Section 1: Foundation of the Study
Organizations can take advantage of innovative initiatives to move toward
cutting-edge development resulting in increased productivity and ability to compete in
their respective markets (North & Kumta, 2018). Small- and medium-size enterprise
(SME) leaders often lack the budget to employ innovation strategies due to the costs
associated with new changes (Herrmann & Nadkarni, 2014). In a dynamic international
business environment, innovation strategies offer opportunities to secure a competitive
position in a given market (Prajogo, 2016; Visnjic, Wiengarten, & Neely, 2016), and
businesses may experience increase in profits.
Business leaders can use innovation practices to achieve the desired business
performance. Business leaders develop and implement more efficient and effective
processes to reduce the cost of product development, thereby leading to increased
revenues (Chowhan, 2016). The benefit generated due to innovation is the result of
collaboration between business leaders’ innovation strategies, the conditions of external
environment, and the fit between innovation strategies and the conditions of the external
environment (Prajogo, 2016). Adopting innovative strategies helps businesses to exploit
changes in the market (Petkovska, 2015). Innovation can lead to increased organizational
performance (Chowhan, 2016), and it is critical for survival, growth, and enhancing the
competitive position of companies. The goal of this qualitative case study was to explore
innovation strategies that some leaders of a global machinery manufacturing business use
to increase their organization’s profit margin.
Background of the Problem
The dynamic business landscape and foreign competition puts pressure on
companies to innovate with respect to their products, services, processes, and business
models (Dasgupta, 2015). Company leaders must make efforts to change both
incrementally and radically to meet stakeholder expectations and identify new sources of
growth (Dasgupta, 2015). SMEs face several constraints in terms of organization,
management, financing, competition, efficiency, growth, and development compared to
large enterprises (Petkovska, 2015). Small businesses are challenged to maintain the
traditional balance between customers and suppliers due to globalization, competition,
and online presence (Taneja, Pryor, & Hayek, 2016). All companies face challenges to
increase business performance.
Some companies face difficulties reaping the profits from newly launched
products in the marketplace. Product innovations brought into the market can fail to reach
an adequate level of customer acceptance and financial performance without
collaboration with different partners such as research organizations and competitors
(Najafi-Tavani, Najafi-Tavani, Naude, Oghazi, & Zeynaloo, 2018). A product innovation
may not entirely complement servitization, which refers to a process employed by
product providers to create greater value by increasing the services they offer (Gilbert,
2015). Servitization may have an adverse effect on service business model innovation.
After-sales services are essential to create and seize value from the product innovation
(Visnjic et al., 2016). Business leaders have growing pressure to increase business
performance and remain competitive, both locally and globally.
Problem Statement
Some global manufacturing businesses fail to increase profit margins (Prajogo,
2016; Visnjic et al., 2016). Despite creating 65.9% of new jobs and employing 99.7% of
the workforce, 50% of SMEs having fewer than 500 employees fail to reach an adequate
level of financial performance within 5 years (U.S. Small Business Administration
[SBA], 2018). The general business problem was that global businesses continue to
experience declining profit margins. The specific business problem was that some leaders
of global machinery manufacturing businesses lack innovation strategies to increase
profit margins.
Purpose Statement
The purpose of this qualitative single case study was to explore the innovation
strategies that some leaders of a global machinery manufacturing business use to increase
the organization’s profit margin. The target population for the study included business
leaders (e.g., executives, directors, and senior managers) of a global manufacturing
company in northwest Illinois who had successfully helped increase the organization’s
profit margin over the past 5 years by applying innovative strategies. The findings from
this study may contribute new insights that could help global machinery manufacturing
business leaders increase their companies’ profit margins and sustainability, leading to
improved economic strength and sustainable development in their communities.
Nature of the Study
I used the qualitative methodology to guide this study. The three traditional
research methods are qualitative, quantitative, and mixed methods (Tonkin-Crine et al.,
2016). The qualitative method is applicable to business settings (Mahoney & Vanderpoel,
2015). Qualitative researchers study participants in their current environment (Lebor,
2015) and interpret the meaning of participants’ experiences (Silverman, 2016). In
contrast, quantitative researchers aim to test hypotheses about the relationships between
variables (McCusker & Gunaydin, 2015; Yom, 2014). Mixed-methods researchers
incorporate aspects of qualitative and quantitative methods (Venkatesh, Brown, &
Sullivan, 2016). A quantitative or mixed-methods approach was not appropriate for this
study because my focus was to identify and explore strategies and themes, not to test
hypotheses. Given the differences among these three methods, the qualitative method was
most appropriate to explore the innovation strategies that global machinery manufacturers
use to increase profit margins.
I used a single case study design in this study. Researchers use the case study
design to explore specific real-time cases at a given point in time (Yin, 2018). A single
case study was an appropriate design for this study because my focus was to explore a
specific real-time case at a given point in time. Qualitative research designs include
ethnography, case study, phenomenology, and narrative research (C. Marshall &
Rossman, 2016). Researchers use the phenomenological design to understand the
meanings of participants’ lived experiences (Bowden & Galindo-Gonzalez, 2015).
Researchers use the ethnographic design to explore groups’ cultures (Yin, 2014) and use
the narrative design to capture the detailed stories or life experiences of participants
(Creswell & Poth, 2017). For these reasons, a case study was the most appropriate design
for this study to reveal strategies of innovation.
Research Question
The research question for this study was the following: What innovation strategies
do leaders of global machinery manufacturing businesses use to increase profit margins?
Interview Questions
To answer my research question, I asked the following questions to participants:
1. What innovation strategies did you use to increase profit margins in your
company?
2. Please explain the initial innovative phase regarding how you generated
knowledge of innovative activities that were helpful to increase your profit
margin.
3. What innovation strategies and methods did you find worked best to increase
profit margins?
4. How did you adapt your strategies to changes in your industry?
5. What key challenges has your company faced? How did your organization
address these key challenges to increasing profit margin?
6. How did your desire to compete with similar businesses affect your decision
to use innovative strategies?
7. What changes are necessary for innovation strategies to be applied in your
industry to increase profit margins in the future?
8. What other insights would you like to provide that we have not already
discussed in this interview regarding innovative strategies to increase profit
margins?
Conceptual Framework
The conceptual framework for this study included the holistic innovation model
and disruptive innovation theory. Cornell (2012) and Van de Vrande, de Jong,
Vanhaverbeke, and de Rochemont (2009) proposed the holistic innovation model to
describe innovation practices of all types of companies. Christensen (2011) developed the
theory of disruptive innovation for business leaders to use when creating future strategies
and increasing performance. Cornell’s innovation model explains how firms could benefit
from the use of innovation practices.
The conceptual framework includes all internal activities, all external activities,
the actions of the business leaders once information is resident within the firm, and the
possible methods for taking advantage of this acquired knowledge (Cornell, 2012). The
framework demonstrates a flow of innovation practices that company leaders can use to
choose activities that will become the company’s innovation strategy from beginning to
end (Cornell, 2012). The innovation process begins with the exploration and exploitation
phases, with potential practices stemming from the appropriate phase (Van de Vrande et
al., 2009). The exploration phase includes the leader’s actions to generate knowledge of
innovative activities that are helpful to the business. The exploitation phase includes all
actions taken to make use of the acquired knowledge, which can increase performance.
The theory of disruptive innovation is a practical framework that business leaders
can use to understand the market, develop a business strategy, and address the potential
threats and opportunities (Gobble, 2015). According to the disruptive innovation theory,
during nascent business development activities leaders should focus on searching for
opportunities; addressing those opportunities through parties, partners, and customers;
and creating a business model to address those prospects (Christensen, 2011). The theory
of disruptive innovation is an approach based on competitive response to innovation
(Christensen, Raynor, & McDonald, 2015; Čiutienė & Thattakath, 2014; Denning, 2016).
Radical innovations are the product of incremental innovation to the point where the
result disrupts the market. Both innovation and the degree of innovation that a company
pursues alter the way that a company operates and performs (Christensen, 2011). The
holistic innovation model provides a framework to describe the types of practices and
processes that a company can use to innovate (Cornell, 2012; Van de Vrande et al., 2009).
An expansion of the innovation chain includes a variety of methods for investing in
innovation to account for the different ways that a company might implement the
innovation strategy (Cornell, 2012). Business leaders may use the theories of holistic
innovation model and disruptive innovation to initiate a process of transformation that
can lead companies to create new ways of doing business and increase performance
(Christensen, 2011; Cornell, 2012; Van de Vrande et al., 2009). For these reasons, the
theories of holistic innovation model and disruptive innovation were relevant to
understanding the findings from this study.
Operational Definitions
Following are definitions of terms I used in this study:
Business model: A business model is a system of interrelated activities that define
how a firm conducts business with its customers (Kim & Min, 2015).
Diffusion of innovation: Rogers (2003) defined the diffusion of innovation theory
as the process of spreading the rates of new idea and technology through the people of a
social community.
Disruption: Disruption refers to how a newcomer can displace an incumbent
(Čiutienė & Thattakath, 2014).
Disruptive innovation: Disruptive innovation is a creative process that a firm can
use to create a new service or product that is capable of disrupting existing products or
services (Christensen, 2011).
Servitization: Servitization is a process employed by product providers to create
greater value by increasing the services they offer (Gilbert, 2015; Vendrell-Herrero &
Wilson, 2017).
Assumptions, Limitations, and Delimitations
In this section, I address the general assumptions of this study. In addition to the
assumptions, I also describe the study’s limitations and delimitations. The reliability and
credibility of this study depended on participants’ responses from an interview inquiry.
Assumptions
Assumptions are claims considered to be true without concrete proof (Hibbert,
Sillince, Diefenbach, & Cunliffe, 2014; Leedy & Ormrod, 2013). The elements of a study
always include assumptions, although researchers may not control the risks of these
assumptions (Denscombe, 2013). The following were the assumptions of my study:
• Participants would answer the open-ended interview questions honestly.
• Participants had experience using the innovation strategies to increase profits
and were willing to share their experiences.
• Global machinery manufacturing companies required innovation strategies to
achieve healthy profit margins.
• A culture of innovation would help global companies in the machinery
manufacturing industry achieve improved financial performance.
Limitations
Limitations are threats that compromise the credibility of a study (Connelly, 2014;
C. Marshall & Rossman, 2015; Yin, 2014) and are potential weaknesses in the study
(Kirkwood & Price, 2013). The following were the limitations of the study:
• Participants could withdraw at any time during the study; therefore,
participants who finished the study might not be truly representative of the
population.
• Business leaders answering the interview questions might not represent
universally accepted expert opinions.
Delimitations
Delimitations indicate the boundaries of a study (Batongbacal, 2015; Leedy &
Ormrod, 2013; Rodner, 2015) and are controllable characteristics that narrow the scope
of a study (C. Marshall & Rossman, 2016). The following were the delimitations of the
study:
• The study was limited to one company.
• Participants included business leaders who had more than 5 years of
experience in the manufacturing industry and more than 2 years of experience
using innovation.
• The participants were employees of a global machinery manufacturing
company located in northwest Illinois.
Significance of the Study
Innovation may affect the growth of businesses and communities. The changing
business environment leads companies towards innovation (Bitektine & Haack, 2015;
Martin-Rios & Parga-Dans, 2016; Saebi & Foss, 2015; Song, Cao, & Zheng, 2016).
Company leaders may use the findings from this study to develop or improve their firm’s
innovation strategies.
Contribution to Business Practice
Innovation is essential to an organization’s success. The appropriate use of
innovation strategies can create additional value for customers and shareholders and
increase enterprise competitiveness (Baker, Grinstein, & Harmancioglu, 2016; Rubera &
Kirca, 2017). Innovation can also lead to increased organizational performance and
revenue as business leaders develop and implement more efficient and effective processes
for reducing costs or facilitating the development of better products (Chowhan, 2016;
Simester, 2016). The success of any given innovation may be temporary, and nurturing a
culture of innovation in organizations is essential to sustaining a competitive advantage
and achieving higher profit margins (Ferreira, Fernandes, Alves, & Raposo, 2015; Villan,
da Silva, & Camilo, 2016). Business leaders should seek to foster a culture of innovation
in organizations to increase business performance.
Product innovation strategies are essential for manufacturing companies to
strengthen competitiveness by creating revolutionary business opportunities in the
marketplace. Business leaders have increasing pressure to remain competitive, both
locally and globally (Burgess, 2013). Some leaders of rapidly changing businesses,
however, lack the innovation strategies to drive the future business performance and
sustainability while maintaining the stable business in the present (Prajogo, 2016; Visnjic
et al., 2016). Through this qualitative single case study, I aimed to contribute to business
practice by adding to a reservoir of working knowledge from which leaders of a global
manufacturing business may gain a more profound understanding of innovation strategies
for increasing the organization’s profit margins. For example, small business owners may
use the innovation strategies identified in this study to reduce their firm’s risk of failure.
Organizational development practitioners can use the knowledge of innovation strategies
to guide firms through the process of transitioning into an innovative company to
increase profit.
Implications for Social Change
The implications for social change include the ability to create developmental or
transformational changes in the business community that could improve business
performance and increase profit, leading businesses to create opportunities for, and
contribute to, their communities. Increased business growth via innovation strategies can
provide more job prospects and increase tax revenues to help local governments increase
or strengthen community services. Positive social change includes improved economic
strength and sustainable development in the community.
A Review of the Professional and Academic Literature
Because of the dynamic nature of the global business environment, companies in
the manufacturing industry may need viable innovation strategies for increasing
performance and sustainability. In a constantly changing international trade environment
or in a persistent economic decline situation, an external crisis leads surviving firms to
attempt innovation actions to achieve renewal of business performance, and the
innovation strategies can offer opportunities to increase profit and secure a competitive
position in business (Martin-Rios & Parga-Dans, 2016; Prajogo, 2016). Business leaders
can use innovation strategies to increase the performance of their businesses.
The adoption of innovation strategies is vital for organizational performance and
could go a long way toward sustaining companies for the long term (Azar & Ciabuschi,
2017; Chuang & Lin, 2017; Jinke et al., 2018; Shanker, Bhanugopan, van der Heijden, &
Farrell, 2017). Some businesses continue to experience falling profit margins, and some
fail to achieve an adequate profit level within the first 5 years (SBA, 2018). The purpose
of this qualitative single case study was to explore the innovation strategies that some
leaders of a global machinery manufacturing business in northwest Illinois used to
increase profit margin. In this literature review, I explore various innovation strategies
that may help increasing profit margin.
The review of literature begins with a discussion of the theoretical context for
innovation practices in consolidated, holistic innovation models by Cornell (2012) and
Van de Vrande et al. (2009). The holistic innovation model includes innovation
exploration and innovation exploitation phases. Innovation exploitation includes three
categories: (a) intellectual property (IP) maturation through the exploitation of process
and product innovation, (b) market innovation, and (c) the realization of the value of IP. I
narrow the discussion of open and closed innovation paradigms to specific theories
relating to manufacturing firms. In the subsections that follow, I discuss disruptive
innovation theory, define and discuss innovation intensity from a theoretical point of
view, and describe innovation theory as the concept related to the holistic innovation
model. I also discuss other related theories and the link between business performance
and innovation strategies. Finally, I discuss the recurring themes in the literature on
innovation strategies.
The intent of this study was to fill a gap in knowledge regarding the ways that
manufacturing firms can approach innovation while increasing profit margin. I attempted
to fill a knowledge gap in this study by exploring and identifying the ways that
manufacturing firms can develop their innovation strategies using different innovation
techniques and different levels of funding. The conceptual framework depicts the
conceptual boundaries of the study based on existing knowledge and demonstrates the
types of practices and investments a manufacturing company could use to build their
innovation strategy.
Literature Search
The sources for the literature review included peer-reviewed journal articles,
dissertations, federal government publications, and germinal books. The literature review
included the search for scholarly articles using several databases, including EBSCO,
ProQuest Central, ABI/INFORM, Business Source Complete, Science Direct, and Info
Science. I also used the Google Scholar search engine. The literature review contains 252
references; 221 (87.7%) were published within the past 5 years, and 216 (85.7%) were
obtained from scholarly peer-reviewed sources.
Holistic Innovation Model Theory
Innovation theories advanced over time in terms of addressing the ways that
businesses innovate and build strategies, putting practices in place to generate
innovations. For example, the core of innovation theory began with the internal focus of
Schumpeter (1934) and Rogers (2003). Chesbrough (2003) created the concept of open
innovation as a new paradigm for conducting research and development (R&D). Later,
Christensen (2011) developed disruptive innovation theory for use in creating future
strategies and increasing performance, and Cornell (2012) and Van de Vrande et al.
(2009) proposed the holistic innovation model to describe innovation practices of all
types of companies. Manufacturing business leaders may find the innovation practices
included in these innovation theories useful for generating innovations.
The holistic innovation model framework applies to manufacturing as well as
service firms. According to Cornell (2012), the innovation model provides a framework
to describe the types of practices a firm can use to innovate. The holistic innovation
model includes Chesbrough, Vanhaverbeke, and West’s (2006) model of innovation
inputs and outputs as well as Van de Vrande et al.’s (2009) innovation processes and
practices. The holistic innovation model framework includes practices that any company
can use (Lusch & Nambisan, 2015). For example, any company can benefit from
Cornell’s (2012) holistic innovation model because of the broadly applicable innovation
practices.
The holistic innovation model contains a generic innovation process flow that
firms can use for sustaining business performance. Cornell (2012) described the holistic
innovation model as a generic innovation process flow of investment, exploration, and
exploitation. In support, Taneja et al. (2016) reported that organizations that can maintain
appropriate balances between explorative innovation and exploitative innovation would
achieve long-term viability and survival. However, one item that is missing from the
holistic model proposed by Cornell is the initial investment of company leaders.
Companies must invest in innovation exploration to collect the information necessary to
stimulate product and nonproduct innovations and then generate intellectual property for
the company. Open disclosures can limit a firm’s competitive advantage or ability to
profitably commercialize their innovations (Gans, Murray, & Stern, 2017). These
findings are relevant to this study because failure to secure intellectual property can
provide opportunities for other businesses of similar interests to exploit a company’s
ideas. In addition to securing a company’s intellectual property rights, maintaining the
appropriate balance between explorative innovation and exploitative innovation can help
a firm to increase and sustain the business performance.
The holistic innovation model contains two main phases: (a) innovation
exploration, or value creation, and (b) innovation exploitation, or value capture.
Innovation exploration is the stage for knowledge creation and ideation (Cornell, 2012;
King & Baatartogtokh, 2015; Van de Vrande et al., 2009). Businesses can increase
generation of creative ideas by merging internal and external sources (Santoro, Ferraris,
Giacosa, & Giovando, 2018; Scuotto & Shukla, 2018), moving from a centralized and
internal R&D method to an ongoing decentralized flow of research activities (Messeni
Petruzzelli & Rotolo, 2015). A firm can develop knowledge internally, procure it from
external sources, or co-source it by collaborating with others to jointly develop
knowledge (Dahlander & Gann, 2010). Innovation exploitation is the transformation of
that knowledge into goal-driven outcomes such as increasing profits or organizational
performance (Chowhan, 2016; Petkovska, 2015; Van de Vrande et al., 2009). The holistic
innovation model is truly holistic because it includes both open innovation and closed
innovation approaches, and because it includes both product innovations as well as
nonproduct innovations.
Innovation exploration. A company’s senior management may set the structure for
following exploration and building a business case for investing in R&D. Innovation
exploration happens when companies seek out information to use for the creation of a
new product or process idea (Van de Vrande et al., 2009). Before investing in innovation,
business leaders should carefully review the company’s analysis regarding expectations
and the nature of intended competitive advantages (King & Baatartogtokh, 2015). Firms
retain the internal process improvements to improve operations, generate value through
cost savings, or serve as a platform for future innovations (Van de Vrande et al., 2009).
Business managers can apply innovation exploration to developing new ideas with the
intent of achieving desirable results such as competitive advantage or process
improvement.
Business leaders have strategic decisions to make regarding how they want to
develop and acquire knowledge to build innovation strategies. Cornell (2012) reported
that innovation exploration includes a set of business practices that generate three types
of knowledge: internally developed knowledge, externally developed knowledge, and
sourced knowledge. Internally developed knowledge of innovation exploration is the
existing knowledge base of a company and the knowledge of its current labor force
(Taneja et al., 2016) and represents traditional closed innovation practices (Manzini,
Lazzarotti, & Pellegrini, 2017). The holistic innovation model classifies internally
developed knowledge as a closed innovation approach because the development and
maintenance of knowledge take place within the organizational boundaries of the
company.
Business leaders may use open innovation practices to share the risk of failure.
Externally developed knowledge and sourced knowledge are both open innovation
practices (Bogers, Chesbrough, & Moedas, 2018; Popa, Soto‐Acosta, & Perez‐Gonzalez,
2018; Spithoven, Vanhaverbeke, & Roijakkers, 2013), including activities such as buying
or leasing IP from other firms, acquiring another company, intimidating competition,
obtaining free intellectual property, or hiring new employees or consultants (Van de
Vrande et al., 2009). Outsourcing or co-sourcing is an activity involving cooperation with
an outside entity (Muqattash, 2017; Rialp-Criado & Komochkova, 2017).
The holistic innovation model classifies externally developed knowledge and
sourced knowledge as open innovation because business leaders obtain knowledge and
innovations from outside the company’s organizational boundaries. A sourced knowledge
approach may benefit business leaders because of the shared risk with an outside entity.
Each of the innovation exploration components (e.g., internally developed knowledge,
externally developed knowledge, and sourced knowledge) have their own sets of
practices that business leaders can use to generate the knowledge for building innovation
strategies.
Innovation exploitation. The holistic innovation model involves the use of
information gathered to facilitate R&D and to implement product and nonproduct
innovations. Innovation exploitation occurs when companies transform knowledge from
the innovation exploration phase into new or improved products, services, processes, and
business models (Van de Vrande et al., 2009). In the current demanding and competitive
market, businesses use technologies for exploiting opportunities (Scuotto, Del Giudice, &
Carayannis, 2017). The National Science Foundation (2015) described product
innovation as the introduction of a new or significantly improved good or service to the
market and described process innovation as the implementation of a new or significantly
improved production process, distribution method, or support activity. Company leaders
select innovation practices to implement processes and product innovation strategies with
the intent of maximizing profit (Chowhan, 2016; Petkovska, 2015). Business managers
can use innovation exploitation to drive the innovation strategies for achieving desired
outcomes such as competitive advantage or profitability.
The holistic innovation model includes the connection between nonproduct
innovations and product innovation to show that one can impact the other. Technological
or product breakthroughs can sometimes lead to new strategic options for changing a
company’s business model (Cornell, 2012; Van de Vrande et al., 2009). For example, a
company may invent a radical technology or product that could lead the company to
change its business model to focus on developing an entirely new industry or industry
segment. The holistic innovation model shows that businesses with unique and strong
expertise in certain areas can make profits from providing consulting services to other
businesses (Chesbrough et al., 2006; Cornell, 2012). Therefore, a firm’s senior managers
should proactively evaluate the firm’s innovation portfolio to make strategic decisions for
implementing the appropriate innovation strategies.
Innovation exploitation includes three subcategories: (a) IP maturation through the
exploitation of process and product innovation, (b) market innovation, and (c) the
realization of the value of IP. The open innovation paradigm encourages businesses to
consider different routes to the market to reduce wasted R&D efforts, promote new
partnering opportunities, and find new ways for exporting goods and ideas (Chesbrough
et al., 2006; Rialp-Criado & Komochkova, 2017). Business leaders select innovation
practices to implement a larger strategy that includes knowledge to implement process
and product innovation with the intent of maximizing profit. Organizational design,
practices, and capabilities must align with innovation strategies to positively influence
innovation and consequent exploitation of innovation (Bitektine & Haack, 2015; Saebi &
Foss, 2015). Pathways to the market under a closed innovation paradigm are
commercializing alone and leaving IP dormant (Chesbrough et al., 2006). The multiple
options available under the open innovation paradigm include commercializing with
other firms, selling or leasing the IP, spinning off a production or service unit, selling the
firm, trading or bartering IP, making IP public, and providing consulting services (Abbate
et al., 2015; Spithoven et al., 2013). The innovation exploitation process ends with
pathways to the market, leaving business leaders with decisions to make regarding how to
leverage generated intellectual property.
Innovation paradigms. Business leaders have a strategic decision to make
regarding the selection of appropriate innovation practices for the growth of their firms.
The list of accepted innovation practices has grown since 1930, expanding into a series of
open and closed activities that a company can use (Cornell, 2012; Van de Vrande et al.,
2009). In a closed innovation paradigm, companies retain all the rights to their creative
work (Chandler, 1990). By contrast, companies using an open innovation paradigm reach
beyond the boundaries of their firm to collect information and develop new products
(Chesbrough, 2003). Each of the innovation paradigms is useful for generating
innovation that results in new products or services. Business leaders also can opt to mix
closed innovation and open innovation practices to achieve the desired business
performance.
Closed innovation: A traditional approach. Business leaders can use closed
innovation to improve company performance. Teece (1980) and von Hippel (1988)
challenged the traditional innovation paradigm and expanded innovation theory based on
observed business practices. In contrast, Hsieh, Huang, and Lee (2016) and Manzini et al.
(2017) reported that closed innovation is suitable for positively influencing a company’s
performance because business leaders using closed innovation can focus on business
innovation process within the enterprise such as creative thinking, technological R&D,
patent applications, manufacturing, and market launch processes. Closed innovation is a
traditional approach to innovation characterized by particular advantages and
disadvantages. Historically, innovation was an internally focused method of creating a
form of a monopoly on a product or market (Schumpeter, 1934, 1950). Innovation has
been traditionally about developing economies of scale and scope through a company’s
value chain (Chandler, 1990; de Roest, Ferrari, & Knickel, 2018; Drucker, 1985).
Chandler (1990) and Hemmert (2003) argued that closed innovation is a paradigm in
which a company seeks to retain complete control over all pathways from a product’s
inception through the product’s end of life. A company using a closed innovation
paradigm will seek to make the best use of the creative power resident within the
company and optimize processes to minimize the operating costs (Armour & Teece,
1980). However, one of the criticisms of internally developed practices is that these R&D
methods can become wasteful when business leaders complete the work to create new
ideas without ever taking the ideas to market (Chandler, 1990). These innovations are
known as spillovers; in a fully closed innovation paradigm, such innovations yield no
profit for the company (Chesbrough et al., 2006). In contrast, business leaders use open
innovation practices to take advantage of spillovers and gain some return on investment
that would otherwise get lost (Choi & Williams, 2014). Therefore, business leaders may
need to decide whether closed innovation (e.g., internal pathways to generate products or
services) is the right choice for increasing company performance or growth or whether
they should use open innovation to take advantage of spillovers.
Open innovation and risks. Internal and external knowledge is equally valuable in
open innovation paradigm for conducting R&D. Open innovation is an operational
paradigm in which companies can evaluate both internal and external pathways to
generate products or services and take those new products or services into the
marketplace (Chesbrough et al., 2006). Szakonyi (1994) noted that business leaders must
choose the internal and external practices that ultimately provide the best value for the
firm. Business leaders who implement open innovation typically look outside the
company for assistance with remaining competitive (von Hippel, 1988), operating under
the assumption that their companies are unlikely to achieve complete vertical integration
and will need to work with entities outside of their companies’ boundaries (Chesbrough,
2003; Un & Rodríguez, 2018). For example, business leaders often must look outside
their companies for funding or information because their companies do not have
everything needed to create new products or services. Cooperation between firms benefits
both participants so long as the shared information does not compromise a company’s
competitive advantage (von Hippel, 1988). Business leaders, therefore, can align their
innovation strategies with their firms’ objectives and can evaluate both internal and
external routes for integrating a competitive open innovation strategy to sustain domestic
and global markets.
Open innovation involves business leaders reaching beyond their companies’
boundaries to collect information and develop new products or services. Chesbrough
(2003) presented open innovation as a complete concept to unite the concept of
collaborative innovation practices with the classical view of internal R&D. Firms use
open innovation to go through a deep organizational change to transform the closed
boundaries and enable innovation to move easily between internal innovation processes
and external environments (Lopes, Scavarda, Hofmeister, Thomé, & Vaccaro, 2017;
Taneja et al., 2016). The benefits of open innovation include accessing new competencies
and know-how, sharing costs and risks of innovation, reducing time to market, increasing
creativity, broadening product range, catching market opportunities, and monitoring
technological change (Manzini et al., 2017). R&D intensity affects the competitiveness of
a firm positively when a firm acquires another firm in the domestic or international
market (Galavotti, Depperu, & Cerrato, 2017; Genc & Zakaria, 2017). Business leaders
may prefer open innovation (e.g., external pathways to generate products or services) for
sharing R&D cost and risk of failure, as well as diversifying products.
