Innovation in Multinational Enterprises

Subject: Global Scale Management
Pages: 36
Words: 11532
Reading time:
40 min
Study level: Undergraduate

Introduction

Overview

This chapter covers the background to the study, problem statement, research objectives, hypotheses, and the significance of the study.

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Background information

During the 1990s, there were massive changes with regard to politics, society, and technology. It is during this time that the entire world came to know about terms like the internet, globalization, and computers. These terms were the threshold of what is reflected in the modern world of today (Morgan 23). In line with history, over the recent many years, humans have undergone two great fundamental transitions: the agrarian revolution, and the industrial revolution. Actually, the modern world is in the third revolution which is yet to be classified.

With regard to the agrarian revolution, farming was the major economic activity. The main factors of production were land and labor. Wealth was determined by how much land an individually owned and how many laborers the individual had employed. The end product in this setup was basically food. With regard to the industrial revolution, capital became an essential factor of production (Kanter 45). labor and land stilled played a greater role in terms of production; the main difference is that this labor was now skilled. Raw materials were used to manufacture goods, which were the main outputs. Factories and industries were set up. The modern world has brought about a third revolution which is technologically based. The use of computers has simplified the workload and provided a shortcut to complete tasks. Many computer software has been developed with specific roles, this is considered as innovation (Gardner 33; Beath 28).

Innovation is the process of bringing in new ideas or knowledge; thus building up the current stock of knowledge. Many of these ideas are meant to speed up the rate of performance or task completion. Innovation comes with ideas, and these ideas contribute to growth. Innovation starts with an individual who initiates an idea. The individual goes ahead to develop that idea; thus, making it available to the colleagues to utilize it. The main positive thing about this is that the idea can be used at the same time by different individuals. This makes the process of task completion easier and faster. New knowledge is seen as an important input necessary for the exponential growth of investments.

Innovation in relation to business competitiveness

The more innovative a business is, the more advantageous it gains in terms of competition. This will further translate to an escalated economic growth of the home country. The firm will also have the ability to compete with other firms located within the same region. Innovation brings about new products and new designs in production. This makes the firm to be flexible to the ever-changing business environment; hence, strengthening its competitive advantage (Argyris 98; Amabile 51).

It is prudent for a firm to meritoriously manage its innovation; this will efficiently prepare it to cope with the increased productivity that comes with innovation. The main aim of innovation is to spur growth and development in a firm. When managed properly, the rate of development can be monitored and controlled in an appropriate manner. The rate of innovation can be limited due to insufficient infrastructure, insufficient knowledge, and improper balancing of the available talents. In addition, there has been inadequate motivation to try out new ideas. Innovation also sometimes comes with very high costs. This has proved to be challenging for many businesses. Consequently, some firms lack qualified personnel to spearhead the innovation process (Aiken and Hage 78).

Problem statement

In developing countries, the level of innovation is determined by the capacity of the firm and the country to amass wealth. Some studies have pointed out that firms in developed countries like the UK still do poorly in terms of innovation. The speed of innovation has been hampered by various bottlenecks such as high costs, inadequate know-how, and misallocation of infrastructure. Indeed the solutions to these problems are yet to be explored.

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Innovation has three perspectives, for instance, the final product, the process of innovation, and the set-up of the organization. The capacity of innovation is determined by how much in terms of output the firms get out of innovation. This is determined by the firm’s values, the in-house processes in the firm, and the outdoor environment. The kind of management in place also determines the capacity of innovation for a firm.

Indeed, studies have pointed out the fact that the performance of a firm is greatly boosted by innovation. This is due to the fact that innovation boosts the competitive advantage of a firm and makes it so flexible, thereby enhancing its performance. Innovation is highly multi-faceted, which makes it difficult to gauge. Information about innovation can be gathered through taking innovation surveys and undertaking patent analysis.

Objectives of the Study

The general objective of the study was to explore the impacts of innovation on multinational enterprises. In line with this, the specific objectives included:

  1. To determine the correlation level between the firm’s performance and innovation.
  2. To investigate the link between the firm’s innovativeness and its ability to innovate.
  3. To ascertain the factors that hinder the firm from innovation.

Hypotheses of the study

In line with the general objective of the study which was to explore the impacts of innovation on multinational enterprises, the following hypotheses were tested:

  1. Ho1: There is no correlation between a firm’s performance and innovation.
  2. Ho2: There is no link between a firm’s innovativeness and its ability to innovate.
  3. Ho3: There are no factors that hinder the firm from innovation.

Justification of the Study

The findings of this study are of great value to policymakers of firms. It provides the policymakers with a wide exposure with regard to the assessment of how innovation affects the performance of the firm, thus enabling them to adopt the relevant strategies in line with the situation. The findings of this study also add to the body of knowledge of related studies about innovation in multinational enterprises.

Scope of the Study

The scope of this study was in line with the general objective, which was to explore the impacts of innovation in multinational enterprises. Using primary data and applying statistical techniques, the study explained the variables to meet the research objectives.

Literature Review

Introduction

This chapter reviews the theories both empirical and theoretical that are closely linked to innovation in multinational enterprises.

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Evolution of business over time

The evolution of the business is quite similar to the evolution of the human race. In today’s world business holds a key component in society since it offers a means of livelihood to almost everybody. Today’s business is far much different from the way it used to be several years ago. It has changed through various aspects and this change is attributed to the various innovations that occur with the human race. In a real sense, the business can mean the aggregate economic activities that human beings engage in.

These economic activities are categorized by the production of goods or services and the trade of those goods and services (Burnes 301; Veroff 338). Modern business, thus, means using the latest innovations and technologies to engage in economic activities in the best way possible (Burnes 302; Pettigrew 23; Penrose 17). Just like other economic activities, the evolution of business has been in three stages: the pre-industrialized period, the industrialization period, and the modern internet period (Burnes 302; Miller 56; Miller 88).

