Analysing the Bilateral Relationship between Technological Readiness and Innovation of Countries by Considering the Mediating Effect of GDP

By Mehregan, Mohammad Reza; Hashemi, Seyed Hamid et al. | Iranian Journal of Management Studies, January 2015 | Go to article overview

Analysing the Bilateral Relationship between Technological Readiness and Innovation of Countries by Considering the Mediating Effect of GDP


Mehregan, Mohammad Reza, Hashemi, Seyed Hamid, Neshan, Mahdi Nik, Iranian Journal of Management Studies


Introduction

In today's globalized world, competitiveness has become a milestone of both advanced and developing countries. Because of pressures introduced by globalization, it is important to have a framework for analysing a country's competitive position in the international market rather than simply focusing on measures of internal productivity. It is common knowledge that the marketplace is no longer restricted to a particular geographic location. A business can thus expect competition from neighbouring entities, and/or from similar operations within its region. The marketplace is now global, and even the smallest organizations compete on an international level. Many policymakers express serious concerns about national competitiveness. The competitiveness of a nation is defined as "the degree to which it can, under free and fair market conditions, produce goods and services that meet the standards of international markets while simultaneously expanding the real income of its citizens, thus improving their quality of life" (Artto, 1987).

Each year the World Economic Forum (WEF) publishes a report on the competitiveness of countries. These reports serve as benchmarks for national policymakers and interested parties to judge the relative success of their countries in achieving competitiveness as represented by accepted indices. A nation's competitiveness can be viewed as its position in the international marketplace compared to other nations of similar economic development levels. The capability of countries to survive and to have a competitive advantage in global markets depends on, among other things, the efficiency of their public institutions, the excellence of the educational, health and communications infrastructures, as well as on the nation's political and economic stability. Besides this, an outstanding macroeconomic environment alone cannot guarantee a high level of national competitive standing unless firms create valuable goods and services with a commensurately high level of productivity at the micro level (Onsel et al., 2008).

While the Global Competitiveness Report (GCR), which is reported yearly by the WEF, displays the results of the 12 pillars of global competitiveness separately (Table 1), it is important to keep in mind that these attributes are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing (pillar 8) for R&D or an efficient goods market which makes it possible to take new innovations to market (Schwab, 2012).

Technology development (TD) is the basic means by which companies, industries and countries can foster their competitive capabilities and increase their competitive advantages (Wang et al., 2007). The importance of technology development and investment in information technology has been studied thoroughly (Jafari, 2014). The central role played by technology in strategies for national competitiveness is further complicated by the presence of multinational enterprises in different countries (Porter, 1985). Furthermore, innovation in science and technology has been noted as an economic factor since the time of the classical economists. From the 1970s onwards, the public and private sectors began to focus on the use of innovation management strategies to gain economic advantages in the global market. Business interest in innovation management strategies had grown for a number of reasons. Two of them in particular provided the major impetus. The first reason was the general restructuring of international business away from resourcedriven and towards knowledge-intensive industries. Secondly, there has been increasing emphasis on the role of innovation management in corporate competitive strategy (Roberts, 1998). …

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