors. Also, one more research [18], has found that the positive relationship between innovation and firm performance is stronger for higher levels of decision autonomy, trust, and organizational commitment. Further, other study [19], were conducted to argue the mediation effect of innovation ambidexterity between structural, contextual, and leadership characteristics on SME performance.

Others focused in identifying factors that promote innovation within organization. One study [20], has determined the relative impact and strength of ten organizational factors on IT innovation adoption in organizations. Other study [21], has examined drivers behind the firms environmental innovation level. Moreover, Sharif [22] argued four basic pillars for the current national governance policies of the technological innovation capacity in order to strengthen national technological innovation capacity. In addition, Terrlle [23] defined many characteristics of successful innovation organization in developed countries. On the other hand, Fu and Gong [24] observed the drivers of technology upgrading in middle-income developing countries; consequently, there is a chance for developing countries to improve their innovation systems.

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Likewise, several recent studies [14], [25], [26], [27] have focused on R&D expenditures, that must be consider by a policy makers and should be a sufficient investment in it by public and private sectors in order to design and develop cutting-edge products and processes and to sustain growth going into the future. As well, there is a positive relationship between human capital in R&D activities and the number of patent applications which represent one of the indicators of countries' innovative power in business enterprise sector and higher education sector [28] . In addition, many studies [29], [30], [31], [32], suggested that the strategic knowledge management has a role in improving organizational innovation. So, the collaboration between firms and other knowledge sources lead to growth oriented innovation activity [33]. On the other hand, the process-focused management practices can be a source of innovation within firms [34]. As well, total quality management with business innovation capability has an effect on the technological innovation [35].

Otherwise, top management team diversity has a strong impact on the strategic choice of firms to focus on innovation fields [30]. Furthermore, the strategic leadership, organization culture [1], and collaboration between industry and academia [36] are fostering innovation ambidexterity. In addition, there was a study [10] has found that innovation awards is an important tool to encourage innovation within the public sector organization.

The stated literature provide a sufficient number of factors that positively affect the innovation management and then the performance of the organization, finally lead to KBE. Hence, it is beneficial to employ these elements depending on the nature of the culture.

Challenges of the diffusion of technological innovation

To achieve the benefits from the technological innovation within organization, some of earlier work has explored challenges against adoption of innovation and set suggestions to overcome such barriers. There was a study [37] argued that products with both market and technology newness face resistance in getting approval and tend to threaten the power base of senior managers. So, the authors studied the implication of using micropolitical strategies in order to reduce resistance and get approval with minimum compromise in the product without harming the new product's performance. Other study [38], focused on the threats posed by new technologies to the firm, the study has debated two possible responses to this issue: perform research and development (R&D), or acquire the new entrants who are successful at innovating.

On the other hand, some studies have been focused on studying innovation system in the public sector. For example, see [39], the authors recognized the importance of collaboration between public-sector organizations and private-sector partners to alleviate major barriers to innovation such as: resistance to change, risk aversion, and organizational structures, and then presented an emerging business model for successful technological innovation for government. Arna and Tunzelmann [40], on the other hand, show that in one way or another, country-specific differences are influencing the innovation process in the public sector services. In addition, Potts and Kastelle [9] explained that there were lack of knowledge about what does and does not work in fostering public sector innovation.

It is obviously recognize that many issues were appear in the public sector. In fact, technological innovation with best practice can play an important role in improving both the efficiency and the effectiveness of public services [41], spend public funds effectively, and provide new policy solutions [10].

Strategic management of technology and innovation

Strategic management is a method of creating a purpose and guide for the survival of a company and to sustain a competitive advantage [42]. The key role strategic management plays in the management of innovation is in appropriately adapting, integrating and reconfiguring the internal and external organizational skills, resources and competences belonging to the firm, towards a changing environment [43]. For simplicity, strategic management theories such as Resource-Based View which "examines how an organization's resources drive competitive advantage" [44], Dynamic Capabilities "the firm's ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments" [45] ,and Absorptive Capacity a type of capability that enables organizations to innovate and, thus, to be dynamic [46],[47] these theories provide well-studied and debated frameworks and methodologies that can be adopted or adapted for use in a PM context as an established base that can be built upon and adjusted to suit the particular environment [48]. Furthermore, Sahlman [49] developed a framework which provides a logical structure of strategic technology management elements to consider technology management in strategic dimension.

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Managers must prepare for a shift in organizational structure toward new approaches to innovation, driven by the need for agility, globalization, and new budgeting models [50]. Working on a set of innovation drivers to develop the talent, energy, method that represent a source of creativity; establish a structure for innovation (individual, team, target, system) and shape a culture that promotes innovation [51] In addition, they should build corporate strategy around the strategic opportunities created by the technology [52]. Over and above, they have to put in mind that the technology platform emerges from a combination of strategies and it needs to be consistently upgraded/renewed to maintain a platform advantage [13]. It is necessary to integrate the technological innovation strategy with the company's overall strategy [53], and it should be consider the intellectual property rights (IPRs) when developing the strategy [54], thus helping organization to keep its competitiveness internationally. Furthermore, they have to take into consideration the ability to innovate with technology overtime is not easily replicated by competing firms. So, a manager should consider this as a long-term rather than a short-term strategy towards technological innovation [55].

On the one hand, Bin and Salles-Filhoa [56] has argued that there isn't single definitive management model can provide the best practice in the management of research and innovation to implement it in the organizational context of public and private organizations, since the processes and tools selected must make sense historically and culturally for each organization. So, they prefer to focus on indeterminacy, professional profile, the collective logic, and the necessary search for economies of scope in evaluation and design of different management models to suit different organizations.

While, many other researchers proposed models in order to provide better understanding of innovation and technology management. Ho [57] developed a technology evaluation strategy to increase organization innovation performance. Other study [58] proposed a framework for R&D managers of large firms to show how can start "thinking small." within their existing innovation processes. Also, there is a study [59] has developed a model for the process of innovation adoption and use of IT in organizations depending on factors that may influence the adoption processes. Moreover, other study [60] proposed a model of innovation center in the university to adapt their provided services to the market and permanently add value to the services provided. Also, other study [61] represented a model for interaction between two critical variables of a competitive strategy: talents management and technology innovation in order to understand the innovation process in a firm or in a country. In addition, one more study [62] that discussed strategies for organizational success around innovation for each stage of innovation process: idea generation and mobilization, screening and advocacy, experimentation, commercialization, and diffusion and implementation. This framework informs managers about the areas of focus, factors to give close attention, and the directions they need to choose.

To conclude, in order to success in managing innovation strategically, the initial step is to fully utilize the local knowledge infrastructure. That lead to the important role of universities and research institutions as a starting point for technological improvement for many firms in developing economies. However, as mentioned the public sector around the world and specially in the developing countries faced many challenges in this field. In addition, little attention has been given to develop a clear conceptual framework that strategically manage technology and innovation in R&D centers to improve the innovative ideas to be real , draw strategy that facilitate the relationship with the private and public sectors ,and facilitate the policy for innovator in Saudi Arabia.