Business in the Pre-Industrialized world

During this time, agriculture was the dominant economic activity. Other minor economic activities in this period included various forms of trade in non-agricultural activities like handiworks and other rural-based industries. Barter trade existed in the market and later developed into an advanced and organized form that broadened beyond countries and continents. The ancient civilization confirms that both local and international trade existed during this period, and the items for trade included precious metals, fruits, and jewels (Galbraith 217; Spearman 149). During this age, the production of goods took place at diverse levels in society. In the rural setup, the production of goods is composed of handicrafts like weaving, metalwork, or woodwork. On the other hand, production in the urban centers included efficient trading activities as the most dominant feature. As time went by, trading began to take another dimension as it was now more centered toward specialization.

Business personalities started to form various classes of trading; for instance, in India, the trading business class was known as Vaishya, who was one of the four castes in the society (Galbraith 218; Langbert 438-439; Kuchinke 292). International trade began taking shape during the third century B.C. and at this time international trade was dominated in many parts of Europe and Asia. The traders were long-distance traders who traveled widely across various countries with the common goal of exchanging their goods for a proper fee. As a result of this, trading empires started to build up in various parts of Europe and Asia (Galbraith218; Krefting and Nord 512-513). The empires became so powerful that they influenced the direction of trade in the whole region.

Business during the industrialization period

The period of industrialization was characterized by the major rise of machines. During this period, human labor gave way to the adoption of machines in the production process (McGrath 78; Kimberly 213, Jackson 124). Until the industrialization period, the dominant factors of production were land labor and capital. The other factor of production, which is manageable, came up as a result of the expanding nature of the business world. The latest development in technologies of production was mainly viewed to be as a result of the introduction of machines.

The existence of machines made it possible for labor to be more efficient. As a result, a lot of goods were produced within a very short time; thus, trade developed and took a central position within the society. This contributed to the emergence of modern markets or business systems. As trade continued to expand, there was an urgent need to further study the market progress, thus, necessitating the research to find out new directions for trading to take place (McGrath 90; Johnson and Scholes 54). As a result of this research to find out the new trading routes, Christopher Columbus bumped into a new land, which was later to be known as America. America later transformed to be the center of the world’s business and many inventions and innovations have originated from that land.

Money was introduced in the 19th century and it replaced the barter trade system of exchanging goods in the market. Paper money quickly replaced the precious metals that were previously used for trade. Another major development during this period was the emergence of the biggest industries in America. Robber Barons became the first Americans to be industrialists (Nelson and Winter 204; Geert 156; Gronn 427; DiMaggio 167). Towards the end of the 19th century, several other industrialists came into play, most notably were the Carnegie Steel Company and Central Pacific railroad (Nelson and Winter 204). These industries created competition in the business world and as a result of this, many more innovations took place.

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At the start of the 20th century, the leading industries in the world were mainly from Europe, and they were followed by American industries and Asian industries in that order. Other parts of the world including the Latin America region and Africa still lagged behind with regard to the establishment of industries within their soil (Nelson and Winter 205; Cameron and Sutton 19 ). The emergence of these industries contributed to the development of the energy market, mainly oil and petrol, as they were the common source of energy in these setups. Floating currencies altered the world’s currency in various perspectives. The introduction of the petrodollar gave rise to rich and powerful oil business empires mostly in the oil rich Gulf countries.

Business in the modern internet period

Initially, the business was perceived to be either involve the trade of goods or manufacture of goods or exchange of goods; however, in the modern internet period that perception has hugely changed as a result of internet technological advancements (Nunnally 124; Capelli 105-106). The development of the World Wide Web necessitated the ease of transfer of goods and services from one area to another. The goods and services became cheaper than before as a result of the reduced cost of production. During this period, it was not mandatory for a person to be physically present in order to provide labor services; instead, the person can provide labor services to an organization while he/she is far away, by use of the internet.

As the internet era began to take shape, many businesses started to use customized business software so as to streamline their operations. As a result, several software companies came into being in order to meet the growing and changing demands with regard to the business world (Vesper 156; Kanter 201; Bollen 201). This course of action streamlined the business world forever. The introduction of the internet to the business world also gave rise to other major developments, especially in the field of health or medical services. The research was made easier as a result of designing software and other computer applications. Up to now, the evolution of a business is a process that still goes on and on as a result of the ever-growing needs of many organizations. In the process of business evolution, it is important to note that the evolution process is much similar to the history of human beings since both processes are connected and interlinked with each other (Bowman 45).

Modern Business views

A business model refers to the standard in which a business enterprise functions with the main objective of achieving the organizational goals and obligations. Business models revolve around establishing a strong and relevant relationship with the customers or clients; putting in place a relevant and efficient mechanism that puts the business in a strategic position to counter the challenges that come about with the management and operations of the business. A business model can therefore be referred to as a theoretical instrument that encompasses a set of items, perceptions,s and how they speak about the goals and aims of the business of the society (Burgelman 236; Capon and Glazer 11; Wernerfelt 10).

High-performing organizations nowadays are acknowledging the significance of using the best training and development systems to improve their competitive advantage in the industry. Training and development of the human resource are critical factors to any organization if the value and potential of the human resources are to be harnessed and grown. Many studies have underscored the apparent correlation between soundly designed and strategic training and the overall success of the organization (Cappelli 103; Dierickx 1508; Wechsler 223). The general image of the industry and workers is also influenced by the level and quality of training and development. In our contemporary business climate, most companies are faced with stiff competition for their quality staff (Gronn 425; Staw 190; Senge 156). Human resource experts assert that companies that invest heavily in training and development benefit from an enriched working environment with a low level of staff exodus as well as enhanced productivity and organizational performance (Kuchinke 292; Rogers 59).

In order to maintain a competitive advantage and retention of high-quality staff, companies must ensure that the training and development of their human resources are not taken lightly. Investing in professional training guarantees stability and productivity in organizations (Wexley and Latham 12). One of the most significant aspects of human resource development is helping employees to become more effective in the work and to be able to adapt to other jobs within the company. However, in order for training strategies and policies to be effective, they must correspond to the company’s goals and objectives (Miller 55). Major changes in an organization are brought about by changes in workers’ behavior and competency. The willingness of the employees to embrace change in an organization is influenced by numerous factors such as organizational structure, performance evaluation system, organization’s culture among others. The training department is the one with the strongest position to integrate the above elements and direct top leaders through change initiatives (Miller 55).

