Competitive Advantage and Motivating Innovation

By Dustin, Gentet; Bharat, Mishra et al. | Advances in Management, January 2014 | Go to article overview

Competitive Advantage and Motivating Innovation


Dustin, Gentet, Bharat, Mishra, Jitendra, Mishra, Advances in Management


Abstract

The purpose of this paper is to investigate how competitive advantage and motivating innovation are intertwined. Creating a sustainable competitive advantage is important in order for a firm to be successful. This paper will explore the concept of competitive advantage, its link to innovation and the importance of motivating innovation in a company. Motivating innovation has many different factors that contribute to competitive advantage. Many companies have developed an approach in which they can motivate their employees to innovate independently and have achieved a competitive advantage as a result. Four progressive companies are examined: Apple, IBM, Google and 3M. This paper will examine their processes to motivate innovation. Finally there will be a conclusion with recommendations for achieving competitive advantage through innovating motivation.

Keywords: Competitive advantage, motivation, innovation, employees.

Introduction

In a capitalistic society companies must struggle to survive and make a profit. Competition is fierce and unrelenting. In order to prosper, much less survive; companies must have an advantage over their competition. Competitive advantage is defined as "a condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with and which results in benefits accruing to that company."

There is much scholarship on the subject of competitive advantage and the topic is under considerable debate. Two major views have emerged: the structural approach and the resource based view. Both views agree on one important point, the importance of innovation in achieving competitive advantage. In the structural approach, innovation facilitates competitive advantage in the three strategies that produce it: Cost Leadership, Product Differentiation and Focus. In the resource approach, innovative ideas and products provide a unique resource that other firms have a difficult time copying. It also leads to more heterogeneous resource endowments for the firm.

But what exactly is innovation? Webster's defines innovation as "the introduction of something new; a new method, idea, or device"12. This can apply to any business activity: a firm may innovate through technology or new management practices, businesses may introduce a new product or service to the market, companies may open new markets, or mangers may find a more efficient way of organizing activities.

Innovation is not without its flaws. As a process, innovation is time consuming and expensive which deters many businesses from pursuing it. Innovation itself is not a guarantee of success; it must be balanced with a company's core competencies and overall strategy to succeed. Many innovations, technology for example, can eventually be copied by other firms eroding the competitive advantage. But despite its risks, innovation is still one of the most important ways to achieve competitive advantage.

It can be concluded then that in order to achieve competitive advantage, motivating innovation should be the key role that managers play in an organization. Over the years there have been many different studies on how to motivate innovation in organizations. Consequently, there are hundreds of theories on how to effectively innovate in the business world. However, motivating innovation is not perfect due to the fact that innovation comes from the exploration of untested theories that have a high probability of failing. Regardless, managers must commit to motivating innovation in order to gain a competitive advantage in the marketplace.

The study of competitive advantage was pioneered by Michael Porter in his book: Competitive Strategy, published in 1980. He defined and elaborated upon his theory in: Competitive Advantage Creating and Sustaining Superior Performance published in 1985. Porter has been a prolific scholar on the subject and his theories have been referred to collectively as the structural approach. …

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