Diversification strategy is a potential path for companies to innovate products and
services through collaboration with external entities, including competitors. Researchers
such as Teece (1980) and von Hippel (1988) reported that diversification and cooperation
serve as viable innovation strategies for companies looking outside of their organizations.
Small companies, which often lack the resources and competence to innovate, would
benefit from exploiting the open innovation model (Manzini et al., 2017). SMEs,
therefore, are increasingly adopting open innovation practices (Spithoven et al., 2013;
van de Vrande et al., 2009). The drastically changing business environment and
increasing product complexity push companies toward innovation network collaboration
(Song et al., 2016). Business leaders can use open innovation as a means of diversifying
products and services or achieving radical innovation with reduced risk.
Mixing closed and open innovation. Firm leaders may choose a mixed approach
to innovation to generate viable innovation strategies for the firm’s growth. Business
managers can use different philosophies of open and closed innovation paradigms while
developing their innovation strategies for increasing business performance and
competitive advantage through a scientific creation process whether that process occurs
inside or outside of the firm (Manzini et al., 2017; Villasalero, 2018). Business leaders
may find a mixed innovation approach more convenient for tailoring to their firms’ needs
once the holistic model gets decompose into a set of different practices. SMEs may
accentuate external and internal factors of the organization such as technological position,
innovation, organizational design and personnel management to encourage innovation
and achieve business efficiency and firm performance (Taneja et al., 2016). A company
can increase profit by fully exploiting the internal and external innovation ideas (Hsieh et
al., 2016; Un & Rodríguez, 2018). Therefore, open and closed innovation are not
necessarily opposite approaches to innovation (Villasalero, 2018). Both closed innovation
and open innovation paradigms contain practices that business leaders can mix to exploit
internal and external innovation ideas for developing new products or services.
Disruptive Innovation Theory
Disruptive innovation theory includes practices companies can use in their
endeavors to meet the need of customers and investors in terms of products and services.
Disruptive innovation theory is based on competitive response to innovation (Christensen
et al., 2015; Čiutienė & Thattakath, 2014; Denning, 2016). Innovation disruption occurs
when customers begin to adopt the market entrants’ new offerings of products or services
in volume (Christensen et al., 2015; Karimi & Walter, 2015). Business leaders of a
company experiencing disruption may face challenges to retain or acquire customers and
the company, therefore, may not achieve expected business performance. For this reason,
the disruptive innovation theory was appropriate for my study.
Business leaders may use disruptive innovation because success with existing
products may not guarantee future success. Different business models emerge because of
the innovation disruption, and although not every disruption succeeds, business leaders
must act to respond to the disruption in creative ways before it becomes a problem
(Christensen et al., 2015). Innovation will likely disrupt a firm if disruptive innovations
have characteristics that the firm is not using already (Gomber, Kauffman, Parker, &
Weber, 2018; Nagy, Schuessler, & Dubinsky, 2016). For example, a technology that a
company uses to secure products can become obsolete if the company fails to keep up
with the pace of technological change. Therefore, the company may experience the
technology innovation disruption. In contrast, a company that created a disruptive
innovation may experience an increase in profits. Disruptive innovations have specific
characteristics, specifically, functionality and a technical standard or a form of ownership
that are comparable to the firm’s current technologies (Nagy et al., 2016). Companies can
continue to transform through research and development. Therefore, a firm’s
management team should foster creativity and align the organization’s culture with
innovation adoption in order to achieve an increase in revenue, to sustain business
performance, and to stimulate future expansion.
From an international SME perspective, innovation is critical to company growth
because SME can generate breakthrough innovation and increase competitive strength
(de Jesus Pacheco, ten Caten, Jung, Guitiss Navas, & Cruz-Machado, 2018; Kocak,
Carsrud, & Oflazoglu, 2017). SMEs play an important role in the global economy
because they are dynamic, easily adaptable, and flexible (Petkovska, 2015). Technologies
make radical changes to the value chain, and firms can capture cost reductions from the
new value chain architecture (Bouncken & Fredrich, 2016). SMEs can increase efficiency
by adopting disruptive innovation strategies, opening new markets, and improving value
(Chen, Zhu, & Zhang, 2017; Del Vecchio, Di Minin, Petruzzelli, Panniello, & Pirri, 2017;
Q. Zhou, Fang, Yang, Wu, & Ren, 2017). Firm leaders should develop distinct
capabilities for enhancing their company’s ability to adapt to the changing global
business environments and the disruptive innovations that will pose competitive
challenges in the changing environments.
Business leaders may need to make quick decisions regarding implementation of
an innovation strategy, because delays can erode competitive advantage. Innovation
intensity is the degree of a firm’s investment in innovation practices. A firm’s innovation
intensity determines the beginning of the firm’s innovation process and represents the
way that company leaders seek innovation through an expenditure of funds (Hsieh et al.,
2016; Tavassoli, 2015). Innovation intensity is also a company’s ratio of R&D investment
to net sales (Hatzikian & Bampasis, 2017; Heyden, Reimer, & Van Doorn, 2017).
Innovation intensity may change when companies change innovation practices.
Innovation intensity is not necessarily connected to a company’s growth potential,
although innovation intensity is an indication of the degree to which a company is willing
to invest in new ideas (National Science Foundation, 2015). Companies with high
innovation intensity experience beneficial knowledge spillovers, networking
opportunities, and diversification that result from the companies’ interest in learning to
generate new kinds of knowledge, whether that interest is directly related to current
products or not (Choi & Williams, 2014). Firm leaders must take steps as quickly as
possible to assess the capacity of the company to invest in R&D for achieving a
competitive advantage.
Businesses may experience failure when managing complex innovation projects.
The expected value of a project and the probability of innovation failure increase with
innovation intensity (Kamoto, 2017). Although failure experiences can lead to frustration,
such experiences are also a vital source of new knowledge for companies and can
enhance innovation (Carmeli & Dothan, 2017). Decreasing R&D can weaken a firm’s
ability to remain innovative in the long run (Heyden et al., 2017). Increase in R&D is the
most influential determinant of firms’ probability of being innovative in declining
industries (Tavassoli, 2015). Business leaders, therefore, may fail to sustain competitive
advantage in international trade without an investment in R&D.
Firms can use buyout investments to outperform investments in the public market,
and their consistent outperformance contributes to the risk of buyout funds (Buchner,
Mohamed, & Schwienbacher, 2016). Innovation intensity, capital expenditure, sales
growth, and return on assets affect the probability of going public for firms with internal
cash flow that’s lower than their investments (Acharya & Xu, 2017). When a firm stays
public, managerial choice of the innovation intensity is subject to shareholders’
intolerance of innovation failure (Kamoto, 2017). Business leaders may increase
investment in R&D in hopes of achieving the desired competitive advantage and
profitability. However, a leadership team still may not achieve desired success in the
short term because the complexity of innovation involves innovation transformation that
requires skill sets and learning processes to continue to develop new knowledge.
Every company’s investment level in innovation depends on inputs for innovation
intensity. Innovation inputs are essential for innovation intensity of firms (Tavassoli,
2015). However, relying only on input indicators might result in overrating unproductive
R&D investment (Edquist & Zabala-Iturriagagoitia, 2015). A top management team’s
functional experience, tenure, education level, and age may influence decisions about
R&D intensity (Heyden et al., 2017). An SME’s intended level of innovation intensity
depends on the company’s stable cost flows, its technical competence, and its
collaborations with directly connected partners (Hatzikian & Bampasis, 2017). Business
leaders must alter the way their companies select their desired levels of innovation
intensity to implement open innovation practices (Lopes et al., 2017). Business managers
may use open innovation practices to leverage internal and external knowledge for
increasing innovation intensity level.
Company leaders may change innovation intensity and innovation practice when
collaborating with external partners. Firms can change the level of innovation through the
acquisition of additional technical competence from external sources (Hatzikian &
Bampasis, 2017). When business leaders realize a need for different products or
processes, they can opt to change their organizations’ innovation intensity and shift the
focus to exploration or exploitation innovation (C. Lee, Park, Marhold, & Kang, 2017;
Soo-Myung, Seong-Taek, & Young-Ki, 2017). Firms in the same industry may have
varying levels of innovation intensity. For example, smaller firms tend to have higher
innovation intensity rates than larger firms due to a desire to create new and unique
products (National Science Foundation, 2105). The marketplace influences the way a
firm experiences value from R&D investments after the firm introduces an innovation in
the market (Un & Rodríguez, 2018). Business leaders can collaborate with the business
leaders of other companies to innovate and extend product range and can also disrupt the
industry at the same time with bold new products or services.
Link Between Business Performance and Innovation Strategies
Companies may use innovation strategies to increase market value and
competitive advantage. Innovations are a method for generating value in a company’s
products or services (A. Karlsson, Larsson, & Rönnbäck, 2018; Riyadi & Sumardi, 2017;
Vendrell-Herrero, Gomes, Bustinza, & Mellahi, 2018; Verdu-Jover, Alos-Simo, &
Gomez-Gras, 2018) provided that the innovation is useful and cost-appropriate (von
Hippel, 1988). Other researchers similarly found that the use of strategies for innovative
technologies and processes leads a company to maintain a competitive edge over other
companies and results in increased market value (Drucker, 1985; Hua & Wemmerlöv,
2006; Jajja, Kannan, Brah, & Hassan, 2017; Prajogo, 2016; Stock, 2015). Bala
Subrahmanya, Balachandra, and Mathirajan (2004) argued that companies also could use
innovation strategies to (a) prevent product or service rejection after bringing offerings to
customers, (b) reduce costs of production, (c) improve quality, and (d) penetrate new
markets. These findings are relevant to my study because the use of innovation strategies
can lead companies to increased market value and competitive advantage.
Business leaders may use innovation strategies to deal with uncertainty in the
market. Companies can pursue innovation as one way to deploy resources to maintain a
competitive advantage in the market (Levin, 1978; Penrose, 1959; N. Yazdani & Murad,
2015). However, companies focusing on innovation strategies and relying on innovation
for their competitive advantages can face challenges when competitors adopt or develop
innovative ideas and apply new pressures in the market (Rogers, 2003). Companies must
continue to innovate over time in order to overcome new forces in the marketplace
(Capello & Kroll, 2016; Christensen, 2011). Implementation of innovation strategies has
many advantages for a company. These findings indicate that business leaders should
have strategies to innovate constantly over time to deal with uncertainty in the market and
achieve the desired competitive advantage.
Innovation strategies may have a positive impact on the business performance.
The knowledge, ideas, interpretations, and insights added to the marketplace from
external networks serve as primary drivers for innovation strategies and offer means for
companies to innovate successfully even when they do not have a strong entrepreneurial
culture (Baker et al., 2016). Other researchers supported the importance of innovation
strategies for increasing revenue and sustaining business performance, arguing that
innovation is a creative process of introducing new technologies, designs, or processes
into the marketplace (Demirkan & Spohrer, 2016; Fernandes & Solimun, 2017;
Karabulut, 2015; Rahman, Hassan, & Said, 2015; Taneja et al., 2016). These findings
suggest that companies promote the culture of innovation and use innovation strategies to
launch new products and services that may have an impact on business performance.
Strategies for building a culture of innovation may help new companies increase
R&D and increase profits. The absence of innovation in small business resulted in the
Small Business Innovation Act of 2011, legislation aimed at increasing efficiency in
innovation development (SBA, 2015). Innovation requires employees to gain and share
knowledge throughout the organization, expanding the company’s knowledge reserve to
result in performance (Ferreira et al., 2015). Small business innovation research exceeded
$100 million, and the SBA allocated 2.8% of its research and design budget to increasing
private sector innovation development (SBA, 2015). The SBA also encouraged
companies to foster innovation culture, arguing that nurturing a culture of innovation is
important for contributing to the development of employee skills and innovation
strategies.
Companies may use innovation strategies to deal with marketplace challenges
such as presenting new products and services and addressing the supply-demand gap.
Firms investing in innovations usually experience financial constraints (Efthyvoulou &
Vahter, 2016; Garcia-Quevedo, Segarra-Blasco, & Teruel, 2018; Howell, 2017; Pellegrino
& Savona, 2017). Partnering with external entities such as suppliers, customers, and
innovation agents can help companies handle the challenges in the marketplace (Song et
al., 2016). For example, external partnerships can help business leaders better understand
the need of customers. Harris, McAdam, and Reid (2016) noted several determinants of
innovation, including: characteristics of the firm, targeted markets for sale and
ownership, the importance of leadership, organizational culture, and variables
representing absorptive capacity. Firms can collaborate with suppliers or other companies
to reduce the demand-supply gap and to introduce new products or services.
Business leaders may adjust R&D levels based on the innovation determinants
such as characteristics of the firm and targeted markets for sale. Chowhan (2016) and
Prajogo (2016) highlighted the importance of product and process innovation strategies
for business performance, whereas Martin-Rios and Parga-Dans (2016) stressed the
importance of companies’ performance renewal abilities to select and implement the
efficient innovation strategies and to understand the consequences of innovation
deployments. Therefore, different innovation practices are necessary for companies to
provide superior customer service.
Types of innovation. A business may choose a form of innovation that is
beneficial to the company’s financial performance and for maintaining market position.
The types of innovation include product innovation, process innovation, marketing
innovation, and organizational innovation (Çetinkaya Bozkurt & Kalkan, 2014; C.
Karlsson & Tavassoli, 2016; Petkovska, 2015; J. Zhang & Zhu, 2015). Another important
classification is the one that divides innovation by the degree of innovativeness on
incremental and radical innovation (Dohse & Niebuhr, 2018; Petkovska, 2015).
Innovation may be disruptive, radical, incremental, or sustaining (Souto, 2015). Business
culture that focuses on big thinking is an accelerator for innovation and creativity, resulting
in concepts that laypersons may not visualize (Connolly, Turner, & Potocki, 2018;
Suwannathat, Decharin, & Somboonsavatdee, 2015). For example, companies can
continue to expand their product ranges, and at the same time, business leaders can launch
breakthrough innovations that disrupt the industry.
A business culture that promotes creativity may foster an environment for R&D
and for taking risks. It is not typical for businesses to use all four innovation types
simultaneously or in combination (Marcelino Sadaba, Perez-Ezcurdia,
EcheverriaLazcano, & Amurrio, 2015; Snihur & Wiklund, 2019). Leadership teams may
prefer particular innovation types depending on business goals and the availability of
physical resources.
Product innovation involves business leaders launching new or improved products
for a firm’s internal and external users. Product innovation is the introduction of a good
or service that is new or significantly improved in terms of its characteristics or intended
uses (Çetinkaya Bozkurt & Kalkan, 2014; National Science Foundation, 2015;
Petkovska, 2015; Restuccia, de Brentani, Legoux, & Ouellet, 2016). Product innovation
includes significant improvements in technical specifications, components, and materials,
incorporated software, user-friendliness, or other functional characteristics (Petkovska,
2015). Business leaders may use product innovation to introduce new goods or services,
to increase market value, or to enter into the new market. Some of the examples of
product innovation are instant photos, camera and touchscreen in a mobile phone, a
global positioning system, electric cars, and drones.
Process innovation may have a positive impact on a firm’s productivity growth.
Process innovation is the implementation of a new or significantly improved production
or delivery method (Çetinkaya Bozkurt & Kalkan, 2014; Hanedaa & Ito, 2018; National
Science Foundation, 2015; Petkovska, 2015). Examples of process innovation would
include: the digitization of the printing process, the automation of equipment, or the
introduction of new equipment such as lasers or sensors (Petkovska, 2015). These
findings are relevant to this study because business leaders can implement process
improvement efforts to increase their firms’ productivity.
Marketing innovation involves business leaders using marketing strategies to
promote new and improved products or services. Marketing innovation is the
implementation of a new marketing method that involves significant changes in product
design or packaging, product placement, product promotion, or product pricing
(Çetinkaya Bozkurt & Kalkan, 2014; Petkovska, 2015). Kumar and Zattoni (2014) argued
that marketing innovation is the introduction of a new marketing strategy into the
business process by incorporating the four Ps of marketing, namely, product packaging or
design, placement, pricing, and promotion of products. Implementing the four Ps fosters
customer satisfaction, encourages new product visibility, and opens new investment
avenues, with those improvements, in turn, providing a surge in sales, increasing profits,
and improving organizational performance (La & Yi, 2015). Examples of marketing
innovation include: introducing director-exclusive sales, using the method variable cost
of goods, promoting a new trademark, or marketing a new product (Petkovska, 2015).
The use of such marketing tactics may also result in the new business development and
expansion opportunities for small businesses.
Business leaders may feel the need to transform their workplace and business
practices. Organizational innovations are the implementation of new organizational
methods in a firm’s business practices, its workplace organization, or its external relations
(Aeron & Jain, 2015; Çetinkaya Bozkurt & Kalkan, 2014; Petkovska, 2015). Examples of
organizational innovation would include: changes in jobs and formation of teams in the
organization, making business improvements, or introducing quality standards
(Petkovska, 2015). Business leaders may think of organizational innovations as tools for
improving organizational culture, fostering a culture of creativity, increasing
competencies of the workforce, and improving quality standards and supplier relations.
Companies benefit from using both incremental and radical innovations.
Incremental innovations refer to small-scale, step-by-step improvements to existing
technologies or to existing products or to modified versions of existing products or
processes (Petkovska, 2015). Radical innovations refer to the introduction of completely
new products or services or to completely new systems of production and distribution
that make existing products and services uncompetitive (Jugend, de Araujo, Pimenta,
Gobbo Jr, & Hilletofth, 2018; Petkovska, 2015; Taneja et al., 2016). Radical innovations
may also include new technologies or may link to existing technologies for new
applications. Whether the innovation focus is on a product, a service, a process, or an
organization, the result of a dynamic innovation process involves factors internal and
external to the company (Taneja et al., 2016). Business leaders use incremental
innovation to build on existing knowledge and ideas, therefore enjoying a reduced level
of risk. Radical innovation, however, means higher risk for a company because it
involves new and more drastic changes in technology and knowledge and results in a new
product.
Challenges to innovation strategy. Businesses may have to face internal and
external challenges to innovation. Internal innovation barriers are those that arise inside
the company, whereas external innovation barriers are those that arise from the external
environment (Çetinkaya Bozkurt & Kalkan, 2014). Without the ability to innovate and
being competitive to provide new products and services, companies can experience the
loss of their major clients (Stoker, 2016). Heidenreich, Kraemer, and Handrich (2016)
pointed out that the historical failure of innovation results from consumers’ resistance to
innovation and their rejection of most of the innovations. These findings suggest that
business leaders may fail to achieve the desired success without increasing their firms’
ability to innovate and providing meaningful product and services to their customers.
Business leaders may try to understand the variety of challenges to innovation.
The key barrier for potentially disruptive and radical innovations includes traditional
riskavoidance focus (Das, Verburg, Verbraeck, & Bonebakker, 2018). Internal factors
influencing SME innovation include inadequate training, a lack of related work
experience for employees, and insufficient communication between departments
(Çetinkaya Bozkurt & Kalkan, 2014). In contrast, external factors influencing innovation
for SMEs include crisis or instability in the market, excessive bureaucracy in government
supports, and difficulty in obtaining support from institutions such as universities
(Çetinkaya Bozkurt & Kalkan, 2014). Therefore, SME leaders may find the external
challenges to innovation more difficult to deal with than the internal challenges to
innovation.
Manufacturing companies may face variety of challenges. Manufacturing
companies face challenges to innovation that complicate the production process,
including small delivery units, high variety of products, shorter delivery times, shorter
product life cycles, or requirements for high quality (Gabriel & Pessl, 2016). A
manufacturing company’s leadership team may not successfully deal with the challenges,
especially if the company is a small one saddled with a lack of financial resources, scant
opportunities to recruit specialized workers, and a small innovation portfolio (Çetinkaya
Bozkurt & Kalkan, 2014; Seibert, Sargent, Kraimer, & Kiazad, 2017). Some SMEs may
find innovation change very difficult and challenging.
Businesses may need the balance between their innovation efforts and customers’
demand in the marketplace. The influence of how businesses understand the demand in
the marketplace and innovate, contribute towards much of the social environment,
business environment, and economic effect (Jennings, Cater, Hales, Kensbock, &
Hornby, 2015). Coad, Pellegrino, and Savona (2016) analyzed the effect of financial
knowledge, demand, market structure, and regulation barriers to innovation on a
company’s economic performance, finding that cost and financing availability negatively
affected productivity across distribution. Saxena (2015) provided supporting evidence,
arguing that challenges to innovation in Indian businesses include a lack of financial
support from the government for research, for training of researchers, and for leadership
training of employees. In the Nizhny Novgorod region of Russia, impediments include
lack of trust, poor collaboration within the innovation system, poor information support,
excessive bureaucracy, legislative obstacles to innovations, legislative obstacles to
intellectual property protection, and a lack of interest on the part of large companies in
collaborating with small ones (Butryumova, Karpycheva, Grisheva, & Kasyanova, 2015).
Kuznecova and Cirule (2015) contend that in the Baltic States and the European Union,
the inclination is to engage young people in social innovation, although individuals over
30 typically have the necessary motivation, knowledge, business experience necessary for
meeting the social and economic goals. The researchers suggested that the broader focus
should include encouraging mature people with more life experience to serve as
sustainable social entrepreneurs to influence policy makers and public institutions
(Kuznecova & Cirule, 2015). The lack of qualified employees can hinder high
productivity firms while removing the financial and bureaucratic barriers can accelerate
innovation efforts.
Resistance to innovation strategy adoption. Business leaders need to address
employee resistance to innovation strategies. Negative links to innovation include
employees adopting unambitious goals and standards, too much formalization, and
promoting the repetitive systems (Harris et al., 2016). To deal with this challenge, Stoker
(2016) recommended that business leaders foster change and innovation by leveraging
rewards and recognition, addressing communication strategies, and providing discussions
that help employees understand and embrace the change. If business leaders fail to
answer employees’ questions regarding planned transformations, employees will
negatively arrive at their conclusions (Stoker, 2016). Business leaders and employees can
address several questions to help companies face change successfully:
• Why are we doing the change?
• What will success look like?
• What role do you expect each individual to play?
• How will people know how they are doing?
• What is in it for each person?
• Will they have your support? (Stoker, 2016).
These articles are relevant to my research because these articles illustrate how employee
resistance to innovation influences leadership teams as well as the overall businesses.
Innovation consumers can also resist innovation. B. McCarthy and Schurmann
(2015) studied Australian farmers’ resistance to innovation, exploring the factors that
prevent Australian farmers from adopting more sustainable farming practices in North
Queensland. The researchers concluded that the farmers’ resistance to innovation came
mainly from the technology and the costs associated with making the switch to
chemicalfree farming methods (B. McCarthy & Schurmann, 2015). Additionally, those
farmers who were interested in organic farming lacked the information and reported that
the long learning curve was a deterrent (B. McCarthy & Schurmann, 2015). The lack of
institutional support, the presence of powerful players in the supply chain, and the fear of
losing competitive advantage while sharing information also contributed towards
resistance to change (B. McCarthy & Schurmann, 2015). The research by B. McCarthy
and Schurmann is relevant to my study because of the findings that consumers’ resistance
to innovation comes mainly from the learning curve associated with new technology and
from the prohibitive costs.
Consumers may resist innovation actively or passively. Although consumers may
seem to open to change and interested in evaluating new products, they also regularly
refuse innovations without considering their potential (Heidenreich & Kraemer, 2016;
Talke & Heidenreich, 2014). Active innovation resistance is an attitudinal outcome that
results from unfavorable new product evaluations (Talke & Heidenreich, 2014). By
contrast, passive innovation resistance results from a consumer’s generic tendency to
resist innovations (Heidenreich & Handrich, 2015; Heidenreich & Kraemer, 2016; Talke
& Heidenreich, 2014). Business leaders can facilitate the adoption of new products by
attempting to understand why consumers may not value a newly launched product and by
managing customers’ active resistance to innovation. Firm leaders also should understand
the impact of consumers’ passive resistance to innovation.
Passive resistance to innovation can impact innovation adoption and performance.
Heidenreich et al. (2016) studied passive innovation resistance and found that consumers
with high cognitive resistance or situational passive resistance displayed negative results
of similar magnitudes, whereas consumers with high levels of both dimensions exhibited
strong tendencies to resist innovations. Because consumers represent the most critical
aspect of new product launches, dealing with their cognitive and situational resistance to
innovations is essential. By understanding how different types of passive innovation
resistance can affect innovation adoption, business leaders can improve the design and
development of new products to increase profitability in the market (Heidenreich et al.,
2016). Mental stimulation is the most effective instrument for overcoming cognitive
passive resistance, whereas benefit comparison is most effective in cases of situational
passive resistance (Heidenreich & Kraemer, 2016). The findings that business leaders
need to recognize and deal with consumers’ passive resistance, e.g., cognitive and
situational passive resistance, to drive the acceptance of a newly developed product, is
useful in understanding strategies to increase profit.
A lack of confidence in privacy and information security also can impact the rate
of consumers’ innovation adoption. Sunday and Vera (2018) analyzed the factors that
influence an SME’s adoption of information and communication technologies (ICT) in
the UK. A lack of confidence in the security and privacy of ICTs and negative perceptions
of ICT cost-benefit balances negatively affect the implementation of technology
innovations (Sunday & Vera, 2018). In an emerging country, companies may lack the
experimental work necessary for analyzing the implementation of technology, in which
case the creation of knowledge could help businesses attempting to explain the
application of ICT (Sunday & Vera, 2018). The article by Sunday and Vera is relevant to
this study because of the researchers’ conclusion that maintaining the privacy and
information security of consumers’ data is essential for motivating consumers to adopt
newly developed products.
Recurring Themes From the Scholarly Literature
Multiple recurring themes in the literature review included: (a) product and
process innovation strategy, (b) service model innovation, (c) business model innovation,
(d) technology innovation, (e) supply chain innovation, (f) managing risk to control profit
margins, (g) cultural diversity as a mechanism for innovation, and (h) innovation theory
for SMEs. The international marketplace in which companies operate and compete for
influences the competitiveness through innovation strategies because innovation strategies
that are useful in one environment may not prove effective in others (Prajogo, 2016). C.
Karlsson and Tavassoli (2016) argued that innovation strategies happen simultaneously but
exclude the sequential manner of innovation strategy options in realtime. Innovation
strategies can influence a strategic competitive benefit in the marketplace that positively
impacts business performance because customers may see the values in market offerings
and make the purchasing decisions.
Product and process innovation strategy. Innovation strategies may come in many
types such as product innovation and process innovation. Product innovation strategy
offers a strategic competitive advantage in the marketplace because customers can see
their value and convinces them to make purchasing decisions that positively impact
business performance (Prajogo, 2016; Riyadi & Sumardi, 2017). In contrast, process
innovations have an advantage over product innovations as a result of being hidden
within organizations and therefore being difficult for competitors to replicate (Prajogo,
2016; Riyadi & Sumardi, 2017). The implementation of more efficient and effective
processes reduces costs and facilitates the development of better products, both of which
lead to increased revenue (Chowhan, 2016). Therefore, while companies focusing on
process innovations may not develop new products aggressively, they may, instead
compete in mature markets where the primary objective is to provide higher customer
values such as faster, more flexible, or cheaper services (Chowhan, 2016; Prajogo, 2016).
Researchers demonstrated that both product innovation and process innovation are means
by which business leaders can improve their firms’ performance. High-equity brands
suffer less than low-equity brands from the adverse effects of innovation failures, but
innovation failures are more detrimental to high-equity brands that have pre-announced
the innovation and to low-equity brands that do not receive word-of-mouth support from
opinion leaders after the failures occur (Cleeren, Dekimpe, & Heerde, 2017). These
articles pertaining to product and process innovation are relevant to this research because
the research demonstrates that the introduction of a new or improved product or service
can influence business performance in areas including competitive advantage and profit
margin.
Innovation may or may not come in the form of new products and processes.
Companies can innovate by finding alternative business techniques, developing new tools
for internal use, transforming company processes, or renovating business models
(Ausloos, Bartolacci, Castellano, & Cerqueti, 2018; Drucker, 1985; Saguya & Taoukisb,
2017). Changes to the way a company does business may reduce costs as an alternative to
developing new products. Cost reductions and product development both generate new
revenue sources, yielding financial benefit to the company (Armour & Teece, 1980;
Drucker, 1985). Innovation practices are typically selected to create intellectual property
and to identify different means that firms can use to leverage property (Chesbrough et al.,
2006). Product and process innovation strategies have positive effects on business
profitability and performance, but yield limited understanding regarding external market
conditions (Prajogo, 2016). Newman (2016) did not include data regarding ways to
handle challenging economic conditions when companies are in survival mode. These
articles are relevant to this research study because the research shows the usefulness of
product and process innovation strategies. Additionally, the studies describe the varied
forms that innovation strategies can take and that business leaders can use to advantage.
