Innovation Policies in Managing Growth for High-Tech Companies: A Tactical Synthesis of Management Insights

Innovation Policies in Managing Growth for High-Tech Companies: A Tactical Synthesis of Management Insights

Belle Selene Xia (Department of Economics and HECER, University of Helsinki, Helsinki, Finland)
DOI: 10.4018/IJSSMET.2015100103
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Given the high percentage of turnover invested in R&D, the cost structure and segmentation of investment in high-tech firms necessitate regular review of resource allocation. For high-tech firms, the vital importance of innovation management is one of the building stones of a successful business. The key question remains how innovations can be managed throughout the S-curve of technological performance from the strategic point of view? The aim of this study is to capture an innovation framework for high-tech firms enabling them to actualize the value of technological breakthroughs based on a case study. The author's results are performance-driven. She will address some of the causes behind a technological failure along with its impact on the firm's profit margins. Based on the management insights of her case company, the author sees that innovation policies in high-tech companies can be dissected into four main management phases: sources, formulation, execution and maintenance. New research opportunities are opened in the performance review of technological innovations for listed companies.
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1. Introduction

Most of the high-tech firms spend a significantly larger amount on research and development than government institutions, and these firms consider their in-house R&D to be one of their most important sources of innovation. For high-tech firms, top management may face constant pressure of profit maximization via commercialization of patents and intellectual property rights. In the present study, high-tech firms primarily refer to dynamic firms operating in the IT industry. We have chosen to focus on high-tech firms in this paper because these firms tend to spend a significant amount of their turnover in R&D making changes to their established products and processes. (Kanter, 1983; Cusumano, 2004) The amount of investment can vary from as low as 0.5% of turnover with a low rate of change to over 20% of turnover with a high rate of change (Fleming, 2002). Given the recent technological advancement, it is evident that the impact of technologies is huge to high-tech firms. (Xia, 2012) In response to some of the cause of technological failures, innovation management can be designed by understanding the dynamics of the S-curve of technological performance, which governs the cycle of innovation managed within the firm. Subsequently, the research problem of this study is formulated as follows: how innovations can be managed throughout the S-curve of technological performance from the strategic management point of view? The research problem can be broken down into the following sub-questions stated as follows:

  • 1.

    What are the challenges of technological breakthroughs?

  • 2.

    What are some of the means to manage technological innovations?

  • 3.

    Can we incorporate the effect of technological challenges to firm operation?

The structure of this study is organized such that we aim to update our existing knowledge on innovation management and apply this knowledge to evaluate some of the means by which technological innovations can be managed in high-tech firms. We will detail our discussion of strategic thinking along the S-curve of technology performance while controlling for situational constraints via a case study. Alternative solutions are presented and prioritized following the evaluation of strengths and weaknesses of the existing framework. We will conclude our studies with summary of results and possible follow-up of future research opportunities.

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