Training and development is the main instrument for breaking new grounds, thus, bringing changes to an organization. The expertise acquired through professional training not only helps in getting accustomed to the new technology but also contributes to the new innovations (Langbert 440; Pinchot 226). Professional training must take place within a framework of the partnership between the training department, the organization as a whole, and the human resources. This will make sure that the training offered is in line with all the stakeholders’ views/interests. Therefore, training brings all the stakeholders together and the common interest is identified and worked upon. Eventually, professional training is about value addition to the company and the stakeholders (Krefting and Nord 513; Miller 54-55).

One of the major obstacles to innovation in businesses is complacency. Most managers after budding through the ranks to the topmost positions forget about training. They only turn to train departments usually after making all the key decisions within an unreasonable time frame (Quinn 82). In order for the training department to accomplish its task successfully, it needs time to design programs, invite workers for training, carry out the training and allow a sample to experiment with what they have learned in order to produce results (Scully 20; Nemeth 28). This often leads to a waste of time and company resources. It is only through professional training that an organization can avoid time wastage and exasperation by assisting the top management to embrace training practices that lead to innovation and change in a business (Miller 54-55).

Many managers always apply a top-down style of leadership which has proven to be ineffective in businesses nowadays. In this case, the manager designs the business strategies sets goals and objectives, sets deadlines, delegates duties among other functions without consultation. In such cases, the training department only executes duties assigned by the top management. Generally, training and human resources development should be a continuous process rather than a spontaneous process (Scully 18-19). Some business managers always think they know everything about the business and understand the effect of a change on the workers and their roles in the company and how the change should be managed to produce optimal results. More so, some managers still believe that consultation is a major obstacle to the quick adoption of innovations; thus, they always avoid performance barriers that are a threat to new innovations (Gronn 425).

Professional training helps managers to make clear decisions. Many managers are great visionaries except that they do not translate their visions into observable variables. Professional training thus plays an important role in articulating the goals and objectives of a business organization. Professional training also acts as a vehicle for communication and leading change (Miller 54-55; Wexley and Latham 19). The managers through training are able to design solutions to challenges in an organization. The training team during the early stages of initiation is always capable of advising the top management on the best possible solutions to the current or the looming problem (Kuchinke 293). Most of the activities carried out in the training department are parallel with the change team. By the time the executives make an announcement about the change, those who have undergone professional training will already be familiar with it. This gives workers confidence, trust, and belief. Professional training helps senior leaders to remain visible in an organization. Leaders become visible through participation and involvement in the training activities or programs.

The best human resource training and development is the one that is all-inclusive and continuous in nature. All-inclusive in this case means participation without discrimination and consensus-building. Professional training should be done on a regular basis and not spontaneously. The training should aim at establishing the solutions to the current looming challenges and developing new ideas/innovations. Human beings are always skeptical about nature when it comes to innovations. Therefore, besides developing new strategies and ideas, professional training should act as a means of communication between the management and the employees. This provides the employees with confidence, trust, and belief when implementing the new strategies/ideas. The employees in this case understand the benefits of the new ideas/ strategy and its challenges. The best design and strategy in professional training must integrate training with other elements of the organizations such as organizational structure, performance evaluation system, organization’s culture among others. This is the only way to achieve sustainability and organizational success.

Business Models

Business entities that seek to find out advanced and innovative solutions are often successful in today’s society. The correlation between advancement in business ideas and the triumph of a business organization plays a major role in building a successful business empire or business world (Cyert and March 201). For instance, it is very true to say that the advancements in technologies such as the invention of gun powder or satellite radar transform totally what warfare meant to be; alternatively, the introduction of the printing press services contributes so much to the revolution of the education system due to the availability of books to be used toward achieving an academic goal or objective. A business model refers to systems or practices that enable a business to meet its objectives and goals that are expected. In order to achieve these organizational obligations, various businesses employ different strategies in order to prosper.

Forms of business models

Trade Associations

Trade associations encompass business organizations in which the individual members have a common business goal or objective. In this case the competitors come and join hands together with the aim of creating a joint podium that will enable them to make it possible for them to tackle the problems that arise with respect to their business environment. A trade association is very relevant since it gives the competitors a great chance to tackle a common enemy. Normally, there are some stipulated rules or regulations that govern the behaviour of the businesses that are in a trade association. These rules are there to be obeyed and it is not recommended for a business unit to break or disregard these rules and regulations. Trade associations always come with various advantages as it gives training opportunities to member business units. Moreover, it gives the business units a chance to tackle and manage the business problems that normally arise by helping them to design and implement solution while working as a team.

Trade associations are not profit making associations; they only help the businesses to come up with quick and manageable solutions to their long term problems. The members are, thus, required to contribute a certain agreed amount of money on a regular basis in order to sustain the survival of the trade associations. Trade associations are very relevant in the modern business world as it helps in eliminating restricted trade practices that would damage the reputation and the image of the organizations.

Cooperative Unions

Just like trade associations, cooperatives are also nonprofit organizations with similar attributes or features. The underlying distinguishing factor between a cooperative and a trade association is that in a cooperative, the business unit members have an equity interest because the members actually own part of the cooperative while in a trade association, the business unit members do not own any stake of the association (Scully 20).

The main contribution of a cooperative to sustaining the business units is that it helps them to purchase goods in an easier way as a result of its strong link to the suppliers of the various products in the market. Thus the cooperatives will organize for the joint purchase of the supplies and bear all the costs to the business units. After resale of the supplies, the excess amount of money realized is distributed to the members as a form of dividends or plowed back profits. Other cooperatives also exist and they are normally given various tasks to tackle in the market, for instance, some cooperatives engage entirely in marketing or advertising campaigns within a given geographical region. Other cooperatives can engage in arranging for transportation, warehousing, insurance, or sales services. Cooperatives thus play a major role in the survival of the modern business.

Franchising

In this model of business, there are various stipulated cultures that are geared toward the maintenance and preservation of business values and goals; for instance, the employees in this setup are required to dress up or behave in a given way as directed by the franchisor. Here again, antitrust laws play an important role in shaping the business environment. The franchisee normally pays a given amount of fee to the franchisor on a regular basis in order to continue having the privileges of being a franchisee (Prahalad and Hemel 86).