Service model innovation. Customer experience creates exceptional value and
also is extremely difficult to cope with. A company’s competitive edge depends on
delivering superior customer value and garnering resulting customer satisfaction (Murali,
Pugazhendhi, & Muralidharan, 2016; Riyadi & Sumardi, 2017; Ul Hassan & Rehman,
2016; Yague & Romero, 2016). Customers’ purchasing decisions depend on the
customers’ perceptions of the value in a provider’s new or improved products or services
(Hsieh et al., 2016; Karia & Asaari, 2016; Komarov & Avdeeva, 2015; Lemon &
Verhoef, 2016; Neupane, 2015; Paluch & Wünderlich, 2016; Simester, 2016;
YoungJoong, 2015). An understanding of customer expectations is fundamental to
planning customer satisfaction strategies for delivering the best customer experience.
Dissatisfied customers will relay their negative perceptions and experiences to other
customers and to other potential customers (Andersch, Lindenmeier, Liberatore, &
Tscheulin, 2018;
Collier, Barnes, Abney, & Pelletier, 2018; Gilal, Zhang, & Gilal, 2018; Rousseau, 2015).
Service quality and the resulting customer satisfaction are principal drivers of financial
performance, so managing the performance of service attributes can increase service
quality (Murali et al., 2016). Negative word-of-mouth communication can harm a
company’s reputation, profitability, and existence.
Word of mouth and understanding customer expectations matter in business
climate. Word of mouth is essential for increasing market share and expanding overall
business (Gilal et al., 2018; Shin, Thai, Grewal, & Kim, 2017). When customers receive
high-quality services and become satisfied with products or services, they communicate
that satisfaction to other customers and to potential customers, thereby influencing an
increase in the provider’s market share. Innovative new products and services may fail in
the marketplace when business leaders do not understand how customers evaluate
products and make purchase decisions (Rousseau, 2015; Simester, 2016). Because
achieving customer satisfaction is not easy, business leaders must pay sufficient attention
to understanding the ways that customers evaluate products and make purchase decisions.
The growth of a firm depends on the abilities of its organizational leaders to
satisfy existing customers and acquire new ones. The measurement of success for any
business is its customer base (D. M. McCarthy, Fader, & Hardie, 2017; Sachdeva & Goel,
2015). The ability of an SME to meet growing consumer expectations largely depends on
its capability of innovating and delivering products and services that customers value
(Taneja et al., 2016). Christensen et al. (2015) reported that when business leaders of
established incumbent firms focus on improving their most profitable products and
services, they ignore the needs of some market segments. Business leaders have decisions
to make about which market segment to focus on when launching new or improved
products and services and determine the value that customers will receive. The abilities of
business leaders to formulate and implement strategies for satisfying existing customers
and acquiring new ones will determine their organizations’ levels of financial success
(Mohamadi, Ab Yazid, Khatibi, & Ferdous Azam, 2017; Pansari & Kumar, 2017).
Additionally, Pansari and Kumar (2017) reported that creating and marketing value in
today’s increasingly service- and knowledge-intensive economy requires motivated and
competent employees, a loyal and profitable customer base, and the development and
implementation of a coherent service strategy for the powerful design and packaging of
intangible benefits and products, high-quality service operations, and customer
information management processes. Erkut (2016) reported that staying close to customers
can give decision makers new insights into successful innovation management, especially
in the absence of hierarchies. Customers want to shop in the least complicated manner
and expect high-quality services. Therefore, business leaders need to have strategies for
increasing customer satisfaction through the introduction of new or improved products
and services and for transforming organizational assets into improved business
performance.
Business model innovation. Business leaders may improve their companies’
business models for delivering value to customers and generating profits for their
companies. A business model is a set of organizational structures designed to maximize
opportunities that arise in the market (García-Gutiérrez & Martínez-Borreguero, 2016;
Karimi & Walter, 2016; Kim & Min, 2015; Markides, 2013). Business model innovation
(BMI) can boost the commercial success of technology and products (Ammar & Chereau,
2018; “Bridging the Gap,” 2016; Hu & Chen, 2016; Olofsson, Hoveskog, & Halila, 2018;
Scannella, 2015). For example, a new product commercialized with a superior business
model may likely become more valuable to a company than a breakthrough product
innovation that is commercialized using a weak business model.
Business leaders may need to renovate business models to continue to provide
value to their customers in changing business environments. A business model includes
the means of creating and delivering consumer value, generating profits, and using
existing resources and processes to create and sustain competitive advantage (Aghdaie &
Alimardani, 2015; Baldassarre, Calabretta, Bocken, & Jaskiewicz, 2017; Foss & Saebi,
2016; Pedersen, Gwozdz, & Hvass, 2018; Scannella, 2015). Other researchers argued that
business model innovation is essential for balancing economic, environmental, and social
values (Neutzling, Land, Seuring, & do Nascimento, 2017; Rauter, Jonker, &
Baumgartner, 2017). These findings indicate that business leaders use BMI to strengthen
business models to boost product success.
Business leaders may experience the challenges to improve their companies’
business models. The main barriers for BMI are the lack of awareness, existing business
culture, and broad focus (“Bridging the Gap,” 2016). The technological innovation by
itself does not assure performance, and business leaders use business models to help
facilitate the success of technological advances (Hu & Chen, 2016). Business models can
influence disruptive innovation. An analysis of many industries experiencing disruption
pointed out that disruptive innovation is a business model challenge rather than a
technology problem (Karimi & Walter, 2016). The profit margins associated with new
business models are often lower than those associated with the old business models,
making business leaders hesitant to adopt the new business models (Karimi & Walter,
2016). While companies may not see immediately higher profit margins from the new
business model, profits can increase in the long term because the new business model
involves the facilitation of new inventions and delivering value to customers.
New businesses may achieve desired success using an efficient business model.
For a startup business, the development and testing of an efficient business model design
under conditions of great uncertainty related to both internal and external factors are
essential to unlocking the potential value embedded in the innovation for all stakeholders
(García-Gutiérrez & Martínez-Borreguero, 2016). Design and manufacturing tolerances
have a significant effect on the performance of products and the associated manufacturing
costs (Ledoux, Teissandier, & Sebastian, 2016). Manufacturing companies transform
their business models that involve manufacturing design and production processes,
yielding positive impacts on performance.
Business leaders may need to change their business model to deliver superior
value to their customers. The ability to innovate, design, and build business models that
support strategic sustainability thinking, and include business scalability and risks, will
lead to better profit margins (França, Broman, Robèrt, Basile, & Trygg, 2016). For
example, Kodak’s financial demise in 2012 was the result of neglecting the
transformation of the company’s business model (Pasternak, 2015). Kodak had a skilled
workforce but failed to adapt to market changes. Kodak did not integrate its business
model with the inventions of new cameras and improvements to film quality, failing to
reach end users. Company leadership teams should continue to explore new opportunities
while also working to exploit existing capabilities.
Some companies can achieve success at both exploiting present capabilities and
exploring future opportunities. Organizational ambidexterity studies present strategies for
managing two conflicting business model designs such as spatial separation and
contextual ambidexterity (Choudhary, Mital, Pani, Papa, & Vicentini, 2018; Markides,
2013; Xing, Javier, Geoffrey, & Marshall Van, 2017). The spatial separation business
model involves the separation of conflicting business model designs and value activities
into two different organizations or units (Markides, 2013). Contextual ambidexterity
occurs when organizations create appropriate organizational contexts, cultures, values,
structures, and procedures for simultaneously operating the two conflicting business
model designs (Markides, 2013). These findings indicate that business leaders can
separate new exploratory units from traditional exploitative ones.
Business leaders can use separate processes, structures, and cultures for new
exploratory business models and for traditional exploitative business models. The
advantages of a business model that simultaneously involves efficiency and novelty
themes include: a reduced threat from other firms’ market entry, maximum use of
organizational assets, and diversification of revenues and profits (Markides, 2013). The
leadership, organizational culture, legal regulations, and coherence of corporate strategy
and the business model for sustainability are the relevant drivers in developing business
models for sustainability (Rauter et al., 2017). These findings indicated the possibility of
pioneering radical or disruptive innovations while chasing incremental gains. Companies
may not generate substantial returns using product and technology innovation when they
lack effective business models and strong leadership.
Technology innovation. Technology innovation is one of the ways that company
leaders can create a competitive edge in unstable market. The development of new
technologies and products constitutes a critical component in innovation (Kingston, 2015;
Oh, Cho, & Kim, 2015). Firms in growing industries face better opportunities for
technological innovation, lower barriers to innovative entry, and consequently higher
returns on innovation investment (Tavassoli, 2015). Companies can use technology
innovation to penetrate new markets faster, with Google being a proven example of this.
Google’s information search engine became extremely popular and positively influenced
the company’s profit margins in dramatic ways. Google’s strength came from its leaders’
skills in identifying creativity. Similarly, the consumer goods company Hindustan
Unilever benefited from its capacity for conducting innovative research (Saxena, 2015).
Wang, Chau, and Chen (2016) highlighted the importance of security in technological
innovation, noting that in agile and Internet world, network virtualization is essential for
technological innovation. These findings indicate that business leaders can experience
higher returns on investment when they use technology innovation and secure their
customers’ data.
Customers are typically concerned about the privacy and security of their personal
data, making it necessary for firms to employ many data security measures to secure
customer data. Technology innovation increases a company’s ability to compete
(Abdallah, Phan, & Matsui, 2016; Denicolai, Hagen, & Pisoni, 2015; Kwon, Park, Ohm,
& Yoo, 2015; Riyadi & Sumardi, 2017). Some Chinese companies entered the market
with third-generation (3G) technology innovation and fourth-generation (4G) mobile
communication. Chinese technological latecomers became successful in high-tech and
radical innovation using 3G mobile communications technology standards (Long &
Laestadius, 2016). Furthermore, 4G technology evolved from 3G, which evolved from
second generation technology (Long & Laestadius, 2016). These findings indicated that
business leaders can achieve competitive advantage through innovation strategies.
Business leaders may use technology innovation as a means of transforming
business practices. Long and Laestadius (2016) reported three theories: (a) that
modularity-in-design opens new windows of opportunity for technological catch-up, (b)
that the lack of essential intellectual property rights acts as an important stimulus to
influence the speed and direction of innovation, and (c) that the long extension of an old
technology affects new innovation take-off, essentially via shortening the required
technological distance. Theories by Long and Laestadius are relevant to any company
using technology because business leaders may face technology debt if they do not
quickly adjust their practices with newer technologies.
The effective integration of technological innovation is important to the success of
SMEs. The emergence of technologies definition includes five categories: (a) radical
innovation, (b) relatively fast growth, (c) coherence, (d) subtle impact, and (e) uncertainty
and ambiguity (Rotolo, Hicks, & Martin, 2015). The success of a firm also depends on
the level of its technology innovation and external sources of knowledge. SMEs integrate
technology innovation strategies to streamline business, to compete, and to achieve
business objectives (Dooley, Kenny, & O’Sullivan, 2017; Gomes & Wojahn,
2017; Héctor, Gabriela, & María del Carmen, 2016; H. Lee, Cha, & Park, 2016;
Martinez-Roman & Romero, 2017; Verbano & Crema, 2016; Xu, 2017). Some small
businesses fail at integrating technological innovation because of a lack of appropriate
resources, a lack of technical aptitude, and the absence of internal strategies (Bala
Subrahmanya, 2015). Business leaders should focus on developing the capacity to
innovate. These findings indicated that companies may not achieve desired success from
the integration of technological innovation, despite an interest in streamlining business.
For SMEs, the availability of skilled employees is critical for integrating
technology innovation to compete in the market and survive. SMEs need streamlined
processes to create a sustainable strategy (Ardito, Carrillo‐Hermosilla, del Río, &
Pontrandolfo, 2018; Caldera, Desha, & Dawes, 2018; Habidin, Mohd Zubir, Mohd Fuzi,
Md Latip, & Azman, 2018; Peterlin, Dimovski, Tvaronavičienė, Grah, & Kaklauskas,
2018; Seidel-Sterzik, McLaren, & Garnevska, 2018). Other researchers concluded that
successful implementations of technological innovations generally has a relation with
quality and cost performance (Aboelmaged, 2018; Azarenkova, Golovko, &
Ponomarenko, 2015; Maryska & Doucek, 2015; Saridakis, Lai, Mohammed, & Hansen,
2018). Business leaders should focus on increasing productivity and reducing cost in
order to accomplish ultimate operational performance. To sustain business growth, SME
leaders must seize opportunities to integrate technological innovations that can transform
business at a fast pace to keep companies ahead of competitors.
Supply chain innovation. Business leaders implement supply chain innovation to
optimize supply chain operations. The supply chain management is one of the most
effective innovation initiatives to achieve operational excellence (Abbey & Guide, 2018;
Abdelkafi & Pero, 2018; Y. Lee & Rim, 2016; Miri-Lavassani & Movahedi, 2018;
Nimeh, Abdallah, & Sweis, 2018). Supply chain management and logistics are critical for
supporting competitive advantages such as enduring superiority over competitors
regarding customer preference and is achievable through better management of logistics
and the supply chain (Neutzling et al., 2017; Yu & Huo, 2018). These articles are relevant
to my study because they explain that the use of supply chain management facilitates and
optimizes the flow of products, information, and finances, allowing companies to create
better relationship value and improve overall business efficiency.
Supply chain management plays a crucial role in addressing the growing
complexity of today’s global supply chains. Traditional supply chains focus on
minimizing costs and increasing profitability (Diabat & Al-Salem, 2015). Therefore, the
traditional supply chains are insufficient in the face of current uncertainty and
complexity. The greater diversity of customer needs and the persistent long-term
recession increases the intensity of enterprise competition (Y. Lee & Rim, 2016). To
survive global competition, each company must focus on achieving innovation excellence
and operational excellence as a core competency for sustaining competitive advantage (Y.
Lee & Rim, 2016; Vijayan & Kamarulzaman, 2016). Business partners can use supply
chain innovation to strengthen supply-demand operations. Sebastian, Fuentes, and Marin
(2015) reported the importance of integrating web technology into manufacturing
businesses. Businesses can track the supply chain (e.g., the flow of products, information,
and financial data) using Internet and web technology. Manufacturing companies deal
with the supply chain. The focus of this study on a manufacturing company makes these
articles relevant to this study. These researchers demonstrate that innovation excellence,
operational excellence, and technology integration are important core competencies for
business leaders to use to account for uncertainty and complexity in the supply chain.
Improved supply visibility leads to improved workflow and an increase in profit
margins. Supply chain visibility (SCV) impacts supply chain performance (Busse,
Schleper, Weilenmann, & Wagner, 2017; Kraft, Valdés, & Zheng, 2018; Youngsu & Suk-
Chul, 2016). In addition, the use of SCV ensures improvement in service to customers
(Kraft et al., 2018). A company can attain SCV through streamlining, standardizing,
simplifying operational portfolio, leveraging latest technologies, and determining which
functions to keep in-house and which to outsource (Somapa, Cools, & Dullaert, 2018).
Although there is a lot of excitement about global SCV and improved decision making,
cybersecurity and privacy are top concerns (Kshetri, 2018). Companies can become fast
and flexible using the visibility in their supply chain as a competitive advantage. Firm
leaders can improve supply chain efficiency by promoting performance management
tools that employees can use to take proactive steps for identifying exceptions. One of the
challenges involved in managing a complex supply chain is the network of resources
scattered across different cities and countries.
Business leaders use supply chain innovation to reduce the supply chain
operational cost. The benefits of supply chain integration include reducing operational,
shipping, and inventory costs (Ataseven & Nair, 2017; Neutzling et al., 2017). Instead of
integrating the whole supply chain, companies drive company performance by integrating
business performance and ICT capabilities and linking to suppliers or customers
(Gonzálvez-Gallego, Molina-Castillo, Soto-Acosta, Varajao, & Trigo, 2015; Scuotto &
Shukla, 2015). These findings include the importance of SCV for increasing supply chain
performance and stress the need for business leaders to maintain the privacy and security
of data. Because data is the fundamental element for gathering the insights for supply
chains, companies must embrace a data-driven approach to realize the full potential of
supply chain management efforts.
Risk management to control the profit margins. A major challenge for those
dealing with innovation practices is uncertainty. The technological and economic
landscapes have vastly changed the demand and expectation of innovation, especially in
the service industries (Bogers et al., 2018). Customers purchase new, innovative products
after recognizing their value (Karia & Asaari, 2016; Paluch & Wünderlich, 2016;
Simester, 2016). However, the variability and uncertainty associated with global supply
chain risks make the prediction of disruptions difficult (Scheibe & Blackhurst, 2018) and
the disruption of the business operations can result in massive losses (Chen, Wei, & Xie,
2017; Lui, Ngai, & Lo, 2015). These findings indicate that business leaders should have a
plan to deal with uncertainty in constantly changing business environment.
Business leaders may need policies to embrace uncertainty. Emerging markets are
less susceptible to global contagion than advanced economies (Disyatat &
Rungcharoenkitkul, 2017), and a United States’ monetary policy can lead to an exchange
rate depreciation (Banerjee, Devereux, & Lombardo, 2016). Business insurance is an
efficient way of transferring risk, since insuring for business interruptions can reduce the
adverse effect of the loss of expected business profit (Chen et al., 2017; Cole, Giné, &
Vickery, 2017). The disruption to business can happen at any time, making it critical for
business leaders to use insurance as a tool for protecting companies from negative
impacts on profits.
Business leaders may analyze and assess different risks to reach a clear and
realistic understanding of operational issues and market opportunities. To develop a risk
management strategy, a firm’s management team must consider the amount of risk the
organization can bear and determine how much to invest in mitigating the risk (Scheibe
& Blackhurst, 2018). Findings are noteworthy in understanding that risk management is
essential for business leaders, to prepare their organizations to take advantage of the
radical change ahead of the competition to foster survival and growth.
Cultural diversity as a mechanism for innovation. The cultural differences may
pose challenges to international companies. The greater diversity of customer needs and
the persistent long-term recession increases the intensity of enterprise competition (Y.
Lee & Rim, 2016). Global businesses are at risk because of the information gaps between
collaborating locations (Keig, Brouthers, & Marshall, 2015). Differences in cultures and
inadequate diversity policies can result in poor communication, misunderstood intent,
interpersonal conflicts, mistrust between counterparties, poor information flow, and
limited learning between the parties (Khanna, 2016; Zeng, Shenkar, Lee, & Song, 2013).
These findings point out the cultural differences in international business environments
that can lead to poor communication and interpersonal conflicts, which can, in turn,
impact teamwork and employee engagement.
Global mindsets and cultural diversity may increase a company’s innovativeness.
A cultural diversity policy is an important part of creating an environment that increases
creativity (Lambert, 2016; Urbiola, Willis, Ruiz-Romero, Moya, & Esses, 2017) and that
drives innovation in the organization (Khanna, 2016). A cultural diversity policy is useful
for increasing the effectiveness of a virtual team within a multinational company when
the national culture has more effect on employees than their organizational culture
(Khanna, 2016; Zapata-Barrero, 2016). These findings included the importance of
cultural diversity in workplace for increasing innovation.
Culturally diverse companies may experience improved performance when an
innovation strategy is in place. The connection between cultural diversity and creativity is
important for increasing the type of innovative work behavior that can influence a firm’s
performance (Fernandez-Esquinas, van Oostrom, & Pinto, 2017; Lambert, 2016; Lozano
& Escrich, 2017) and provide superior services for customers (Clark & Polesello, 2017;
Cooper, 2017; Stock, 2015). Culturally diverse company can benefit from the variety of
thoughts and ideas that employees from different cultural backgrounds may have
regarding business problems the companies face. Companies should foster cultural
diversity in order to become increasingly innovative, using their employees’ abilities to
transform creativity into valuable ideas, products, and services (Khanna, 2016; Lambert,
2016). N. Zhou and Guillén (2015) described the diversity of foreign experiences as a
determinant of the foreign market. Global companies can improve their global innovation
positions by including insights from team members of diverse nationalities with diverse
knowledge about markets and cultures (Bouncken, Brem, & Kraus, 2016). Findings
highlight the importance of workplace diversity for increasing innovation. Cultural
diversity is a valuable resource for employee creativity because the use of cultural
diversity promotes the varying problem-solving styles, knowledge, perspectives, and
skills of a diverse workforce, encouraging employees to create new ideas and influencing
company performance.
Talent management in the multicultural environment can drive organizational
success. Companies face challenges in hiring enough people with the right skills
(Anbuoli, Thenpandian, & Sakthivel, 2016; Bradley, Elenis, Hoyer, Martin, & Waller,
2017). Global talent management is a necessity for ensuring that the right employees are
in the right positions to generate optimal growth in a multicultural environment (Collings
& Isichei, 2018; Karin, 2015; Mehmet Saim, 2017). Supplier diversity as an extension of
cultural diversity involves making the explicit linkage between workplace and
marketplace in order to enhance innovation and teamwork and to engage the best talent
(Kaufmann & Wagner, 2017). For example, professional networking companies like
LinkedIn provide opportunities for global companies to hire foreign employees more
quickly, often resulting in an ability to execute projects more expediently and increase
company profits. Effective management of a diverse workforce increases the
collaboration among diverse team members, increases the team’s performance, and
ultimately leads to superior business results (Randel et al., 2018). Creating a positive
psychological state for employees is essential for cultivating innovative work behavior, as
is customer support (Stock, 2015). Many companies face challenges with recruiting the
right individuals with the right skills. Aligning global talent management to a firm’s
strategy is essential for ensuring the availability of the key skills. For example, firm
leaders may use suppliers to hire the right skills or may encourage talented employees to
take expatriate assignments. When properly handled, diversity and inclusion can
influence creativity and provide a source of competitive advantage for an organization.
Innovation theory for SMEs. SMEs face challenges in increasing their levels of
innovation. Small firms are often resource-constrained and are more vulnerable to
adverse conditions (Bamiatzi & Kirchmaier, 2014; O’Connor & Kelly, 2017; Petkovska,
2015; Taneja et al., 2016; Tavassoli, 2015). SMEs face difficulty in increasing the level of
innovation as a result of increasing competition, globalization, and technology
development (Harris et al., 2016; Taneja et al., 2016). Small companies must determine
the degree of investment to pour into internally focused efforts versus externally focused
efforts (Usman & Vanhaverbeke, 2017). SMEs are more flexible than larger enterprises
and are more sensitive to changes in the business climate (Petkovska, 2015).
SMEs may use innovation as the main source of growth. The factors stimulating
the firm’s performance in SMEs remains unclear because most research focuses on large
companies (Baggen, Lans, Biemans, Kampen, & Mulder, 2016). Continuous
improvement encourages change and creative thinking in both workplace and product
improvement (Harris et al., 2016). Regardless of size and location, small businesses must
continuously innovate and adapt to changes in the marketplace by improving their
learning capabilities to survive and to surpass the competition (Taneja et al., 2016). These
findings include the need for SMEs to continuously innovate in order to deal with
increasing competition, technology development, and globalization. Some companies
may prefer product innovation over process innovation, or vice versa, depending on their
innovation strategies.
Small companies typically favor product innovation over process innovation.
Small companies typically prefer product innovation, as opposed to process innovation
because they seek unique products with which to distinguish themselves in the market
(Agostini, Nosella, & Filippini, 2017), and often can invent quickly and take their ideas
to the market with minimal internal conflict (Jinke et al., 2018; Petkovska, 2015). Small
companies are an ideal breeding ground for disruptive innovations that initially fill a need
in a small market (Christensen, 2011). Larger companies, on the other hand, are better
able to expend resources to make marginal improvements to the quality of products
(Agostini et al., 2017) instead of making disruptive innovations that do not contribute to
the sustainment of existing technologies (Christensen, 2011). Small firms, because of
their size, can adapt to technological changes in the industry more easily than large
businesses can (Bouncken & Fredrich, 2016). These findings are relevant to my research
study because they indicate that small firms can increase market share and profitability
through product innovation, technology innovation, and disruptive innovation. Product
innovation is often an entry point into the market for small firms because they can invent
quickly and introduce new products to the market with minimal internal conflict.
Small businesses use open innovation to increase competitive advantage.
Chesbrough et al. (2006) reported that open innovation is beneficial to small
technologyoriented firms and firms that can quickly leverage the external knowledge that
is being made available through widely accessible means such as the internet. Open
innovation paradigm is relevant to small firms (Cornell, 2012; Spithoven et al., 2013).
For example, because SMEs generally also have smaller customer bases and less robust
supply chains, they benefit from entering supply chain relationships with larger firms,
enabling them to leverage the larger firms’ more robust commercialization capabilities
(Harris et al., 2016). Large companies have a significant, monopolistic advantage for
innovation due to their access to more substantial resources and because of their greater
power in the marketplace (Schumpeter, 1950). However, the Internet, population growth,
and the availability of education have provided small companies with many opportunities
to remain competitive through knowledge sharing and alternative pathways to the market
(Chesbrough et al., 2006; Cornell, 2012). As a result, many companies may rely on
customers and partnerships with other companies outside of their industries to fuel
innovation and to remain competitive. About 90% of all businesses in the global economy
are SMEs, and these small companies contribute up to 81% of all private sector
employment (Petkovska, 2015). Thus, small businesses can use open innovation to
leverage their external knowledge of their business environments to gain a competitive
advantage.
SMEs can benefit from different capability strategies depending on their ages.
Existing internal skills and knowledge in dynamic environments play a crucial role in
fostering knowledge creation for innovation and growth in SMEs (Scuotto, Santoro,
Bresciani, & Del Giudice, 2017), even in declining markets (Bamiatzi & Kirchmaier,
2014). Training is an important prerequisite for innovation and performance (Frederiksen
& Knudsen, 2017; Petkovska, 2015; Protogerou, Caloghirou, & Vonortas, 2017;
SotoAcosta, Popa, & Palacios‐Marqués, 2016). SMEs must mix open and closed
innovation strategies to achieve peak R&D performance because SMEs particularly
benefit from open innovation to increase sales of collaborative products, reduce cost, and
increase total profit. (Santoro et al., 2018; Scuotto et al., 2017; V. Singh & Agrawal,
2017; Vrontis, Thrassou, Santoro, & Papa, 2017). These findings indicate that SMEs also
can mix open and closed innovation strategies to achieve peak R&D performance and
should foster knowledge creation for innovation.
SMEs may benefit from collaborating with outside firms. Joint R&D projects are
less costly and can be completed more quickly but can also yield smaller potential profits
since results are shared as well (Petkovska, 2015). Younger SMEs benefit from accessing
external resources (e.g., collaboration with outside firms), whereas older SMEs benefit
from combining strategies such as collaboration and training (Whittaker, Fath, & Fiedler,
2016). SMEs can use the knowledge and technologies of other companies shared through
partnerships and alliances to pursue innovative processes (Hsieh et al., 2016; Petkovska,
2015; Scuotto et al., 2017). These findings include the strategies SMEs can use to
increase business performance. SMEs can undertake small, incremental innovations
instead of trying to implement major radical innovations.
SMEs may exploit their R&D to survive in the global market. Increased
internationalization leads non high-tech SMEs to exploit their R&D investments more
effectively in order to enhance firm performance (Booltink & Saka-Helmhout, 2017).
Non high-tech firms emphasizing value-added niches with investments in highly skilled
labor, advanced machinery, and R&D are replacing labor-intensive, non-high-tech firms
(Hansen & Winther, 2014). R&D and higher absorptive capacity increase the probability
of innovation and reduce export barriers (Harris et al., 2016; Love & Roper, 2015). For
example, SMEs with innovation experience are more likely to export successfully and are
more likely to generate growth exports than non-innovating firms. Non high-tech SMEs
should develop capabilities and competencies for competitive advantage (Love & Roper,
2015), including product development via customer involvement, informal business ties,
acquisition of knowledge capability, R&D collaborations, and increasing R&D intensity
(Janger, Schubert, Andries, Rammer, & Hoskens, 2017; Whittaker et al., 2016). These
findings help explain the abilities of non-high-tech SMEs to exploit R&D investment
more effectively to enhance firm performance in the global marketplace. R&D is
important key to the efforts of all manufacturing companies to increase innovation levels
and to launch new products or services. SMEs can exploit their R&D investment through
the effective use of open innovation strategies that involve customer involvement,
informal business ties, and collaborating with other companies for R&D.
Conclusion
The literature review included the details of the holistic innovation model and
disruptive innovation theory as the conceptual framework used to answer the primary
research question. The focus was on the research question of what innovation strategies
do leaders of global machinery manufacturing business use to increase profit margins.
