Innovation has emerged as a key weapon to take on the challenges of information economy. Companies must learn that producing standard products using standard methods alone will not sustain competitive advantage. They must be able to provide customized goods/services of high quality at low-cost, which is possible only when their value chain comprehends the importance of innovation.
In this new world, value creation through profitable growth can come only from innovation (Prahlad and Ramaswamy, 2003). It is now widely recognized that innovation is the main driver of industrial growth as well as a major cause of social and environmental disruption (Hall and Vredenburg, 2003). There are two paths by which companies can use knowledge to create sustained competitive advantage. First, companies can act to internally spread knowledge that other companies will find almost impossible to copy, that is, tacit knowledge. Second, companies can create superior knowledge-management capabilities. Both these strategies will foster innovation (Faisal, 2004a).
From a company's perspective, innovation can be a primary source of sustained competitive advantage as well as a significant source of risk, competitive disruption and failure (Teece et al, 1997). Most executives agree that continuous innovation is a competitive necessity for their organizations (Linder et al, 2003). Today, companies are increasingly looking beyond their boundaries for help with innovation, working with customers, research companies, business partners and universities (Rigby and Zook, 2002; Quinn, 2000). |
