Role of Innovation in Firms Competitiveness - Coursework Example

Role of innovation in firm’s competitiveness Name Course Institution Date Introduction Technological innovations have come up in recent years and they are used as an imperative foundation for competitive strength. Most companies have been successful through the use of innovation. Innovation has helped the firms gain an upper hand as compared to their competitors. If a firm wants to be competitive and capture new markets, it cannot avoid innovation (Becheikh, Landry & Amara, 2006). There are many factors that drive innovation; they include individual, academic institutions and companies. While large organizations have strong technological innovation, the ideas for products and services introduced in the market by the big companies originate from SMEs. Looking through a business eye, this paper will look into the technological capacities of firms and the role of technological innovations in the business competitiveness. This paper will look at the framework used by businesses to classify and characterize diverse forms of technological innovations and how they affect the capability of the firm. Small enterprises have a narrow focus that allows them to be functional companies with the expertise potential. Organizational Innovativeness In the dynamic economies, all the organizations embrace technological innovations inclusive of companies in the production industry and the distribution of services and goods who are thought to be traditional in nature. This helps the organizations who embrace innovation to have a competitive advantage in the environment in their respective industry globally. This shows that innovation and competitiveness are related closely. The formation of an efficient and the vigorous system of technological innovation is an important factor to spur economic growth. The system also helps in improving the standards of living in the society (Adkinson, 2011). For the technological innovation structure to produce the intended impact on the competitiveness of the organization, they should not only improve the major feature like technological, production, financing and scientific components but improvement of the relationship of these components via the available mechanisms of interface (Chen, Lin & Chang, 2009). Institutional and microeconomic environment which is favorable is also necessary. A system of public education should also be in place to provide customized training for the business needs, an efficient market for the goods and services that would encourage competence of the entrepreneurs. The labor market which assists the organization adapts quickly to the change demanded and economic environment should also be in place. A number of these factors are the basic principles for an organization to develop an excellent innovation system (Chen, Lin & Chang, 2009). Better standards of living, job growth and competitiveness are mainly driven by innovation. So as to improve the firm’s competitiveness, it is helpful to study the features that earlier allowed innovation in the organizations (Chen, Lin & Chang, 2009). These features are numerous. The procedure of innovation and competitiveness is complicated in developing and differs in accordance with the industry and the products. Technological innovations in a business are supported by infrastructure, education and research. This helps the organization to be competitive even in the future (Cefis & Marsili, 2006). In a firm’s competitiveness, technological innovation plays a vital role. It is also worth to note that, between organizations of different sizes, the small and medium enterprises have an upper hand in innovation. The SMEs are flexible and have the capability to adapt in a better way while they are a perfect position to start and execute fresh ideas. SMEs are flexible and have an organizational structure which is simple. The SMEs also boasts of approachability and they have a low risk. Al these vital features combined facilitates the SMEs to be innovative. This shows that the SMEs have unrealized potential to be innovative (Chaminade and Vang 2006). Research by Bala Subrahmanya, Mathirajan & Krishnaswamy (2010) have shown that the numerous SMEs in diverse industries takes part in technological innovations which are imperative in the success of the firms. The innovative capacity and the ability of the firms significantly differ and are dependent on the organization focus, sector, business environment and the resources. Predominantly, the manufacturing industry has a very complex innovative process determined by various factors of innovation (Becheikh, Landry & Amara, 2006). Innovation helps in economic growth due to the fact that it helps consumer welfare as well as economic efficiency via technological change. An important question is as to how the economic growth happens. The technological innovation brings down the costs through the creation of distribution and production methods that are efficient. Through the efficient distribution methods the organization competitiveness is enhanced. Innovation also helps in the introduction of improved or new products in the market (Asheim & Isaksen, 2002). These products attract customers, hence providing the customers with a choice. The development of new technologies brought about by innovation which camouflages the technologies that already exist. This leads to the entry of new players in the market with the aim of replacing the principal companies of the day thus providing competition (Carneiro, 2000). In the present day, it is broadly perceived that the effective advancement of innovation calls for equally aggressive markets and the assurance of licensed innovation rights. This due to the fact that each one drives innovation in reciprocal ways, making the right motivating forces for technological innovative movement to happen. If by any means organizations are protected from open rivalry, they won't have the motivations to put resources into the innovative work that breeds fruitful innovation (Bala Subrahmanya, Mathirajan & Krishnaswamy, 2010). According to Adkinson (2011), Intellectual property laws make enticement to advance through the creation of cognizable intellectual rights in upcoming items and methodologies. Intellectual property rights license