The importance of innovation strategies in the business is included. The literature review
on the innovation strategies includes recurring themes in existing scholarly articles. The
themes include: the link between business performance and innovation strategies, product
and process innovation strategy, service model innovation, business model innovation,
technology innovation, supply chain innovation, risk management to control profit
margins, cultural diversity as a mechanism for innovation, and innovation theory for
SMEs.
Transition
Section 1 included the background of the problem, problem statement, purpose
statement, and nature of the study. The section also included the research and interview
questions, conceptual framework, operational definitions, assumptions, limitations,
delimitations, and significance of the study. Section 1 concluded with a review of the
professional and academic literature.
Section 2 includes the following sections: purpose statement, role of the
researcher, participants, research method and design, population and sampling, ethical
research, data collection instruments, data collection technique, data organization
technique, data analysis, and reliability and validity. Section 3 contains an overview of
the study, a presentation of the findings from the research, applications to professional
practice, implications for social change, recommendations for action, recommendations
for further research, reflections, and the conclusions.
Section 2: The Project
The focus of this qualitative case study was to explore the innovation strategies
some leaders of a global machinery manufacturing business use to increase their firm’s
profit margin. This section includes a restatement of the purpose and description of the
role of the researcher, participants, method and design, and population and sampling.
Furthermore, the section includes information regarding ethical research, data collection
instruments, data collection technique, data organization technique, and data analysis.
The final sections address the reliability and validity of the study and provide a summary.
Purpose Statement
The purpose of this qualitative single case study was to explore the innovation
strategies that some leaders of a global machinery manufacturing business use to increase
the organization’s profit margin. The targeted population for the study included business
leaders (e.g., executives, directors, and senior managers) of a global manufacturing
company in northwest Illinois who had successfully increased the organization’s profit
margin over the past 5 years. The findings from this study may contribute new insights
that could help global machinery manufacturing business leaders increase profit margins
and sustainability, which may lead to economic strength and sustainable development in
their communities.
Role of the Researcher
A researcher’s role is critical in the data collection process because researchers act
as the main research instrument responsible for developing the interview protocol,
conducting interviews, collecting data, analyzing data, and interpreting the data.
Researchers are facilitators (C. Marshall & Rossman, 2016) and the main research
instrument (W. C. Morse, Lowery, & Steury, 2014). A researcher is the person responsible
for conducting interviews and collecting data, in addition to analyzing and interpreting
data (Arriaza, Nedjat-Haiem, Lee, & Martin, 2015; Cleary, Horsfall, & Hayter, 2014;
Hlady-Rispal & Jouison-Laffitte, 2014). The roles of a researcher help determine research
results (Collins & Cooper, 2014), and the researcher plays a vital role in understanding,
assessing, and appreciating the experiences and reactions of research participants (Bashir,
Sirlin, & Reeder, 2014). Researchers are the main research instrument and have many
responsibilities to complete the study.
Researchers have a responsibility to ensure the accuracy of the gathered
information. Data collection involves gathering information through multiple sources
such as semistructured interviews and observations (Cleary et al., 2014). Researchers use
a case study design for analyzing participants’ views and experiences that can lead to
identifying emerging themes (Dasgupta, 2015). My role in this qualitative single case
study was to interview the participants, collect data through semistructured interviews
and from a review of business documents, analyze the data, and manage the interview
process while protecting the privacy of the participants. The member-checking process
involves participants reviewing and correcting the researcher’s interpretation of interview
responses (Fusch & Ness, 2015; Noble & Smith, 2015; Yin, 2016). I conducted member
checking to allow participants to review and correct interview notes.
The Belmont Report includes basic ethical principles a researcher should follow
when researching human subjects, including ensuring respect for vulnerable populations,
avoiding deception, and providing equal treatment for all participants (U.S. Department
of Health and Human Services, 1979). To adhere to The Belmont Report protocol,
researchers must follow ethical standards and guidelines for the protection of research
participants (Honig, Campel, Siegel, & Drnevich, 2014; L. Zhou & Nunes, 2013; Zucker,
2014). I followed the ethical principles mentioned in The Belmont Report and the ethics
training I received from the National Institutes of Health.
Mitigating researcher bias is essential. Bias occurs when a researcher uses
preconceived experiences to interpret interview notes (Bashir et al., 2014; Malone,
Nicholl, & Tracey, 2014). Case studies have little to no value if the researcher has
preconceived beliefs about the phenomenon under study and leans toward supporting
evidence while ignoring opposing data (Baskarada, 2014; Yin, 2018). Researchers should
exhibit active listening, avoid casting judgments, and remain vested in the responses of
each participant (Bashir et al., 2014). I avoided preconceived beliefs from previous
experiences and remained vested in the participants’ responses.
I have worked in a machinery manufacturing company for the past 13 years. I
possess extensive experience in technological innovation integration, and I have played
an integral role in integrating technological innovations in businesses within the private
sectors. Researchers can use participants from outside the researchers’ organization to
ensure objectivity (Alimo, 2015). Researchers can use an interview protocol to maintain
consistency and accuracy while mitigating bias throughout the research process and with
each interviewee (France et al., 2015; A. Yazdani et al., 2018; Yin, 2018). Butler, Hall,
and Copnell (2016) noted that the researcher’s review process should be well developed
and preplanned to reduce researcher bias and eliminate irrelevant information. The topic
of this study and the research area were new to me. To mitigate researcher bias, I did not
conduct this study with business leaders for whom I have worked or employees with
whom I have worked. I avoided referring to my personal beliefs and opinions from
previous experiences of working in a machinery manufacturing company, and I used a
well-structured interview protocol (see Appendix) to maintain consistency and accuracy
while collecting data.
An interview protocol is useful for ensuring fairness, uniformity, and the quality
of exploratory interviews. A structured research protocol is a useful tool to ensure the
quality of research results (Kono, Izumi, Kanaya, Tsumura, & Rubenstein, 2014; Platt &
Skowron, 2013). According to Yin (2014), an interview protocol is important to ensure
data address the actual research question. To ensure high quality of research results, I
used an interview protocol (see Appendix) to conduct the interviews in proper order and
kept the participants’ information confidential.
Participants
There were nine participants for this study who were business directors, factory
managers, and senior managers of a global manufacturing company in northwest Illinois.
Researchers can use business owners and management officials in a study because of
their firsthand and thorough understanding of business challenges (Emmel, 2015; Fugard
& Potts, 2015; B. Marshall, Cardon, Poddar, & Fontenot, 2013). To enable researchers to
answer the research question, participants in a qualitative study need to meet the
eligibility criteria of having experience and knowledge with the research phenomenon
(Palinkas et al., 2015; Robinson, 2014; Yin, 2014). Participants with knowledge and
experience of a phenomenon are generally more willing to participate in research (C.
Marshall & Rossman, 2015; McCullagh, Sanon, & Cohen, 2014; Pierre-Etienne &
Verret-Hamelin, 2017). The participants’ eligibility criteria in this study were as follows:
business leaders with more than 5 years of experience in the machinery manufacturing
company in northwest Illinois and more than 2 years of experience using innovation
strategies to increase the organization’s profit margins.
To foster a working relationship with participants, I contacted the potential
participants via e-mails, telephone calls, and office visits to introduce myself and explain
the purpose of the research and informed consent procedure. The success of a research
study is dependent on the relationship between the researcher and the participant
(Hansson & Polk, 2018; Manning & Kunkel, 2014; Yin, 2014). Researchers include or
exclude study participants using the purposive sampling procedure (Emmel, 2015;
Palinkas et al., 2015; M. Q. Patton, 2015). One of the potential participants declined
participation; therefore, I used the next randomly selected participant on the list.
Qualitative researchers ensure privacy and confidentiality, which are critical aspects of
research (Carbonetti, 2016; J. M. Morse & Coulehan, 2014; Tetnowski, 2015; Yin, 2014).
I conducted confidential interviews and ensured all data collection methods were
confidential.
Researchers should follow a research protocol that requires participants to sign
informed consent forms to participate in the study (Broom, Broom, Kirby, & Post, 2018;
Chapple & Ziebland, 2018; Levitt et al., 2018). The Belmont Report serves as a guide to
institutional review board’s (IRB’s) deliberations to ensure researchers conduct ethical
research (Honig et al., 2014; J. M. Morse & Coulehan, 2014; L. Zhou & Nunes, 2013).
After receiving approval from the IRB, I asked participants to provide consent to an
email I sent that contained an attached informed consent form. The participants provided
consent via e-mail responses before the interviews.
I ensured confidentiality and privacy using alphanumeric symbols P1 through P9
for Participant 1 through Participant 9. Researchers guarantee privacy, confidentiality,
confidence, and trust and use pseudonyms to classify participants and businesses during
research investigations (Allen & Wiles, 2015; J. M. Morse & Coulehan, 2014; Parkinson
& Wood, 2015). Study participants are concerned about the confidentiality and privacy of
the data (Bromley, Mikesell, Jones, & Khodyakov, 2015; C. Marshall & Rossman, 2016;
Namageyo-Funa et al., 2014). Information collected will be secured in a safety deposit
box for a minimum of 5 years, and only I have access to this safety deposit box.
Research Method and Design
The success of a research project depends on using the correct research method
and design (Yin, 2018). The three research methods are qualitative, quantitative, and
mixed (Rich, 2017). The selected research method for this study was qualitative, and the
chosen design was a single case study.
Research Method
Researchers can use different research methods based on the problem statement
and the potential contribution of study results to business practice (Kozleski, 2017). A
qualitative research method is appropriate to obtain an in-depth understanding or
explanation of participants’ experiences within a specified context (Vass, Rigby, & Payne,
2017). Researchers use a qualitative method to interpret the meaning of participants’
experiences based on personal experience and collaboration (Neusar, 2014; D. U. Patton,
Hong, Patel, & Kral, 2017; Rich, 2017). Involvement with the data is an essential aspect
of qualitative research, and the emergent themes or different patterns observed in a data
set depend on the integration of many perspectives (Fugard & Potts, 2015; D. U. Patton et
al., 2017). Researchers can use software to interpret the findings from interviews (Engle,
2015; Kozleski, 2017). A qualitative method is suitable for exploring the unique
perspectives and experiences of study participants (Pugach, Mukhopadhyay, & Gomez-
Najarro, 2014). To explore the innovation strategies to increase profit margin, I used the
qualitative method.
Researchers who conduct quantitative research perform statistical tests and
quantify the problem. Quantitative researchers test and confirm theories, whereas
qualitative research is exploratory and concerned with theory building (Dasgupta, 2015).
Researchers use quantitative studies for testing hypotheses about the relationships among
variables (Counsell & Harlow, 2017). Many researchers ask closed questions and test a
hypothesis in a quantitative study (Balkin, 2014). Quantitative researchers can measure
and describe participants’ actions but cannot describe experiences (Rich, 2017). A
quantitative research method was not appropriate for this study because the focus was to
understand participants’ experiences and explore themes, not to test a hypothesis.
Researchers who conduct mixed-methods research use more than one research
method and may need more time than is available for one doctoral study. Mixed-methods
researchers include both qualitative and quantitative methods and examine behavior in
more than one context or condition (Brown, Strickland-Munro, Kobryn, & Moore, 2017;
D. U. Patton et al., 2017). Researchers use the mixed-methods approach for collecting,
analyzing, and combining qualitative and quantitative data in one research study
(Kachouie & Sedighadeli, 2015; Sánchez-Gómez, Pinto-Llorente, & García-Peñalvo,
2017; Yin, 2016). I did not require quantitative analysis because the qualitative method
alone was needed to answer the research question.
Researchers who conduct mixed-methods research use a quantitative method to
test a hypothesis. Research may yield a richer explanation of a phenomenon through a
mixed-methods approach with the merits of both quantitative and qualitative tools
(Counsell & Harlow, 2017). Data validity can become challenging in a mixed-methods
approach because of both qualitative and quantitative data sets (Brown et al., 2017).
Sparkes (2014) asserted that mixed-methods research involves measuring the
relationships that exist among variables. A mixed-methods approach was not appropriate
for this study because the focus was identifying and exploring strategies and themes, not
testing a hypothesis. Given the differences between these three approaches, a qualitative
methodology was most appropriate for exploring the innovation strategies global
machinery manufacturers use to increase the profit margins of their business in northwest
Illinois.
Research Design
Researchers have a decision to make regarding the selection of an appropriate
design for their study. If the research design is not appropriate, then the collected data
may not adequately address the research problem (Yin, 2018). Qualitative researchers
typically use four research designs: phenomenology, narrative, ethnography, and case
study (Levitt, Motulsky, Wertz, Morrow, & Ponterotto, 2017). Researchers can use
different types of research designs to collect and analyze the data in different ways.
Researchers use the case study design for an in-depth study of a particular
situation at a given point in time. Case study research involves narrowing a broad field
into one researchable topic and focusing on a situation, event, organization, or process at
a given point in time with the purpose of capturing unique perspectives of human
behavior and experience from a social perspective or naturalist worldview (Westerman,
2014; Yin, 2018). The case study design involves in-depth investigation and analysis of a
subject to promote possibilities of further study (Cronin, 2014). The case study design is
useful to narrow a broad field of research into one easily researchable topic and to
capture human behavior and experience through an in-depth study.
Researchers use a research design that fits their research question and purpose of
the study. Rahi (2017) described a case study design as the preferred strategy when the
researcher has little control over events. Researchers use the design that will fit their
research questions (Arino, LeBaron, & Milliken, 2016; Denzin, 2014; C. Marshall &
Rossman, 2016) and use the case study design to respond to how and why research
questions (Dumez, 2015; Tetnowski, 2015; Yin, 2014). I used a single case study design
to explore what innovation strategies leaders of global machinery manufacturing business
use to increase profit margins.
Case study researchers collect data from multiple sources to strengthen the
credibility of their research findings. Collecting data using multiple sources for each case
is a characteristic feature of the case study design (Carolan, Forbat, & Smith, 2016).
Triangulation improves the certainty and integrity of the case study by strengthening the
credibility of the research findings (Cronin, 2014; Yin, 2018). For example, researchers
use the case study design to explore real-time cases at a given point in time through
historic documentation reviews, observations, and interviews (Creamer & Tendhar, 2016;
Yin, 2018). I collected data using multiple sources such as relevant company documents
and participants’ interviews.
Other qualitative research designs, such as ethnography, phenomenology, and
narrative research, would not have addressed the research problem and questions. A
phenomenological design is ideal when a study involves many participants (Wagstaff &
Williams, 2014). Researchers who use a phenomenological design include discussions on
current phenomena in real-life contexts (N. N. Chan & Walker, 2015; Z. C. Chan, Fung,
& Chien, 2013; Davidsen, 2013) to understand lived experiences (Bevan, 2014; Khan,
2014; Levitt et al., 2017; Sloan & Bowe, 2014). Therefore, a phenomenological design
was not appropriate for this study, which involved exploring the innovation strategies
business managers use to increase profit margins.
Researchers use an ethnography design to understand the shared culture and
everyday life and experiences of the research participants. Researchers use an
ethnography design to share life experiences with research participants, to gain insight
into the understanding of participants, and to use the humanness of participants as a
research instrument (Wijngaarden, 2017). An ethnography design fits well to understand
shared culture and the way the social behavior in different ethnic groups can differ on a
subject over a prolonged period (Armstrong, 2015; Mannay & Morgan, 2015; Shimei, et
al., 2016; Vernon, 2015). Ethnography was not a choice for this study because the focus
of this study was not to understand shared culture but instead learn of innovation
strategies from the participants. Furthermore, researchers conducting ethnographic
research develop a single narrative that applies to the entire population (Yin, 2014),
whereas the focus of this study was to explore different perspectives and possible
approaches to the research problem.
Researchers use narrative research design to focus on gathering data through the
collection of participants’ stories and reporting the meaning of experiences for the
participants. Researchers who use a narrative research design discuss and articulate
participants’ life stories (Creswell & Poth, 2017; Kuronen, 2014; Raeburn, Schmied,
Hungerford, & Cleary, 2015; Von Contzen & Alders, 2015). The narrative design would
not have fit well for understanding participants’ profound views of the phenomenon
because researchers need to capture the detailed stories or life experiences of participants.
Population and Sampling
The target population for this qualitative single case study was business leaders of
a global machinery manufacturing company in northwest Illinois, who had experience
using innovation strategies to increase the organization’s profit margins. The number of
participants in a study depends on the purpose of the research and the desired analytic
level (Apostolopoulos & Liargovas, 2016; Tran, Porcher, Falissard, & Ravaud, 2016).
Participant selection criteria consisted of business leaders, e.g., executives, directors, and
senior managers, who had experience using innovation strategies to increase the
organization’s profit margins. A population of management-level individuals was
appropriate for the study because owners, executives, and managers have a thorough and
firsthand understanding of business challenges (Emmel, 2015; Fugard & Potts, 2015; B.
Marshall et al., 2013). Population criteria are useful to ensure participants have
experienced the phenomenon under study and can answer the research question (Rahi,
2017; Robinson, 2014). The population aligned with the overarching research question
because I expected the targeted participants for this study to have profound experience
and in-depth knowledge using innovation strategies to increase an organization’s profit
margins.
Researchers use a sampling method to ensure the selection of appropriate
participants who have experience and knowledge about a study topic (Emmel, 2015;
Fugard & Potts, 2015; Grossoehme, 2014; Rahi, 2017). Qualitative researchers use
purposive sampling to analyze and anchor the objectives of a research problem and allow
transferability of research findings (Duan, Bhaumik, Palinkas, & Hoagwood, 2014; B.
Marshall et al., 2013; C. Marshall & Rossman, 2015; Yin, 2014). M. Q. Patton (2015)
described purposeful sampling for an in-depth case study as information rich. I used
purposeful sampling to select the participants for this study. The purposive sampling
method is most suitable for gathering lived experiences from qualified participants about
a topic (Grossoehme, 2014; B. Marshall et al., 2013; McBeth et al., 2014; Palinkas et al.,
2015; Yin, 2014). I selected business directors, factory managers, and senior managers,
who fit into two categories: (a) those who had experience using innovation strategies and
agreed to willingly share their experiences and (b) those who had more than 5 years of
experience in the manufacturing industry and more than 2 years of experience using
innovation strategies to increase the organization’s profit margins.
Sample size refers to the number of units a researcher will observe (B. Marshall et
al., 2013). Sampling is a decision about sample size and about ensuring the integrity of
the research objective, the depth of data, and the fit of the data with the theory (Roy,
Zvonkovic, Goldberg, Sharp, & LaRossa, 2015). A small sample size is adequate for
qualitative studies (Palinkas et al., 2015) and for the purposeful sampling (Yin, 2014).
Use of a small sample is justifiable when a researcher wants to achieve quality and to
obtain a full understanding of a study phenomenon (C. Marshall & Rossman, 2016).
Qualitative researchers achieve data saturation with a sample size of between five and 50
participants (Emmel, 2015). I interviewed nine business leaders with requisite knowledge
and experience from the total potential population of this qualitative single case study.
Qualitative researchers aim to enhance the accuracy of their research. Data
saturation occurs when a researcher can no longer find new information, new coding, or
new themes and when there is a commonality in responses from the participants (Fusch &
Ness, 2015). Researchers aim to achieve data saturation to enhance the rigor of
qualitative research (J. M. Morse, 2015). Sample size can influence bias in most
qualitative studies (Anderson & Hartzler, 2014). Conversely, B. Marshall et al. (2013)
found that the composition of the sample size, not the size of the sample, helps to reach
data saturation. I collected data using multiple sources such as relevant company
documents and participants’ interviews. I interviewed nine business leaders, asked
probing questions, and continued data collection until there was new information. I
achieved data saturation after the seventh interview for this study, as the eighth and ninth
interviewees repeated key information collected during the first seven interviews.
Qualitative researchers may validate their interpretation of the interview data with
participants. Experienced participants can provide data rich enough to achieve saturation
and to satisfy the requirements of a study (Palinkas et al., 2015). Member checking is
useful for reaching data saturation (Fusch & Ness, 2015). Data saturation occurs when
interview responses become replicable (Elsawah, Guillaume, Filatova, Rook, & Jakeman,
2015). The member-checking process involves follow-up interviews with participants to
confirm the researcher’s interpretation and to enhance the reliability and validity of the
study (Behr, 2014; Horton, 2014; Noble & Smith, 2015). After completing nine
interviews at the case study organization, I conducted member checking to further ensure
data saturation occurred and to confirm the accuracy of the interview data.
Qualitative researchers often use semistructured interviews to collect data from
participants with varying viewpoints on the same topic (De Massis & Kotlar, 2014;
Namageyo-Funa et al., 2014; Yin, 2014). I allocated 60 minutes for conducting face-
toface semistructured interviews at the convenience of participants. A consent form is a
tool that researchers use to ensure confidentiality and the protection of participant rights
during the data collection process (Gibson, Benson, & Brand, 2013;
Koonrungsesomboon, Laothavorn, & Karbwang, 2015; Newington & Metcalfe, 2014). I
used the consent form as a tool to ensure participants of confidentiality, data security, and
their freedom to withdraw from the study without penalties. I collected information from
company documents such as multiyear strategic plans, annual reports, past marketing
campaign fliers, sustainability reports, customer needs documentation, statements, and
other relevant information from the company’s website, in addition to nine participants’
responses to interview questions.
Ethical Research
The informed consent process involves explaining to all participants (a) the
purpose of the proposed research study, (b) how the proposed study might be beneficial
to their business, (c) the process for conducting the study, and (d) the voluntary nature of
the proposed study (Zucker, 2014). Researchers use consent forms to provide information
to participants to ensure confidentiality and the protection of participants’ rights during
the data collection process (Gibson et al., 2013; Koonrungsesomboon et al., 2015;
Newington & Metcalfe, 2014). I sent consent forms to all study participants via e-mail
and asked participants to respond “I consent” in replying to the e-mail, should they agree
to participate in this study.
Researchers must ensure they follow informed-consent rules that include
obtaining participants’ consent to the research; furthermore, participants can withdraw at
their discretion, must receive protection and confidentiality, and face minimal or no risks
regarding their participation (Bromley et al., 2015; Honig et al., 2014). Participants
should know they have the right to withdraw from a study (Connelly, 2014). Participants
in a study have the right to withdraw at any time during the study without penalties
(Haahr, Norlyk, & Hall, 2014; J. M. Morse & Coulehan, 2014). I informed study
participants that they were free to withdraw their participation at any time, by informing
me via e-mail or phone or in-person. Researchers must contact participants to address
compensation methods and participants’ right to end their participation (Gibson et al.,
2013; J. M. Morse & Coulehan, 2014; L. Zhou & Nunes, 2013). I did not provide
compensation for participating in this research because participation in this study was
voluntary.
The ethical protection of participants in research is vital (Honig et al., 2014)
because researchers face ethical challenges in all stages of a study, from designing to
reporting, and the challenges include privacy, confidentiality, informed consent, and
researchers’ potential influence on the participants and vice versa (Sanjari,
Bahramnezhad, Fomani, Shoghi, & Cheraghi, 2014). The three basic areas of ethics in
research involving human subjects are (a) autonomy, (b) beneficence, and (c) justice
(U.S. Department of Health and Human Services, 1979). Researchers can provide ethical
protection to participants using three basic ethics principles mentioned in The Belmont
Report: (a) autonomy, where a participant reserves the right to participate or not
participate in a study; (b) beneficence, where a researcher minimizes potential risk or
harm to participants; and (c) justice, which involves potential benefits for research
participants (Honig et al., 2014; J. M. Morse & Coulehan, 2014; L. Zhou & Nunes,
2013). I adhered to The Belmont Report to ensure the ethical protection of participants.
Bias is an influential risk that may distort study results or conclusions (Whiting et al.,
2016). Researchers must make a deliberate effort to avoid biasing the respondents
(Gittelman et al., 2015). Researchers should reduce bias by avoiding their personal
beliefs and opinions gained from experience (Yin, 2014). I avoided my personal beliefs
and opinions gained from working in a machinery manufacturing company, and I
reviewed the interview questions with the doctoral committee appraising my doctoral
study.
Ethical issues are necessary to consider when conducting interviews (Gelling,
2016). Taking the utmost care always during data gathering, data storage, and data
analysis is paramount in protecting the rights of the participants and preserving their
privacy (Levitt et al., 2017). Participants share a concern for confidentiality and
anonymity during the data collection process (Bromley et al., 2015; C. Marshall &
Rossman, 2016; Namageyo-Funa et al., 2014). Therefore, I stored all electronic data in a
password-protected external hard drive, and the hard drive will be secured in a safety
deposit box for a minimum of 5 years to protect the confidentiality of the participants.
Researchers use electronic files and digital formats to maintain the safety of research data
(Alimo, 2015; Richardson, 2014; Trace & Karadkar, 2017).
I scanned my handwritten notes that were captured during the interviews to
convert them into digital files, stored the digital files in a password-protected external
hard drive, and then shredded the paper documents to protect the confidentiality of
participants. Research projects with poor quality research designs, poor quality data
analysis, and poor-quality reporting of the research findings lack ethical support
(Brzeziński, 2016). The Belmont Report serves as a guide to IRB deliberations to ensure
researchers conduct ethical research (Honig et al., 2014). I conducted this study after
receiving an approval from the IRB at Walden University. I included the Walden
University IRB approval number 05-16-19-0615528 on the final doctoral manuscript.
Researchers keep the identities of participants confidential to maintain the
participants’ privacy and safeguard the integrity of research (C. Marshall & Rossman,
2016). Using pseudonyms to identify participants and businesses during research helps to
ensure privacy, confidentiality, confidence, and trust (Gibson et al., 2013; J. M. Morse &
Coulehan, 2014; L. Zhou & Nunes, 2013). To ensure the confidentiality of participants
and business, I used alphanumeric labels such as P1 and P9 to represent Participant 1 and
Participant 9, respectively, and BUS to reference the company.
Data Collection Instruments
I was the primary data collection instrument in this study because of my direct
involvement in gathering and interpreting the data firsthand. The researcher is the
primary data collection instrument in qualitative research (De Massis & Kotlar, 2014;
Holmes, 2014; Noble & Smith, 2015) because the researcher has firsthand experience
with the research subject and participates in hearing, seeing, and interpreting the data
(Denzin, 2014; C. Marshall & Rossman, 2016; Yin, 2014). Interviews are one of the
effective ways to collect data from participants with different viewpoints on similar
concepts.
I collected data through semistructured interviews. Semistructured interviews
involve asking the same set of questions to each study participant (Wilson, 2014).
Semistructured interviews are an effective way to collect data from participants with
varying viewpoints on similar concepts (De Massis & Kotlar, 2014; Namageyo-Funa et
al., 2014; Yin, 2018). Participants tend to give more detailed explanations when
responding to open-ended questions (Manning & Kunkel, 2014; Newington & Metcalfe,
2014; Yin, 2014). I asked open-ended questions (see Appendix) in the semistructured
interviews to explore the innovation strategies business leaders used to increase the
company’s profit margins.
Researchers use company or archival documents as an instrument for collecting
data (Behr, 2014; C. Marshall & Rossman, 2016; A. Smith, 2016). Case study researchers
collect data from documentation that adds supporting evidence to semistructured
interviews (Kornbluh, 2015; J. M. Morse & Coulehan, 2014; Yin, 2018). In order to gain
extra insight into the research question, I reviewed company documents such as multiyear
strategic plans, annual reports, past marketing campaign fliers, sustainability reports,
customer needs documentation, statements, and other relevant information from the
company’s website. I accessed these documents by asking each of the interviewees to
voluntarily provide materials worth analyzing, such as multiyear strategic plan, materials
on the company’s website, and social media sites. Archival documents provide historical
data and can improve value to case studies (De Massis & Kotlar, 2014; El Haddad, 2015).
Qualitative researchers collect data from multiple sources to enable triangulation
(Baskarada, 2014; Santiago-Delfosse, Gavin, Bruchez, Rous, & Stephen, 2016).
Conducting triangulation minimizes the threat to validity (C. Marshall & Rossman, 2015;
J. M. Morse & Coulehan, 2014; Noble & Smith, 2015; Yin, 2014). I collected data from
multiple sources of evidence to use methodological triangulation. After interviewing the
participants and member checking, I performed methodological triangulation analysis on
the nine interview transcripts, company documents, statements, and other relevant
information from the company’s website, to determine whether I had attained data
saturation.
Member checking and triangulation enhance reliability and validity (Behr, 2014;
Harvey, 2014; Van Rensburg & Ukpere, 2014). Furthermore, researchers achieve data
saturation when themes are recurrent or have a high degree of similarity (Kornbluh, 2015;
J. M. Morse & Coulehan, 2014; Yin, 2018). I provided study participants an opportunity
to review and change the answers they gave during their interview. Member checking
involves follow-up interviews that benefit researchers by enhancing the reliability and
validity of the study (Behr, 2014; Horton, 2014; Noble & Smith, 2015). To ensure
reliability and validity in the data collection process, I asked open-ended questions (see
Appendix) and used member checking, triangulation, and recorded similar themes to
achieve data saturation.
