Keeping Up with Global Competition: Why Firms Need to Innovate?

Innovation is often seen as the lifeline of the modern firm, which has to survive and move ahead in a world of global competition and rapid technological change. Because of globalization and the increasing interaction of every individual and the different entities through out the world, the need to innovate most especially in the lines of business and information, is a must. To innovate and create better knowledge to compete in the furious battle between who gets who, and who gets it first. Time is very important in all dealings, every minute matters, seconds mean a firm's chance to compete and acquire success.

As business entities grow and have extended their opearations worldwide, they have acquired better understanding on how international business works, the falls one may get and the highs that go along the way. Learning is always there. But learning is only as sweet if it is acquired without much business resources gone. I am talking about understanding and knowing important processes without falling down and only learning after it. Unproductive activities will cost a firm and these type of unwanted costs could mean a firm's demise. Firms need to be careful in all it do and learn at most without using too much of important money.

In keeping up with competitors, continuous innovation is required. One way organizations innovate is by absorbing new ideas, insights and expertise from outside in an attempt to combine existing and new knowledge. The formation of alliances and the mobility of inventors are two more ways that companies can reach beyond local technological and geographic barriers. Both strategies can serve as bridges to new contexts and help spur innovation.

By forming alliances and tapping into the mobility of inventors, companies can absorb new knowledge. For example, the Japanese firm Matsushita accomplished a technological transition though the strategic use of alliances. The underlying idea is that companies should consider entering into alliances with other companies that are unlike them, this being the point of Lori Rosenkopf, a professor of management at Wharton, when citing Microsoft and Cisco Systems as examples of firms that have done this well. "Such alliances help companies create relationships and get into areas that they might otherwise not have considered."

Mobility of knowledge workers also provides a strong impetus to fresh ideas and innovative practices. In the early days of the Korean semiconductor industry, the practice of bringing U.S.-educated and U.S.-employed Koreans back home did a lot to strengthen the semiconductor industry in Korea.

In a research paper done by Rosenkopf and Paul Almeida of Georgetown University’s McDonough School of Business titled, "Overcoming Local Search Through Alliances and Mobility", they argue that "the occurrence of alliances or mobility between firms in a similar context merely duplicate pre-existing relationships but offer little added value to the firm. Distant technological and geographic contexts may offer access to new and unique knowledge." Companies need to use ways to acquire knowledge so as to fill the holes created by their immediate technological and geographical contexts.

Rosenkopf points out that these research findings have important implications for business executives. "It shows that they should cast a wide net when thinking about possible alliance partners," she says. "In considering an alliance, they should look at its larger, knowledge-based benefits. It is easy to keep returning to the same partners and allies because of your past experience with them. It is important, however, to invigorate the mix. That can happen when you make uniqueness and non-redundancy important considerations in choosing an alliance partner."

Taking in new things and carefuly exploring new possiblities will help a firm keep up, get new ideas, innovate better and be more competitive in the global market. When things have become everyone's concern, where businesses of one is also of the other, the need for knowledge in effectively dealing and addressing all these changes in the business environment must be a priority for firm who wish to make it big in the global market. Globalization can never be hindered. It is here to stay and change all of things, it is only up to us to make this revolution to our advantage or lose hope and resist the could-be "greatest" thing that has happened to the world.






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Points and information are taken from the article "The Loneliness of the Long-Distance Innovator" accessed through web address http://www.bettermanagement.com/library/library.aspx?l=1869 as of 09 January 2006.