To effectively implement a global strategy, managers should focus on three key actions based on Patel and Pavitt’s insights. First, they should emphasize Multi-Field Technological Competencies by fostering a culture of innovation that encourages exploration beyond core competencies, allowing firms to adapt to market changes and seize new opportunities through cross-disciplinary collaboration and R&D investment. Second, managers need to leverage Path Dependency in Technological Accumulation by developing frameworks that recognize existing technological strengths while permitting exploration in adjacent areas, thus aligning innovation strategies with both current capabilities and future market demands. Finally, enhancing External Technological Linkages is essential; managers should actively seek partnerships with universities, research institutions, and other firms to access new knowledge and technologies. By building these networks, firms can strengthen their technological capabilities and global competitiveness, ultimately driving sustained competitive advantage through strategic resource allocation and innovation.

The insights from Patel and Pavitt’s research have notable limitations that affect their applicability. First, the findings primarily focus on large, technology-driven firms, rendering them less relevant for non-tech-intensive industries such as traditional services or low-tech manufacturing. For example, small businesses like local bakeries may prioritize improving recipes over investing in advanced technologies, missing out on strategic insights that could enhance efficiency. Second, the emphasis on path dependency can hinder firms from recognizing disruptive innovations. Kodak’s failure to adapt to digital photography exemplifies this risk, as does a traditional bookstore’s potential oversight of e-commerce opportunities. Lastly, the reliance on patent data as a measure of technological competency overlooks important non-codified knowledge and tacit competencies essential for innovation. For instance, a cybersecurity firm may develop advanced algorithms that remain unpatented, meaning its true capabilities might not be captured in conventional assessments. These limitations highlight the need for a broader understanding of technological competence that considers diverse industries and forms of knowledge

Further references:

Kafouros, M., & Wang, C. (2020). The role of technological capabilities in firm performance: Evidence from emerging markets. Technovation, 99, 102144.

O’Reilly, C., & Tushman, M. L. (2020). Managing technological change: A systematic review of the literature. Research Policy, 49(8), 103947

Teece, D. J. (2020). Dynamic capabilities and innovation: A review and future directions. Strategic Management Journal, 41(3), 1-35

Optimizing Resource Allocation Between Innovation and Quality:
Balancing investment between innovation and quality is critical to maximising a firm’s performance. While innovation drives growth, quality underpins profitability, and both contribute to market value. Firms must carefully allocate resources to ensure that innovation and quality do not conflict, but rather complement each other. This strategic alignment enables companies to perform well both in exploring new opportunities and in exploiting existing strengths.

Path to Market Value:
The final path to superior market value is achieved through the integration of innovation and quality. The study shows that both growth and profitability mediate the relationship between innovation, quality and market value. By creating a synergy between these dimensions, companies can improve their overall financial performance and market capitalisation.

LIMITATIONS:
The papers face several limitations that impacts its relevance today.
Sample limitation: Focus only on Fortune 1000, excluding non-American companies and SME’s.
Oldest: Relies on data collected between 1990 and 2000.
Measurement: Subjective measures for innovation and quality, can lead to inflated perceptions depending on the respondent.
External factors: Excludes the macroeconomic influences and their impacts on the company’s market value.

FURTHER READINGS:
Wang, C., Guo, F. and Zhang, Q. (2021) How does disruptive innovation influence firm performance? A moderated mediation model, European Journal of Innovation Management.
• This study focuses on the impact of disruptive innovation on firm performance, emphasizing the mediating role of innovation speed and quality, as well as the critical role of market institutions.

Corral de Zubielqui, G. et al. (2019) ‘Knowledge quality, innovation and firm performance: A study of knowledge transfer in smes’, Small Business Economics, 53(1), pp. 145–164.
• This study investigates how knowledge transfers impact innovation and firm performance in SMEs, highlighting the mediating role of external knowledge in innovation. This study extends the scope to smaller companies.