Data Collection Technique
After receiving approval from the Walden University IRB, I started the process of
enrolling participants. I conducted semistructured interviews at a location and time
convenient to participants. Steps involved in data collection techniques included making
initial contact with participants by e-mail, scheduling and conducting the interview, and
recording and taking detailed notes during the interview process. Interviews lasted no
more than 60 minutes. These steps were in accordance with suggestions made by Miller
and Dorman (2014). Interviews occurred at a location identified by the participants after
the participants provided consent via e-mail.
Methodological triangulation is a combination of different types of data collection
(Ruiz, Martínez, & Bravo, 2016). Researchers may use the within-method triangulation
by using at least two data collection procedures, and the same design approach (Hussein,
2015). Qualitative research includes a variety of data collection techniques such as
faceto-face interviews, questionnaires, reviews of documentation and physical artifacts,
focus groups, and observation (Pasila, Elo, & Kääriäinen, 2017). I used methodological
triangulation in this study, which included two different data collection techniques.
Sources in this study included semistructured interviews with company leaders and a
review of pertinent company documents such as multiyear strategic plans, annual reports,
past marketing campaign fliers, sustainability reports, customer needs documentation,
statements, and other relevant information from the company’s website.
Detailed data collection in a qualitative study involves a variety of research tactics
such as interviewing, survey, observation, and document or artifact review (Bailey, 2014;
Gergen, Josselson, & Freeman, 2015). Although qualitative research can involve many
ways of conducting investigational research, the common types of data collection are
interviews, observations, and review of documents (Jamshed, 2014; C. Marshall &
Rossman, 2016; Yin, 2014). I collected data from multiple sources of evidence to use
methodological triangulation.
Interviewing is one of the most popular forms of collecting data for qualitative
research (Cairney & St Denny, 2015) and to reach data saturation (Fusch & Ness, 2015).
Qualitative researchers use semistructured interviews as a primary tool for data collection
(Denzin, 2014; Holmes, 2014; C. Marshall & Rossman, 2015; J. M. Morse & Coulehan,
2014; Uribe-Jongbloed, 2014). Face-to-face interviews are the preferred means for
collecting qualitative data (Deakin & Wakefield, 2014). Therefore, I used face-to-face
semistructured interviews and asked study participants open-ended questions to explore
the innovation strategies some leaders of a global machinery manufacturing business
used to increase the organization’s profit margin.
I used a digital recording device for audio recording the semistructured interviews
and later transcribed the audio recordings to preserve the content of all interviews and to
facilitate automated cataloging and analysis of the data as recommended by researchers
such as Fredrick (2015), M. Q. Patton (2015), Richardson (2014), and Starr (2014).
During interviews, digital recording and noting interviewees’ body language are effective
tools for qualitative data collection (Rosenblum & Hughes, 2017). Transcribing involves
experiential (event or action), interpersonal (the relationship between participants and a
researcher), and annotating textual data (transcribed data) undertakings (Widodo, 2014). I
audio recorded the personal interviews after participants provided consent and then
transcribed the audio recordings into usable documents in Microsoft Word. I had 91
pages in Microsoft Word document after transcribing audio recording of nine interviews.
Qualitative researchers use semistructured interviews due to many advantages.
The advantages of using semistructured interviewing include (a) obtaining detailed
information about the research participant, (b) asking questions in detail, and (c)
obtaining thorough responses from participants (Harvey, 2014; Leedy & Ormrod, 2013;
Yin, 2014). The use of semistructured interviews may also be disadvantageous because
(a) participants may not feel comfortable answering questions in a formal setting and (b)
answers may not truly reflect participants’ real views or opinions (Harvey, 2014; Leedy &
Ormrod, 2013; J. M. Morse & Coulehan, 2014; Yin, 2014).
Researchers often collect and review company documents in qualitative studies
(Kornbluh, 2015; C. Marshall & Rossman, 2016; Yin, 2016). Case study researchers
collect data from documentation that adds supporting evidence to semistructured
interviews (Kornbluh, 2015; J. M. Morse & Coulehan, 2014; Yin, 2018). This study
included the analysis of company documents such as multiyear strategic plans, annual
reports, past marketing campaign fliers, sustainability reports, customer needs
documentation, statements, and other relevant information from the company’s website.
Qualitative researchers use relevant company documents due to many advantages.
The advantages of using documentation include the researcher can review information
multiple times to ensure accuracy and the researcher may have access to information that
the public may not have (De Massis & Kotlar, 2014; Kornbluh, 2015; Yin, 2014). The
disadvantages of using documentation are the researcher may only have access to
outdated documents and participants may not want to disclose documentation they
perceive as confidential (De Massis & Kotlar, 2014; Kornbluh, 2015; Yin, 2014).
Researchers can use documents, archival records, and physical artifacts to triangulate the
data, but the data may be redundant (Yin, 2014). The review of company documents, the
use of interview data, and the observations are critical in reaching triangulation (C.
Marshall & Rossman, 2016; A. S. Singh, 2014; Yin, 2016). I achieved triangulation by
noting participants’ responses to interview questions and company documents.
Member checking refers to the research process of obtaining feedback from
participants to enhance validity, accuracy, credibility, and applicability (Andrasik et al.,
2014; Emrich, 2015; Harvey, 2014; Leedy & Ormrod, 2013; Nyhan, 2015). Researchers
audio record interviews to ensure research participants’ views are accurate and detailed
(J. M. Morse & Coulehan, 2014; Yin, 2018). I provided participants an opportunity to
review and correct my written interpretation of their responses to ensure accuracy.
Data Organization Technique
I transcribed the collected data in the form of audio recordings to identify the
themes. Korhonen (2014) stressed the importance of organizing data because researchers
can use properly stored data and analyzed data to understand emerging themes. New
themes can emerge in the coding process after the collection of data is complete
(Chowdhury, 2015; Pasila et al., 2017; Yin, 2014). I identified themes using a coding
method. Researchers can use electronic files and digital formats to keep data safe (Alimo,
2015; Richardson, 2014). Researchers often scan paper documents to convert them into
electronic files to organize the data (Trace & Karadkar, 2017). I scanned paper documents
to convert them into digital files, stored the digital files in password-protected electronic
folders to organize the data, and shredded the paper documents after converting them into
digital files to maintain the confidentiality of the data.
Thomas (2015) noted that qualitative researchers use a filing system to maintain
confidentiality and enhance integrity. Copying the data in different locations and forms
such as in a hard drive, pen drives, and cloud drives could help in data recovery when
disasters occur (Madu, 2016; Trace & Karadkar, 2017). Research participants often share
a concern for confidentiality and privacy during the data collection process (Bromley et
al., 2015; C. Marshall & Rossman, 2016; Namageyo-Funa et al., 2014). I maintained all
electronic data in a password-protected external hard drive and will secure the hard drive
containing all digital data in a safety deposit box for a minimum of 5 years, before
deleting all the stored data.
Researchers should categorize stored data (Alimo, 2015; Yin, 2014). Researchers
can use a coding system to uphold research integrity, validity, and reliability
(InghamBroomfield, 2015; Thomas, 2015; Yin, 2014). I used a coding process that
involved categorizing and aggregating the text into small groups of information, finding
evidence for the code, and assigning a label to the code. For example, I categorized the
study participants using unique labels such as P1 to refer to Participant 1.
I organized the data and ensured the confidentiality of the data. Researchers
properly organize data when they document the research process, make checklists, and
use computer software to store the data (Alimo, 2015). Researchers can use Microsoft
Excel or Microsoft Word to organize research data (Ose, 2016; Scotson et al., 2017). I
stored the study data using Microsoft Excel and Microsoft Word. I also used NVivo
qualitative data analysis software to upload data from Microsoft Excel and Microsoft
Word and then analyzed the data. Researchers use NVivo to analyze data in research
(Sarma, 2015; Sotiriadou, Brouwers, & Le, 2014; Woods, Paulus, Atkins, & Macklin,
2015). Researchers can maintain the privacy and confidentiality of the data using
password-protected electronic folders that have unique identification numbers (Connelly,
2014; Grossoehme, 2014; Leins, Fisher, Pludwinski, Rivard, & Robertson, 2014). I
organized the data in password-protected electronic folders to ensure privacy and
confidentiality.
Data Analysis
I performed data analysis using a constant comparative method for the data
collected from participants. When analyzing qualitative data, researchers must begin by
organizing the data and applying meaning to the data using a systematic process (Vaughn
& Turner, 2016). The four types of triangulation are (a) data triangulation, (b) investigator
triangulation, (c) theory triangulation, and (d) method triangulation (Yin, 2014).
Researchers may use methodological triangulation for collecting and analyzing data from
multiple sources such as interviews and documents (Joslin & Müller, 2016; Manganelli et
al., 2014; Spadafino et al., 2016; Yin, 2018). Researchers should use multiple sources of
evidence for a case study (Yazan, 2015).
I used methodological triangulation to analyze the semistructured interview data
and data from company documents, such as multiyear strategic plans, annual reports, past
marketing campaign fliers, sustainability reports, customer needs documentation,
statements, and other relevant information from the company’s website. Qualitative
researchers use coding to protect the identities of study participants (Cleary et al., 2014;
Emmel, 2015; Houghton, Casey, Shaw, & Murphy, 2013). Qualitative researchers use
coding to reinforce the reliability and validity of data analysis (Munn, Porritt, Lockwood,
Aromataris, & Pearson, 2014; Stuckey, 2015; Yin, 2014). I used coding to protect the
identity of company and study participants and for identifying major themes emerging
from the interview process.
Transcribing the collected data and member checking are essential activities
during data analysis. Transcribing data is a powerful act of data representation, analysis,
and interpretation in such a way that it exerts considerable influence on how to
conceptualize the data (Widodo, 2014). The review of transcripts ensures all responses
and themes are part of the analysis and the new themes can emerge in the coding process
after the collection of data (Pasila et al., 2017; Yin, 2018). I transcribed the interview
responses and reviewed them with participants to ensure my interpretation was correct for
member checking. Researchers use member checking to improve the credibility, validity,
accuracy, and applicability of qualitative research by providing an opportunity for
participants to confirm data collected is accurate (Harvey, 2014; Holmes, 2014;
Houghton et al., 2013). I started the data analysis process after participants confirmed that
my interpretation was correct.
I used Yin’s five phases to analyze the data. These included: (a) compiling, (b)
disassembling, (c) reassembling, (d) interpreting, and (e) concluding (Yin, 2014).
Qualitative researchers can use Microsoft Excel and Microsoft Word to analyze and
transcribe research data (Ose, 2016; Scotson et al., 2017; Y. Yang et al., 2018). I
transcribed the audio recordings of interviews into Microsoft Word. Researchers can use
qualitative software such as NVivo for sorting, grouping, and arranging data during the
data analysis process (Stevens, Moser, Köke, van der Weijden, & Beurskens, 2017;
Thiem, 2015; Wood, Gnonhosou, & Bowling, 2015; Woods et al., 2015; Zamawe, 2015).
For this case study, I compiled company documents, interview transcripts, and
memberchecking data confirmed during follow-up interviews. I manually disassembled,
reassembled, and analyzed the data to identify key themes. I also used NVivo throughout
the data analysis process for compiling data into a logical order, computer-aided
disassembling, reassembling, coding, interpretation, and theme development.
After compiling the data, I disassembled the data into smaller sets. Disassembling
data involves creating meaningful groupings after taking the data apart (Castleberry &
Nolen, 2018). Researchers use coding to protect participants’ data and to identify the
relationships between the coded data and the phenomenon (Emmel, 2015; Kelsey, Karen,
& Hude, 2017). Researchers often use coding for disassembling and reassembling data
(Castleberry & Nolen, 2018). I used smaller sets of data to create meaningful groupings
after disassembling.
After disassembling data, I used coding to reassemble closely related data into
categories. Researchers code themes to relate the responses to the themes (St. Pierre &
Jackson, 2014). The identification of themes is an important step in a qualitative study
(Grossoehme, 2014). Researchers use coding to discover the relationships between coded
data and a phenomenon under study (Elo et al., 2014). After reassembling the data, I
interpreted the data to discover themes using thematic analysis, which involved an
abstraction and synthesis of themes. Researchers interpret data to identify themes using
thematic analysis, which involves abstracting and synthesizing themes (Castleberry &
Nolen, 2018; Padilla-Diaz, 2015; Sloan & Bowe, 2014). Waters (2016) noted that
researchers use participants’ experiences to identify the themes and associate themes with
phenomena.
I verified the findings after organizing the data, analyzing the data broadly, and
noticing regularities and what patterns stood out in the data among participants’
responses. Researchers can use participants’ quotes to achieve authenticity (Cope, 2014;
Madu, 2016). Researchers use member checking to increase the validity of research
results (Horton, 2014). Oghuma, Libaque-Saenz, Wong, and Chang (2016) noted that
researchers correlate the identified themes with the literature and the conceptual
framework. After using NVivo, I compared the NVivo-generated themes with the themes
I developed manually to identify consistencies. Finally, I correlated relevant themes from
interviews and relevant company documents with the recurring themes from the literature
review and the conceptual framework. The findings from data analysis provided
successful innovation strategies that business leaders used to increase company’s profit
margins, competitiveness, and sustaining profitable growth.
Reliability and Validity
Ensuring the reliability and validity of the data are equally important during data
collection. Validity refers to the precision in which the findings accurately reflect the
data, and reliability refers to the consistency of the analytical procedures, including
accounting for personal and research method biases that may have influenced the findings
(Noble & Smith, 2015). The basic criteria for achieving quality and rigor in a qualitative
study are dependability, credibility, transferability, and confirmability (C. Marshall &
Rossman, 2016). These criteria are not measurable and need to form using qualitative
methods such as member checking and triangulation.
Member checking is the process of reviewing the ideas of participants for their
confirmation and to gather material to elaborate categories (Harvey, 2014). Reliability
and validity are characteristic of quantitative research (Zohrabi, 2013), whereas the
criteria of qualitative research are dependability, credibility, transferability, and
confirmability (Avenier & Thomas, 2015; El Hussein, Jakubec, & Osuji, 2015;
Onwuegbuzie & Byers, 2014). I used Onwuegbuzie and Byers’s (2014) criteria to ensure
the reliability and validity of the study.
A clear reflection of data collection, sampling, and analysis can increase the
validity and reliability of a study (Kasim & Al-Gahuri, 2015). The strategies used to
maintain validity and reliability include (a) acknowledging personal biases, (b) verbatim
transcriptions of participants’ interviews, (c) use of peer reviews for questions or
debriefing, (d) use of member checking, and (e) data triangulation (J. M. Morse, 2015;
Noble & Smith, 2015). J. M. Morse (2015) included additional strategies such as
prolonged engagement, rich description, negative case analysis, and external audits.
Reliability
Gathering high-quality data was essential. Reliability refers to the consistency of
the analytical methods, including accounting for personal and research method biases that
may influence the findings (J. M. Morse, 2015; Noble & Smith, 2015). Researchers
achieve precision in qualitative studies using unbiased research information (Gringeri,
Barusch, & Cambron, 2013), and researchers achieve reliability when research
information is not biased (Hess, McNab, & Basoglu, 2014). After achieving reliability,
researchers can replicate the research results (Baskarada, 2014; Noble & Smith, 2015).
Case study research is reliable if a future researcher or auditor can achieve similar
findings and conclusions after repeating the procedures (Yin, 2018). I focused on
achieving reliability so that future researchers can replicate the research results.
Dependability is a concept in a qualitative study that is similar to reliability.
Dependability refers to the reproducibility of study findings using a transparent process
that includes limitations and the anticipated contribution of the study (Van Rensburg &
Ukpere, 2014). Ways to enhance the dependability of a study include member checking
of data interpretation, transcript review, pilot test, expert validation of the interview
questions, interview protocol, focus group protocol, and participant observation protocol
(Harvey, 2014). Achieving reliability in a qualitative study requires a researcher to
maintain dependability and consistency throughout the research process (Hess et al.,
2014). Reliability ensures the dependability of the results of a qualitative study (Garside,
2014). The use of member checking in a qualitative study confirms the dependability and
reliability of participants’ information (Harvey, 2014).
Researchers can ensure dependability using an audit trail process (Connelly,
2016). C. Marshall and Rossman (2016) supported the process of member checking as
ideal for enhancing academic accuracy. I enhanced dependability through member
checking and creating and maintaining an audit trail of the research process. I created and
maintained research notes and followed the order of the study using an interview
protocol. Yin (2014) supported the use of proper documentation to record the research
process. Dependability is achievable using a step-by-step process from data collection to
making a final decision on the study (De Ceunynck, Kusumastuti, Hannes, Janssens, &
Wets, 2013). I used the interview protocol to achieve dependability (see Appendix).
I used consistent data instruments to ensure the reliability of this study. The use of
the same open-ended interview questions and asking questions in the same order with
each participant, ensures reliability (Harvey, 2014; Yin, 2018; Zohrabi, 2013). I used the
same interview questions for each interview with nine participants until I reach data
saturation. I collected interview data with a set of interview questions and ensured
reliability by following the interview protocol (see Appendix).
Audio recording, note taking, and coding enhance reliability (Gringeri at al.,
2013). It is imperative to seek consent from the participants for audio recording of the
interviews to ensure research validity and reliability (Mitchell et al., 2018; Wright et al.,
2018; Yin, 2018). I obtained permission from the participants for an audio recording of
the interviews to assure research validity and reliability. Member checking is the process
that involves participants to review and correct the researcher’s version of the interview
notes (Birt, Scott, Cavers, Campbell, & Walter, 2016; Nyhan, 2015; B. Smith &
McGannon, 2018; Yin, 2016). After the interviews, I collected the participants’ feedback
on the interpretation of the interview and asked them to validate the findings and themes
for accuracy, reasonableness, and credibility and to look for errors and additional
information.
Reaching data saturation helped ensure the dependability of the study findings. A
case study should consist of multiple sources of evidence (Yazan, 2015). Methodological
triangulation enhances quality research findings because the data collected are from
different sources (Wilson, 2014). Triangulation is the way to achieve dependability in a
study (Yin, 2018; Zohrabi, 2013). I achieved methodological triangulation using relevant
company documents and responses to semistructured interview questions.
Validity
Validity is an assessment of truth and honesty when concentrating on study
findings to reflect the data correctly (Bengtsson, 2016; Noble & Smith, 2015). Validity in
qualitative study refers to the credibility, transferability, and confirmability of the findings
(Brown et al., 2017; Cope, 2014). Credibility and transferability are synonymous with
validity in quantitative studies, while confirmability is a philosophical perspective for
objectivity (De Ceunynck et al., 2013; Houghton et al., 2013; Kornbluh, 2015). This
study included a level of sincerity in finding literature, collecting data, organizing data,
and analyzing data.
The credibility of qualitative findings is enhanced by using reliable assessment
coding (MacPhail, Khoza, Abler, & Ranganathan, 2016). Credibility is achievable when
study participants agree with the findings from a study (Daniel, 2018; Yin, 2018).
Member checking and persistent observation of participants during the interviews
enhance the credibility of research results (Houghton et al., 2013). Member checking is
the process of providing interview participants with a summarization of the researcher’s
interpretations to verify accuracy and data saturation (Abedini, Stack, Goodman, &
Steinberg, 2018). Researchers such as Stevenson, Israelsson, Petersson, and Bath (2018)
used member-checking to validate the accuracy of their study results. The
memberchecking process is the same for credibility and dependability (Van Rensburg &
Ukpere, 2014). Researchers use member checking and triangulation to enhance reliability
and validity (Behr, 2014). Therefore, I enhanced credibility through the member-checking
process.
Triangulation improves the certainty and integrity of a case study by strengthening
the credibility of the research findings (Cronin, 2014; Kornbluh, 2015; Yin, 2018).
Researchers can use different types of triangulation in a study, such as data triangulation,
investigator triangulation, theoretical triangulation, and methodological triangulation
(Wilson, 2014; Yin, 2014). Methodological triangulation enhances credibility (Harvey,
2014; Wilson, 2014), and helps the qualitative researchers to obtain various perspectives
of participants during a research.
Data triangulation is a way to explore different levels and perspectives of the
same phenomenon and is a method to ensure the validity of the study results (Fusch &
Ness, 2015). Wilson (2014) used methodological triangulation to understand data and for
enhancing the quality of research findings. Theoretical triangulation is useful for
capturing the changing role of expertise (Burau & Andersen, 2014). All types of
triangulation are useful for maintaining consistency in qualitative data analysis, as long as
a researcher is mindful of the applicability of the research design in relation to the type of
triangulation chosen (Yin, 2014). Methodological triangulation can reinforce the validity
and the credibility of a research study because cross-verifying data using two or more
methods will provide more credibility (Carter, Bryant-Lukosius, DiCenso, Blythe, &
Neville, 2014; Lodhi, 2016). Therefore, I used methodological triangulation to enhance
validity and credibility. Specifically, I used responses to semistructured interview
questions and data from company documents such as multiyear strategic plans, annual
reports, past marketing campaign fliers, sustainability reports, customer needs
documentation, statements, and other relevant information from the company’s website.
Transferability is achievable when the readers of a study can decide on the
applicability of the research findings in other settings (Bellemare et al., 2018; Bryman &
Bell, 2015; Korstjens & Moser, 2018; Sinclair et al., 2018). Transferability depends on
the judgment of decision makers (Bærøe, 2018). I used the same interview protocol with
each study participant, which involved audio recording and member checking. I
triangulated nine participants’ interview responses and company documents such as
multiyear strategic plans, annual reports, past marketing campaign fliers, sustainability
reports, customer needs documentation, statements, and other relevant information from
the company’s website. Transferability is more likely if data saturation is achieved
(Bekhet & Zauszniewski, 2012). Failing to reach data saturation has an impact on the
quality of the research conducted and hampers content validity (Fusch & Ness, 2015).
Evidence of data saturation is essential to improving the validity of a qualitative study (J.
M. Morse, 2015; Noble & Smith, 2015). Researchers reach data saturation when there are
no new data, no new themes, and no new coding emerge and when other researchers are
able to replicate a study (Fusch & Ness, 2015). I ensured the attainment of data saturation
to help future readers and researchers make decisions on the transferability of the
research results.
A direct link exists between data triangulation and data saturation. Data
triangulation is a method to attain to data saturation (Fusch & Ness, 2015). Saturation of
data occurs when information collected for a study reaches a level of breadth and depth
(O’Reilly & Parker, 2013). Data saturation occurs when collected information becomes
redundant or repetitive (B. Marshall et al., 2013), and important aspects of reaching data
saturation are the nature of the interview questions, the researcher’s level of experience in
qualitative research, the philosophical understanding of the method, and the use of a
guiding theoretical framework (Aldiabat & Navenec, 2018). I used various steps to reach
the data saturation that included (a) reviewing and interpreting interview transcripts, (b)
writing each question and synthesizing interview data in one paragraph, (c) providing a
copy of the synthesis to each participant, (d) asking participants for feedback to
understand if the synthesis correctly represented the answers or if there was additional
information, (e) confirming and correcting the interpretations of the data based on
participant responses, and (f) member checking until there were no new data to collect.
Confirmability is achievable when other researchers can use the same data to
collaborate the findings (C. Marshall & Rossman, 2016). Neutrality and accuracy of data
ensure objectivity and enhance confirmability (Houghton et al., 2013). Researchers can
achieve neutrality and accuracy through their analysis documentation that includes the
ways of reaching a decision (Houghton et al., 2013). Bekhet and Zauszniewski (2012)
maintained neutrality and objectivity to achieve confirmability. Research data must
accurately reflect participants’ responses (Elo et al., 2014). Researchers can provide
participants’ quotes to achieve authenticity (Cope, 2014). I enhanced confirmability by
being neutral and objective throughout the research process, using an audit trail, and
using quotations. Researchers describe the conclusions and interpretations of participants’
responses to achieve confirmability (Cope, 2014). I adhered to the purpose of the study to
ensure the confirmability of the data by following the objectives of the study, using
semistructured interviews, recording the interviews on digital recording devices, using
member checking, and sharing some direct quotations to enhance confirmability.
Sample size does not ensure data saturation (Fusch & Ness, 2015). A researcher
can reach data saturation even with a small but adequate sample, as long as the sample
comprises experts in the field of interest (J. M. Morse, 2015). Participants had experience
using innovation strategies to increase organizations’ profit margins, and I reached data
saturation with a sample size of nine participants. Researchers must prevent bias in their
analysis to increase validity (J. M. Morse, 2015) and should demonstrate the validity of
the analysis and the conclusions using a qualitative method (Hammarberg, Kirkman, &
de Lacey, 2016). This study involved verifying the data with participants to increase the
likelihood of accuracy.
Transition and Summary
In Section 2, I discussed the (a) role of the researcher; (b) participants; (c)
research method and design; (d) population and sampling; (e) ethical research; (f) data
collection instruments and technique; (g) data organization technique; (h) data analysis;
and (i) reliability and validity. Section 3 contains (a) an overview of the study, (b) the
presentation of findings from the research, (c) applications to professional practice, (d)
implications for social change, (e) recommendations for action and further research, (f)
personal reflections, and (g) conclusions.
Section 3: Application to Professional Practice and Implications for Change
This section includes a summary of the innovation strategies used by business
leaders of a global machinery manufacturing company in northwest Illinois to increase
the organization’s profit margins. Section 3 contains (a) an introduction of the study, (b)
presentation of the findings, (c) application to professional practice, (d) implications for
social change, (e) recommendations for action, (f) recommendations for further research,
and (g) reflections on my experience as a researcher. I end this section with conclusion to
the study.
Introduction
The purpose of this qualitative single case study was to explore the innovation
strategies some business leaders of a global machinery manufacturing business in
northwest Illinois used to increase the organization’s profit margins. The data came from
face-to-face semistructured interviews with business leaders and from a review of
business documents. None of the participants had additional comments or changes to the
transcripts during member checking, and each participant confirmed my interpretation
was accurate.
After the analysis of interview responses and business documents, I identified one
overarching theme and eight subthemes. The importance of increasing a firm’s
competitiveness and sustaining profitable growth was the overarching theme. The eight
subthemes were (a) distinctive customer experience, (b) technology-based modernization,
(c) distinctive product quality, (d) business model advantage, (e) diversity of thoughts and
inclusion, (f) strategic partnerships and alliances, (g) speed, and (h) win in aftermarket.
Findings from the study indicated that the most highlighted component from the study
results was the importance of increasing a firm’s competitiveness and sustaining
profitable growth.
Presentation of the Findings
The research question of this study was what innovation strategies do leaders of a
global machinery manufacturing businesses use to increase profit margins? One
overarching theme (the importance of increasing a firm’s competitiveness and sustaining
profitable growth) and eight subthemes (distinctive customer experience,
technologybased modernization, distinctive product quality, business model advantage,
diversity of thoughts and inclusion, strategic partnerships and alliances, speed, and win in
aftermarket) emerged from the analysis of interview responses and business documents
such as multiyear strategic plans, annual reports, past marketing campaign fliers,
sustainability reports, customer needs documentation, statements, and other relevant
information from the company’s website. Table 1 includes business leaders’ demographic
information. Table 2 includes the findings that led to the overarching theme. There were
eight references to the idea of increasing a firm’s competitiveness and sustaining
profitable growth.
Table 1
Business Leaders’ Demographic Information
Participants
code name
Highest level of education
Gender
Years of experience as a
business leader
P1
Master’s degree
Male
>15
P2
Master’s degree
Male
>18
P3
Master’s degree
Female
>15
P4
Master’s degree
Female
>18
P5
Master’s degree
Male
>12
P6
Master’s degree
Female
>15
P7
Master’s degree
Male
>12
P8
Master’s degree
Male
>18
P9
Master’s degree
Male
>16
Table 2
References to Increasing a Firm’s Competitiveness and Sustaining Profitable Growth
Overarching Theme
Subthemes
Frequencies
Percentage of
respondents
agreement
The importance of
increasing a firm’s
competitiveness and
sustaining profitable
growth
9
100
Distinctive customer experience
9
100
Technology-based modernization
9
100
Distinctive product quality
8
89
Business model advantage
7
78
Diversity of thoughts and inclusion
6
67
Strategic partnerships and alliances
6
67
Speed
6
67
Win in aftermarket
5
56
Note. N = 9.
