Academic journal article Journal of Managerial Issues

Scanning Behavior and the Process of Organizational Innovation

Academic journal article Journal of Managerial Issues

Scanning Behavior and the Process of Organizational Innovation

Article excerpt

Intelligence is not something possessed once and for all. It is in constant process of forming, and its retention requires constant alertness in observing consequences, and open-minded will to learn and courage in readjustment.

John Dewey, Reconstruction of Philosophy (1920)

The rapidity of market and industry change that organizations face in the 1990s has emphasized the criticality of understanding the nature and characteristics of competitive arenas and their impact on the strategy formulation process. Porter (1985) suggests that competitive strategy is the search for a favorable competitive position in an industry, the goal being the establishment of a profitable and sustainable position against the forces that determine industry competition. But in their pursuit for competitive advantage, organizations will face change. That is, change is a key driver of competition. The unending search for competitive advantage acts as a motivator while selecting one strategic approach over others. As a result, organizations will develop strategic responses to cope with any perceived alteration in their competitive circumstances. In this light, Day and Wensley (1988) assert that it is imperative to develop an understanding of how the acquisition, translation, and distribution of information may assist an organization in coping with changing circumstances. Moreover, Hambrick (1982) suggests that distinctive competencies appear to arise primarily through the propensity and ability to act on certain environmental information. Many have asserted that differential advantage can only be preserved in dynamic markets (i.e., markets whose complexity and rate of change are perceived by managers as high) through continuous innovation, the process of creating new value and new satisfaction for its users (Alderson, 1957, 1958; Lin and Zaltman, 1973).

Our aim here is to systematically integrate theoretical notions regarding organizational strategy, scanning behavior, and innovation into a comprehensive and descriptive model of the process of organizational innovation within the overall context of organizational change. Our presentation will gear around a model, shown in Figure 1, focusing on how an organization may engage the process of innovation as a strategic option. We enhance the importance of formal (e.g., strategic intelligence system) and informal (e.g., personal) mechanisms for acquiring information used for strategic purposes. The innovation process will be, therefore, guided by these mechanisms as implemented by organizational constituents. Notice also that the diffusion and adoption of innovations within organizational boundaries are integral parts of the model.

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The model in Figure 1 underscores two primary issues. Environmental scanning and information processing are imperative for strategic decision making in processes critical to an organization's well-being, such as innovation. Second, we view innovation as an organizational process that may come about as a strategic response to changing circumstances in the external environment (i.e., opportunities or threats). In the following sections we use Figure 1 to present our postulations on how the reformation gathering and dissemination activities may affect the decisions by which organizations respond to change, innovation being an option.

Scanning the Environment

The external environment has been defined as including all events and/or variables in the world that have any effect on an organization's activities or outcomes (Pearce and Robinson, 1988; Schendel, 1985). However, Pfeffer and Salancik (1978) warn that conceiving an organizations environment as encompassing every event that affects it would not be useful for understanding how the organization responds. Every event confronting an organization does not necessarily affect it, and organizations do not notice every event. Additionally, not all occurrences are perceived to be important enough to require a response (Pfeffer and Salancik, 1978). …

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