Hypothesis is involving modern businesses and innovation management

Innovation means a new idea that can be put into practice (Van de Ven 591). Therefore, innovation entails intelligence since intelligence plays a key role in the development of new ideas. Whenever intelligence fails to be in line with innovation, its function toward innovation is realized. There are various hypotheses that are connected to modern-day business and innovation management.

Large firms account for an unbalanced allocation of innovations

In line with this hypothesis, research and development have proved the fact that firms that have a large volume of resources attributed to them have an ever-increasing return to scale attributed to them. Such firms often dominate the market and have a larger market share as compared to the other small firms. They are, therefore in a good position to make inventions and more innovations. When a business unit has reached such a size, it will benefit from economies of scale. In any given business system, the size of the organization really matters as it determines the position of the business in society. A business will achieve a dominant position in society when it has achieved a given level of economies of scale. Large firms or business enterprises normally call the shots on the market and they can swing the direction of the market by any one of their actions. In the modern business world where much emphasis has been given to information and communication technology, innovation has really been simplified as there are no major challenges involved. The work is made much easier and participation of every member of staff is enhanced.

Profitable firms are in a better position to innovate

Every business is driven by the primary objective to make profits as much as possible. Thus, every mechanism will be put in place in order to realize this business objective. Business owners or business employees really feel good when their business unit has realized a given level of profits. At the start of every financial year, targets are drawn and these targets are the main drivers of the business. Profits can, therefore, be perceived as the main source of income for the business. Various business units that realize a substantial amount of profits are in a better position to re-invest part or whole of that profit toward innovative work.

For instance, a business can decide to streamline its information and communication department in order to boost precision and communication systems e.g. adopting a teleconferencing system of communication so as to improve the reliability and validity of the communication systems. Business units that do not realize a good amount of profits still continue to lag behind since their resources cannot match the changing business environment all over the world. Therefore much effort should be invested in these business units in order to propel them towards achieving a target profit that will enable them to engage in innovations that are beneficial to them.

Adverse resources foster innovation

When a business unit is infringing on resources, innovation will be stimulated in order to come up with solutions that will be able to propel the business forward so as to position it to achieve its goals and objectives. Inability to access resources leads to poor performance of the business, thus, further stalling the growth prospects of the business. Due to this, the business unit will lag behind in terms of trade or market share. As a response mechanism, the research and development department of the business unit will have no other option other than to innovate or invent new ideas so as to foster the survival of the business (Cyert and March 65). These innovations will help the business unit to boost the resource base and reorganize the factors of production in an objective manner. Many innovative ideas in the business world have come up as a result of thorough research and development. Each business wants to stay ahead of its competitor or wants to be unique in a given way in order to achieve recognition or a given status in the modern world.

Efficient leadership fosters innovation

Leadership is a key component to the survival of any business entity. Mediocre leadership pulls the business unit backward rather than pushing it forward. A business unit with stable and efficient leadership will be in a better position to stay ahead of its competitors with regard to all aspects of the business. The business environment is very competitive in nature and any slight shortcoming with regard to leadership or management could possibly contribute to the downfall or the collapse of a business unit. Due to this many modern businesses across the world have stipulated high standards in terms of qualifications of candidates to be considered for the top management posts.

An efficient leader will highly invest in the research and development department in order to foster innovation with the intention to stay far much ahead of the competitors and drive the business towards maturity (Burns and Stalker 61). Leadership and management, therefore play a vital role toward upholding the values and philosophies of a business entity. Innovation comes with a wide range of opportunities that are viewed to be of great importance and value to modern business. The evolution of business is still a continuous process and these innovations play a major role in the shaping of the future business world.

High-performance level of the business fosters innovation

Performance of a firm is attributed to the economic activities that the business enterprise engages in. It is a common practice for many businesses to not only engage in activities that are for the interest of the business but also activities that contribute to the welfare of the whole society in general, for instance, corporate social responsibility. Businesses that mind the welfare of the entire society is held at higher standards than the ones that ignore the plight of the society (Cameron and Sutton 88). These activities necessitate the development of research, thus, possible potential ideas that manage the plight of society. Research leads to possible innovations which are necessary for the performance and development of the business enterprise.

Efficient organizational culture contributes to innovation

Organizational culture refers to the relationship between the individual workers within the business unit. When the workers relate harmoniously and coexist peacefully within the organization a good environment for work is created. This environment boosts the working culture and further necessitates the emergence of innovation to the organization. Organization culture plays a central role in cementing business ideologies in an objective manner. Businesses with poor or inefficient organizational cultures are left behind in the modern world as far as innovation is concerned (Lawrence and Lorsch 67). The changing dynamics in the world of business in the modern era demand an efficient organizational culture as a requisite to innovative ideas due to the fact that when the workers are communal in terms of job performance, much emphasis will be created on research and innovation.

Firms with imperfect performance are more likely to adopt innovations than firms that are highly performing

Businesses that have continual problems are more likely to innovate than businesses that are already successful. This is because there is a high spirit of innovation in these businesses as compared to the complacency of the already successful business entities. The management of the poorly performing businesses will resort to risky ventures in order to sustain their survival; on the other hand, already successful firms fear to engage in these risky ventures (Bolton 60).

Firms with imperfect organizational culture are more likely to adopt innovations than firms with stable organizational culture

Businesses which have persistent problems with regard to organizational culture are more likely to innovate than businesses that are already stable in terms of organizational culture. This is attributed to the high sense of the spirit of innovation to these businesses as compared to their stable counterparts. The decision-makers of the businesses with mediocre organizational culture will resort to precarious projects in order to uphold their continued existence; on the other hand, the stable firms do not see the need to carry on innovations. It is imperative for businesses to have a proper organizational culture in place in order to attract potential workers or investors into the business (Lawrence and Lorsch 90).

Unprofitable firms are more likely to adopt innovations than highly profitable firms

When a firm is not profitable, the decision-makers will look at all the options available in order to foster innovation in the business. On the other hand, businesses that are making huge profits are complacent to engage in risky innovations because they have already reached the summit and are gaining from economies of scale. The realization of maximum profits is the goal for every business unit; any business that does not make sufficient profits should rather be shut down in order to avoid making more losses. Profits are the main source of income for any business entity, thus, the more profits a business makes, the more opportunities it has toward innovation (Boulding and More 186).