MANAGERIAL IMPLICATIONS:
Following the paper’s recommendations, three implications for managers emerge. Firstly, firms should comprehend their operating environment to adopt the most suitable organizational structure and strategic posture for enhanced effectiveness. Second, constant evaluation of alignment with the ever-changing environment is vital. Lastly, developing tools or models to assess the current environment is crucial. However, as noted by the authors, these strategies may not be universally applicable, emphasizing the importance of seeking additional insights into evolving dynamics of strategic orientation and performance.

LIMITATIONS:
We have encountered two limitations that were not already discussed in the paper. First, the paper does not take regulatory environments into considerations which can significantly affect a firm’s operations and profitability. The regulatory landscape includes industry-specific regulations, tax policies, and environmental standards. Second, the paper does not discuss how firms can identify whether they are operating in a hostile or benign environment. While they do identify how to describe a hostile environment, for example – precarious industry settings, intense competition, harsh, overwhelming business climates, and the relative lack of exploitable opportunities – it does not address any model or similar that can be used by firms to identify in which environment their business is currently operating.

FURTHER READINGS:
McKenny, A.F., Short, J.C., Ketchen Jr., D.J., Payne, G.T., & Moss, T.W. (2018). Strategic entrepreneurial orientation: Configurations, performance, and the effects of industry and time. Strategic Entrepreneurial Journal. 12(4), 504-521
• This study examined the performance of technology industries on industrial-, temporal-, and measurement-related factors, extending the dimensions of strategic posture of the analyzed paper – risk taking, innovativeness, and proactiveness – by two additional dimensions: autonomy and competitive aggressiveness.
Peng, X.B., Liu, Y.L., Jiao, Q.Q., Feng, X.B., & Zheng, B. (2020). The nonlinear effect of effectuation and causation on new venture performance: The moderating effect of environmental uncertainty. Journal of Business Research. 117, 112-123
• This paper contributed to the literature on entrepreneurial decision-making and performance in uncertain environments by offering a view of the relationship between effectuation and causation and new venture performance.

Complementors share together a market. Company strategies will influence the total size of the cake and the shares received by the various market players.
The three key insights of this paper are possible strategies for influencing complementors.
The first strategy is “hard power”. Exercising hard power is a coercive strategy based on the strength of the company undertaking it. The strongest company will try to impose its choices, for example, by making its offer compatible or incompatible with that of a complementor. The company may also decide to buy or build a complementor.
The benefits of this strategy are control and a greater share of the profits. But it leads to mistrust and deteriorating relations.
The second strategy is “soft power”. This is based on cooperation or co-optation. Companies enter into partnerships by sharing information, giving guarantees or even investing in each other. The aim of this strategy is to design the business environment to foster trust and mutual benefit. It’s well-suited to smaller companies. But its effects are more diffuse, slower and difficult to evaluate.
Finally, the third strategy – “smart power” – is a mix of the two previous ones. It combines the advantages and disadvantages of in varying degrees.

To use these insights in business, managers must first identify and understand their complementors by analyzing their business, their strategies and identifying their incentives to cooperate or compete.
Managers must also analyze their own leverages. These being derived from relative market positions, competitive advantages, resources and capabilities.
Finally, they need to decide how to influence their partners. The choice of strategy depends not only on the two previous analyses, but also on the company’s own philosophy and values.

We have identified three limitations based on a number of examples. The first is that, even if a company has a strong market leadership position, it may suffer from the hard power of an even stronger competitor. For example, Microsoft on Intel.
Secondly, some companies are just too small to have leverage over their complementors. Third limitation is that sometimes soft power can be very costly for a company trying to influence another. Sometimes even more expensive than creating or buying one’s own. For example, IBM investment in Linux development.

