StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article - Essay Example

Cite this document
Summary
"Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article" paper analyzes technological strategies’ impact on the financial performance of a firm. It is analytic in the sense of relating different firm articulations to financial scenarios…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.1% of users find it useful
Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article
Read Text Preview

Extract of sample "Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article"

?Review Task: Critical review on the article “Technological Activities and Their Impact on the Financial Performance of the Firm: Exploitation and Exploration Within and Between Firms”. Summary It is vital to note that this paper analyzes technological strategies’ impact on financial performance of a firm. It is analytic in the sense of relating different firm articulations to financial scenarios. It is in the view of finding the best alternative, among various decisions, for a firm. The paper operates in two dimensions. To begin with, it analyzes explorative against exploitative strategies. Secondly, it analyzes collaborative versus solitary strategies. It further merges these two dimensions that give rise to four compartments of the research orientation. This pertains to collaborative explorative and exploitative activities. It also pertains to solitary explorative and exploitative activities. It is vital to note that the research relied on technology alliances literature and organizational learning theory. This refers to the secondary data used. The examples of secondary data in the study include statistics and literature on management and marketing theory. Statistics provided rich backgrounds for guiding the study and providing the study with grounds for management theories (Wang and Pizam, 2011, p. 87). However, the analysis was more complex as it involved the use of graphs and curves in reaching conclusions. This pertains to the use of Tobin’s Q index in measuring market performance. It was a market value indicator. The curves and graphs helped show relationships between variables. This pertains to financial performance and strategies’ relationships. Purpose of the study This study has notable purposes. For instance, it strives to find solutions for treatment of patents as regards their ages. In addition, it strives to give information for proper management decisions as regards different cases. This means that there could be different scenarios for management as regards the age of firms and invention. Besides, such information would be vital for balance of different strategies that bear financial success to firms. Concisely, this paper is critical for treatment of innovation in ways that accord feasible financial plans. In this sense, the research fills a gap that previous research in the field has missed. Methodology The research is a qualitative one that stresses abstract concepts such as innovation and value of decisions. However, it is vital to note that the research has quantitative aspects that it utilizes to analyze the data qualitatively. The overly qualitative aspect of the research reveals in the utility of terms such as explorative and exploitative aspects. The term exploitative is employed to refer to the age of patents and innovations. Exploitative aspects of a firm’s strategies refer to enhancing financial capabilities by means of strategies such as refinement and standardization. On the other hand, exploration refers to an act of raising performance platforms, or creating new capabilities, through means such as research and experimentation. This dichotomy is employed in the research whereby it accounts for quantitative aspects such as efficiency and financial success. However, it is vital to note that the results of such strategy articulations are quantitative (Cole 2004, p. 68). It is clear that this research is an experimental one that has two types of variables. This pertains to a dependent and an independent variable. The dependent variable, in this case, refers to a financial success. This is because it relies on different firms’ strategies for particular quantitative results. On the other hand, strategies are independent variables because they determine particular financial success of various scenarios (Fandel, 2003, p. 167). This makes a relation between these variables for easy plotting in graphs and curves. In this case, it makes the research develop an analytic approach. The distinction pertains to the idea that it analyses the results that the same research finds. It is vital to note the philosophical approach to this research. The ontological leanings refer to the view that knowledge is objective and should be realized through analysis and research. This research only relies on analysis at the realization of results. It does not impose an idea at the beginning of the research. If it were the opposite case, the research would have tried to move the same towards imposing an original idea. In this sense, the research is open to the solutions that its findings would give. The approach of the methodology is built on a deductive approach. In this case, it presented four hypotheses in respective scenarios. This guided the research into giving three possible scenarios out of the four scenarios. The third articulation of results would concern with a null situation. The