Innovative Behavior by Organisations - Literature review Example

TOPIC: Innovative Behaviour byb organisations owes more to firm size than either organisational structure, or Knowledge Management or the Changing Global Landscape. INTRODUCTION: Large firms can easily innovate as compared to smaller firms. Large firms have more capital to infuse into innovative changes because many smaller firms lack the money to invest in many innovative changes. Further, many smaller firms can easily innovate. Also, there are many factors that constrain large companies to innovate faster than small companies. For example, some big companies have lesser elbow room to innovate. In addition, some factors make smaller firms better innovators. Likewise, innovation is a better criteria for the organisation's successful than knowledge management or the changing global landscape. However, some cost reductions may work against the company. Plus, there are other evidences that small companies can overtake the big companies because of innovation. And, another good example of innovation is the case of Xerox and the small copiers. Plainly, companies should not innovate and reduce production costs blindly. Plus, another clear example of innovation is the RCA radio fallout. Finally, managers must forget the outdated and outmoded management strategies. BODY: Section four entitled Strategic Innovation and Firm Size stated that Large firms can easily innovate as compared to smaller firms. Large firms have more capital to infuse into innovative changes because many smaller firms lack the money to invest in many innovative changes. Likewise, clients prefer to deal with large firms as compared to smaller firms because large firms bring a symbol of stability and financial strength. Large firms also have the much -needed idle cash that it could use to infuse into research and development of new products and processes. Many smaller firms do not have the luxury of having excess money for researching and developing new products and processes. Likewise, large firms often market more diverse products than many smaller companies. Clearly, Large firms can easily innovate as compared to smaller firms. Further, many smaller firms can easily innovate. The smaller companies can easily innovate as compared to larger firms because the firm's structure is not as fixed or stationary as the management structure of the large firms. For example, a single proprietorship owner can immediately decide whether to set up another branch in another city or not because he is only responsible for himself. On the other hand. Many of the managers of large firms have to present their plans to set up a new branch in another city to the board of directors for approval. The board of directors many even ask for the bold and expansionist manager to present his or her feasibility study. Evidently, many smaller firms can easily innovate. Also, there are many factors that constrain large companies to innovate faster than small companies. One such factor is the board of directors. the board of directors will then take a longer time to decide among themselves whether to approve the manager's plans to expand to a new territory. This only shows that there is lesser flexibility in the large firms as compared to the smaller firms. Many of the research and development department of large firms are usually over -organised to the point where there is lesser elbow room to innovate. Smaller firms can easily flex its marketing muscles and the smaller firm's officers can all all facets of the business due to its small size. On the other hand, It is normal for one person to only see one facet of the entire business because of the sheer size of the company. Surely, there are many factors that constrain large companies to innovate faster than small companies. For example, some big companies have lesser elbow room to innovate. The big firm's marketing manager is only responsible for reaching the company quota in terms of sales. The big firm's production manager is too focused on meeting the minimum number of units that the marketing department needs for the month. The accounting department's accounts receivable clerk is only focused on the collection of all trade receivables amounts. The board of directors is too busy with other fields of interests because they are only concerned with approving projects that would make the stockholder and future investors profitably happy. In fact, the stockholders are even called to vote on some marketing and strategic management actions if such decisions involve large sums of the stockholders' money. On the other hand, managers of smaller firms can easily see all phases of the business. This would result to faster decisions as compared to decisions where time is a huge disadvantageously influential factor that many big firms have. Undoubtedly, some big companies have lesser elbow room to innovate(Ulijn et al. 2000, 293). In addition, some factors make smaller firms better innovators. The article Strategic Innovation and Firm states that there is greater flexibility in smaller firms in terms of deciding whether to set up a branch in another city, to offer new products and services or just simply reducing the current operating expenses or increasing them as compared with the time constraint that large firms are burdened with before a much needed product is approved for production and marketing. One