Some complementary resources have enabled us to go further in understanding the concepts.
– Understanding how complementors can interact on platforms and with platforms owners.
Cenamor, J. (2021). Complementor competitive advantage : a framework for strategic decisions. Journal of Business Research, 122, 335 343. https://doi.org/10.1016/j.jbusres.2020.09.016

– Giving us a precise example of this case with Android, Google and independent app developers.
Strategic Management Society. (2019, 20 juin). Threat of platform‐owner entry and complementor responses : evidence from the mobile app market [Vidéo]. YouTube. https://www.youtube.com/watch?v=lBX2RdPwfXk

– Explaining how revolutionary innovation can impact business relationships and, for example, complementors.
Miehé, L., Palmié, M., & Oghazi, P. (2023). Connection successfully established : How complementors use connectivity technologies to join existing ecosystems – Four archetype strategies from the mobility sector. Technovation, 122, 102660. https://doi.org/10.1016/j.technovation.2022.102660

MANAGERIAL IMPLICATIONS:
Upon plotting the 3 dimensions along x, y, and z axes, we get 8 possible types of innovations. The paper outlines reputed examples of each innovation type. To convey the framework to managers and help them adopt the same, one needs to ask the right questions for them to evaluate their firm’s innovation type and categorize it with respect to Change (transitional or transformational), Strategy (business or corporate), and Market (sustaining or disruptive) Impact. Further, managers also need to understand that an innovation’s position in the cube is dynamic subject to external factors and internal capabilities. Putting the cube in action in real life also involves assessment of the following trade-offs:
• Complexity vs Simplicity of the innovation
• Flexibility vs Stability – more flexibility leads to better innovation culture but higher uncertainty
• Experimentation vs Control – whether impact can be foreseen or needs hit and trial approach
• Focus vs breadth – innovations impacting multiple units can lead to loss of core competencies
Thus, managers need to qualify their existing innovation types, decide the innovation which is most-suited to the company’s strategy, and communicate and stick with the innovation strategy to create clear and impactful results.

LIMITATIONS:
Like any research, the cube solution has its limitations. Below are 3 important areas where the paper falters:
• Subjective limit to scope of innovation: Determining the magnitude of impact of an innovation and thereby categorizing it as low or high along a particular dimension is not documented and is therefore subjective. For instance, Dell’s PC innovation was low market impact at the start (from Strategic innovation to Paradigm change)
• The paper does not account for the impact of internal capabilities to manage innovation
• The 3 dimensions don’t account for customer impact directly, which is a limitation since the ultimate impact of an innovation is measured by customer value and willingness to pay

FURTHER READINGS:
Below are a few relevant and interesting articles related to this subject matter:
• The Innovation Value Canvas – International Journal of Innovation Management (Vol. 24, No. 2)
o Underlines a framework to choose an apt business model and value proposition for technological innovations
• Real options or fallen angels – Creativity and Innovation Management (Vol. 31, October 17, 2022)
o Examines failed/terminated projects with emphasis on how past failures determine the magnitude and frequency of future failures
• Supply chain innovation – Journal of Product Innovation Management (Vol. 39, Issue 2)
o Develops a framework to measure supply chain innovation basis marketing, technology and development, and logistics-oriented innovation activities

Gras, D., Conger, M., Jenkins, A., & Gras, M. (2020). Wicked problems, reductive tendency, and the formation of (non-) opportunity beliefs. Journal of Business Venturing, 35(3), 105966.
Ooms, W., & Piepenbrink, R. (2021). Open Innovation for Wicked Problems: Using Proximity to Overcome Barriers. California Management Review, 63(2), 62-100.

