IBM Corporation: Innovation in a Global Setting

Subject: Case Studies
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Study level: PhD

Innovation and Global and Cross-Cultural Impact


In an international setting, the capacity to communicate successfully could be tricky. Even if two parties engage in a similar language, there could be misapprehensions because of cultural and racial dissimilarities. Comprehending the influence of globalization on cross-cultural communication is crucial for organizations making efforts to attain competitive benefit in the global marketplace. Current monetary problems further stress the requirement for organizations to establish the internal communication ability required to manage and examine external risks. With the world becoming more globally connected, the capability to communicate across cultural borders has achieved a growing reputation. International businesses have to comprehend the way to communicate effectively. For instance, the communication between the workers and clients from dissimilar cultural backgrounds has to be done successfully to accomplish the organizations’ operations and generate significance for stakeholders. Effective cross-cultural communication does not entail remembering every cultural aspect of each marketplace, but understanding when to pay attention, when to request assistance, and when, lastly, to speak (Moon & Park, 2011). The application of technology has had a deep influence on the way businesses communicate internationally and promote their services and products. Nevertheless, with the developments in technology, businesses have to be still cautious about the cross-cultural impact that can present hindrances in attempting to raise revenue, in addition to market share.

Concepts of Innovation

The articles by Douglas and Craig (2011), Sheth (2011), Steenkamp and de Jong (2010), Moon and Park (2011), Mangelsdorf (2011), and Heller Baird and Gonzalez-Wertz (2011) affirm that globalization is majorly taken to be amid, if not the leading concept driving innovation. In the past, the notion of globalization was majorly confined to companies from the developed nations with the interest centered on innovation in such regions. Nevertheless, this approach has varied noticeably in the current times. The authors concur that many companies are now concentrating on cross-cultural impact and new marketing chances across the globe and not just in developed countries. On this note, companies are developing strategies to encourage and kindle demand in markets around the world. This has necessitated the companies to devise new approaches to target the broad scope of development opportunities as the emerging marketplaces have turned into significant fields for growth and development. Nevertheless, the four articles differ in that Douglas and Craig (2011) focus on convergence and divergence in globalization while Sheth (2011) concentrates on five major features of globalization that encompass chronic scarcity of resources, sociopolitical authority, market heterogeneity, insufficient infrastructure, and unbranded competition. On the other hand, Steenkamp and de Jong (2010) instigate attitude toward local products and attitude toward global products to offer executives with considered direction on the means of marketing in an internationalized world while Moon and Park (2011) focus on the impacts of culture on globalization. Moreover, Heller Baird and Gonzalez-Wertz (2011) concentrate on establishing customer-centered market management for excellent marketing directors and experts while Mangelsdorf (2011) states that notions for the creation of products should be obtained from users to satisfy their needs.

On the contrary, Nambisan and Sawhney (2011), O’Dwyer, Gilmore, and Carson (2011), and Rese and Baier (2011) focus on networks and alliances as concepts of innovation. Strategic alliances are helpful in innovation as market tools. For instance, they are normally employed by businesses to offer them competitive benefits. Through the formation of alliances with other firms, small and medium enterprises can compete favorably with large corporations because this equips them to operate with the capability of big companies through merging their resources, proficiencies, and capabilities, and geographical coverage. Since corporations are currently operating in unstable and intricate settings, they require being more practical and innovative. Therefore, networks are advancing insignificance, particularly for small and medium enterprises that have inadequate resources as large multinational corporations. Networks and alliances appear to be the only means for small and medium enterprises to succeed in technologically demanding and promising markets that necessitate costly and uncertain innovations. Nonetheless, amid the major challenges with such networks is the inquiry of the way to strategize, organize, and manage the innovative practices that are distributed to different collaborators. Though the four articles are similar concerning their discussions on the broad subject of networks and alliances, they have some differences. For instance, Rese and Baier (2011) focus on triumph aspects for innovation in networks regarding small and medium enterprises, O’Dwyer et al. (2011) center on strategic alliances as a constituent of innovation in small and medium enterprises, and Nambisan and Sawhney (2011) focus on the shifting of firms from innovation approaches employing internal resources to the ones applying external networks.