first hypothesis relied on the idea that corporate strategies’ problem relies on achieving the balance of attention and resources between explorative and exploitative activities (Belderbos, 2011, p. 875). The deduction in these two scenarios regards the view that exploitative activities can improve efficiency in the short-run period. However, such a situation would lead to laxity and non-exploitation of exploration activities. This refers to the case of a performance trap that blinds the firm from realizing new capabilities. Similarly, a sole focus on exploration could cause a major detriment to firms. This refers to the case whereby a firm cannot concentrate its energies on realizing existent opportunities for profits and expansion (Adetule, 2011, p. 79). This is situation whereby a firm’s strategies follow a pattern cycle of change after failure. It compromises the ability of realizing a full potential of a particular strategy. As regards these arguments and management literature, the research came up with a hypothesis. The hypothesis said that there exists an inverted U-relationship between a firm’s explorative technological activities and financial success in a firm’s technological portfolio. The second hypothesis is built on the dimension of solitary and collaborative aspects. Collaboration has always been an argument for sharing and cutting down on costs. On the other hand, collaboration has always been an argument for maximum enjoyment of financial benefits of innovation. According to management literature, collaboration provides the benefit of minimizing of risks. On this basis, the research highlighted the hypothesis that collaborative technological activities enhance the financial success of a particular portfolio. However, the hypothesis generated a blur articulation because the research awarded a two-way speculation. This is because collaborative activities possess the detriment of inefficiency in coordination and sharing of innovation benefits (Swamidass, 2000, p. 119). This is a scenario whereby one firm could be largely responsible for financial success of a joint innovation. The third and fourth hypotheses employed the resource factor as the argument for the same. The first hypothesis stated that a greater collaborative exploitative activities result into decreased financial performance in a portfolio. The fourth hypothesis stated that a greater collaboration results into increased financial performance within a portfolio. It is essential to analyze the actual method in which the team conducted this research. The research involved an intensive study of firms across diverse industries. This involved the employment of a panel data set of the period from 1996 to 2003. The research began by considering 500 intensive European research and development firms. It also considered 500 intensive Japanese and US research and development firms. It is notable that this research utilized statistics of three sets of countries. This pertains to Japanese, US and European countries. This is appropriate due to the fact that these are technologically and industrially active countries. The research narrowed into a feasible sample of 168 firms. This possessed two attractive and constructive qualities. To begin with, it reduced the large sample into a workable and feasible one. In addition, it was a fair distribution of statistically rich firms among the Japanese, US and European firms. This suggests that the large number of European firms can only compare to both Japanese and US firms. The aspect of European and Japanese firms did not limit the research to Europe and Japan respectively. In addition, the research was extensive in consideration of industries to date. This regards the fact that every industry might possess its own set of strategy for financial success in a portfolio (White and Bruton, 2010, p. 78). In addition, this study could result into the same that can be integrated into comprehensive analysis. The industries included electrical and electronic, chemical, non-electrical machinery and IT hardware. It also included pharmaceutical and biotechnology industries. It is a vital idea that the research did not focus on software technology, because they may involve abstract concepts and dual results because they depend on substantial subjectivity. It is crucial that software companies consider research from a hardware perspective. This is because hardware involves quantity that easily projects relationships in graphs and analytic tools. The research utilized very essential tools in finding the answers to its questions. To begin with, the researchers used patents as measurements of the firms’ activities. Patents provide more information as regards details and ownerships. Patents are available and verifiable source of information that differs across companies. However, it is crucial to note that patents could have provided confusing information since they do not possess uniform value. In addition, the measurements had financial performance as a dependent variable. The research utilized the Tobin Q as a measurement and indicator of financial performance. Tobin Q relates to the ratio of the firm’s market value to the book value of the firm’s assets. This was reliable in the sense that the book’s assets neutralized the chances of attaining erroneous information from the market’s value. The aspect of the market’s value is vital in the sense of predicting future