Firms with inefficient leadership are more likely to adopt innovations than stable firms

Leadership has proved to be a major component to the success or failure of an organization. Efficient leadership qualities have proved to sustain the development of a business in various aspects. However, it is worth noting that firms with inefficient leadership standards have been at the forefront to initiate innovative activities. The decision-makers here feel that everything should be done so as to promote innovative activities. On the other hand, the businesses with efficient leadership capabilities feel that there is no need to worry or panic about innovation because they are in a better position. Efficient leadership qualities contribute to building and maintaining the good reputation of the organization (Burns and Stalker 161).

Leadership in innovation

Every leader knows that an organization really needs innovation and more creativity in order to sustain itself. Innovation is, thus, regarded as the backbone of any organization. Creativity brings about new ideas that are greatly beneficial to the survival and sustainability of the organization. It is, therefore, imperative for any leader to focus on ideas or programs that supersede the current ones that the organization is based upon. Leaders, therefore have various methods to employ so as to foster innovation in the organization. These methods vary from organization to organization due to the different nature of their needs. The best way is to create an environment in the workplace to stimulate creativity and innovation.

Change is a widespread feature in the life of a business and the capability to handle such changes is the core competence of success in the organization (Senge et al. 20). The main drivers of organizational changes over the last two decades have been globalization, advancement in technology, and fluctuation in the global economy. This has led to the distressing exploration of mechanisms for achieving competitive advantage through increased radical forms of change (Stacey 5; Burnes, 25). Organizational strategies must take the form of a process of continuous learning, in which at the limit, preparation and execution become impossible to tell apart. Organizations should generate, develop and maintain excellent business designs capable of taking advantage of its strategic landscape and business environment beyond the lifetime series of changes in an organization. This can only be achieved through a self-organizing process of the individual employees (Cortese, 2003).

The ever-changing global economy calls for new innovations and strategies in different organizations in order to maintain a competitive advantage. These include training and development of the human resource to enhance productivity and overall business performance. Organizations are taking huge risks by investing heavily on human resource training and development (Tushman 77). Business leaders and executives view innovation as one of their top most agenda toward the realization of a perfect business model. Many studies have found out that training and development are the main instrument for breaking new ground bringing changes in an organization. These changes include changes in workers behaviour and competency, upholding innovations and adopting new technologies (Stacey 2003). The best design and strategy in professional training must be all inclusive, continuous in nature and should integrate training with other elements of the organizations.

Senge et al explains how individuals and organizations work jointly to create a sustainable planet. He developed new ideologies related to leadership using an organized approach (8). The systematic approach views the entire organization as a complex system with interconnected parts. The constituents of an organization include the management, general employees and the stakeholders. He describes sustainable thinkers as innovators who work relentlessly to create a regenerative economy in the future and are capable of viewing and understanding the system in which they live and work. Their vision is beyond the events and organizational boundaries thus make critical choices which take into consideration the natural and societal edge so as to create sustainable cycles of innovation (Senge et al. 8).

High performing organizations nowadays are acknowledging the significance of using best training and development systems to improve their competitive advantage in the industry. Training and development of the human resource are a critical factor to any organization if the value and potential of the human resources are to be harnessed and grown. It creates a big opportunity for the workers to come up with new ideas that can improve the face of the organization, and also the mode of operation. Leaders normally want the best from their employees or subjects, thus, they make it possible for training activities for the. Many studies have underscored the apparent correlation between a soundly designed and strategic training and the overall success of the organization (Cappelli 108). The general image of the industry and workers is also influenced by the level and quality of training and development. In our contemporary business climate most companies are faced with stiff competition for their quality staffs (Gronn 452). Human resource experts assert that companies which invest heavily in training and development benefit from an enriched working environment with a low level of staff exodus as well as enhanced creativity, innovation, productivity and organizational performance (Kuchinke 292).

In order to maintain a competitive advantage and retention of high quality staff, companies must ensure that training and development of their human resources are not taken lightly. Investing in professional training guarantees stability and productivity in organizations (Wexley and Latham 20). One of the most significant aspects of human resource development is helping employees to become more effective in the work and to be able to adapt other jobs within the company. However, in order for training strategies and policies to be effective they must correspond to the company’s goals and objective (Miller 54). Major changes in an organization are brought about by change in workers behaviour and competency. The willingness of the employees to embrace change in an organization is influenced by numerous factors such as organizational structure, performance evaluation system, organization’s culture among others. The training department is the one with the strongest position to integrate the above elements and direct top leaders through change initiatives (Miller 55).

Efficient leadership strategies are essential in an organization since it defines where the organization is headed to. An efficient leader builds up strategies aimed at developing the staff and the creation of new ideas to the organization. The democratic leadership style makes it necessary to define goals for the staff members and also allows the members of the staff to develop and get promotions. Achievements are distinguished and rewarded accordingly. Highly experienced staff members make it easy for this leadership style to hold since there is improved coordination and communication in the organization. Democratic style of leadership is most applicable when team building is required in the organization. When the staff members are needed in the decision making process, this kind of leadership is relevant. This kind of leadership style makes it possible for easy problem solving and objective decision making in the organization.

Business entities that seek to find out advanced and innovative solutions are often successful in today’s society. The correlation between advancement in business ideas and the triumph of a business organization plays a major role towards building a successful business empire or business world. For instance it is very true to say that the advancements in technologies such as the invention of gun powder or satellite radar transform totally what warfare meant to be; alternatively, the introduction of the printing press services contributes so much to the revolution of education system due to the availability of books to be used toward achieving an academic goal or objective.

Training and development are the main instruments for breaking new grounds, thus, bringing changes to an organization (Stacey 23; Burnes, 320). The expertise acquired through professional training not only helps in getting accustomed to the new technology but also contributes to the new innovations (Stacey, 21; Burnes, 310; Kirton 625). Professional training must take place within a framework of partnership between the training department, the organization as a whole and the human resources. This will make sure that the training offered is in line with all the stakeholders view/ interest. Therefore, training brings all the stakeholders together and the common interest is identified and worked upon.