unprofitable reason for large companies to stick with the old products is that the old products are doing well by themselves in terms of generating profits and the managers of the large firms do not want to venture into the uncharted sales territory. For, the old products have already proven themselves to be money makers and there is a danger that the new products may not turn out as profitably as expected. Truly, some factors make smaller firms better innovators. Likewise, innovation is a better criteria for the organisation's successful than knowledge management or the changing global landscape. The article Strategic Innovation and Firm states that company many have the knowledge on how to produce a product. However, the customers would rather from a company that sells products to fill the whims and caprices of the buying customer. For example, the Ford car manufacturing company is a good example of a large firm that suffered because of the entry of smaller car firms. The Ford company continued investing lots of money on blast furnaces, logging operations, saw mills, coke ovens, glass plant, cement plant and other car manufacturing facilities. The company's company's labor hours were reduced and the workers were reduced by 5% of the total employed. These costs reductions were done in order to increase profits. Evidently, innovation is a better criteria for the organisation's successful than knowledge management or the changing global landscape. However, some cost reductions may work against the company. The same Strategic Innovation and Firm states that cost reduction also lessened the company's drive to innovate and maintain its strategic edge over its competitors. Ford felt that the imported Japanese cars like Toyota could not defeat it in the marketing battlefield. Ford was unprofitably caught by surprise. Ford car manufacturing company continued to focus its scarce money resources on the plant, property and equipment needed to increase production of its Ford cars. The Ford became heavier by as much as 25% whereas the Ford engine remained the same. Ford company tried to innovate by using the System / 360 circuitry. However, this was a slow production process that took its toll on the Ford Sales. On the other hand, the Japanese car manufacturers were creating smaller cars that were fuel efficient. The general public were immediately attracted to the lower priced, smaller Japanese cars that could run more miles to each liter of gasoline as compared to the Ford cars. Obviously, some cost reductions may work against the company. Plus, there are other evidences that small companies can overtake the big companies because of innovation. The same article Strategic Innovation and Firm states that Lansdowne and Cromton & Knowles who were the large and pioneering textile machines that were used by rug manufacturers were overtaken in terms of sales by the new and smaller tufting technology in the carpet industry. Ford motor company had failed because this large company was too inwardly focused on reducing cost to the point where money was not allocated for research and development of new products. On the other hand, many small companies succumbed under the marketing strategy of the large companies because these small companies could not increase their production volume to meet the strong demand for the cost efficient products. The smaller companies could not fill the need of the market. Thus, the big competitors were chosen by the customers because of the big companies abundant supply of goods and services that the smaller companies do not have the luxury of having. This shows that management needs to recognise that conditions stimulating innovations are different from those that favor high volume, efficient, established business operations. Surely, there are other evidences that small companies can the big companies because of innovation. And, another good example of innovation is the case of Xerox and the small copiers. The large Xerox company invented the copier machine. The article Strategic Innovation and Firm states that many smaller copier companies started cropping up and eating away large chunks of the Xerox copier markets. The main reason is that Xerox had taken a long eight years to innovate. The Xerox company felt that the smaller copier companies were small Davids that could not topple a large Goliath like Xerox. The innovative years of Xerox were marred by missteps and false starts. Thus, Xerox had lost fifty percent of its original market to the small competitors. Unquestionably, another good example of innovation is the case of Xerox and the small copiers. Plainly, companies should not innovate and reduce production costs blindly. The companies must innovate in order to fill a need that the customers have. The innovation should result to the company having a marked strategic marketing advantage over the competitors. One such example is that the company should not just reduce cost by retrenching ten percent of its factory workers. The company must give a valid reason for the reduction of costs. One very good reason for retrenching employees is that the demand for their products has dropped to the point where some of the workers have become idle. Likewise, innovation will only be done if such move would increase sales by chopping away the competitors share in the company's specific market segment. One example of a market segment