performance of a technological innovation. In close relation to the same, the research employed valuable control variables in attaining comprehensive results. Findings and Evaluation It is crucial to note the analytical and presentation tools that the research utilized in reaching its findings. It employed measures of coefficients in compiling the data for results. For example, the paper notes skewness between Tobin Q and measures of technological activities. In addition, it notes the variance in exploration and exploitation activities. Similarly, Pearson coefficients were evident as regards the same. It was manifested in the strong correlation between Tobin Q and its lagged value. It is vital to note that the results were in tables for notable empirical analysis (Amason, 2010, p. 34). To begin with, the research utilized least ordinary techniques to estimate regression. In addition, all regression models had lacked dependent variables for control of unobserved technological changes. Exploration share has a negative and a significant quadratic term. In addition, the same has a significant linear term that is positive. This confirmed the first hypothesis of a U-relationship between the firm’s financial performance and exploration activities. It is vital to note that the results disapproved the second hypothesis that postulated a decreased performance due to a great share of collaborative activities. The research concluded that firms attain proper financial performance by having a balance of explorative and exploitative activities. In addition, the disadvantages of collaborative activities, in terms of relational costs, outweighed the benefits of the same. Increase in financial performance due to collaboration activities is limited to the period before the peak performance. The study had notable limitations. For instance, it used the aspect of co-patenting information. Research utilizes it to indicate collaborative technological activities. This regards the fact that not all R&D activities result into patents (Drejer, 2002, p. 67). In some cases, patent applications apply to one partner rather than a whole collaboration. This means that future indicators should contain more variables other than patents (Haberberg and Rieple, p. 165). Implications This article realized concepts that could be vital for management and respective technological strategies. This research contributed to previous research by highlighting the strategic benefits of balance between explorative and exploitative activities. To begin with, it draws the distinction between explorative and exploitative activities in terms of patents. In addition, it is vital to note that previous research did not include financial performance to the realization of balanced strategies. The research splits this case into four domains whereby it analyzes the financial performance of the four strategies. Additionally, this research reveals an essential aspect in technological innovation. This pertains to the view that collaborative activities contribute to technological performance. However, technological and financial performances are not synchronized. Reference list Adetule, Jide, 2011. Handbook on management theories. Bloomington. Amason, Allen, 2010. Strategic management: from theory to practice. New York: Taylor & Francis. Belderbos, Rene, Faems, Dries, Leten, Bart and Van Looy, Bart, 2011. Technological activities and their impact on the financial performance of the firm: Exploitation and exploration within and between firms. Journal of Product Innovation Management, 27 (6), pp. 869–882. Cole, Gerald, 2004. Management theory and practice. Mason: Cengage Learning EMEA. Drejer, Anders, 2002. Strategic management and core competencies: theory and application. New Jersey: Greenwood Publishing Group. Fandel, Gunter, 2003. Modern concepts of the theory of the firm: managing enterprises of the new economy. New York: Springer. Haberberg, Adrian and Rieple, Alison, 2008. Strategic management: theory and application. New York: Oxford University Press. Swamidass, Paul, 2000. Encyclopedia of production and manufacturing management. New York: Springer. Wang, Yuocheng and Pizam, Abraham, 2011. Destination marketing and management: theories and applications. Cambridge University Press. White, Margaret, and Bruton, Garry, 2010. The management of technology and innovation: a strategic approach. Mason: Cengage Learning. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Technological Activities and Their Impact on the Financial Performance Essay”, n.d.)
Technological Activities and Their Impact on the Financial Performance Essay. Retrieved from https://studentshare.org/management/1455465-technological-activities-and-their-impact-on-the-financial-performance-of-the-firm-exploitation-and-exploration-within-and-between-firms
(Technological Activities and Their Impact on the Financial Performance Essay)
Technological Activities and Their Impact on the Financial Performance Essay. https://studentshare.org/management/1455465-technological-activities-and-their-impact-on-the-financial-performance-of-the-firm-exploitation-and-exploration-within-and-between-firms.
“Technological Activities and Their Impact on the Financial Performance Essay”, n.d. https://studentshare.org/management/1455465-technological-activities-and-their-impact-on-the-financial-performance-of-the-firm-exploitation-and-exploration-within-and-between-firms.
  • Cited: 0 times

