International journal of Contemporary Business Studies

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International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com A Review on the Role of Managerial Levers in Innovation Management Suriati Bt Zainal Abidin 1 Sany Sanuri Bin Mokhtar 2 Rushami Zien Bin Yusoff 3 1, 2, 3 College of Business Universiti Utara Malaysia 06010 UUM Sintok, Kedah Darul Aman, MALAYSIA. ABSTRACT Managerial levers are essential elements to ensure the synchronization between people and system which would assist in implementing innovation in the organization. Based on the diverse literature, this paper reviews five types of managerial levers: strategy, organization structure, resource allocation, knowledge management and organizational learning and culture. Each lever has its beneficial function to be effectively assist innovation process. Despite the fact that innovation is a dynamic process and involved multi-dimensional factors, the role of managerial levers is considered fundamental building blocks that will shape innovation. This review indicates that managerial levers should be applied side by side in the innovation management in order to ensure that innovation is establish and managed efficiently. Keywords: Managerial Levers, Innovation Management, Innovation Process, International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 pp.6-14 ©Academy of Knowledge Process 1. INTRODUCTION Levers are the basic structure of any organization and it must be linked consistently to maximize efficiency (Steward, 2010). It is claimed that seven managerial levers are needed in order to be a strong company: strategy, structure, leadership, information and decision processes, people, culture, reward and incentives (Steward, 2010). In a study of cultivating new mental space for business innovation, managerial levers act as a technique that enable organizations to find new opportunity by adapting to rapid changes (Leibold, Voelpel, & Tekie, 2004). While in a case study of 124 companies in USA, it has shown that structural and skill levers of strategy implementation is proven in building a capable organization (Crittenden & Crittenden, 2008). It has also emphasized that organization need to have a clear understanding of each lever role so that it could really bring impact on organization ability to succeed (Crittenden & Crittenden, 2008). Managerial levers facilitate in creating new market or customer, product, service, value chain and capability space (Leibold, et al., 2004) According to Crossan and Apaydin (2010) managerial levers is a Copyright © 2012. Academy of Knowledge Process 6
International Journal of Contemporary Business Studies Vol: 3, No: 6. June, 2012 ISSN 2156-7506 Available online at http://www.akpinsight.webs.com meta-construct consolidating firm level variables that support innovation. Five types managerial levers used are strategy, structure, resource allocation, organizational learning and knowledge management tool and culture (Crossan & Apaydin, 2010). Innovative organization faced dilemmas such as structure and action, dilemma with opposition of persistence and change or repetition and novelty which appeared as tensions between different time horizons (Chanal, 2004). In this context, managerial levers is used to overcome the innovation dilemmas (Chanal, 2004). The following discussions will describe each of the managerial levers. 1.1Strategy The first managerial lever is strategy. Strategy has been perceived as a continuous management activities (Drejer, 2006; Li, Zhou, & Si, 2010). Indeed, it is an activity the most necessary form of and the foundation for innovation (Ian Steward & Peter Fenn, 2006). Strategy is needed in order to overcome managerial challenge which might arise from potential disruptive with existing resource endowments, capabilities and organizational routines (Blumentritt & Danis, 2006). Strategy is claimed to defined the gaps between the current and desired performance and thus it is vital for innovation in pursuing competitive advantage (Ian Steward & Peter Fenn, 2006). Therefore, the role of innovation and firm‟s innovative target should be linked with the competencies and strategic orientation of particular firm (Blumentritt & Danis, 2006). In fact, a study in manufacturing firms has showed that innovation strategy with formal structure are significant predictors of performance (Terziovski, 2010). Strategy managed to differentiate organizational pattern between the high innovation performance and the less successful ones (Pullen, Weerd-Nederhof, Groen, Song, & Fisscher, 2009). Innovation practices differ among firms with different strategic orientation (Blumentritt & Danis, 2006). For instance, the SMEs firms achieved high innovation performance combine both analyzer (used for incremental innovation) and prospector (used for radical innovation) business strategy (Pullen, et al., 2009).This is because strategy concerned the survival of entire organization and involved large portion of resources and also strategic thinking of tactical level (Drejer, 2006). When discussed the importance of strategy with innovation, Drejer (2006) has come out to define strategic innovation as the ability to create and revitalize the business idea and concept of the company by changing both the market of the company and the competencies and business system of the company. In an empirical study of Taiwanese electronics industry, found that product innovation is strongly related to differentiation strategy while the process innovation was strongly related to differentiation and cost leadership strategies (Liang-Hung & Chun-Hsien, 2008). Empirically, Blumentritt and Danis (2006) indicated that approaches to innovation vary across firms with different strategic orientation and firm‟s strategies played significant role in deciding which to pursue and which to disregard. As mention by Y. Chen and Yuan (2007), a firm needs to seek optimal balance between internal R&D and technology outsourcing when formulating innovation strategy. Innovation which is oriented by strategy is essential in determining organization direction in the long run, generate innovativeness and contribute to the different pattern of innovation orientation (Stock & Zacharias, 2011). For instance, it is found that innovation orientation of strategy contributed high scores to integrated innovator and top-down innovator while scored low to the internally driven and proactive customer innovator type (Stock & Zacharias, 2011). In a case study of Chinese firms, Q. Xu, Liu, and Chen (2002) have argued the use of knowledge strategy to be integrate with technological innovation to ensure companies effective and efficient. This is important due to the fast changing environment and firm need to articulate knowledge strategy to stimulate innovative activities (Xu, et al., 2002). Various elements and measures are used to represent strategy in relation to innovation study. A study of 600 Australian small and medium enterprises of manufacturing sector, the innovation strategy has emphasize on vision or mission, strategic goals, increase in production, customer satisfaction, administrative, employee skill and employee commitment (Terziovski, 2010). While Stock and Zacharias Copyright © 2012. Academy of Knowledge Process 7
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