is the car industry. Another market segment is the textile industry. In short, the company must not reduce costs only to be hurt by the competitions' infusion of scarce money resources for research and development of new products, services and processes. Evidently, companies should not innovate and reduce production costs blindly (Lewis, Palmade, Regout, and Webb 2002). Plus, another clear example of innovation is the RCA radio fallout. The large company RCA had invented the transistor radio receiver. The company did not pursue innovating its transistor radio because it had a big share of the market. A new and smaller Japanese company, Sony, innovated on the transistor radio receiver market and overtook RCA as the number one choice of customers in the United States. Sony had innovated by improving the sound quality of the transistor radio and introduced the FM radio frequency. The Japanese company used information technology to profitably research, develop and market its transistor radio(Antonelli 2002, 10). The small company completely routed the big company, RCA in its own territory, The United States. There are many types of innovations. Two such innovation styles are innovation that changes only the core design concepts of a technology and innovation that changes only the relationships between them. Another type of innovation includes improvement of individual components but the underlying core design concepts as well as the links between them remain the same. The architectural innovation is described as that faced Xerox copiers and RCA transistor radio. Sony's success was due to its "...ability to adapt organizationally and culturally in order to accommodate technological change"(Forbes 2002, 13). This type of innovation is marked by linking of component parts together while leaving the core design concepts untouched. Convincingly, another clear example of innovation is the RCA radio fallout. Finally, managers must forget the outdated and outmoded management strategies. To successfully innovate, managers of companies must throw away their preconceived ideas of what determines success as well as how value is created regardless of the company's size. Managers must use information technology in our borderless global economy to outsmart the competition (Steinberg 2003). This is the best way to successfully stop wasting their scarce time resources as well as money following outmoded management strategies where innovation is not a part thereof. many small banks survived the turbulent banking industry by innovating. One vary popular banking innovation was to merge smaller banks with large ones. Here, both the small and large banks would benefit in terms of increased territory and exchange of banking information between the two combined banks (Baden -Fuller & Stopford, 1). Truly, managers must forget the outdated and outmoded management strategies. CONCLUSION: Large firms can easily innovate as compared to smaller firms. Large firms have more capital to infuse into innovative changes because many smaller firms lack the money to invest in many innovative changes. Evidently, many smaller firms can easily innovate. Surely, there are many factors that constrain large companies to innovate faster than small companies. Undoubtedly, some big companies have lesser elbow room to innovate. Truly, some factors make smaller firms better innovators. Evidently, innovation is a better criteria for the organisation's successful than knowledge management or the changing global landscape (Tansey 2002, 78). Obviously, some cost reductions may work against the company. Surely, there are other evidences that small companies can the big companies because of innovation. Unquestionably, another good example of innovation is the case of Xerox and the small copiers. Evidently, companies should not innovate and reduce production costs blindly. Convincingly, another clear example of innovation is the RCA radio fallout. Truly, managers must forget the outdated and outmoded management strategies. Conclusively, Innovative Behaviour by organisations owes more to firm size than either organisational structure, Knowledge Management or the Changing Global Landscape. Works Cited Antonelli, Cristiano. 2002. The Economics of Innovation, New Technologies and Structural Change. New York: Routledge. Forbes, Naushad. 2002. From Followers to Leaders: Managing Technology and Innovation in Newly Industrialized Countries. London: Routledge. Lewis, William W., Vincent Palmade, Baudouin Regout, and Allen P. Webb. 2002. What's Right with the US Economy: The Secret Behind the New Economy Isn't Information Technology but Old-Fashioned Competition and Managerial Innovation. The McKinsey Quarterly : 31+. Steinberg, James. 2003. Information Technology & Development: Beyond "Either/or". Brookings Review, Spring, 45+. Tansey, Stephen D. 2002. Business, Information Technology and Society. New York: Routledge. Ulijn, Jan, Dan O'Hair, Mathieu Weggeman, Gerald Ledlow, and H. Thomas Hall. 2000. Innovation, Corporate Strategy, and Cultural Context: What Is the Mission for International Business Communication. The Journal of Business Communication 37, no. 3: 293. Section 4 :Strategic Innovation and Firm Size Baden -Fuller & Stopford, The firm matters more than the industry, Rejuvenating the Mature Business: The Competitive advantage, Harvard Business School Publishing, p23 -40, Boston MA, 1994 Read More