CHECK THESE SAMPLES OF Analysis of Technological Activities and Their Impact on the Financial Performance of the Firm Article

Transnational Business and Its Role in Contemporary Society

This is a reflective paper 'Transnational Business and Its Role in Contemporary Society' which summarises the author's learning experience gained through the entire model describing each of the sessions undertaken by me all through the course.... ... ... ... The author states that the first session of the module was meant to have an understanding of the various types of business concerns operating in different parts of the world and how they are governed....
10 Pages (2500 words) Article

SWOT, and PESTLE Analyses of Virgin Media

One needs to analyze the strategies of the company with the help of tools like SWOT and PESTLE and study its impact on the financial performance of the company with the help of ratio analysis.... The assignment "SWOT, and PESTLE Analyses of Virgin Media" focuses on the critical analysis of the strategies of Virgin Media, a subsidiary of Virgin group and a company listed in the London Stock Exchange.... he primary weakness of the company is that it is investing a lot of amounts in restructure activities involving the spin-off of certain subsidiaries and the disposal of assets....
8 Pages (2000 words) Assignment

Mergers and Cost of Capital at Delta Airlines

Mergers can be of different forms one firm can take over a different firm resulting in both firms ceasing to exist individually to create a new firm.... For instance, a vertical merger can take place between an automobile manufacturing firm and its supplier firm.... financial and legal complications too needed to be sorted out.... During the 1990s, M & A activities broke all previous records both in terms of the number of such transactions and also the size of the mergers or acquisitions....
38 Pages (9500 words) Dissertation

Analysis of Articles about Economics

he extent of the perceived threat depends on the neighbouring countries' ability to expand exports likewise, that is, “the relative growth of technological and other capabilities” between the countries.... This article examines the nature of China's threat using benchmarks for competitive performance in terms of technology and market.... China's increasing competitive performance is causing a concern for other exporters in East and Southeast Asia from low wage countries to more advanced economies, as well as around the world....
17 Pages (4250 words) Essay

Managing Resources: Doman Synthetic Fibres Plc

n this regard, the essay is written to address three-fold objectives, to wit: (1) to present an analysis of the case, Doman Synthetic Fibres plc (B); (2) to summarize two articles from academic and scholarly journals on the topic, managing resources; and (3) to link the case with the two articles on relevant and critical perspectives....
19 Pages (4750 words) Essay

Virgin Media UK

EE also competes in this same space, the firm providing Virgin Mobile with the physical network, together with TalkTalk.... Virgin Media UK provides a breakdown of financial data for Virgin Mobile in its UK investor relations reports of financial performance.... That aside one can get a glimpse of the kinds of numbers that Virgin Mobile is able to generate too, by looking at the financial and subscriber data for Virgin Media, which is the owner of Virgin Mobile in the UK....
13 Pages (3250 words) Essay

A Positive Impact of Diversity amongst the Board Members on the Organizational Performance

During the annual general meeting, the board of directors is required to provide detailed reports to shareholders regarding the performance of the company and specify the strategic plans of action for the future.... Such meetings also facilitate analysis of the duties performed by individual directors and verification of efficiency in their performances.... The paper 'A Positive Impact of Diversity amongst the Board Members on the Organizational performance' is a thrilling example of human resources case study....
11 Pages (2750 words) Case Study

Apples Operation Management

His article is reliable due to its critical analysis of information on strategic plans.... Pietro's article text is reliable since it is used by business people to plan their activities effectively.... The strength of the article base on the ability to give reliable information on strategic business plans and designs while its weakness is the inability to provide information to the strategic plan in a developed organization.... In my view, this article is suitable for providing information of supply chain of the company's products supply chain....
8 Pages (2000 words) Annotated Bibliography
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us