First, the Cauldron strategy entails the leaders to have a rough picture of the needed change in their business. Consequently, this rough image is shared with the leader’s most trusted associates who then refine it according to their own knowledge and points of view. Finally, these associates pass it down to more and more people who are involved in the company until the final picture is polished enough to the point that it is a realistic situation. Managers are required to be aware of their own business problems, as well as critically assess employees’ involvement with the company. Examples of this were Enron and Lucent Technologies. Second, the Spiral Staircase, in which managers focus on their existing business and keep innovating on what they already have repeatedly. Usually, customer problems are key factors to guide innovation in this strategy, making it very susceptible to customer experiences and insights on the delivered products or services. This implies that managers constantly exchange information with customers about possible product improvements. That was the case for both British Airways and Charles Schwab Company. Third, the Fertile Field. This innovation strategy finds disruptive ways to use existing resources. For that, it is compulsory that the company has a deep understanding of its own portfolio of competencies in order to be able to advance in new, yet undefined, directions. For managers, it is imperative that they continuously assess the company’s capabilities and that they are aware of potential innovative developments in analogous markets. Two companies that followed this strategy were Emerson Electric and NiSource. The fourth innovation strategy, Pacman, works better in a fragmented field, in which the next idea is still unclear. Thus, by investing in smaller firms that are in the earlier stages of the innovation cycle, innovation will be right around the corner. However, heavy investments in R&D well-developed processes to facilitate the integration of the newly acquired firms. Thus, managers are required to being well-informed about both the market and the start-up industry, while establishing a culture of integration. A good example of a company who used this strategy is Microsoft. Finally, The Explorer innovation strategy works best in a long-term perspective. In other words, it is required to pursue new business models that are initially fuzzy, but that can provide high payoffs in the future. The best circumstance to adopt this strategy in is when a company has a stronger intuition than the competitors on a long-term subject. Managers need to have a long-term perspective and a mindset implementation aiming at disruptive innovation. Monsanto company is a great example of this strategy.

The limitations of this paper can be divided into two categories, environment and resources.

Firstly, the article only refers to large corporations such as Microsoft, Enron and Lucent Technologies that have (or had) many resources and talent. Other types of companies, mostly SMEs, might not have these resources and talents as they are limited to not only a certain amount of people and sales. Another limitation might be different management structures. The presented corporations have hierarchical structures when one person might change a lot. With the right number of resources, people, and persuasion. Nevertheless, different companies with, for instance, flat management structures might not be able to execute the strategies presented in the paper due to the completely different company culture. In addition, different industries and markets have different conditions. The paper presented only a few industries that were like each other. Other industries might not be capable of utilizing the strategies solely because of the different settings. An example might be a company focusing on the Food and Beverage industry where the conditions might not be suitable as in the technology, or telecommunication industries.

Secondly, the paper does not really take resources into consideration. It often describes champions in the companies that made the success happen. For example, Charles Schwab or Chuck Knight who had the expertise, experience and trust of the board to find completely new departments that enabled the companies to innovate. In addition, the money issue was not there. It might be a problem for a company lacking these champions or not having a culture enabling them to risky steps like that. In relation to money, there is no indication of how the strategies would survive during difficult economic times. An example might be the current situation with high inflation, a recession nearby and high energy prices. Companies cannot really put innovation as their focus, because they would possibly go bankrupt.

To tackle the limitations we propose three new sources sumarrized below:

Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go?. Journal of management, 43(1), 200-227

BM and its innovations have been an important topic in macro-management debates over the last few decades. Although the BM and BMI literature streams are clearly related to strategic areas, they are not clearly anchored to any particular (macro) management area. The BMI literature is characterized by conceptual ambiguity and disjointed research efforts. The BMI literature currently represents a significant attempt to confront the confusing and complex realities that pose real challenges to practitioners. They are implicit, but often vague and ill-defined concepts. Simplifications, conceptual clarifications, theoretical models, and cumulative empirical work are required.

Pisao, G. P. (2019). The hard truth about innovative. Harvard Business Review, 97(1), 62-71.

Leading the way in building and maintaining an innovative culture is particularly difficult for three reasons. First, an innovative culture requires a combination of seemingly contradictory behaviors that can lead to confusion. Second, certain behaviors required for an innovative culture are relatively acceptable, while others are unacceptable to some within an organization. Highly competent people are accustomed to decision-making and accountability, and their “failures” are more likely to lead to learning outcomes than waste. Disciplined experimentation costs less and yields more useful information, so tolerance for failed experiments becomes prudent rather than shortsighted.

