Impact Of Innovation On Business Development

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Introduction Few topics in managerial studies have received as much attention throughout the past decades as innovation has. This can partly be attributed to the global political turmoil as well as economic instability in which companies strive to survive. Through innovation, businesses attempt to outcompete others in order to captivate market share and increase profits. However the process is full of obstacles, and few manage to successfully innovate. This paper will aim to discuss the role of innovation in business development, introduce disruptive innovation, consider how and why disruptive innovation may occur in developing economies and lastly provide a basic framework to deal with disruptive innovation from the incumbent firm’s…show more content…
Banbury and Mitchell (1995) state that innovating in terms of product development and rapid product introduction were crucial to reach high performance. Moreover, Johnson (2001) concludes that surviving in an increasingly competitive marketplace required large businesses to take a proactive attitude towards innovation. Small and medium enterprises must also innovate in order to improve their performance (Rosenbusch, Brinckmann and Bausch , 2011). Having established the importance of innovating for companies regardless of size, an issue arises: why are not all businesses innovating? IBM (2006) proposes 5 factors that prevent some businesses from innovating. Inadequate funding is often an issue, and thus the firm will simply be unable to afford the innovation. This is a common occurrence with small businesses that lack capital. Risk avoidance attitudes may also prevent it, despite the fact that progress requires calculated risks. The third barrier is time commitments, such as not making investments that take a longer amount of time to pay off. Furthermore, some businesses employ incorrect measures to measure performance, for example, they only focus on profits and revenues instead of other such as knowledge and reputation. The last barrier IBM (2006) proposes is “siloing”, which refers to issues such as who will run the innovation department, and how will the profits be divided. Disruptive Innovation Occasionally a business leader will make logically
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