The role of technological innovation in a firm's strategy

Article type: Research Article

Authors: Windsor, Duane | Tuggle, Francis D.

Affiliations: Jesse H. Jones Graduate School of Administration, Rice University, Houston, TX 77001, U.S.A.

Abstract: Macroscopically, technological innovation is desirable as on average it improves the net present worth of business firms and thus aggregate economic performance. However, at the level of individual firms, technological innovation is merely one of a number of potential strategies for optimal resource deployment. As such, the overriding determinant of the proper role of technological innovation in a firm is the nature of the fit between the organization's competencies and desires on the one hand and the threats and opportunities presented by the firm's environment on the other – all as perceived by the managers of the firm. The paper addresses the issue of how the propensities of firms to invest in innovation are influenced by properties of the firms, their competitors, and their environments. A sufficiency analysis exhibits the characteristics of the preliminary theory. Illustrations of these contentions are derived from firms in four industries: home appliances, homebuilding, food distribution, and prescription drugs. The data are consistent with eight hypotheses relating organizational and industry characteristics with the mode of technological innovation.

Keywords: Technology, strategy, organization theory, innovation, resource deployment

DOI: 10.3233/HSM-1981-2409

Journal: Human Systems Management, vol. 2, no. 4, pp. 306-315, 1981