holders to avoid others from utilizing these innovations for a constrained period of time. This makes impetuses for innovators or the individuals who market inventions to benefit by leading research, creating or enhancing items, in additional to introduction of the products to the market. The enhancement of these rules and regulation gives confidence to organizations knowing that their innovations are safe and cannot be emulated. This confidence makes more organizations to come up with new innovations hence increase the competition in the market. Likewise, in return for the restricted time of segregation, the inventions must be revealed to people in general, subsequently permitting others to expand on the shoulders of the designers that go before them (Adkinson, 2011). Rivalry among organizations is a driving factor of innovation and innovative change. Rivalry pushes organizations to advance so as to benefit from these innovations by being in the front line to create and put up another item for sale to the public or by expanding a portion of the overall industry. The obligation, for instance, to assemble regularly influential microchip to fulfill the wants of refined shoppers originates from makers who always keep watching for competition from their closest rivals to see whose chip will be accessible first (Carneiro, 2000). Competition regulations are paramount in the process on innovation. They guard the innovation incentives that are provided by the competition in the market. For instance, the United States competition regulations promote and maintain a market place which is competitive through the hindrance of anticompetitive behavior which hinders the process of competition, delay innovation incentives which in turn troubles clients (Asheim & Isaksen, 2002). In taking after this line of contention, it is paramount to recognize globally contending business segments. Organizations should also understand economical dissection force and expansive understanding of the worldwide setting in which they work. The local or non-business parts, whose execution is nearly fixed to nearby arrangements that set the guidelines for competition in the businesses, need also to be understood. Understanding of these factors will help the organization to have a competitive advantage over its rivals (Danneels & Kleinschmidtb, 2001). The results as far as productivity and employment in numerous administration sectors are to a great extent the impression of the activity an organization brings when confronted with innovative regulations. Technological innovative policies don't slow down the passage of new organizations into the business nor encourage the activity of action to those officially settled (Kedia & Jain, 2013). The regulations have the tendency to expand organizational competitiveness and efficiency hence progress economically. Correspondingly, improved household work adaptability, less inflexible working hours or low maintenance work assertions are connected with the higher occupation and more fast acclimations to economical changes hence increased competition (Asheim & Isaksen, 2002). For the organizations to be competitive, every company should have an environment where innovations are produced. The process of innovation should be continuous. The environment should be conducive is such a way that the practice of commercializing technological innovation can prosper. Considering the role paid by technological innovation in the global economy, it is imperative to be acquainted with the significance of developing an organization culture that promotes technological innovation. The challenges and the solutions to anticompetitive behavior in the business that cause problems to the technological innovation should be dealt with. This will guarantee the promotion of economic growth and human progress through technological innovation. Conclusion The main goal of innovation in any business is to improve competition through cost reduction, quality improvement, replacement of old products, and increase in choice of products to the consumers. Innovation also helps organizations to enter into the global market. From the paper, we can learn that there is relationship between innovation and the company’s competitiveness. An environment which is competitive, forces the organizations to be innovative or otherwise there is a risk of being taken over by innovative products and services that enter the market. The intellectual property rights harmonize the competition regulations through providing exclusive rights, assisting in commercialization while also encouraging new innovations to be disclosed to the public (Kedia & Jain, 2013). References Adkinson, W. (2011). Promoting Innovation Through Competition: The Roles of Patent Notice and Remedies. Competition L. Int'l, 7, 33. Bala Subrahmanya, M., Mathirajan, M., & Krishnaswamy, K. (2010). Importance of Technological Innovation for SME Growth-Evidence from India. UNU-WIDER. Becheikh, N., Landry, R., & Amara, N. (2006). Lessons from innovation empirical studies in the manufacturing sector: A systematic review of the literature from 1993-2003. Technovation, 26(5), 644-664. Carneiro, A. (2000). How does knowledge management influence innovation and competitiveness?. Journal Of Knowledge Management, 4(2), 87-98. Cefis, E., & Marsili, O. (2006). Survivor: The role of innovation in firms’ survival. Research Policy, 35(5), 626-641. Chaminade, C. & Vang, J. (2007). Innovation policies for Asian SMEs: an innovation system perspective. Handbook Of Research On Asian Business, paper no. 2006/03. Chen, Y., Lin, M. & Chang, C. (2009). The positive effects of relationship learning and absorptive capacity on innovation performance and competitive advantage in industrial markets. Industrial Marketing Management, 38(2), 152-158. Danneels, E. & Kleinschmidtb, E. (2001). Product innovativeness from the firm's perspective: its dimensions and their relation with project selection and performance. Journal Of Product Innovation Management, 18(6), 357-373. Kedia, B., & Jain, S. (2013). Restoring America's global competitiveness through innovation (1st ed.). Cheltenham: Edward Elgar Pub. Ltd. Tirupati, D. (2008). Role of technological innovations for competitiveness and entrepreneurship. Journal Of Entrepreneurship, 17(2), 103-115. Read More