One of the major obstacles to innovation in businesses is complacency. Most managers after budding through the ranks to the top most positions forget about training. They only turn to training departments usually after making all the key decision within an unreasonable time frame (Miller 90). In order for training department to accomplish its task successfully, it needs time to design programs, invite workers for training, carry out the training and allow a sample to experiment what they have learned in order to produce results (Stacey 8; Burnes 322). This often leads to waste of time and company resources. It is only through professional training that an organization can avoid time wastage and exasperation by assisting the top management to embrace training practices that leads to innovation and change in a business (Miller 92).

Many managers always apply a top-down style of leadership which has proven to be ineffective in the businesses nowadays. In this case, the manager designs the business strategies, sets goals and objectives, sets deadlines, delegate duties among other functions without consultation. In such cases, training department only executes duties assigned by the top management. Generally, training and human resources development should be a continuous process rather than a spontaneous process (Scully 200). Some of business managers always think they know everything about the business and understand the effect of a change on the workers and their roles in the company and how the change should be managed to produce optimal results. More so, some managers still believe that consultation is a major obstacle to quick adoption of innovations; thus, they always avoid performance barriers which are threat to new innovations (Gronn 450).

Research Methodology

Introduction

Methodology is the process of instructing the ways to do the research. It is, therefore, convenient for conducting the research and for analysing the research questions. The process of methodology insists that much care should be given to the kinds and nature of procedures to be adhered to in accomplishing a given set of procedures or an objective. This section contains the research design, study population and the sampling techniques that will be used to collect data for the study. It also details the data analysis methods, ethical considerations, validity and reliability of data and the limitation of the study.

Research philosophy

For this part, choosing a philosophy of research design is the choice between the positivist and the social constructionist (Easterby and Lowe 67). The positivist view shows that social worlds exist externally, and its properties are supposed to be measured objectively, rather than being inferred subjectively through feelings, intuition, or reflection. The basic beliefs for positivist view are that the observer is independent, and science is free of value. The researchers should always concentrate on facts, look for causality and basic laws, reduce the phenomenon to the simplest elements, and form hypotheses and test them.

Preferred methods for positivism consist of making concepts operational and taking large samples. The view of the social constructionists is that reality is a one-sided phenomenon and can be constructed socially in order to gain a new significance to the people. The researchers should concentrate on meaning, look for understanding of what really happened and develop ideas with regard to the data.

Preferred methods for the social constructionists include using different approaches to establish different views of phenomenon and small samples evaluated in depth or over time (Saunders and Thornhill 87). In the case of exploring on the impacts of innovation on multinational enterprises, the philosophy of the social constructionists was used for carrying out the research. Because it tends to produce qualitative data, and the data are subjective since the gathering process would also be subjective due to the involvement of the researcher.

Sample selection

Population refers to the total elements that are under investigation from which the researcher draws conclusions (Saunders and Thornhill 90). A sample is a subset of the population, i.e. it is a representation of the total population. This study mainly used a non-probabilistic design of sampling. In this design, not every participant in the study has an equal chance of being chosen. Non-probability sampling design does not utilize much cost and time, hence it is widely preferred. When smaller samples are used, a non-probability research design is susceptible to errors, thus, normally a larger sample size is selected. In addition, it was preferred for the number of observations to be more than the number of variables as a regression analysis was to be conducted.

Research design

In line with the main objective of this study which is to explore on the impacts of innovation on multinational enterprises, this study employed a cross-sectional research design. Under this design 450 respondents were targeted. They were issued with questionnaires to assist with data collection. The respondents were assured of the confidentiality of their participation.

Statistical method

Descriptive statistics and inferential statistics were both applied in the study in order to test the hypotheses.

Descriptive statics

Descriptive statistics are mostly applicable for analysing numerical data. It uses distribution frequencies, distribution of variables and measures of central tendencies (Saunders and Thornhill 93). The characteristics of the sample chosen will be used to compute frequencies and percentages with regard to the questionnaires.

Inferential statics

Inferential statistics give the researcher the chance to convert the data into a statistical format so that important patterns or trends are captured and analysed accordingly (Easterby and Lowe 72). Regression analysis is utilized in inferential statistics. Regression analysis is employed to check on the relationship between a dependent variable and independent variable. It allows for the researcher to predict and forecast the expected changes to a dependent variable when one independent variable changes.

Data Collection and Instrumentation

Questionnaires were used to collect the data. The questionnaires were issued to 450 respondents who were mainly employees in multinational enterprises. The participants’ responses were treated with much confidentiality.

Data Analysis Methods

Data from the survey were entered into the Excel spreadsheet program for future analysis. The data was analysed using SPSS, ANOVA, regression and correlation analysis.

Limitation of data collection methods

There have been a lot of concerns on additional budgetary expenses for collection of the data, regardless of whether the gathered data is really genuine or not and whether there may be an explicit conclusion when interpreting and analysing the data. In addition, some employees were reluctant to offer some information they deemed confidential and unsafe in the hands of their competitors. This posed a great challenge to the research as the researcher had to take a longer time to find employees who were willing to give out adequate information.

Validity and reliability

The validity of the data represents the data integrity and it connotes that the data is accurate and much consistent. Validity has been explained as a descriptive evaluation of the association between actions and interpretations and empirical evidence deduced from the data. More precaution was taken especially when a comparison was made between employee commitment and job attitude. The employee motivation may differ from business to business and may not be identical in an industry. Reliability of the data is the outcome of a series of actions which commences with the proper explanation of the issues to be resolved. This may push on to a clear recognition of the yardsticks concerned. It contains the target samples to be chosen, the proper sampling strategy and the sampling methods to be employed.

Findings, Data Analysis and Interpretation

Introduction

This section covers the analysis of the data, presentation and interpretation. The results were analysed using SPPS, ANOVA, regression and correlation analysis.

Descriptive statistics

Biographical information

237 respondents (52.6%) of the expected 450 respondents completed the questionnaires. The respondents had varied age distribution which is summarized in the Figure 4.1 below.

Age distribution of respondents.
Figure 4.1 Age distribution of respondents.

The figure indicates that many respondents were from the age group 40-49 years (43%, n=101). This was followed by respondents in the age group 30-39 years (24%, n=57). The third largest age group was 50-59 years which had 55 respondents (23%). The age group under 30 years had the lowest number of respondents (10%, n=24).

An analysis of the gender of the total respondents was made. The gender distribution is summarized in Figure 4.2 below.

