When we think about the relationship between competitiveness and innovation, we must consider the type of innovation that can promote the growth of our company. Likewise, the loss of competitiveness creates an increase in production costs that has a negative impact on the price or the profit margin, all without providing improvements to the quality of the product. And this is how innovation is a fundamental part of this process, taking three main foundations, value as its goal, change as its path and knowledge as its basis. In addition, innovation is aimed at increasing the value of both the company itself and its offer.
Keywords: Innovation, Company, Competitiveness, Products, Services Talking about innovation
The subject of innovation and that whose concept was introduced by Schumpeter in the forties, which was the foundation for the development of different authors from this moment on, has become today a primary need for companies, since it is a fundamental essential for the growth of both production and productivity, in particular because it is a tool for generating value.
Likewise, talking about innovation is talking about generating value since innovation is all change that is based on knowledge and that generates value. This expresses that innovation contains three main foundations, value as its goal, change as its path and knowledge as its basis. In addition, innovation is aimed at increasing the value of both the company itself and its offer.
Regarding increasing the value, it should contribute to a better income statement, a better position or a better image and, in terms of increasing the offer, reference is made to a better performance in the market of its offer, reflected in the increase of its quota or in a better acceptance of higher unit prices.
Traditionally in general terms, innovation has been linked to an exclusively industrial and technological context. However, this can also be based on the detection of a new business line or the ability of companies to maintain the largest possible market share.
These competitive advantages (innovation) range from high levels of investment and basic research, to the smallest changes in the design or in the way of presenting an existing product or service, as well as its manufacture and market support.
Throughout this process of innovating, companies must assume that all their functional areas will be affected, from the design and development of goods and services, communication and marketing, to internationalization, human resources, processes or business management for example.
Likewise, companies have the need to adapt better and faster to technological progress as well as to the current competitive world where a series of measures are adopted to achieve the level of competitiveness demanded by the markets and optimize the achievement of results.
And in this way define innovation as the commercial application of an idea so that new or improved products, processes or services are originated, allowing the generation of business benefits.
Within the different types of innovation, they can be analyzed from three different approaches:
- According to the degree of innovation:
- Incremental Innovation: Small changes aimed at increasing the functionality and provision of the product or services, without substantially modifying its utility. o Radical Innovation: It is a break with the previously established, being innovations that give rise to new products, designs, technologies, uses or organizational forms, which are not the result of a natural evolution of the existing ones.
- Commercial Innovation: Variation in strategic points of marketing that in turn influence the launch of a new product or service. o Organizational Innovation: Changes oriented towards the organization under which the productive and commercial activity of the company takes place, enabling greater access to knowledge and better use of material and financial resources.
- Process Innovation: Redefinition of production processes or in the application of a new or significantly improved production technology, in order to increase the value of the final product. The result must be significant and could affect the value chain.
Likewise, the classification of innovative companies according to their strategic structural characteristics contributes significantly to the diagnosis of reality, as shown by research on innovation patterns. These investigations classify innovative companies according to their age, size or productive sector, mainly, associating to each of these categories similar values in other descriptors such as the existence of a business group, the level and type of cooperation, the effort in R&D, etc…, so that:
- Age: Seniority is related to accumulated experience and knowledge, being a basic structural variable in these investigations. Size: The size of the company influences the resources available for innovation, thus being a basic structural variable in this type of study. Productive sector: The technological and competitive conditions of each sector appear as influencing factors of innovation (sector analysis). Technological intensity: The relationship of technology with certain types of innovations can constitute a differentiating feature between companies in the territory. Financial solvency:The availability of financial means conditions the development of innovation projects, being one of the main problems for innovative companies. Degree of internationalization: The foreign sales figure is a reference for the level of competitiveness of companies. Business group: Belonging to a group can mean more available resources, greater negotiating power, a broader stock of knowledge and experiences, and a source of lifelong learning for participants. Family ownership: The particularities of the family business can affect innovation, although there is no consensus among researchers on the meaning of this influence.Inter-company and institutional cooperation in R&D: Cooperation in R&D and other technological innovation processes usually bring important advantages to companies.
Speaking of competitiveness
Companies have different strategic objectives, such as seeking maximum profit, increasing market share, improving productivity or increasing competitive success. The literature provides two alternatives to explain its achievement; one of them maintains that external conditions determine business competitiveness and the other indicates that the source of competitive advantage is found in the existence, compared to its competitors, of critical resources and distinctive capabilities.
