Examine the importance of Innovation in creating and sustaining competitive advantage

Exposé Économie & marchés Économie générale

Date de publication :

23/03/2005

Langue :

Français

Format :

.doc

Nombre de pages :

5 pages

Niveau :

expert

Consulté :

19 fois

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Validé par :

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Sommaire :

Sommaire

Why firms want to create or sustain their competitive advantage through innovation?.
What are the limits of sustaining competitive advantage through innovation?.
How firms can create and/or sustain this competitive advantage?.
1. Create innovation as an aim of business and develop new knowledge more quickly than competitors.
2. Limit the capability of competitors to develop new knowledge.
3. Use government regulatory or legislative intervention protects or disables the competitive potential of the knowledge.

Résumé :

Nowadays, companies aim is to compete in the market place. The best way for them is to develop superior capabilities or competence which will enable to lead the market, in other term, to innovate.
J.Weerawardena and A.O'Cass (2003, p3) defined innovation as "the application of ideas that are new to the firm to create added value either directly for the enterprise or indirectly for its customers, regardless of whether the newness and added value are embodied in products, processes, work organization or management, or marketing systems."
This innovation will enable firms to create or sustain competitive advantage. J.Weerawardena et al. (2003, p4) cites Hyvarinen (1990), Lengnick-Hall (1992) and Rothwell (1992); according to them, "empirical evidence supporting the view that innovation leads to competitive advantage (stronger performance)". (J.Weerawardena et al. (2003, p4))
The aim of this essay is to understand, in a first part, why firms want to create or sustain their comparative advantage through innovation. In a second part, we will explain what the limits of this strategy are; and finally, how they can create and/or sustain this competitive advantage.