Gender distribution.
Figure 4.2 Gender distribution.

The figure indicates that many respondents (60%, n=142) were female, whereas only 40% (n=95) were male employees.

An analysis of the race of the respondents was undertaken. The race distribution is summarized in Figure 4.3 below.

Race distribution.
Figure 4.3 Race distribution.

The figure indicates that a majority of the employees were Coloured (53%, n=126). This was followed by Blacks (18%, n=42), Whites (16%, n=39) and Asian employees (13%,, n=30) in that order.

An analysis of the employee academic qualification was made. The qualification level is summarized in Figure 4.4 below.

Employee qualification distribution.
Figure 4.4 Employee qualification distribution.

The figure shows that many employees (54%, n=128) hold Bachelors degrees. This was followed by employees who had Higher diplomas (18%, n=42), Diploma holders (16%, n=39) and Masters degree holders (12%, n=28) in that order.

An analysis of the employment category of the respondents was done. The employment category is summarized in Figure 4.5 below.

Employment category distribution.
Figure 4.5 Employment category distribution.

The figure shows that a majority of the respondents (55%, n=130) was employed on a permanent basis. This was followed by 89 respondents (37%) who were temporarily employed. Only 8% (n=18) of the respondents were employed on contract.

Summary of descriptive statistics

Descriptive statistics using the measures of central tendencies were computed from the results gathered from the questionnaires. The questionnaires focused on employee commitment and job attitude.

Results for factors impacting the capacity of firms to innovate

Respondents who were majorly employees were issued with questionnaires in order to express their opinions on the factors impacting the capacity of the firm to innovate. The summary of results is summarized in Table 4.1. The results show that from the sample of 237 respondents, the mean for the job attitude is 113.20 with a standard deviation of 14.30. From this computation, it can be deduced that many employees still have a lower attitude to their jobs; this is indicated by the lower value of the standard deviation. A low attitude to the job indicates that the level of satisfaction is also low. In addition, the calculated arithmetic means for job environment, remuneration, administration and job progress are less than the calculated arithmetic mean for work colleagues. With regard to the fact that an average level of satisfaction is represented by a mean of 36, then it is evident that many employees have a lower attitude to work because they are not satisfied with the job environment, remuneration, administration and job progress. Employees were greatly satisfied by their colleagues (Mean=38.24, SD=3.13) than the job environment (Mean=32.12, SD=6.30), administration (Mean=27.20, SD=5.30), job progress (Mean=24.35, SD=4.22) and remunerations (Mean=23.10, SD=4.80).

Table 4.1 Results for factors impacting the capacity of firms to innovate.

Mean Standard deviation
Job attitude 113.20 14.30
Job environment 32.12 6.30
Remuneration 23.10 4.80
Administration 27.20 5.30
Job progress 24.35 4.22
Colleagues 38.24 3.13
Capacity to innovate in relation to the firm’s competitiveness

Respondents who were majorly employees were issued with questionnaires in order to express their views on the capacity of the firm to innovate in relation to its competitiveness. The summary of results is in Table 4.2. The results show that the total organizational commitment has a mean of 55.43 and a standard deviation of 9.24. With regard to the fact that an average level of employee attitude is represented by a mean of 60, it is evident that quite a number of employees portrayed a lower level (below average) of organizational commitment. In addition, affective commitment (mean=20.12, SD=3.02) stipulates that the employees did not have enough faith in the values and beliefs of the organization. Normative commitment (mean=22.41, SD=5.02) stipulates that employees were reluctant to represent the organization in transacting business. Continuance commitment (mean=17.02, SD=7.41) stipulates that employees feel shy to continue working for the organization.

Table 4.2 Capacity to innovate in relation to the firm’s competitiveness.

Mean Standard deviation
Affective commitment 20.12 3.02
Normative commitment 22.41 5.02
Continuance commitment 17.02 7.41
Organizational commitment 55.43 9.24

Inferential statistics

The results of inferential statistics were used to establish the relationship that exists between innovation in the firm and the performance in terms of business. In addition, inferential statistics were used to ascertain the connection between employee commitment, job attitude and provision of quality service. The results in Table 4.3 show that there are major correlations between remunerations and job attitude (r = 0.598, p < 0.01), job progress and job attitude (r = 0.585, p < 0.01), work colleagues and job attitude (r = 0.386, p < 0.01) and between administration and job attitude (r = 0.268, p < 0.05). There was no significant relationship between the nature of the job and job satisfaction (r = 0.113, p > 0.05).

Table 4.3 Pearson correlation matrix for factors impacting the capacity of firms to innovate.

Job attitude
Pearson correlation Sig (2-tailed)
Job environment 0.131 0.396
Remuneration 0.598 0.000**
Administration 0.268 0.042*
Job progress 0.585 0.000**
Colleagues 0.386 0.003**

NOTE:

  1. * = p<0.05
  2. ** = p<0.01

The results in Table 4.4 confirm that the most significant relationship subsists between sex and job attitude (r = 0.67, p < 0.01). In addition, there was a strong correlation between the age of respondents and job attitude (r = 0.50, p < 0.01). There was also a significant relationship between job status and job attitude (r = 0.45, p < 0.01), and job level and job attitude (r = 0.37, p < 0.01). Lastly, there was a strong relationship between education and job attitude (r = 0.28, p < 0.05).

Table 4.4 Pearson correlation between capacity to innovate and biographical variables.

Job attitude
Sex 0.67**
Age 0.50**
Job status 0.45**
Education level 0.28*
Job level 0.37**

NOTE:

  1. * = p<0.05
  2. ** = p<0.01

The results in 4.5 are for the biographical variables regressed against the capacity to innovate Table 4.6 shows the ANOVA Analysis. The result found out that the multiple R-value is 0.602. The R-Square value of 0.361 indicates that 36.1% of the variables explained the dependent variable. The F-statistic (5.295) is statistically significant at 0.01 level; meaning that the demographic variables significantly enlighten 36.1% of the variance in job attitude. Job status is the best predictor of job attitude as it has a beta coefficient value of -0.3189 and is statistically significant at the 0.01 level. In addition, sex, age and job level are statistically significant at 0.05. The negative value of the beta coefficient of job level indicates that employees in higher positions of employment have a lower attitude towards their job. In the same manner, the negative beta value of the age coefficient shows that older employees have a lower attitude towards their job.