Müller, J. M., Buliga, O., & Voigt, K. I. (2021). The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models-A comparison between SMEs and large enterprises. European Management Journal, 39(3), 333-343.

SME still don’t see cross-company collaboration as a priority. Small businesses may want to focus on developing novelty-driven business models rather than “making what was done before more efficient.” However, a firm’s ability to interact with other firms affects not only the extent to which knowledge can be accessed and transferred, but also its value to other potential partners in the value creation and innovation ecosystem creation.

There are a handful of limitations to the identified implications, which can limit the extent to which managers can use the learnings from the published article. First, the author argues that the innovation strategy should be set up by senior management only. This method fails to take into consideration the ideas and arguments from lower level employees, which should be taken into account when creating an innovation strategy. Secondly, Pisano argues that there must be a high-level detailed plan on how to use the resources accordingly to innovate. However, some of the factors mentioned in the article, such as technological change, the magnitude of the technological opportunity and the intensity of competition can be hard to quantify, and thus, analyse and design a detailed plan. In addition, it would be particularly hard for SMEs to analyse such factors due to lower levels of available budget and personnel for such. Third, regarding the stated fact that innovation strategy evolves and needs adaptation, it is not explained how senior management can time such evolution and therefore act accordingly. Finally, on a more general scope, the author fails to mention how culture is important when developing an innovation strategy. According to a McKinsey study, 94% of senior executives argue that people and corporate culture are the most important drivers of innovation. Therefore, it is important to incorporate a culture and an environment that incentivizes innovation.

We took a look at a number of other articles that supported, disagreed, and complemented the article. Ishak W writes about why a culture of innovation should start from the bottom-up instead of the top-down. Any company needs a mechanism and culture that enforces and promotes innovation from within. The author argues that the generic ideas of investing, attracting talent, and idea development are just hygiene factors and the key driver is innovation parenting, as the author calls it. It is the process in which innovators and leaders are held accountable for innovation and are given personal responsibility. In other words, organizational networks should be based on a democratic decision-making process and a horizontal, non-hierarchical structure, given that these types of organizations tend to be more innovative.
Another paper that complemented the original paper was ‘The impact of hard and soft quality management and​ proactive performance​ behaviour in determining innovation​’ develops a model of the relationship between quality management (QM) as a multidimensional construct. They defined hard QM as practices that include benchmarking, zero-defects mentality, goal measurement and process improvements.”Soft QM” practices included adherence to culture, management commitments, suppliers and customer focus.
By splitting into hard QM and soft QM, the authors used the model on data on ISO 9001 certified firms and interpreted that it is the Hard QM that has a high correlation to innovative performance and firms should prioritize that, while soft QM has a very low correlation.

Here are the references of our two articles:
Escrig-Tena, A. B., Segarra-Ciprés, M., García-Juan, B., & Beltrán-Martín, I. (2018). The impact of hard and soft quality management and proactive behaviour in determining innovation performance. International Journal of Production Economics, 200. https://doi.org/10.1016/j.ijpe.2018.03.011

Waguih, I. (2017, September 7). Creating an innovation culture. McKinsey. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-an-innovation-culture

Arthur Posch, Christian Garaus (2020). Boon or curse? A contingent view on the relationship between strategic planning and organizational ambidexterity. Long Range Planning (53- 6). https://doi.org/10.1016/j.lrp.2019.03.004.

Dietfried Globocnik, Rita Faullant, Zulaicha Parastuty (2020). Bridging strategic planning and business model management – A formal control framework to manage business model portfolios and dynamics. European Management Journal (38 – 2, 231-243). https://doi.org/10.1016/j.emj.2019.08.005.

Richard J. Arend,Y. Lisa Zhao,Michael Song,Subin Im (2017). Strategic planning as a complex and enabling managerial tool. Strategic Management Journal. https://doi.org/10.1002/smj.2420