But what is competitiveness? According to Garay, “competitiveness is a concept that has no precise limits and is defined in relation to other concepts.
Currently, the interest in knowing the strategies that improve competitiveness is notable, thereby allowing to achieve better results. Another line of open research is the one that tries to relate the competitive strategy with the resources and capacities. Obviously, the objective of the work is twofold: on the one hand, it seeks to see the influence that the company's strategy has on the competitive success of MSMEs and, on the other, to analyze the effect on business results of resources and capacities, interaction between business strategy and resources as well as capabilities in organizational results.
Competitiveness is a common and vulgar way of measuring the economy of a country in relation to others, it is as if we want to see that it arrives first in a career, in which it is only important to attract and retain talent and investment.
Other important aspects to have a better performance in competitiveness are the efficiency of the systems and the use of the resources that make it possible to produce goods and services.
From the point of view of economic development, a company will be most competitive in a market if it can produce more products at a lower limit. Maintaining high levels of productivity, efficiency and quality at all times, which can be understood as a profitable company.
But as we can measure this level of efficiency that we are talking about, the IMCO (Instituto Mexicano para la Competitividad AC) also suggests public policies such as: competing for talent with a flexible university system, immediate relationship and with political parties that adhere to a transparency law, and finally open to foreign investment.
The essence of competitiveness lies in the quality of the interactions established by the company, therefore Urie Bronfenbrenner's theory gives us an idea of the relationship between the various systems, this theory consists of an environmental focus on the development of the individual, however it is can extrapolate to companies because competitiveness not only has to do with the internal organization of the company, external factors are also considered, there are four Bronfenbrenner systems: microsystem, mesosystem, exosystem and macrosystem, you are likely to wonder: How is competitiveness related or how can one argue based on ecological theory?
The answer is simple, within the multiple definitions that have been created around competitiveness, there are some that speak of competitiveness not as an exclusive concept of the private sector, the new critical competitiveness approach, the traditionalist model that considers static analysis, Currently this term is based on competitive advantages: economic environment, efficiency of the value chain, physical infrastructure, human capital, financial services, exports, technology and legal systems, in short, competitiveness is not a microeconomic but a macroeconomic phenomenon, it is by This means that public policies and inter-institutional relations must be considered. Now the question is, how is competitiveness measured? Through the global competitiveness index (World Economic Forum);Doing Business Index (International Finance Corporation, IFC, and the World Bank); the World Competitiveness Yearbook (International Institute for Management Development, IMD) and the International Competitiveness Index (Mexican Institute for Competitiveness, IMCO).
As a final point, it only remains to say that competitiveness through ecological theory comprises the interrelation of the environments of the organizational world, social, cultural and structural conditions that determine institutions, competitiveness has as its cornerstone the individual, in this way development of the individual is essential to its understanding.
Relationship between innovation and competitiveness
When we think about the relationship between competitiveness and innovation we must consider the type of innovation that can favor the growth of our company, that is why when talking about innovation we have to take as a starting point the difference between a closed innovation and an open innovation, The first does not take into account external factors, on the contrary, your information is protected and is not shared, this is a problem that is the time for the implementation of innovation, that is, a company can have a great idea but to carry it out many Sometimes there are not enough resources, which generates a loss of time, therefore competitiveness must be linked to open innovation,where ideas can be materialized for this, a characteristic of open innovation is required, which is intellectual property.
However, competitiveness also touches other aspects such as quality and innovation, as well as the ability to generate satisfaction in consumers when they make the purchase, which are key factors for the development of competitiveness.
If we can realize that in other countries such as South Korea, its economic development is based on two aspects: competitiveness and innovation. According to a 2014 economic bulletin, South Korea ranks 25th on the list of the most competitive nations in the world, even above European countries like Spain. According to the 2013-2014 Global Competitiveness Report of the World Economic Forum, it can be concluded that South Korea has as its main competitive priorities the infrastructure of its country as well as the stability of its macroeconomic environment, its health system and mainly its level. education, the size of your market, and the ability to innovate. The term innovation refers to that change that introduces some novelty or several in an area, a context or a product. So when someone innovates,applies new ideas, products, services among other things, this with the intention of being useful for increasing productivity and in turn delivering products with greater added value.