Table 4.5 Multiple regression results: capacity to innovate and biographical variables.

Multiple R 0.602
R Square 0.361
Adjusted R Square 0.332
Standard Error 12.961
F 5.295
Sig F 0.00**
Variable Beta T Sig T
Age -0.2164 -0.2670 0.03969*
Sex -0.2684 -2.4021 0.0108*
Job status -0.3189 -3.0942 0.0029**
Education level -0.1537 -1.2951 0.0701
Job level -0.1806 -1.1092 0.0229*

NOTE:

  1. * = p<0.05
  2. ** = p<0.01

Table 4.6 Analysis results: capacity to innovate and biographical variables.

ANOVA-Analysis of Variance
Alpha0.05 F-table3.874
ANOVA Table
Sources SS df MS F-stat P-value
Between 138 4 68.7 5.295 0.04274
Error 192.5 12 18.3
Total Error 330.5 16

Connections between innovation and the performance of the business

Many scholars have pointed out that innovation and business performance are highly correlated. Innovation brings in new ideas that helps the firm to produce new products. These new products enhance the competitive advantage of the firm. With great competitive advantage, the firm stands a greater chance in the market share as compared to the rivals. When the firm maintains this position for an extended period of time, the level of profitability also goes up. More so, with the production of new products, the firm becomes flexible, thus, it can adjust to the ever changing market and withstand the pressure that come with it. It is therefore true to say that the business performance of any firm is greatly improved by innovation.

Conclusions and Recommendations

Introduction

This chapter presents the summary of the findings and discussion of the results in accordance to the objectives of this study. Finally, the chapter contains the conclusions and recommendations.

Conclusion

From the results it is evident that motivation contributes to the growth of the business performance, but it is very wrong to say that the level of innovation is equivalent to the business performance. This is due to the fact that the performance of the business does not purely rely on innovation, there are other factors too that contribute to it. Innovation is just a necessary condition for improving the business performance, but it cannot be regarded as a sufficient condition of the same. All the same, an innovative firm always does better than a non-innovating firm.

The ever changing global economy calls for new innovations and strategies in different organizations in order to maintain competitive advantage. These include training and development of the human resource to enhance productivity and overall business performance. Organizations are taking huge risks by investing heavily on human resource training and development (Tushman 77). Business leaders and executives view innovation as one of their top most agenda toward the realization of a perfect business model. Many studies have found out that training and development are the main instrument for breaking new ground bringing changes in an organization. These changes include changes in workers behaviour and competency, upholding innovations and adopting new technologies (Stacey 20). The best design and strategy in professional training must be all inclusive, continuous in nature and should integrate training with other elements of the organizations.

Recommendations

Innovation is very essential to the increase in performance in any organization. The top management should look into ways to foster motivation among the employees. This study mainly focused on multinational enterprises. Future researchers should explore on how the innovative capacity of the firm can be enhanced.

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Appendices

Appendix 1: Questionnaire

This is an academic research study and your participation is voluntary. Information provided will be confidentially and individual data will be reported. THANK

YOU! ————————————————————————————————————

Part A

  1. Are you a par- time or a full-time employee?
  2. Are you satisfied with your work?
  1. Not satisfied
  2. Less Satisfied
  3. Moderately Satisfied
  4. Very satisfied.
  1. Do you prefer working as a part-time or a full time employee?
  2. What kind of relationship do you have with your superiors?
  3. How do you rate your work conditions?
    • Bad []
    • Not sure []
    • Good []
    • Excellent []

Part B

The following 17 statements describe your degree of attachment and loyalty to the organization you are now employed with. Please respond by indicating the degree to which each of the statements applies to you using the following scale:

1
Strongly
Disagree
2
Disagree
3
Slightly
Disagree
4
Neither
Agree of
Disagree
5
Slightly
Agree
6
Agree
7
Strongly
Agree

There is no right or wrong answer. Write the number that best indicates to what extent each of the statement is true or not true in the parenthesis provided at the end of each statement

  1. I would be very happy to spend the rest of my career in this organization [ ]
  2. I enjoy discussing my work with people outside it [ ]
  3. I really feel as if this Enterprise’s problems are my own [ ]
  4. I think I could easily become as attached to another Enterprise as I am to this one [ ]
  5. I do not feel like “a member of the family” at this Enterprise [ ]
  6. I do not feel “emotionally attached” to this Enterprise [ ]
  7. This Enterprise has a great deal of personal meaning for me [ ]
  8. I do not feel a strong sense of belonging to this Enterprise [ ]
  9. I am not afraid of what might happen if I quit my job at this Enterprise without having. Another one lined up [ ]
  10. It would be very hard for me to leave my job at this Enterprise right now even if I wanted to [ ]
  11. Too much of life would be disrupted if I decided to leave my job at this Enterprise right now [ ]
  12. It would not be too costly for me to leave my job at this Enterprise in the near future [ ]
  13. Right now, staying with my job at this Enterprise is a matter of necessity as much as desire [ ]
  14. I believe I have too few options to consider should I decide to leave my job at this Enterprise [ ]
  15. One of the few negative consequences of leaving my job at this Enterprise, would be the scarcity of available alternative elsewhere [ ]
  16. One of the major reasons I continue to work for this Enterprise is that leaving would require considerable personal sacrifice; another place may not match the overall benefits I have here [ ]
  17. If I had not already put so much of myself into this organization, I would consider Working elsewhere [ ]

Part C

Biographical Characteristics
  1. What is your Sex?
    1. Male
    2. Female
  2. What is your Job Title?
  3. Do you supervise others?
    1. Yes
    2. No
  4. How long have you worked for the Enterprise?
    • _______________ Years ____________ Months
  5. How long have you worked for your Immediate Supervisor?
    • _______________ Years ____________ Months
  6. What is your Age Group?
    1. Under 30
    2. 40-49
    3. 20-39
    4. 50-59
  7. What is your highest level of Education?
    1. Diploma
    2. Higher Diploma
    3. Bachelors Degree
    4. Masters Degree
  8. What is your Race?
    1. White
    2. Black
    3. Asian
    4. Colored
    5. White