Overarching Theme: The Importance of Increasing a Firm’s Competitiveness and
Sustaining Profitable Growth
Interview participants from the machinery manufacturing business (henceforth
referred to as BUS) mentioned that increasing the firm’s competitiveness and sustaining
profitable growth were crucial components in determining which innovation strategies to
implement to increase profit margins. Study findings revealed that the way to increasing
competitiveness and sustaining profitable growth is complex and comprises
transformation of products, services, operating business models, delivery of distinctive
customer experience, effective use of modern technologies, strategic partnerships and
alliances, diversity of thoughts and inclusion, and speed to market and improved quality,
which are vital for formulating innovation strategies to increase profit margins (see Table
2). This knowledge may aid machinery manufacturing business leaders in developing
innovation strategies and objectives to increase their organization’s competitiveness,
profit margins, and sustain profitable growth.
In their responses to Interview Questions 1 through 6, all participants highlighted
that increasing profit margins, market share, shareholder value added, and operating
return on assets (OROA) were the drivers for them to use innovation strategies to find
innovative ways to serve customers and stay ahead of competitors. The capacity of the
company to launch creative solutions for their customers’ pain points while maintaining a
competitive advantage on their market leads to profitable growth (Moeuf, Pellerin,
Lamouri, Tamayo-Giraldo, & Barbaray, 2018). Participants in the current study
determined which innovation strategies worked to increase profit margins using
indicators of strengthened competitiveness and profitability such as an increase in market
share, shareholder value added, OROA, and measurable value to customers and
stockholders, which were essential to sustaining profitable growth.
Sustainable and profitable growth is about staying ahead of the competition and
remaining profitable. In responses to Interview Question 6, all participants mentioned
that their desire to compete with similar businesses and remain profitable drove their
decision-making for innovation strategies. P1 through P5 said that the biggest concern
was not necessarily competitors in the industry, but rather the competitors that they did
not know about. The threat of new product entry to manufacturers is from not only their
traditional competitors, including manufacturers from other countries, but also from
unknown competitors, including their customers (Tyagi & Raju, 2018). Current study
findings revealed that poising company strategy to adapt innovation strategies to develop
products according to emerging trends in the industry and the needs of the ever-changing
customer leads to profitability.
Bias toward profitability is critical for business growth, which is a requisite
element for survival. In response to Interview Question 1, P1 reflected on the experience
of serving the customers with product features that they did not have before, and this
participant stated that providing a solution to customers’ pain point faster had an
incremental margin of return that was exponentially greater for the company because
when market share increased they were able to command more pricing. Innovation
strategies and R&D investment drive a firm to increase its market share in the
international market by increasing its new product sales across the globe (Ma & Jin,
2019). P1 expressed, “we needed to have a bias towards increasing profit margin in the
longer term so that we can continue to invest in future innovation. Therefore,
understanding customer value was critical.”
The success of manufacturers depends on their dynamic capability to assimilate
and use industry knowledge according to the demands of the market. In responses to
Interview Question 6, all participants mentioned that focusing on market share enabled
them to pursue profitable growth because they concentrated on increasing measurable
value to customers through superior product and services. In an unpredictable and
turbulent business environment, dynamic capacity is essential for firms’ revival (Oliver &
Parrett, 2018), which leads to the achievement of a competitive advantage in a global
market (Szymanski, Fitzsimmons, & Danis, 2019). As a result, companies get
remembered and chosen by satisfied customers among others existing in the same place
or region (Ngo, Bucic, Sinha, & Lu, 2019). P3 and P5 stated that their ability to
understand the market, invest in R&D, and launch breakthrough products and services
desired by customers led to profitable growth.
The success of machinery manufacturers is contingent on successfully launching
product innovations, as well as customers’ response to the products and services they
offer. In responses to Interview Questions 1, 3, and 6, Participants P1 through P8
mentioned that they implemented innovation strategies to create distinctive product
quality, which increased the perceived value of products for their customers leading to
increased competitive advantage, profit margins, and growth in market share. My
findings aligned with the findings from previous researchers who found that product
innovation strategy provides a strategic competitive advantage in the marketplace
because customers are convinced to make purchasing decisions when they see value, and
consequently, product innovation strategy positively impacts growth in sales revenue and
market share (Bustinza, Vendrell-Herrero, & Gomes, 2019; David, 2019).
Study findings revealed that using product differentiation to enhance customer
value positively impacts profitable growth. In responses to Interview Questions 1, 3, and
6, all nine participants from BUS mentioned that the implementation of innovation
strategies to differentiate their products and services from those of their competitors
helped them to increase their firm’s competitiveness and sustain profitable growth.
Asheim (2019) identified significant aspects of competitive advantage and indicators of
differentiation strategies, which include a wide assortment of goods, use of cutting-edge
knowledge and technologies, skilled employees, leadership, financial capabilities, and
density of innovation and production networks within value chains. After-sales services
are also essential to creating and seizing value from product innovation and can generate
growth in profit margins (Story, Raddas, Burton, Zolkiewski, & Baines, 2016).
Being on par with competitors in quality, performance, and price of the products
is essential to enter into the market, whereas efficient after-sales services are essential for
winning in the aftermarket. In responses to Interview Questions 1, 3, 4, 5, and 7,
Participants P1, P2, P4, P6, and P8 highlighted that they needed to maintain the delicate
balance between newly launched product innovations and associated aftermarket services
proficiency, which they referred to as “win-in-aftermarket services.” They mentioned that
enhanced aftermarket service quality to provide world-class customer experience helped
them to increase the perceived value of products for their customers, leading to increased
competitive advantage, profit margins, and growth in market share. Aftermarket services
are a source of competitive advantage because this type of service enables firms to access
information directly from customers and capture additional value, creating new streams
of revenue from services (Vendrell-Herrero, Bustinza, Parry, & Georgantzis, 2017).
Positive customer experience and brand personality influence customer loyalty
and result in repeat business, which is compatible with firms’ competitiveness and
profitable growth. In responses to Interview Questions 1, 3, and 6, all participants
mentioned that sales volume and profitability increased when customers responded
positively to their product and service innovation. Customers’ loyalty stems from
complex variables like consumer involvement, trust, satisfaction, commitment, and
engagement (Hajli, Shanmugam, Papagiannidis, Zahay, & Richard, 2017), and it benefits
manufacturers because customers spread good words and repurchase the same brand
(Han et al. 2018). Participants added that customers who had positive experiences with
products and services became their repeat customers and remained loyal to the brand, a
trend that positively impacted their firm’s profitable growth.
In response to Interview Question 2, Participants P2, P4, P5, P6, and P9
mentioned that customer research and industry benchmarking were invaluable to look at
what competitors were doing and focus on what they knew about their customers’ needs.
My findings aligned with the findings from previous researchers who found that
innovative new products and services may fail in the marketplace when business leaders
do not understand how customers evaluate products and make purchase decisions
(Moretta Tartaglione, Cavacece, Russo, & Granata, 2019). Customer-focused learning
activities play an essential role in the strategic knowledge development process (Salunke,
Weerawardena, & McColl-Kennedy, 2019).
Firms’ capability to innovate and launch effective business models that support
strategic sustainability thinking, and include business scalability and risk appetite, leads
them to increased competitiveness and sustainable profitable growth. Study findings
revealed that innovating business models to increase firms’ ability to reconfigure, build,
and integrate competencies through internal and external collaboration to adapt to
changes in its turbulent business environment is a crucial capability for strengthening its
competitiveness and profitability. In responses to Interview Questions 1, 3, 5, and 6,
Participants P1 through P6, as well as P9, mentioned that they transformed their global
business operating models to adapt to the industry changes, which involved using more
efficient business practices to improve the production efficiency and quality by making
the manufacturing and overall business processes more modern, scalable, and innovative,
thereby positively impacting BUS’s profitability.
Participants used business model transformation and successfully reduced the
global operating costs and facilitated the development of better products, both of which
lead to increased revenue for R&D. The reduced cost provided them opportunities to
position their product slightly differently in the marketplace from a pricing standpoint.
My findings of business model advantage aligned with the conclusions of previous
researchers who found that business model innovation is critical for firms to gain
competitive advantages and improve their financial performance (Tian, Zhang, Yu, &
Cao, 2019), and the effective execution of a business model involves constantly
advancing and increasing a company’s dynamic capacity (Gupta & Agarwal, 2019).
Designing suitable business models as tools for innovating and delivering value is
essential for business leaders to foster innovation practices in ways that go beyond
shortterm goals, making their mission profitable rather than making profit their only goal
(Alberti & Varon Garrido, 2017), and also requiring revision of operational processes and
activities for global delivery (Parida, Sjödin, & Reim, 2019).
Industry revolution shapes the manufacturing of products and other services in an
exponential speed and digital transformation can impact firm’s competitiveness and
profitable growth. In their responses to Interview Questions 1, 2, 3, and 4, all participants
mentioned that using digitalization and advanced technologies were vital for increasing
efficiency of their global business operations and continually maximizing their firm’s
competitiveness, which had a positive impact on profitable growth. Digital
transformation results in a fundamental change in business and organizational activities,
processes, competencies, and business models, enabling higher productivity
(Govindarajan & Immelt, 2019). Participants P1 through P6 highlighted the use of
artificial intelligence (AI), advanced analytics and machine learning for continuously
exploring the ways of improving the performance and reliability of machines in real time
and grabbing the opportunity to boost customers’ productivity continually.
In responses to Interview Questions 1, 6, and 7, Participants P2 and P5 mentioned
that ability to use the data from machines for remote diagnosis, helping them to be
proactive with their customers in terms of trying to fix problems on machines before
(ideally) customers even knew. Participants linked the communications stream among the
factories, dealers, equipments, and customers to remotely troubleshoot devices. A digital
transformation involves reimagining products and services as digitally-enabled assets,
generating new value by linking physical and digital assets through data, and building
ecosystems to make that viable (Govindarajan & Immelt, 2019). My findings are
identical with other researchers who considered the impact of AI, data science, and
machine learning are critical for the innovation strategies, and companies need to
understand these tools so that they will not be left behind by well-executed AI projects
from competitors (Kiron & Unruh, 2019).
Strategic partnerships and alliances are useful for firms to create value: firms can
grab opportunities for downsizing, externalize risks, and share knowledge. Supporting
external collaboration for innovation, P3, in response to Interview Question 1, added that
their collaboration with suppliers on the multimillion-dollar project for AI related
technology innovation resulted in successfully increasing efficiency and effectiveness of
the business process that positively impacted OROA. Strategic alliances positively
influence the firm’s R&D intensity and profitability (Fernández, Triguero, &
AlfaroCortés, 2019), and firms are successful in choosing the right partners when they
decide what they want to own before thinking about partnerships (Govindarajan &
Immelt, 2019). In response to Interview Question 3, P7 stated that collaborating with
another company to increase the value in the remanufacturing business led to increased
profit margins.
Study findings revealed that keeping pace with new areas of expertise could be a
challenge, and even the experts in the field might become out of date. Hence, diversity of
thinking and inclusion of varied perspectives is essential for competitiveness and
profitability. Diversity involves recognizing, respecting, accepting and tolerating
individual uniqueness and differences of thoughts, and it is a construct that describes the
differences in individuals’ gender, race, ethnicity, age, religious beliefs, physical abilities,
sexual orientation, socioeconomic status, and other factors (Ohunakin, Adeniji,
Ogunnaike, Igbadume, & Akintayo, 2019). P1 emphasized the need for advanced skills
and bringing different points of view through including people from different
generations, different parts of the world, different genders, and different socioeconomic
backgrounds, because that inclusion fundamentally helped them to come up with crucial
innovation strategies to serve the customers with what they want, consequently leading to
increased sales revenue and profitable growth.
Study findings revealed that speed to launch innovative products and services,
speed to increase the quality of existing product and services, and leveraging digitization
for speed are critical for increasing competitiveness and profitable growth. P6, in
response to Interview Question 7, mentioned that they did market research and used
available information to innovate and deliver products and services quickly, with high
quality, and on par with the customer expectations, by leveraging digital transformation,
which had a positive impact on competitiveness and profitability. Govindarajan and
Immelt (2019) suggested that manufacturers must embrace approaches such as speed,
agility, simplicity, and responsiveness to deliver cost-effective quality products at
foreseeable intervals.
Evidence from the literature in section 1 relating to successful business
performance with product innovation strategy, service model innovation, business model
innovation, technology innovation, supply chain innovation, managing risk to control
profit margins, diversity and inclusion, and positive impact of competitive advantage on
profitability coincides with the overarching theme which emerged from data collection.
Rapidly-changing business environments increase uncertainty for companies due to the
disruption caused by new business models, technology innovations, deregulation, and the
threat of new competitive entrants (Oliver & Parrett, 2018). Therefore, designing the right
value propositions is a crucial source to increase the profits from products and services
(Mora Cortez & Johnston, 2019).
Although many studies have been carried out about the significant essence of
competitive advantage for business performance (Y. Chang, Wong, Eze, & Lee, 2019;
GS et al., 2019; Kneipp, Gomes, Bichueti, Frizzo, & Perlin, 2019; Na, Kang, & Jeong,
2019; Udriyah, Tham, & Azam, 2019), there has been a lack of scholarly attention
elaborating on the practical importance of innovation strategies for profitable growth, and
the alignment of profitable growth with sustainability, which may become an insightful
point of view to the potential performance in terms of survival of businesses. Findings of
this study revealed that maintaining the dynamic capacity to provide higher customer
value by offering differentiated products and services, effectively dealing with emerging
industry trends, and striving to sustain profitable growth, is essential for business
survival.
The findings also relate to the theories of holistic innovation and disruptive
innovation, used as the conceptual framework, which describe innovation practices of
manufacturing and services companies highlight a process of transformation, that lead
business leaders, to create new ways of doing business and increasing performance.
Holistic innovation model explains how manufacturing firms could benefit from the use
of innovation practices and includes total, collaborative, open innovation driven by a
strategic vision in an era of strategic innovation, which aims for a sustainable and
competitive advantage (Chen, Yin, & Mei, 2018). Innovation knowledge integration
capability is vital in building new knowledge configurations to deliver new
servicesolutions of higher value to customers (Salunke et al., 2019). Capabilities of
sensing emerging technology and market trends drive explorative and exploitative
innovation activities, which then determine firm performance in an emerging market
(Ngo et al., 2019). Dogru, Mody, and Suess (2019) found that disruptive innovation
theory is a practical and useful framework for business leaders to understand the market,
develop a business strategy, and address the potential threats and opportunities involved.
Subtheme 1: Distinctive Customer Experience
Study findings revealed that the world-class customer experience is complex and
comprises behavioral and attitudinal components, which are vital for formulating
innovation strategies to deliver distinctive customer experiences because positive
customer experiences with products and services trigger customers’ long-lasting
emotional attachment to a company brand. All nine participants mentioned that
commitment to the distinctive customer experience was the distinguishing feature in the
drive to attain more market share and retain existing customers. Perceived functional and
emotional value toward the products in use become competitive mediator and impact on
customers’ readiness for an upgrade, brand loyalty intention, and their commitment
toward service providers (Poushneh & Vasquez-Parraga, 2019).
One path to profitable growth is through providing a distinctive customer
experience. In response to Interview Question 1, P1 stated that precision of their products
and timely prescription allowed their customers to do things that they had never thought
possible before, resulting in a significant reduction of their input costs and increase in
output generation. This occurrence was favorable to the firm’s competitiveness and profit
margins. The majority of customer experience lies in delivering a customized approach to
satisfying the needs of customers (S. Zhao, Zhang, Peng, & Fan, 2019).
Understanding customers’ pain points and wants, and then delivering innovative
solutions that matter to customers, leads to increased competitiveness and sustaining
profitable growth. In responses to Interview Questions 1, 2, and 3, Participants P4 and P8
indicated that their enterprise customer acquisition process allowed them to assess what
they knew about customers’ needs and wants, determine the best solutions to meet those
customers’ needs and wants, and then pursue product development, marketing, and sales.
Efficient complaint management can be a competitive advantage, and minimizing
customer dissatisfaction usually proves to be more profitable than maximizing the
satisfaction of already satisfied customers (Cieśla, 2019). P4 continued to note that, “by
using a consolidated view of customers’ needs across product segments and
customerfocused innovation, I saw positive results such as increased customer
satisfaction and sales revenue.”
Customer-focused innovation is essential to generate higher profitability. In
response to Interview Question 1, P1 stated that after understanding customers’ pain
points, employees thought of innovative ways from a R&D standpoint how they could
bring new ways of doing things to the field so that their customers could experience the
benefits from innovation. Resolving customer issues that enhances customer value
proposition may lead to product market success (Sokolinskiy, Sopranzetti, Rogers, &
Leuschner, 2019), and improving customer experience involves value creation, cognitive
responses, and discrete emotions at touchpoints across the customer journey
(McCollKennedy, Zaki, Urmetzer, Neely, & Lemon, 2019). P1 highlighted, “we listened
to customers to understand their pain points and needs. We served customers with new
and innovative ways that could improve the way to do things and ultimately their bottom
line.”
Customer experience is relational, instead of functional, and it is more
complicated than simply customer service and customer satisfaction. In response to
Interview Question 7, P6 expressed that employees must stay diligent of really
understanding their customers. They cannot over-collect customer feedback. P6 used
every chance to collect feedback and spent time with customers, whether was through
trade shows, visiting them directly, or gathering input from the field teams and channel
dealers that supported them all the time. Business leaders need to formulate effective
customer experience strategies that are broad and far-reaching beyond the scope of
traditional service encounter strategies (Georgantzas & Katsamakas, 2016). In responses
to Interview Questions 1 and 7, Participants P1 and P6 mentioned that field personnel
regularly visited their customers to understand customers’ experience with the products
and ultimately aiming to increase customer value proposition, which consequently, lead
to profitable growth.
Customer experience involves some level of preconception by customers, and
their multifaceted needs. In responses to Interview Questions 1, 2, 3 and 7, Participants
P2, P4, P5, and P6 stated that they developed, implemented, and regularly evaluated
products and proactive customer experience strategies to align with the customers’
journey and their multifaceted needs. The sales channel was integral in relaying
promotions to customers on a timely basis. Delivering superior customer experience
requires managing customers’ journeys by prioritizing actions to improve customer
experience through understanding customer perspectives, capturing customers’ emotional
and cognitive responses, identifying at-risk segments of customer satisfaction and solving
root causes, and identifying and preventing decreasing sales (McColl-Kennedy et al.,
2019). The use of customer satisfaction and feedback was significant in determining
innovation ideas to provide higher value to their customers.
Study findings revealed that sustained or improved customer loyalty was one of
the measurements that participants used to determine the success of customer experience
strategies. All BUS participants indicated that a consistent review of their customer
experience strategy took place to ensure customer value proposition and retain customers.
Customer delight has a positive effect on customer loyalty, and parallel and separate to
that of satisfaction (Ahrholdt, Gudergan, & Ringle, 2019). In response to Interview
Question 4, P5 mentioned that if a firm does not provide unique value to customers
through its products and services, the firm’s competitive advantage is diminished. On a
related note, Participants P1, P2, and P6 responded to Interview Questions 1, 2, 3 and 7
by stating that differentiating products and services was vital for them in sustaining
customer loyalty and attaining the competitive advantage, positively impacting the firm’s
profitable growth.
Evidence from the literature review, which discussed service model innovation as
an avenue for attaining competitive advantage and building brand loyalty, was supportive
of the distinctive customer experience subtheme. Business leaders rely on the formulation
of a distinctive customer experience strategy as an avenue to differentiate their products
and gain a competitive advantage (Hailey, 2015), because customers who frequently have
good experiences with a brand tend to be the most loyal (Moretta Tartaglione et al.,
2019). Business-to-business (B2B) firms, such as Caterpillar, Michelin, and Rolls-Royce,
understand the importance of customer-focused innovative solutions (Windler, Jüttner,
Michel, Maklan, & Macdonald, 2017).
Services literature clearly recognizes the shift to customer-focused innovations
(D’Antone & Santos, 2016; Story et al., 2016). However, among these studies, none
provide deep insight into using distinctive customer experience or commitment to sustain
profitable growth, which is essential for the survival of businesses. My study added a new
viewpoint on business sustainability by suggesting that commitment to customers, and
delivering the distinctive experience throughout the customers’ journey that increases
measurable value for customers, is critical for increasing competitiveness and sustaining
profitable growth.
The holistic innovation model and disruptive innovation theory, which formed the
conceptual framework for this study, endorsed the study results on distinctive customer
experience. The effects of innovation intensity and creativity on innovation strategy
depend on customer demand (Liao & Tsai, 2019). A process of customer value ingestion
involves all activities related to designing, creating, and delivering value to customers by
using specific capabilities such as customer relationships, marketing channels, customer
experience, and new product development (Mora Cortez & Johnston, 2019).
Exploratory innovation identifies new customers using disruptive or new
technologies, and therefore, breakthroughs and radical innovations are often associated
with explorative activities (Ngo et al., 2019). Customer integration which includes
customer-based idea evaluation, participation in direct and indirect idea generation, R&D
partnerships with customers, having a customer orientation, and disseminating customer
knowledge via R&D-marketing collaborations can lead to the creation of radical new
product innovations that increase measurable customer value (Schweitzer, Van den
Hende, & Hultink, 2019), and as a result, firms can achieve competitive advantage and
profitability (Martinelli & Tunisini, 2019).
Subtheme 2: Technology-Based Modernization
Modernizing the manufacturing business through the effective use of modern
technologies can help business leaders to create a competitive edge in an unstable market,
which is essential for profitable growth. In responses to Interview Questions 1, 2, 3, and
4, all participants mentioned that the use of advanced technologies was vital for bringing
unprecedented efficiency to global business operations that contributed towards profitable
growth. P3 highlighted the necessity of advanced technologies for worldwide production
and distribution systems, and P5 used advanced technology in designing and
implementing incremental and radical innovations to maximize the firm’s
competitiveness continually, as well as in determining and evaluating future innovation
strategies. Nazir (2019) recognized that technology innovations are reshaping and
transforming businesses across the world and are critical for companies to stay on top of
technological changes and advancements to future-proof business for their customers
across the globe.
The integration of advanced technology such as AI, as well as predictive and
prescriptive analytics, into products and services increases the business operational
efficiency and profitability. P1, in response to Interview Questions 6 and 7, and P3, in
response to Interview Questions 1 and 3, mentioned that the integration of acquired
machine learning and AI technology into the products helped them to make real-time
decisions in the field, whether the technology is sensor technology, object detection
technology or virtual reality enhancement, therefore positively impacting the profitability.
Because of the increased use of sensors and networked machines in manufacturing
operations, AI techniques play a pivotal role in deriving meaningful value from big data
infrastructure (W. J. Lee, Mendis, & Sutherland, 2019; Lin & Chen, 2019). Businesses,
with the use of advanced technology, can now hone in on customers’ tastes and
preferences to optimize repeat sales and improve profitability (Peppers & Rogers, 2017).
In response to Interview Question 1, P3 stated, “OROA was the major driver for using
technology innovation to automatically sort the material coming in, going to the
production-ready lasers. The use of AI technology increased the efficiency and
effectiveness of automatic sorting by 27%, and therefore, increased our overall laser
capacity.”
Securing customers’ digital data using modern technology is one of the ways to
achieve a competitive advantage. In response to Interview Question 5, P2 stated that BUS
has a global distribution model, and its employees worked hard to protect global
customers’ data. In response to Interview Question 7, Participants P3 and P5 mentioned
that they used advanced technologies and tools to secure customers’ data given the
increasing cybersecurity threats. My findings aligned with the conclusions of the previous
researchers who highlighted the importance of data security in network virtualization for
technological innovation, because when data security breaches occur in virtual networks,
the firm’s competitors have opportunities to absorb market power (Dong, Wu, & Zhang,
2019; Jeong, Lee, & Lim, 2019), and therefore, this can lead to profit loss and drops in
stock price.
Technological modernization can have a stronger impact on business operations,
and benefit customers by faster problem-solving, and benefit businesses with higher
profitability. In response to Interview Question 1, P1 said that the use of modern
technology increased firm employees’ capabilities to unlock their ability to make
machines smarter, easier to use, and more precise, for a faster and stronger impact on
business operations. C. Lee et al. (2017) advised business leaders to create an R&D plan
and incorporate a detailed strategic proposal as a guide to acquiring and integrating
technological innovations for improving profitability. In responses to Interview Questions
6 and 7, Participants P1 and P3 mentioned that they could monitor the performance of
their equipments remotely and often learned of potential downtime issues even before the
customer becomes aware of it. In response to Interview Question 1, P1 added,
“technology-based modernization is allowing the customers to do things that they had
never thought possible before because, through data mining and data acquisition, we
could be more prescriptive to customers. Thus, advanced technologies helped to provide
a solution faster to customers’ pain points and to have a positive impact on profit
margins.”
Proactive thinking about what can be done differently within the digital space to
help customers complete the work that they are already inclined to do is essential for
increasing profit margins. Participants P2, P4, and P5, in responses to Interview
Questions 1, 4, and 6, mentioned that the use of data and analytics for digitalization and
aftermarket parts services helped them to make firm business decisions to meet
customers’ needs while transforming the business model. Digitalization of the innovation
process through information technology tools is more finely nuanced than a “the more,
the better” logic often promoted in the digitalization context (Huesig & Endres, 2019). A
big data analytics capability enables firms to generate insight that can help strengthen
their dynamic skills, which, in turn, positively impact marketing and technological
capabilities (Mikalef, Krogstie, Pappas, & Pavlou, 2019). P4 added, “the use of digital
experience formed a relationship with customers when dealers were at capacity within
their service and unable to take on work and build a relationship. We used machine data
analytics to tie machine hours to the service needs of the machine to the recommended
parts.”
Evidence from the literature review, which included that successful
implementations of technological innovations generally has a relation with quality and
cost performance, was supportive of the technology-based modernization subtheme,
which developed from the results of the study. Other researchers similarly found that the
use of strategies for innovative technologies and processes leads a company to maintain a
competitive edge over other companies and results in increased market value
(Klimontowicz & Harasim, 2019; Martinelli & Tunisini, 2019; Schweitzer et al., 2019). A
strategic vision requires that business leaders should embed technological innovation
management in the entire management process and the overall goal of business
development (Chen et al., 2018). Successful integration of technology requires business
leaders to undertake thorough planning to minimize technology synchronization
problems (Abdallah et al., 2016).
The conceptual framework of this study, based on the holistic innovation model
and disruptive innovation theory, supported the technology-based modernization
subtheme that emerged from the data. Innovation processes incorporating technological
innovations into non-technological innovation improve firm’s performance (Heredia
Pérez, Geldes, Kunc, & Flores, 2019). Business leaders may use the knowledge of
disruptive innovation to identify innovation techniques, evaluate the firm’s ability for
successfully integrating technological innovation, and avoid the challenges of adoption,
acceptance, and assimilation of innovation within the business (Daidj, 2015). Business
leaders should evaluate new and trending technology innovation before integrating it in
their business and should not acquire it simply because companies from similar industries
implemented the technology (Bokhonko, 2017), which may lead to technological
integration failure.
Subtheme 3: Distinctive Product Quality
A firm’s competitiveness and profitable growth depend on its ability to offer
distinctive product quality to the customers. Study findings revealed that extensive
product evaluations to understand the type of products and the type of product features
that promise to add the most value to customers lead to competitive advantage and
profitable growth. Participants P1 through P8 from BUS (89%) answered Interview
Questions 1, 3, and 6 by stating that the implementation of distinctive product quality
strategy was integral in differentiating their products, gaining the competitive advantage,
sustaining customer loyalty, and profitable growth. Improving the quality of the products
and services provided to the customers leads to achieving product reliability, competitive
advantage, and long-term profitability (Ladewski & Al-Bayati, 2019). In response to
Interview Question 6, P3 defined distinctive product quality as doing the product right the
first time because their customers depend on it.
Understanding market needs and gaps are essential to deliver distinctive product
quality and increase profitability. In response to Interview Questions 1, 2, and 3, P8 stated
that they maintained market leadership by gaining a profound understanding of what is
currently available in the market for the product line that they were interested in, and by
understanding what gaps existed according to their customers. Superior product quality
has a positive impact on firm performance in transition economies, complemented by the
significant effect of size, total labor cost, and capital of the firm (Ramadani et al., 2019).
Businesses formulate and implement precise strategies to cope with changes in the
business environment, and to improve proficiency and increase profitability (Vargas,
2015) because the degree of product innovations failure is higher without an
understanding of industry trends (Q. Zhang, Cao, & Doll, 2019).
Both incremental and disruptive innovations are critical for distinctive product
quality. In response to Interview Question 1, P5 stated that incremental innovation
process helped to develop better products and services, and disruptive innovation for
launching breakthrough innovative product ideas. Superior products satisfy customers,
drive sales, even in flat markets, which will yield more profit over time (Govindarajan &
Immelt, 2019). P3 responded to Interview Question 3 by highlighting their
groundbreaking innovation that disrupted the industry, whereby they doubled the speed
and accuracy at which machine can operate and the price of the machine increased by
close to 40% and the profit margin increased by a lot more than that. P3 related the
success of improving product quality to listening to what customers needed.