One of the strengths of globalization is that it allows companies to concentrate on what they best can achieve (Douglas & Craig, 2011). For instance, a company embarks on a given line of products in its target markets. The second strength of globalization is that it gives corporations a broader market rather than just operating locally. However, globalization has some pitfalls as well. One of its pitfalls is that it may lead to increased unemployment in developed nations as corporations can outsource cheaper employees from other nations. Additionally, globalization could result in increased environmental pollution where some companies may take advantage and engage in pollution in nations that do not have strict environmental laws. Like globalization, networks and alliances have their strengths and pitfalls. One of the strengths of networks and alliances is that they enlarge the businesses’ support and enhance their customer base, which makes the businesses realize more together as compared to operating alone (Rese & Baier, 2011). Moreover, they enhance the sharing of knowledge and proficiencies to make the businesses operate more skillfully for enhanced success. One pitfall of networks and alliances is that the businesses could fail to develop a clear goal or find it impossible to agree on an approach (Mangelsdorf, 2011). In addition, networks and alliances could lead to the domination of a powerful company that could subdue the others as the large companies may have more power in decision-making.

Innovation Strategy

Open network alliances are presently obligatory across a range of industries and businesses, but devoid of careful structuring of the actual networks, companies risk losing management of precious knowledge courses, sequentially compromising competitive benefit (O’Dwyer et al., 2011). Nevertheless, most of such collaborative encounters have a tendency of dangling in front of organizational leaders since they never succeed as the difficulties in the implementation are normally insuperable. Open organizational models lead to success and firms, conscious of how development engines splutter when enclosed by company walls, encourage co-advancement with other businesses to ignite innovation and create value. The concepts of alliances and open networks and collaboration are particularly valuable with respect to innovation in the telecommunication industry. Nevertheless, a vital concern with implementing the open model is to comprehend precisely what is signified by the plethora of uncertain expressions employed nearly interchangeably to define a similar incident fundamentally. It is not a wonder that time-strained directors are normally left perplexed over tags, for instance, open novelty, distributed novelty, open industry model, co-inventive collaborations, and decentralized novelty to mention a few.

Certainly, the idea to collaborate with other firms, some that could even be rivals, is normally overwhelmed with tactical vagueness (Nambisan & Sawhney, 2011). Being able to manage effectively both opportunities and risks appears easy, and regardless of attractive chances, the risk of coming into restrictive, excessively intricate, or fruitless affiliations is firstly in the mentality of company directors. As evident as it seems, industries ought to attempt to learn regarding each other before getting into an alliance but inevitably they have to arrive at conclusions anchored in deficient data. Inequitable capacities, cross-cultural impact, internal practices, and a wide-ranging lack of confidence between collaborating firms comprise the key relational threats that hinder alliance advancement. Moreover, unsuitable governance systems and a lack of flexible knowledge exchange avoids well-intentioned alliances from setting in motion. Such inadequacies imply the significance of configuration and development for network alliance effectiveness.

The risk of opportunistic conduct normally seems large in the formation of alliances in the telecommunication sector, with firms attempting to gain massively from the partnership. Slight changes in intentions, from shared aims to competitive benefits, add unsteadiness to alliances and open networks and collaborations that become competitive and at the same time collaborative. In extreme instances, such as the well-known alliances amid Japanese and United States automobile companies, there is a learning competition where both firms attempt to discover as much as achievable from the other prior to the termination of the alliance, with minimal consideration for the mutual objectives where the affiliation was proclaimed. In addition, chances exist for the rascal collaborator to gain competitive intellect and discover the information regarding tactical objectives while recognizing major talents to take up from competing affiliate companies (Sheth, 2011).

Such concerns keep on resonating around network alliances in intricate technology industries and not just the telecommunications sector (Sheth, 2011). Nonetheless, other companies seeking to join this sector should emulate the international telecommunications giant with its headquarters in Finland, Nokia. Nokia is excelling in the telecommunications sector through recognizing the requirement of being open and collaborative while maintaining a powerful safeguard of information skills. The last couple of years has witnessed the corporation adopt the idea of the open business model through starting numerous prestigious innovations and investment schemes set to coordinate systems of innovation collaborators across the globe. This has resulted in Nokia venturing considerably in building up an international network of new skills, notions, marketplaces, and monetary progressions. Such international networks are aimed at generating network alliances and collaborations in markets that Nokia perceives as major development facilitators.