It is very important that innovation is used at some times, because changes, improvements, reduction of processes can be introduced, this in order to facilitate and make a change to something that has a weakness and in this be able to apply the concept. It will never imply a step backwards in something, involution, but on the contrary, innovation means improving and growing in some aspect or sense and it will always be very welcome wherever it is. But how do ideas arise?
It should be mentioned that the human being is a thinking being and in turn analyzes the environment that surrounds it, making this an origin to create ideas and be able to be used as an information provider.
An essential condition of innovation is its application at a commercial level, so that it is not only inventing something, but it is also creating that idea successfully by adding techniques and knowledge, so that this way it has an impact on the market. Likewise, competitiveness is the ability to compete in the economy, in other words, it refers to the ability of a person, company or country to obtain profitability in the market compared to its other competitors.
In addition, the main factors that a company must have to be competent are: the relationship between the quality and the price of the product, the price level of the inputs. Likewise, other very important aspects to increase competitiveness are the efficiency of production systems or techniques, the use of the necessary resources for the production of goods and services, that is, productivity and a very important point innovation since if You don't innovate, you don't make the difference between other competitors.
The loss of competitiveness creates an increase in production costs that negatively affects the price or the profit margin, all without providing improvements to the quality of the product. The loss of competitiveness, in this sense, threatens a company in the long term and with it its life.
Also, competitiveness is a concept that can be applied to various rivalry situations in life. Thus, it can refer to the job competitiveness of a professional person in his / her field of work; to that of a team in a sports discipline; to that of a country considered from a global or international point of view.
However, competitiveness also involves aspects such as quality, innovation and differentiation of the product or service in relation to that offered by competitors. The National Institute of Statistics (INE), which carries out surveys on Technological Innovation, adopts a much broader definition of an innovative company, so that it does not refer to the launch of a new product, service or process but to those activities related to its launch. Specifically, an innovative company in a certain period of time is considered to be one that has carried out at least one of the following activities:
- R&D Industrial Design Acquisition and modification of production machines and tools, production procedures and quality control, methods and standards essential for the manufacture of a new product or process Manufacturing launch (modification of products or processes, Recycling of personnel and experimental manufacturing) Commercialization of new products Acquisition of immaterial technologies (patents, non-patented inventions, licenses, know-how, trademarks, designs, utility models and purchases of services with technological content) Acquisition of material technologies (machinery and capital goods with technological content related to product or process innovations introduced by the company).
The added value in any product, service or process in a company is and will be innovation, since it is a reliable guarantee to compete which allows obtaining a competitive advantage over competitors. And having a competitive advantage allows companies to be leaders in their field, such is the case of the Google company, which in its short time of life innovated mobile operating systems and from this innovation, a revolution in mobile telephony and the creation of new companies that in some cases have fallen by the wayside and in other cases companies that did not innovate and were not immersed in the new change generated by the market disappeared although they were well structured companies as it was the case of BlackBerry.
Finally we have the added value of every company is innovation since it seeks to show a novelty to the world and make a difference day by day, this added value consequently provides us with a competitive advantage and competitive advantage allows us to lead the market, which is the greatest desire that all companies seek, taking into account that not all achieve it, only the most constant, consistent and persevering in the exercise and execution of innovation.
In such a way that innovation is equal to competitive and for this to happen it is necessary to open minds to generate changes for the benefit of companies and in turn for the benefit of a better society.
But just as we speak of competitiveness gain, it supposes a situation of increased production costs which were not contemplated and that fall on the results. When the loss of competitiveness, in this sense, threatens a company in the long term. Finally to finish with the concept, competitiveness is a concept that is applied to different situations of life rivalry. In this way, the competitiveness of a person in their work is their only letter of introduction.
References:
. SCHUMPETER, Joseph. Theory of economic development. Fifth Reprint, Fondo de Cultura Económica, Mexico, 1978.
. Oslo, Manuel. (2005) Oslo Manual: Guide for the collection and interpretation of data on innovation (3rd Edition) (Vol 1.). Spain: TRAGSA Group
. Guzmán, Joaquín. & Martínez, Juan (2008) Typology of innovation and business profiles an empirical application. Innovation in the economy and in business, pp. 59-77
. Garay S., Luis Jorge. Colombia: industrial structure and internationalization 1967-1996.
. Available at
. BRONFENBRENNER, U. (1987b). The ecology of human development. Experiments in natural and designed environments. Barcelona: Paidós.
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