Differentiated product quality is essential for higher value proposition, improving
customer experience, and consequently for increasing profit margins. Competitive
advantage involves offering a unique product or service that an organization can provide
as a strategy to meet or exceed its customers’ needs (Hailey, 2015). In response to
Interview Question 7, P8 recommended providing real substantial value through every
feature of the product when charging more to customers. In response to Interview
Question 6, P4 highlighted the importance of product quality and further stated,
“customers told us that they didn’t want to shop for parts because that’s not valuable time
and money spent for them. It didn’t mean that they expect that the machine will never
break. But when they need the machine to run, it should be ready to run.”
High product availability became a necessity for profitable business. In response
to Interview Question 6, P3 described distinctive quality as a robust infrastructure for
high product availability or zero downtime, promoting customer delight and enabling
agility of the workforce. Customer expectations of high-quality products and services put
pressure on business leaders for high product availability and innovation and firms
sometimes need to trim their product lines to maintain high overall performance and
competitiveness (Pourhejazy, Sarkis, & Zhu, 2019). In response to Interview Question 1,
P2 described their product support process referring as “connected customer support,”
which was the ability to use the data from machines in the field to be more proactive with
the customers in terms of anticipating and fixing problems on customers’ machines.
Modern technologies are critical for ensuring distinctive product quality.
Participants P3, P5, and P7 used technology to automate some business operations as a
means to improve product quality. In response to Interview Question 1, Participants P1,
P2, and P3 mentioned that the use of advanced technologies such as AI, data science, and
advanced analytics helped them to enable precision products, increase product quality,
decrease input cost for their products and services and increase output, and consequently
improve profit margins. Digitalization of the manufacturing systems is a solution to react
to the rapidly varying demands and make the use of resources more flexible to increase
product quality (Schumacher, Erol, & Sihn, 2016). P1 added, “precision products can be
sold to the customer at a much higher margin, especially when you have the architecture
in place to focus on the software behind it to improve from generation to generation,
which is fundamentally much faster and much cheaper than a hardware revolution.”
Evidence from the literature review, which indicated that introduction of a new or
improved product positively impacts business performance, was supportive of the
distinctive product quality subtheme which developed from the results of the study. Each
employee of the company must understand the customer expectations and try to provide a
positive purchasing experience to their customers through the quality product and
services (Bendaravičienė & Vilkytė, 2019). Radical new products include both
technological and market innovativeness, as well as the different perspectives on
customer integration which include customer-based idea evaluation, participation in
direct and indirect idea generation, R&D partnerships with customers, having a customer
orientation, and disseminating customer knowledge via R&D-marketing collaborations
(Schweitzer et al., 2019).
The holistic innovation model and disruptive innovation theory, which formed the
conceptual framework for this study, supported the distinctive product quality subtheme
that emerged from data. Innovation exploration and exploitation are inherently different
capabilities related to product development (Aoki & Wilhelm, 2017). Exploitative
innovation leverages current skills to develop products and services to serve existing
customers better, and firms often find themselves disrupted by new entrants when their
focus is more on exploitative innovations (Ngo et al., 2019). Disruptive innovation is a
form of radical innovation that simplifies processes, and is user-friendly as well as less
expensive (Gandhe, 2015). Manufacturers must use a sequential innovation exploitation
and exploration pathway to improve product and service innovations outputs (Bustinza et
al., 2019).
Subtheme 4: Business Model Advantage
In order to stay competitive and profitable, companies need to regularly
modernize and innovate their business models by being agile. Data analysis revealed that
Participants P1 through P6, as well as P9 supported transforming the business models in
the pursuit of increasing the firm’s dynamic capacity for addressing business operational
inefficiencies and remaining competitive in creating higher customer value, which
impacts firm’s profitability. Organizational agility and entrepreneurial orientation have a
significant effect on competitive advantage and profitability because a firm will thereby
have the capacity to identify and deal more effectively with many business opportunities,
customer relationships, and resources (Qosasi et al., 2019).
Manufacturers need to prepare themselves to change or give up an existing
business model to create and capture new value to increase competitive advantage
(Govindarajan & Immelt, 2019). In response to Interview Question 6, Participants P2, P4,
and P6 mentioned that the business model that worked for them in the past may not be
the best business model for the future and may require change management. Business
models incorporating mobile technology into operations are favorable for creating a
competitive advantage and value for customers (Klimontowicz & Harasim, 2019). In
response to Interview Question 6, P4 expressed, “competitor’s bold statements about
transforming their service business model to sell their machine parts online, and some
dealers being far ahead of us in the digital space, and customers’ expectations built by the
e-commerce industry leader (e.g., Amazon), forces us to re-look at our business model.
Therefore, how customers interact with dealers in the future for parts sales could be
different, and some dealers will need the mindset change because they can’t assume that
the customers will always come into their dealership for parts.”
Integrating advanced technologies into business models can help companies to
enhance dynamic capacity to gain competitive advantage and improve their financial
performance. Study findings revealed that industry trends and participants’ desire to
remain competitive and profitable drove them to transform their business model by
integrating modern technologies such as AI, data science, and machine learning. New
business models are created to improve the value chain by analyzing machine data, the
use of sensors, and the intelligent real-time processing of vast amounts of data in the
cloud (Tohanean & Weiss, 2019).
In the economic downturn, continuing to push forward a robust innovative idea
leads to an increase in profitability. Participants P1, P2, and P4 recognized the need to
manage value throughout the business cycle because of the cyclical nature of their
machinery business. Emerging new technologies such as internet of things, cyberphysical
systems, cloud computing, and big data can improve the transmission of information
throughout the entire system, which enables the adaptation of better control and
operations in real time according to varying demand (Moeuf et al., 2018). P6 mentioned
that the relevant business model drove the firm’s competitiveness, generated profit, and
impacted business growth in a specific strategic area. In response to Interview Question
4, P6 expressed, “understanding emerging economic, industry, or technology trends was
essential before we head into it. The more innovative you are, the more adaptive to
change you must be, to have a positive impact from a financial perspective.” Effective
business models that generate profit margins involve working through the intricacies of
how the profit stream can benefit all parties involved in business operations. In response
to Interview Question 3, P2 asserted that understanding the entire profit stream was
essential, and the profit stream of BUS included the profitability of BUS, its dealers, and
its customers. Furthermore, for an innovative idea to root itself into driving profit, a clear
path was useful in guiding all three components of the profit stream that benefited from
the innovation. Value from servitization exhibits a win-win-win outcome for the
manufacturer, customer, and product and service supply networks (Erkoyuncu et al.,
2019), and study results also indicated that the business model must benefit all parties
involved in business operations.
A crucial element of the firm’s business model is its distribution model to serve
the local customer globally. In response to Interview Question 5, P2 mentioned that
because of the firm’s world-class global distribution, the products were delivered
promptly to a customer globally through their partners, i.e., dealers. Customers’ needs are
becoming increasingly more complex, putting pressure on the manufacturer’s distribution
channel to integrate products with advanced services into customized solutions (Hakanen,
Helander, & Valkokari, 2017). Manufacturers often respond to these challenges by
designing advanced service solutions and delivering those themselves, through their
dealers, and independent distributors (Hullova, Laczko, & Frishammar, 2019). In
response to Interview Question 4, P1 emphasized that they understood the customers’
changing behavior and industry trends when deciding the appropriate business model, in
terms of addressing the customers’ need in the rapidly evolving global marketplace.
Openness to accept the risk to continue to explore new opportunities while also
working to exploit existing capabilities is essential to increasing the firm’s profit margins.
Innovation development can fail early on or at later stages and depends on both the
external environment and internal practices; however, certain forms of failure may not be
a detriment to performance (Friend, Ranjan, & Johnson, 2019). P1, in response to
Interview Question 7, and P9, in response to Interview Question 4, stated that innovation
initiatives have a certain amount of risk of failure, but they were not afraid to take risks to
increase business efficiency. P3, in response to Interview Questions 6 and 7, highlighted
that their business environment promoted failing fast to learn fast from the experiences so
that they could take short-term risk to understand the pilot opportunities that may not
always show a return on investments.
Industry change is inevitable and requires firms to have flexible business models
for taking risks to invest in innovation. Effective risk management often leads to an
increase in competitiveness with the consequence of profitable growth and improvement
of business sustainability (Amankwah-Amoah, 2019). P6, in response to Interview
Question 6, mentioned that understanding organization’s level of risk acceptance, having
the risk plan in place whereby one can pivot and “pull levers” to reduce risk, and having a
more flexible business model to start doing those things earlier, helped them to have a
positive impact on the profit margins. In response to Interview Question 3, P6 stated,
“some of our most profitable innovations involved taking a risk and deciding that the
value to the customers was more significant than short-term financial gain. Customer
focused innovations turned out to be some of the best investments because the loyalty and
the partnership that we established with our customers drove a significant increase in
competitive advantage and profitable growth.”
Innovating business process models that support open innovation practices
increase business operation efficiency and quality while paving the way to new products
at competitive costs, leading to profitable growth. Study findings revealed that business
process models need to be value-driven, partnership-focused, and centered on increasing
dynamic capacity to respond to uncertainty and emerging threats. Business process
models encompass inter-model consistency problems which mainly arise due to the
existence of multiple variations of the same business process such as multiperspective
modeling, the presence of many models illustrating the same business process, and the
merger of business process models (Awadid & Nurcan, 2019). In response to Interview
Question 1, P5 stated that their business model was flexible and allowed external
collaboration such as strategic partnership and alliances, and it helped them to build
capabilities, increasing benefit-to-cost ratio, and ultimately improving their products and
services.
Evidence from the literature review, which highlighted that business models
include the means of creating and delivering customer value, generating profits, and
sustaining competitive advantage, was supportive of the business model advantage
subtheme, which developed from the results of the study. Industrial paradigm shifts
involve changes in technical and product development, and therefore, the ways of value
creation evolve and bring enormous organizational consequences and opportunities
(Teece, 2019). In order to achieve profitability, business models’ design needs to include a
balance between being similar to and different from competitors (E. Y. Zhao, Ishihara,
Jennings, & Lounsbury, 2018), and risk management is essential because of a positive
relationship with the firms’ competitive advantage and profitability (Saeidi et al., 2019).
Ultimate operational performance is an indicator of the increase in productivity and
reduction in cost (Petrillo, De Felice, & Zomparelli, 2019). Both internal and external
implementations of successful innovation strategies are generally associated with proper
planning, collaboration, communication, quality, and adequate budgeting (Ahn,
Roijakkers, Fini, & Mortara, 2019).
The findings also relate to the theories of holistic innovation and disruptive
innovation, used as the conceptual framework for this study. Sustainable business models
involve both incremental and radical innovation approaches, and innovation practices
require the effective use of organizational and managerial capabilities for successful
transformation (Inigo, Albareda, & Ritala, 2017). Disruptive innovations and dynamic
competitive business environment increase the level of uncertainty, and therefore, to
deliver on corporate mission, business leaders require dynamic capacity for the strategic
development of the firm, precisely in terms of the future direction, innovation practices
and strategies, and innovation intensity (Oliver & Parrett, 2018).
Business leaders should plan and prepare the business to respond to disruptive
innovation by ensuring the business model captures the value of disruptive innovation
that may produce new metrics for the business (Murthy & Kumar, 2015). Disruptive
innovation is a product or a service offering with a business model that is based on a
unique value proposition to enhance customer experiences and co-creation expectations
using advanced technologies, and that causes disruptive challenges among incumbents
while improving the industry setting and yielding profitable growth (Tabbah & Maritz,
2019). Dogru et al. (2019) found that disruptive innovation theory is a practical and
useful framework for business leaders to understand the market, develop a business
strategy, and address the potential threats and opportunities.
Subtheme 5: Diversity of Thoughts and Inclusion
Diversity of thoughts and inclusion of diverse perspectives are essential to further
the growth, development, and financial success of the business. Participants P1 through
P6 mentioned that generating knowledge of innovative activities was critical for
remaining competitive and increasing profit margins. P1 through P6 from BUS answered
Interview Questions 1, 2, 3, 4, 5, 7, and 8 by stating that the inclusion of diverse thoughts
involved diversity of work experiences, age, gender, race, ethnicity, education, and
socioeconomic status. Therefore, inclusion of diverse thoughts helped them to generate
the innovative ideas that could increase competitive advantage and profitability. Diversity
involves differences in individuals’ socioeconomic status, gender, race, ethnicity, age,
religion, physical abilities, and sexual orientation (Ohunakin et al., 2019). P4 stated that
having the right talent in place to be able to make firm business decisions was essential to
meet customers’ needs.
Diversity in work experience and age is favorable for the diversity of innovation
ideas, and therefore it may positively impact competitive advantage and profitability. To
have a diversity of thoughts and maintain the competitive advantage, P2 hired students to
work on specific projects on a part-time basis as a means for them to address challenges
in new areas of expertise that are moving fast. In response to Interview Question 1, P3
asserted that the experience of senior managers and the latest education and knowledge of
millennials were favorable for the diversity of thoughts. My findings are identical with
the findings of other researchers who found that non-millennials are more strongly driven
by their self-direction values, and diversity in work experiences and age increases firm’s
innovation capacity (Dust, Gerhardt, Hebbalalu, & Murray, 2019).
Educational diversity is essential for the diversity of thoughts and innovation
capacity, which may positively impact competitive advantage and profitability.
Educational diversity provides business leaders with a broader range of knowledge and
information sources to identify innovative opportunities from the international market (Li
& Huang, 2019). In response to Interview Question 7, P1 stated that the industry needs an
advanced skillset, and one way to generate a diversity of thoughts was sending employees
to school to learn advanced skills such as systems engineering, code texture design, and
artificial intelligence. Education in advanced skillsets helped with creative problem
solving as well as creating processes and strategies that impacted competitive advantage
and profitability.
The responses of Participants P1 through P6 to Interview Question 2 were
consistent on the goal of fostering diversity, which was identifying and understanding the
current pain points, getting diverse perspectives together to figure out how to creatively
solve those pain points, and identifying future opportunities, all in the context of value to
customers. Inclusive leadership behaviors facilitate diverse perspectives among group
members, which in turn lead to psychological empowerment and behavioral outcomes
such as innovative ideas and increased productivity (Roscoe et al., 2019). P6 stated, “the
focus of ideation or any innovation project that we considered, remained on the problem
we were trying to solve, the value we were trying to deliver to customers, and then
defined up front what that meant from a profitability perspective. If one of these
components is not solidly considered to identify value and measuring the success,
innovation will likely not ever be adopted.”
In response to Interview Question 3, P2 asserted that getting the right people
engaged brings credibility to the ideas, otherwise, ideas are just thoughts and get rejected.
P3 used inclusion of diverse thoughts as one of the innovation strategies to increase the
efficiency and effectiveness of manufacturing operations, and increased operational
performance positively impacted profit margins. In response to Interview Question 1, P3
stated, “using a diversity of thoughts and inclusion, we figured out how to be more
productive and efficient, and addressed the challenge of continually connecting our
manufacturing engineering to quality engineering to supply management team, being on
multiple shifts. As a result, we never have downtime now because there’s always
somebody to answer, and our metrics improved in the area of safety, quality, cost, and
delivery.”
P4 and P6 stressed that involving customers in generating ideas for innovation
was vital because it significantly increased the odds of developing successful new
products. In response to Interview Question 2, P4 stated that sometimes it was hard for
some employees to believe potential value from innovation until they heard it directly
from customers. Engaging customers in value co-creation initiatives devoted to new
product development results in creating, expanding, and enlarging value for all
participating parties (Bettiga & Ciccullo, 2019).
Understanding the dynamics of cost versus value and framing problems as
opportunities for cross-functional teams to work on unlocks possibilities for increasing
profit margins. In response to Interview Question 2, Participants P1 and P3 highlighted
that they collaborated with cross-functional teams representing given the product lines
while ideating to understand holistically and address the inefficiencies of different parts
of the business operations, which helped them maximize the value of the cost investments
and increasing profitability. Team learning and inclusion arbitrate the effect of cognitive
diversity on innovation (Chow, 2018). P1 emphasized on ensuring the presence of a
finance controller while collaborating with cross functional teams, because a finance
controller provided a very detailed view of the financial state from the standpoint of
overall profit per model within a product line, material costs, spend, and total overhead,
whether direct or variable.
Study findings revealed that both bottom-up and top-down approaches are useful
for generating innovative ideas for problem resolution. In response to Interview Question
2, P3 stated that ideas had to come top-down as well as bottom-up in order to maintain a
prioritized backlog of innovative ideas. Management practices must include bottom-up
process improvement and regular top-down strategy review (Hutton & Eldridge, 2019).
Participants P3 and P5 conducted hackathons to generate innovation ideas from the
bottom up, whereby employees were challenged to come up with the problem statements
and possible solutions.
The world of hackathons brings opportunities for business leaders to balance
creative autonomy with productivity in order to achieve their corporate mission. Study
findings revealed the importance of hackathons for creating value from the bottom up and
unleashing people with different viewpoints to see the pain points and do something
about it. Managing hackathons requires bringing together myriad technologists,
designers, and other professionals, and supporting their free exploration, while
simultaneously helping them finish with working prototypes (Lifshitz-Assaf, Lebovitz, &
Zalmanson, 2019). P3 answered Interview Question 2 by highlighting the importance of
hackathons and mentioned that people worked above and beyond in their typical day job
to find a solution for the pain point that was continually hindering them. And three of
their 19 ideas that came from hackathon were game changers.
Evidence from the literature review, which highlighted the importance of
workplace diversity for increasing innovation, was supportive of the diversity of thoughts
and inclusion subtheme which developed from the results of the study. Generations differ
in their thinking and the way they cognitively process information because of their
unique set of experiences and collective memories that influence how they portray
situations, new information, and experiences (Dust et al., 2019). Brainstormed ideas from
different functional domains are more likely to be selected by managers (Beretta, 2019).
In a global business environment, locally developed knowledge is not necessarily shared
with different regional teams (Hwang, Singh, & Argote, 2015), and therefore, multiple
collaborative approaches significantly enhance the relationship between cognitive
diversity and innovation (Chow, 2018). The success of collaborative innovation depends
on critical aspects of the operation, such as intellectual diversity, knowledge, and
networking (Chu et al., 2019). Positive associations exist between the pairs among
diversity, quality, and financial performance (Gomez & Bernet, 2019).
The conceptual framework of this study, based on the holistic innovation model
and disruptive innovation theory, supported the diversity of thoughts and inclusion
subtheme. New ideas open up opportunities for new directions and better business value
(Aytekin, Değerli, & Değerli, 2015). The capability to integrate external knowledge into
the innovation process plays a key role in business service innovation (Salunke et al.,
2019). The users’ tendency to accept or adopt innovation typically depends on
characteristics of the particular innovation, their organizational culture, or the indirect
messages conveyed to them by management (McMullen, Griffiths, Leber, & Greenhalgh,
2015). Radical innovation development processes include three phases such as discovery,
incubation, and acceleration, and they influence customer integration success (Schweitzer
et al., 2019).
Subtheme 6: Strategic Partnerships and Alliances
Strategic partnerships and alliances allow for the development of capabilities to
detect new opportunities and can become a source of increasing competitive advantage
and profitability. In response to Interview Question 2, Participants P1, P2, P3, P5, P7, and
P9, mentioned that strategic partnerships and alliances were critical in the context of
cocreating value and generating breakthrough product and services, and consequently for
increasing a firm’s competitiveness and growing market share. A strategic alliance is a
flexible vehicle of learning, a way to transfer useful knowledge in partner firms and to
generate combinations of resources, and a superior means of access to technological
capabilities and other complex capabilities (Mamédio, Rocha, Szczepanik, & Kato,
2019).
The strategic alliance between large and small companies can benefit both parties.
In response to Interview Question 3, P1 mentioned that they partnered with a small
company for product innovation that resulted in increasing the speed and accuracy of the
machine by close to 40%, which disrupted the industry and increased profit margins by
even more. P3 also described the same phenomenon while highlighting the distinctive
product quality. Freytag (2019) stated that partnerships between innovative startups and
large established businesses improve chances of success and benefits both sides by
considering the interests of both parties.
Balancing the use of incubators with a high level of work autonomy for
employees leads to profitability. P1, in response to Interview Question 3, and P2, in
response to Interview Question 2, said that incubators served a purpose to build up
technical knowledge for their large organization. Additionally, they identified the need of
providing space to their employees to think about the solutions differently because the
person doing the job can have insights about how to do the job better. To overcome the
challenges of complex organizational structures, corporate cultures, and technological
inertia associated with the automotive industry, the manufacturers set up corporate
incubators and accelerator programs to engage with external startup companies (Anders,
Gustaf, & Aravind, 2019).
Working with external stakeholders is critical for increasing a firm’s
competitiveness and profitability, and it requires resilience. In response to Interview
Question 4, Participants P3 and P5 expressed that they used crowdsourcing innovation to
solve some of the complex problems expediently. Companies use crowdsourcing to keep
pace with a fast-changing business climate by solving business problems, supporting
R&D activities, and fostering innovation in an inexpensive, flexible, and dynamic fashion
(Devece, Palacios, & Ribeiro-Navarrete, 2019). In crowdsourcing innovation, higher
participation intensity leads to higher idea quality and better business performance
(Camacho, Nam, Kannan, & Stremersch, 2019).
The use of crowdfunding can help to generate the funds for innovation. P9, in
response to Interview Question 1, and P5, in response to Interview Question 8, mentioned
the challenge of financial availability and recommended a crowdfunding model for
generating funds for innovation ideas that need larger capital inputs. According to this
model, people voluntarily fund the innovation project or provide input to the innovation
process, and all parties are rewarded upon the success of an innovation project.
Crowdfunding is an open innovation concept which is based on volunteerism and
requires a deep understanding and appreciation of what the initiator seeks to achieve for
motivating potential volunteers (Chu, Cheng, Tsai, Tsai, & Lu, 2019). In reward-based
crowdfunding, companies with innovation projects reach a funding goal by seeking
capital from potential consumers, and in return, offer them future products or services
(Dai & Zhang, 2019).
Manufacturers collaborate with their strategic business partners to share expertise,
costs, and risks. P1 conducted ‘supplier days’ at the product line level, where they
brought in suppliers to engage them in innovations. Furthermore, P1 described that the
focus of collaboration remained on cost reduction to make the overall product cheaper, a
win for all the involved parties. Alliances involves the agreement of the partner’s
longterm strategic plans, and a main goal of collaboration was addressing the increase in
the cost of productive efficiency (Kyrylenko, Riazanovska, & Novak, 2019). Other goals
were increasing innovations and knowledge, flexibility and scale of activity, stability in
resource provision, and strengthening competitive advantages (Kyrylenko et al., 2019).
External partnerships are useful to increase production efficiency and build a
diverse workforce. Participants P3 and P5, in response to Interview Question 4, stated
that external partnerships helped them in building an extraordinary diverse workforce. In
response to Interview Question 7, P7 mentioned that supplier’s skills, core competencies,
and recommendations were useful to increase firm’s dynamic capacity and efficiency of
remanufacturing, consequently leading to increased profit margins.
Taking a risk to collaborate externally for developing technology, products, and
processes can help spark an increase in the profit margins. In response to Interview
Question 6, P3 mentioned that they felt comfortable enough to establish the boundaries or
rules of engagement with their partners so that they could take risks and be successful. P3
further highlighted that some risks would fail but that one should learn from it and should
not stop from taking other risks. In partnerships and alliances, knowledge transfer poses a
series of risks for both sides because of the valuable and non-withdrawable nature of
knowledge (Q. Yang, Liu, & Li, 2019). In response to Interview Question 7, P7
highlighted that they had non-disclosure agreements and professional service agreements
in place with suppliers, which governed and helped mitigate risk to the BUS. The
inclusion of critical stakeholders in the decision-making process of a business is vital in
increasing profit margins.
Findings from the literature review, which discussed partnerships and alliances,
were supportive of the strategic partnerships and alliances subtheme that emerged from
the study. The entrepreneurial managers play a vital role in the new knowledge
development process, leading to profitability (Salunke et al., 2019). The use of strategic
partnerships and alliances for collaborative knowledge helps business leaders to manage
disruption (v. Alberti-Alhtaybat, Al-Htaybat, & Hutaibat, 2019). Although many
researchers studied the significant essence of partnerships and alliances for successful
business performance (Camacho et al., 2019; Devece et al., 2019; Fernández et al., 2019;
Freytag, 2019; Mamédio et al., 2019), there is a lack of scholarly attention to elaborate in
practical terms on both partnerships and competitive alliances, which may become an
insightful approach to increase innovation intensity for a firm’s profitable growth.
The holistic innovation model theory formed the conceptual framework for this
study and included both open innovation and closed innovation approaches. Disruptive
innovation theory which also formed the conceptual framework for this study can
presents opportunities for businesses; however, unexpected threats may emerge, which
may affect profitability and productivity (Lui et al., 2015). Both theories relate to the
study findings. The businesses cohabiting the open innovation ecosystem should look at
innovation from a holistic, strategic, and global perspective (Chen et al., 2018), because,
in open innovation networks, companies disclose their needs, data, and operations for
others in the network to boost their change process and innovation (Leminen, Nyström, &
Westerlund, 2019). Firms that take advantage of the variety of inter-organizational
relationships to achieve knowledge exploration develop more radical innovations, and
therefore, clustered firms should build their network with a great diversity of
relationships to obtain knowledge exploration since it is critical for developing radical
innovation (Martínez-Pérez, Elche, & García-Villaverde, 2019).
Subtheme 7: Speed
Speed to market is critical for early mover advantage, which can generate growth
in profit margins and market share. P8, in response to Interview Question 4, expressed
that they tried to be faster to bring offerings to the market because of the pressure from
competitors. Speed for rapid launch of product and services is a matter of survival and
requires leveraging pre-existing networks (Stayton & Mangematin, 2019). In responses to
Interview Questions 5, 6, and 7, Participants P2, P3, P5, and P6 mentioned that when
they were faster to launch the innovation in the market as compared to competitors, it
positively impacted profit margins and market share, because when it takes a long time to
launch innovation into the marketplace, it is less innovative and can cause the loss of
early mover advantage and hence of market share.
The slow speed of understanding customer needs and launching innovations to the
market will cause firms to lose profitability. In response to Interview Question 7, P6 said
that being slow to the market reduces profitability because of not able to recoup any of
that cost of investments or obtain the value of new technology development. Increasing
speed and productivity performance requires realigning the firm’s manufacturing strategy
to include a range of prioritized actions, including capital investment and changes in
management practices concerning bottom-up process improvement and regular, top-down
strategy review (Hutton & Eldridge, 2019). In response to Interview Question 1, P1
asserted that the bias towards speed was essential to increase customer value and generate
more profit margins because they were faster than the competition in understanding and
addressing customers’ pain points and wants, and enabling them to do specific tasks
much faster than they used to do it.
The problem-solving speed that increases the quality of the existing product and
services is critical for profitable growth. P3, in response to Interview Question 5 and P5,
in response to Interview Question 4, stated that the speed to distinctive quality, which is
the speed of solving the actual root cause of the problems with products and services
offerings was essential and vital for increasing market share. Managing the complex
relationships between capabilities such as quality, speed, and cost improves business
performance (Hutton & Eldridge, 2019). In response to Interview Question 8, P8
mentioned that they did not sacrifice the quality of products and services and value to
customers for the speed because innovative solutions do not mean a thing if they do not
work like they are supposed to. P3 stated, “when we had machine quality issues, we saw
our market share deteriorating multiple points because of the impact on the quality side.
One of the highest market shares that we have had when the customers were ecstatic.”
Speed through digitization is critical for profitability. In response to Interview Question 7,
P3 mentioned that manufacturing businesses are going through the fourth revolution in
the industry and every business is going to get there with the digitalization, but speed,
and how to connect and use the data in the right way, is so critical for the competitive
advantage and is essential for profitability. Industry 4.0 refers to technological advances
where the internet and supporting technologies (e.g., embedded systems) serve as a
backbone to integrating intelligent machines, physical objects, product lines, and
processes across organizational boundaries to form a new type of smart, networked, and
agile value chain (Schumacher et al., 2016). P3 highlighted that digitization was essential
for BUS to remain competitive and profitable, further adding that other companies would
bypass them if they did not have the speed to change the architecture.