Similar to the case of Nokia, innovation in the telecommunications industry could be done with the aid of alliances and collaborations. Nevertheless, a company desiring to venture into the telecommunications sector ought to be cautious regarding safeguarding its vital intellectual property in fields where it could be greatly vulnerable to risks such as IP loss. In this manner, such a company could end up being reputed as a leader in safeguarding and developing its proprietary expertise via the intelligent administration of its partnerships. This could normally result in lucrative licensing agreements being reached to take advantage of alliances and open networks (Sheth, 2011). In addition, the company ought to create strategies that will make it evade the drawback of unintentionally generating an opponent from collaborations that entail the free sharing of information amid collaborators with the intention of enhancing the innovation endeavor.

Constructive collaboration deals could be attained with IP normally being traded to aid the knowledge exchange. It is evident from the case of Nokia that threat mitigation in this sector is anchored in the assumption that the success of a network alliance starts or concludes with the existence (or nonexistence) of formation. On this note, open networks and alliances should entail equity-anchored affiliations amid businesses. Policies ought to be executed to make such transactions beneficial since equity tends to stabilize networks and stiffen the affiliations involving partner companies for the facilitation of exchanges of implicit understanding, in addition to learning. In addition, more information open networks and collaborations have their supporters, who believe that a flexible, casual advance to collaboration can ignite enhanced resourcefulness that the majority of companies employing a formal collaboration could find difficult to pursue (Steenkamp & de Jong, 2010). In addition to this are the alleged cost savings linked to more relaxed company affiliations when judged against traditional business deals.

Case Study

IBM is an example of technology industry that has incorporated the concepts of alliances and open networks and collaboration (Gilsing, Vanhaverbeke, & Pieters, 2014). IBM has built up a completely developed open network of chip research and development through collaboration with 9 collaborator firms. The network encompasses diverse firms and businesses such as Albany Nanotech and Advanced Micro Devices. IBM ascribes the triumph of the ecosystem to careful alignment around every partner’s strategic objective, which has aided alliance connections that are strongly specific in scale and that respect cross-cultural differences. Moreover, in an attempt to enhance collaboration, the technology giant has generated a constructive sum setting permitting network partners to provide capital to develop IBM’s amenities and achieve access to the most recent IBM semiconductor expertise. In addition, the network affiliates result in high-tech knowledge through co-merging with IBM’s engineers and other professionals, upholding even more facts sharing. The benefits from this policy have been immediate. IBM has successfully built up new semiconductor devices and manufacturing capacities and has attained excellent outcomes even during periods of economic insecurity. Such turnabout from internally to externally facing is summarized most excellently through the conviction that IBM is most innovative following collaboration.

The danger of opportunistic conduct normally appears great in the creation of alliances with firms attempting to take more from a partnership as compared to how they are ready to offer (Gilsing et al., 2014). Just like the semiconductor firms, few sectors have been more intensely impacted by alliances as compared to pharmaceuticals. In this regard, alliances characteristically assist in the creation of value through the facilitation of beneficial positioning in a particular sector or boosting market share via innovation or enhanced service contributions. Different firms have as well created alliances to achieve competitive benefit from a resource point of view via advanced capacities and contributions.

Millennium Pharmaceuticals centered their consideration on the early phases of drug development and collaborated with big companies such as Merck and Pfizer to triumph over the other competitors. Such collaborations ensured that they had time to establish their capacity to have new drugs in the marketplace. When Millennium Pharmaceuticals achieved great support, it started expanding to other sections of the industry via co-advancement. Developments from both the resource and emplacement viewpoints illustrate the strength of network deals in the transformation and evolution of technology-based firms and their capacities. Though competitive benefit could be easily attainable for the companies wishing to collaborate, it could be deceptive to assume that the progression is risk-free (Gilsing et al., 2014).


In a global setting, the competence to communicate productively could be difficult. Realizing the influence of internationalization on cross-cultural communication is essential for businesses making efforts to achieve competitive benefits in the global marketplace. The relevance of technology has had an immeasurable influence on the manner that businesses communicate worldwide and uphold their services and products. Open network alliances are currently necessary across an array of businesses, but devoid of cautious structuring of the networks, businesses risk losing administration of valuable knowledge courses, sequentially affecting competitive benefit. Among other companies, IBM is an instance of a technology industry that has integrated the concepts of alliances, open networks, and collaboration. Although competitive benefit could be simply achievable for the businesses wishing to collaborate, it could be deceiving to presuppose that the progression is without risks.


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