Evidence from the literature review, which indicated the challenges of innovation
such as shorter delivery times, shorter product life cycles, and requirements for high
quality, were supportive of the speed subtheme, which developed from the results of the
study. The turbulence of markets requires that companies adjust their activities at a higher
pace, and therefore, capabilities should be reconfigured based on market evolution (Mora
Cortez & Johnston, 2019). Manufacturers collaborating with customers in the new
product development process at higher levels can increase the speed of new product
development and commercialize products at a faster rate (Morgan, Anokhin, Song, &
Chistyakova, 2019). Digitalization has an impact on the speed of globalization because of
the speed of more efficiently identifying new market opportunities in global markets
(Neubert, 2018). Problem-solving speed involves a firm’s ability to find useful
information for resolving problems and implement solutions rapidly to reach
organizational goals (Giampaoli, Ciambotti, & Bontis, 2017).
The holistic innovation model and disruptive innovation theory, which formed the
conceptual framework for this study, includes innovation intensity that can alter the way a
company operates and performs. Therefore, the conceptual framework supported the
speed subtheme that emerged from data. The use of explorative and exploitative
innovation activities can impact the firm’s performance in an emerging market (Ngo et
al., 2019). Given the global business environment, science and technology, and
collaborative innovation featuring openness, cooperation, and sharing have proven
effective in improving the efficiency of innovation (Chen et al., 2018). Breakthroughs
and radical innovations are often associated with exploratory activities (Ngo et al., 2019),
and therefore, companies race to understand customers with sufficient depth in new
markets and thrive in the global economy by filling gaps in their globalization
capabilities through innovation practices (Ramamurti & Williamson, 2019).
Subtheme 8: Win in Aftermarket
Product innovations cannot be profitable without complementary aftermarket
services. Participants P1, P2, P4, P6, and P8 mentioned that winning in the aftermarket
was essential in order to grow their aftermarket business by addressing their customers’
critical needs beyond the product warranty. The crucial role of the after-sales service
offerings is to protect firm’s traditional products (Raddats, Kowalkowski, Benedettini,
Burton, & Gebauer, 2019). In response to Interview Question 7, P2 stated that in order to
generate better profit margins, they needed to somehow close the gap between the
complexity of equipment and the capability of their dealers, themselves, and customers.
Manufacturing companies feel pressure to improve after-sales operations due to intensified
competition on the global manufacturing markets, and larger companies are more likely to
have the market power and organizational slack that are favorable conditions for success
(Kowalkowski, Gebauer, & Oliva, 2017). Aftermarket services, too, can become a source
of differentiation and can lead to higher profitability.
Aftermarket services are a high-profit margin business and account for a large
portion of corporate profits. In response to Interview Question 3, P1 said that parts and
service yielded more profits as compared to whole goods, and therefore to increase profit
margins, quality of aftermarket services was vital whether that means maintenance or
service parts or just keeping the machine up. In the process of aftermarket service, the
quality of machine maintenance is affected not only by a manufacturer’s effort level, but
also by proper operation and predictive maintenance, which help manufacturers to
continue to fulfill the continuously changing customers’ needs (Liang, Xie, Liu, & Xia,
2017). In response to Interview Question 1, P2 stated that they leveraged data to be more
forward-looking in their parts forecasting, from a strategy standpoint regarding the value
proposition to customers.
Manufacturers develop or adjust global aftermarket services to create universal
value propositions. P1, in response to Interview Question 3, and P4, in response to
Interview Questions 1, 4, and 5, highlighted the importance of parts business for
profitability and mentioned that they developed quality aftermarket services after
understanding the pain points of customers worldwide. My findings aligned with the
findings from previous researchers who said that enhancing local value co-creation with
customers to build global operating models, ensures global brand coherency (Hakanen et
al., 2017), and effects on revenue, profit, and growth (Baines et al., 2017).
In a global B2B distribution, ensuring that channel partners understand the
potential value from service innovation is essential for manufacturers to yield profit from
service innovation. In response to Interview Question 1, P6 asserted that innovations
impacted their distribution channel because they did not distribute directly for most cases.
This participant also emphasized the importance of articulating the value of potential
customer experience from service innovation. Hakanen et al. (2017) found that
servitization influences global B2B distribution, and value co-creation and customer
experience activities become central for manufacturers to service in global distribution.
The quality of aftermarket services depends on identifying and solving customers
pain points. In response to Interview Question 4, P8 stated that their customers became
more and more dependent upon their dealers to be a solutions provider rather than just an
equipment provider. Therefore, their sales teams and territory customer support managers
gathered feedback from dealers and directly from customers about where they are finding
value, specifically, and what they think is working or failing to work. Then, they used that
feedback to provide the right solutions, so that customers can continue to go to their
dealer as a trusted advisor. My findings aligned with the findings from previous
researchers who said that improving customer experience involves value
creation, cognitive responses, and discrete emotions at touchpoints across the customer
journey (McColl-Kennedy et al., 2019).
Study findings revealed that aftermarket service quality and the resulting
customer satisfaction and brand loyalty are principal drivers of profitability in the
aftermarket area. Customer satisfaction is a quality measure and the basis for customer
loyalty to the brand, which is useful to predict customers purchasing intentions (Moretta
Tartaglione et al., 2019). P4 and P6 mentioned that when their customer and product
support employees and dealer organizations provided a world-class experience to their
customers by resolving their product problems effectively, it increased customer
satisfaction, and their brand loyalty.
Faster problem solving is essential in the aftermarket area. P1, in response to
Interview Question 3, stated that when a machine failed due to extreme weather
conditions, they brought the customer’s machine back up and running faster because time
was money for both customers and them, in terms of high availability of machinery. A
unique combination of differentiation and exclusivity by service employees will be
difficult to emulate by competitors (Rosenzweig, Queenan, & Kelley, 2019), and
enhanced customer experience may lead to product market success (Sokolinskiy et al.,
2019). In response to adapting the strategies to changes in the industry, P4 added, “it
became a requirement to look at service models outside of our industry to understand
how others are enabling do-it-yourself type behavior for their customers, to figure out
what to do next.”
Many manufacturers face a significant challenge in managing spare parts
inventory (Togwe, Eveleigh, & Tanju, 2019). In response to Interview Question 5, P4
highlighted the importance of addressing the challenge of having parts always being
available at the dealership without increasing inventory. P4 also stressed the importance
of striving to keep the relationship with customers intact so that they remain satisfied
with parts availability and loyal to the brand. P4 stated, “although parts logistics cost
could be significantly higher, our goal was to get the parts as close to customers as we
could, because growth in part sales was one of the key measurements to determine our
success.”
Evidence from the literature review, which described that service quality and the
resulting customer satisfaction are principal drivers of financial performance, was
supportive of the win in aftermarket subtheme which developed from the results of the
study. Manufacturers, instead of focusing entirely on products, strive to complement their
products with value-added services and to re-position themselves as world-class solution
providers (Kuijken, Gemser, & Wijnberg, 2017; Luoto, Brax, & Kohtamäki,
2017; Valtakoski, 2017). The ability to construct and effectively operate global product
distribution channels is a critical determinant of a manufacturer’s competitiveness and
profitability (Baines et al., 2017; Hakanen et al., 2017). However, the literature still has
gaps in addressing this aspect of servitization (Kowalkowski et al., 2017). The findings of
my study indicated that developing a new service model or adjusting a current one may
involve manufacturers’ global B2B distribution channel. Furthermore, it is of vital
importance for manufacturers to select distributors that best improve the sales and are
capable of co-producing value for the end customer.
The theories of holistic innovation model and disruptive innovation, used as the
conceptual framework for this study, includes exploratory and exploitative innovation, as
well as nonproduct innovations. Therefore, the conceptual framework supported the win
in aftermarket subtheme that emerged from data. Incremental service innovations are
more successful for manufacturers when customers participate in new service
development, while developing radical service innovations leads to higher firm
performance (Johansson, Raddats, & Witell, 2019). Manufacturers must use a sequential
innovation exploitation and exploration pathway to improve product and service
innovations outputs (Bustinza et al., 2019). Significant mobility of machines and users
causes frequent communication network disruptions and wide variability in channel
performance (Tortonesi et al., 2019), and therefore, risk planning for service model
disruption in regards to dealing with disaster management issues is critical for
minimizing the impact of service disruption (Hasani & Mokhtari, 2019).
Applications to Professional Practice
The innovation strategies emphasized in this research study toward increasing the
organization’s profit margins might assist business leaders in reducing their firms’ risk of
failure, in increasing competitiveness and profit margins, and in sustaining profitable
growth. The objective of this study was to explore the innovation strategies that business
leaders of a global machinery manufacturing company in northwest Illinois used to
increase the organization’s profit margins. The findings of this study promise to be
helpful to business leaders in seeking to explore and employ innovation strategies for
improving the profit margins of a global machinery manufacturing company. The results
of this study might also help owners and business leaders of machinery manufacturing
businesses to formulate an introspective analysis of their current innovation strategies and
determine how effective they are in improving sales revenue and increasing their firm’s
profit margins. This self-reflection might be vital in attaining or sustaining competitive
advantage and profitable growth.
Integrating innovation as one of the core values and using relevant innovation
strategies is essential for crafting an enduring foundation of a company’s competitiveness
and profitable growth, because the use of innovation strategies can help business leaders
to enhance their firm’s competitiveness both locally and globally (Kneipp et al., 2019), as
well as to sustain and increase desired profits (Na et al., 2019). Innovative products can
become obsolete (Ribeiro, Santos, & Dutra, 2019), or can fail, resulting in significant
economic burdens (O’Donnell, Ives, Mohiuddin, & Bunnell, 2019). Therefore,
innovation strategies should remain vital and relevant to deal with the dynamic nature of
the business, to increase the firm’s competitiveness and sustain profitable growth.
Distinctive product quality was one of the subthemes that emerged from the data
collection. Because of the dynamic nature of the global business environment and
competitive pressure, providing distinctive quality products is critical for increasing a
firm’s competitive advantage and profit margins. Hailey (2015) stated that competitive
advantage involves offering a unique product or service that an organization can provide
as a strategy to meet or exceed its customers’ needs.
Superior value originates from offering superior-quality products and unique
benefits that more than offset a higher price, or from providing a lower price than
competitors for equivalent benefits. The main approaches to the competitive strategy
include low-cost leadership, differentiation, and market focus strategies (David, 2019).
Machinery manufacturing business leaders may implement the innovation strategies to
enhance the efficiency of machines, and to differentiate their products and services from
those of their competitors, and therefore they might increase firms’ competitiveness,
customer experience, sales revenue, and sustenance of profitable growth.
Distinctive customer experience was another subtheme that emerged from the data
collection. To achieve competitive advantage and profitable growth, delivering distinctive
customer experience must be the premiere strategy and must include customer feedback,
employee commitment to customers, leadership, and technology. Business leaders should
leverage the collective experience of a cross-functional team such as manufacturing
operations, finance, sales and marketing, R&D, risk, product supply, customer and
product support, and technology, to understand the consolidated view of customers’ pain
point and then finding innovative solutions to increase measurable customer value. The
execution of these action plans to deliver distinctive customer experience may increase a
firm’s competitive advantage and profitability. Business leaders can explore innovation
strategies to create measurable customer value and deliver distinctive customer
experience as an avenue in achieving competitiveness, increasing sales revenue, and
profitable growth.
Business leaders should scrutinize customer feedback, identify the areas of
improvement, and create action plans for ensuring that customer concerns are heard and
resolving customer issues promptly. Managing customer experience in this manner may
influence customers’ behavior by improving trust in the brand, loyalty, satisfaction, and
financial performance. Havir (2017) recommended that business leaders practice a formal
process of analyzing customer experience feedback to get a more comprehensive view of
the dimensions and factors of customer experience. Territory customer support managers’
role is essential in implementing innovation strategies to push value-driven organizational
change further, enhance customer experience, and improve customer loyalty.
Building relationships with existing customers and designing new strategies to
increase customer value propositions are essential to maximizing sales and profitability
(Ramaj & Ismaili, 2015; Shukla & Pattnaik, 2019). Business leaders need to understand
the critical link between distinctive customer experience, competitive advantage, and
profitability, because the main avenues for increasing profitability and sustaining
profitable growth include differentiated products and services that customers want to buy
as well as building customer loyalty and retaining customers by delivering distinctive
customer experiences. To remain profitable, business leaders must invest in relevant
innovation strategies that will help them achieve business objectives.
Technology-based modernization was another subtheme that emerged from the
data collection. Investing in technological innovation and the effective use of modern
technologies have a positive impact on competitive advantage and profitability.
Advanced technologies are useful for companies to understand customers’ tastes and
preferences and therefore are favorable to optimize repeat sales and improve profitability
(Peppers & Rogers, 2017). Furthermore, the slow acceptance of technological innovation
might erode firms’ competitiveness and may create technical debt.
The use of appropriate advanced software technologies can make a direct and
measurable contribution to the success of manufacturing business operations, because
business leaders can monitor the performance of their equipment remotely and often learn
potential downtime issues even before the customer becomes aware of it. For example,
the use of AI technology can increase the efficiency and effectiveness of business
operations via remote diagnostics and increased use of sensors and networked machines
in manufacturing processes (W. J. Lee et al., 2019; Lin & Chen, 2019).
Business model advantage was another subtheme that emerged from the data
collection. Business model innovation is critical for firms to gain competitive advantages
and improve their financial performance (Tian et al., 2019). Participants P1, P2, P3, and
P5 transformed their global business operating models to their advantage by adapting to
industry changes, and by making the manufacturing and overall business processes more
modern, scalable, and innovative. The increased production efficiency and quality, as a
result, helped them to reduce the global operating costs and facilitated the development of
better products, both of which led to increased revenue for R&D.
Business leaders transform business models to continually advance and increase
their company’s dynamic capacity (Gupta & Agarwal, 2019). Increasing dynamic
capacity involves leveraging business models to increase manufacturers’ ability to
reconfigure, build, and integrate both internal and external competencies to adapt to
changes in an uncertain business environment, and is a key competency for strengthening
a firm’s competitiveness and profitability. Business models that support strategic
sustainability thinking, and include business scalability and risk appetite, are favorable
for increasing competitiveness and sustainable profitable growth.
Diversity of thoughts and inclusion was another subtheme that emerged from the
data collection. Keeping pace with emerging trends and new areas of expertise could be a
challenge, and the subject matters experts in the field might become out of date, so the
diversity of perspectives is essential for competitiveness and profitability. Generations
differ in their thinking, and the way they cognitively process information, because of their
unique set of experiences and collective memories that influences how they portray
situations, new information, and experiences (Dust et al., 2019). Therefore, generating
knowledge of innovative activities using a diversity of thoughts from different social
positions has a competitive advantage, and therefore is critical for increasing profit
margins.
Availability of the right talent to make firm business decisions is essential to meet
customers’ needs. Participants P1 through P6 emphasized the necessity of diverse
thoughts and their inclusion toward finding innovative solutions for customers’ pain
points and needs. The success of collaborative innovation depends on critical aspects of
the operation, such as intellectual diversity, knowledge, and networking (Chu et al.,
2019). P1 through P6 shared that the inclusion of a diversity of work experiences, age,
gender, race, ethnicity, education, and socioeconomic status, helped them to generate
diverse perspectives and more innovation ideas that impacted competitive advantage and
profitability.
Strategic partnerships and alliances with suppliers or external firms can help
business leaders to increase their firm’s competitiveness, profitability, and market share,
because collaborating partner firms benefit from sharing costs, risks, and expertise.
External partnerships and alliances are useful to strengthen competitive advantage, and
external collaboration offers many benefits such as increase in the productive efficiency,
increase of innovations and knowledge, flexibility and scale of activity, increase stability
in resource provision, and cost reduction (Kyrylenko et al., 2019). P7 collaborated with
the supplier with a transparent approach, and leveraged the supplier’s skills, core
competencies, and recommendations to increase the efficiency of remanufacturing,
leading to increased profit margins.
Speed was another subtheme that emerged from the data collection. The
turbulence of markets requires that companies adjust their activities at a faster pace, and
therefore, capabilities should be reconfigured based on market evolution (Mora Cortez &
Johnston, 2019). The speed to market is requisite when launching innovation; it impacts
profit margins and market share, because when it takes a long time to launch innovation
into the marketplace, it is less innovative and businesses may lose early mover advantage,
leading to loss of market share. P8 mentioned that one must run fast but cannot sacrifice
quality and value to customers, because innovative solutions mean nothing if they do not
work like they are supposed to.
Win in aftermarket was another subtheme that emerged from the data collection. A
world-class aftermarket service is critical to effectively serve customers in the parts and
services business, which leads to profitable growth in the aftermarket business. Customer
experience management focuses on every facet of the company’s operations and is
critical in viewing the organization as a synergistic whole from the customer’s viewpoint
(San-Martín, Jiménez, & Puente, 2019). Business leaders use customer experience
management to efficiently manage points of interface with the customer using a proactive
approach (San-Martín et al., 2019). P6 indicated that there was a consistent review of
feedback from customers and customer experience strategy to achieve desirable profits
by delivering unique value to customers through customer-focused innovation.
Study findings revealed that speed to market and quality through digitization are
critical for increasing competitiveness and profitable growth. Speed to distinctive quality,
which is the speed of solving the true root cause of the problems, is essential for
increasing market share. Managing the complex relationships between capabilities such
as quality, speed, and cost increases business performance (Hutton & Eldridge, 2019).
Using digitalization, business leaders can connect and use the data in the right way, at a
faster speed. Therefore, speed of globalization increases firms’ ability to more efficiently
identify new market opportunities in global markets (Neubert, 2018).
An additional contribution of this study is an illustration of how the innovation
strategies from this case aligned with the theories of holistic innovation model and
disruptive innovation, which initiate a process of transformation that leads business
leaders to create new ways of doing business and increasing performance (Christensen,
2011; Cornell, 2012; Van de Vrande et al., 2009). Both innovation and the degree of
innovation can alter the way a company operates and performs (Christensen, 2011), and
creation of innovation knowledge or ideas (i.e., innovation exploration) is essential to
transform that knowledge into goal-driven outcomes (i.e., innovation exploitation)
(Cornell, 2012; Van de Vrande et al., 2009). In this case, positioning innovation strategies
for disruption, strategic partnerships and alliances, transformation of products, services,
operating business models, delivery of distinctive customer experience, effective use of
modern technologies, diversity of thoughts and inclusion, and speed to market and
improved quality, were consistent themes that emerged from the data for increasing firm’s
competitiveness and profitable growth.
Implications for Social Change
The implications for social change include the potential to create developmental
or transformational changes in the business community that could improve business
performance and increase profit, leading businesses to create opportunities for, and
contribute to, their communities. Increased business growth via innovation strategies can
lead to more revenue for the community, provide more job prospects, and increase tax
revenues to help the local governments to increase or strengthen community services.
Thus, social impact includes improved economic strength and sustainable development in
the community. The findings of this study might encourage business leaders in the
community to adopt and implement relevant innovation strategies, leading to business
growth and an increase in profitability.
Recommendations for Action
Some business leaders of a global machinery manufacturing company in
northwest Illinois use innovation strategies to increase the organization’s profit margins.
When the business leaders use such strategies, they help not only to increase the
profitability but also to improve businesses’ competitiveness, which leads to sustainable
profitable growth. Therefore, the need to increase the firm’s profitability cannot be
overemphasized. Current and future business leaders of all machinery manufacturing
companies should focus on recommendations arising from the overarching theme that
emerged (the importance of increasing a firm’s competitiveness and sustaining profitable
growth) and eight subthemes (distinctive customer experience, technology-based
modernization, distinctive product quality, business model advantage, diversity of
thoughts and inclusion, strategic partnerships and alliances, speed, and win in
aftermarket). Following are recommendations for action in formulating innovation
strategies that assist in increasing organizations’ profit margins:
1. Business leaders should make crucial decisions regarding integrating
innovation as one of the core values and using relevant innovation strategies
for an enduring foundation of company’s competitiveness and profitable
growth, because the use of innovation strategies can help them to enhance
their firm’s competitiveness both locally and globally, increase profit margins,
and sustain profitable growth.
2. Business leaders should understand customers’ pain points, and then invent,
design, and develop breakthrough products and services that customers want
to buy, which will lead to increasing their firm’s profit margins and achieving
profitable growth.
3. Business leaders should foster a culture of innovation exploration and
innovation exploitation to deliver on the corporate mission’s profitability, in
order to increase their firm’s profit margins, to enhance competitive advantage
and to reduce the risk of failure.
4. Business leaders should ensure that innovation strategies remain vital and
relevant to increase dynamic capacity for increasing their firm’s
competitiveness and profitability because innovative products also can
become obsolete.
5. Business leaders should invest in and promote the cutting edge of technology
innovation to gain competitive advantage. The slow acceptance of technology
innovation may erode the business’ competitive edge.
6. Business leaders should understand where cost is locked up in their business
operations and where the value lies, framing operational inefficiencies as
opportunities for cross-functional teams to work on, unlocking possibilities
for increasing profit margins.
7. Business leaders should fully incorporate distinctive customer experience as a
competitive element to create measurable customer value, to attain more
market share, and to retain existing customers. Incorporating distinctive
customer experience will require business leaders to understand changing
customers’ motivation and the impact of rapid or slow-creeping change on
customer satisfaction.
8. Business leaders should invest in strategic partnerships and alliances for
sharing expertise, cost, and risks, which increases the opportunities for
increasing the firm’s competitiveness and gaining more market share.
9. Business leaders should promote diversity of thoughts and the inclusion of
diverse perspectives. Generating diversity of thoughts should include the
diversity of socioeconomic backgrounds, work experience, age, gender, race,
ethnicity, and education.
10. Business leaders should include all stakeholders at the appropriate time for
collaboration and communication. The inclusion of diverse expertise and the
experiences of all stakeholders possessing a clear understanding of the
business processes and objectives produces faster, less expensive, and better
results, and therefore it will have a positive impact on profitability.
11. Business leaders should ensure that the current business model aligns with the
strategic objectives of the business, which will serve as a platform for good
business practice.
Business leaders might use rational insights from this study to develop or
transform the business community and society. I will disseminate the results to different
learning institutes and organizations, and through publication research journals. I believe
that the application of this study’s findings will encourage business leaders to implement
innovation strategies to increase their firm’s competitiveness, increase profit margins, and
sustain profitable growth.
Recommendations for Further Research
I conducted a qualitative single case study in a global machinery manufacturing
company in northwest Illinois. This study provides the basis for future research in
sustainable innovation practices for profitable growth in the manufacturing sector. This
study had two key limitations. The first limitation was that the participants who finish the
study might not be truly representative of the population. The second limitation was that
the business leaders answering the interview questions might not represent
universallyaccepted expert opinions. Therefore, the recommendation for future research
is to conduct a qualitative multiple case study in machinery manufacturing companies in
all regions of northwest Illinois to increase the chances of acceptance of study results by
other researchers. Additional research with small or medium-size firms and those located
in other regions may provide added insights into what innovation strategies are being
implemented or overlooked by business leaders. The following is a list of
recommendations for further research related to improving business performance using
innovation strategies:
1. Future researchers could explore the impact of innovation strategies when
collaborating between small and medium firms.
2. Future researchers could explore the possible ways to avoid product
innovations becoming obsolete.
3. Future researchers could explore the effectiveness of crowdfunding on the
profitability of small and medium firms.
4. Future researchers could investigate the impact of introducing public-private
partnerships on the financial viability of machinery manufacturers.
5. Finally, future researchers could explore innovation strategies for increasing
profit margins or sustaining profitable growth in non-machinery
manufacturers, such as parts supply companies or technology suppliers, in
order to compare and contrast the findings for the possibility of mutual
benefit.
Reflections
I preferred to pursue a Doctor of Business Administration (DBA) degree instead
of a Ph.D. because of the focus on studying a business problem. I appreciated the DBA
program approach because it related to me more as a professional, especially coming
from the business world with 20 years of experience. This research on innovation
strategies for a global manufacturing business was informative and provided a great deal
of knowledge regarding innovation strategies to increase profit margins. The results of
the study confirmed my perception that a qualitative case study approach is an effective
method to explore the experiences of business leaders. I also gained a depth of
knowledge and understanding from many different scholarly articles. Furthermore, I
recognized the value of research work and how to integrate the process together.
The process of completing the DBA doctoral study broadened my knowledge of
qualitative research methodology as I practiced conducting practitioner-scholarly
research. The value of using insider research lies in bridging the gap between
professional practice and academia (Milano, Lawless, & Eades, 2015). However, the
continuous use of reflexivity and reflectivity throughout the insider research process is
essential (Tuesner, 2016). Reflexivity is the ability to see around and beyond what is in
front of you; to halt the action and think about what is working or not working (Vettraino,
Linds, & Downie, 2019). Acting on that process can cause a useful transformation in the
research process (Vettraino et al., 2019). Reflectivity enhances researchers’ reflective
practice and creates new opportunities to develop greater self-awareness (Vettraino et al.,
2019). Reflections about the DBA research process had to do with personal bias, my
effect, as the researcher, on participants, and changes to my thinking upon completing the
study.
Insider researchers’ implied knowledge facilitates an understanding of the
organizational culture and the study’s participants; however, this benefit also increases
the risk of personal bias (Tuesner, 2016). Therefore, Tuesner recommended using
reflexivity and reflectivity throughout the research process to ensure the mitigation of
personal bias before and after interacting with every participant. I used reflexivity to
consider my relationship with participants and their assigned departments, as well as my
understanding of departmental processes, before conducting each interview. I repeated
the same process shortly after each interview; however, I focused on my new or improved
understanding of the processes used by participants. Using reflexivity and reflectivity
helped me to separate my opinions and personal bias from the research process, which
allowed me to focus on the participants’ responses. I also considered how my effect on
participants might affect response bias.
Research participants might withhold or change responses based on their
relationship status with the researcher (Tuesner, 2016). To mitigate researcher bias, I did
not conduct this study with business leaders for whom I have worked or employees with
whom I have worked. I had, in fact, a neutral relationship with participants because we
had never worked for the same department. I explained the research process to the
participants to answer their questions and eliminate confusion.
Bias occurs when a researcher uses preconceived experiences to interpret
interview notes (Buetow, 2019). The topic of this study and the research area were new to
me. I avoided preconceived beliefs acquired from previous experiences of working in a
machinery manufacturing company and remained grounded solely in the participants’
responses. I used an interview protocol (see Appendix) to maintain consistency and
accuracy. I asked the interview questions in the same order and did not introduce bias into
the data collection or data analysis process. I avoided assumptions by asking probes and
follow-up questions to obtain clarification during the interviews, as though I was an
outsider.
Using the process of reflexivity, reflectivity, and member checking to verify the
accuracy of the interview data allowed me to determine that the data did not support my
preconceived notions. I found that as an insider to the organization, I was still an outsider
to multiple departments and needed to adjust accordingly to the advantages and
disadvantages of my researcher role with each participant. Furthermore, learning from the
research process and the experiences from this study positioned me for future research as
a scholar.
Conclusion
The use of expedient innovation strategies can differentiate a business’ products
and services from competitors, as well as sustaining and growing profit margins.
Business leaders must implement appropriate innovation strategy which increases
revenue and sustains business performance (Fernandes & Solimun, 2017; Taneja et al.,
2016). The findings of this research study reveal that the success of generating higher
profits from the products and services, depends heavily on innovation strategies business
leaders implement to differentiate the products and create measurable customer value.
The findings also reveal that business leaders’ ability to invent, design, and develop
breakthrough products and services that customers want to buy lead the firm to profitable
growth. Furthermore, even the most innovative product becomes obsolete; therefore,
business leaders must ensure that innovation strategies remain vital and relevant to
increase their firm’s competitiveness and profitability, both locally and globally.
Machinery manufacturing business leaders must conceive of sustainable
profitable growth as a broad strategy which includes competitive advantage, distinctive
customer experience, effective use of modern technology, distinctive product quality,
business model advantage, diversity of thoughts and inclusion, strategic partnerships and
alliances, speed, win in aftermarket, and so on, and not just as an individual innovation
strategy. For example, distinctive product quality should be viewed as a subset in the
broader sustainable profitable growth strategy, and not as the entire sustainable profitable
growth strategy. The findings of this research study reveal that machinery manufacturing
business leaders must evaluate and select the most viable innovation strategies based on
their type of innovation and market research, as well as insights about customers,
competitors, and channel members.
Business leaders’ ability to translate innovation strategies into profitable solutions
help them win customers, attract high-caliber employees, develop extraordinary global
talent, and achieve desired profitable growth. Business leaders must identify the need to
launch radical or incremental innovation since different types of innovation require a
different set of innovation strategies. Business leaders must consistently value the need
for innovation exploration and exploitation on the critical facet of an organization’s
competitiveness and profitable growth. A failure to do so could result in a loss of
competitive advantage, reduced customer loyalty, loss of sales revenue, decreased
profitability, and even business closure (Prajogo, 2016; Visnjic et al., 2016), which may
further intensify social issues such as weakened economy, unsustainable development in
communities, unemployment and poverty (Eschker, Gold, & Lane, 2017).
