Gaining Strategic Advantage through Social and Technological Innovation: Evidence from European Countries

Introduction

Today’s business world has many common aspects with the wild nature. The members of both environments face similar factors while trying to survive. Gaining competitive advantage and adaptation capability to new conditions in the long run are the key factors for companies in the business life and for all the creatures on earth. It is explained by a single word of ‘survival’, which has been imported from physical sciences to social sciences. Survival of organizations is vital in this knowledge era where constant change is ready (Agarwal, Sarkar and Echambadi, 2002; Christensen, Suárez and Utterback, 1998; Klepper and Simons, 2000). Due to the fast changes and developments in technology and other factors in the environment, both organizations and even countries seek ways to gain competitive advantage. According to resource-based view (Wernerfeldt, 1984), firms control their resources and capabilities so as to survive. Firms can possess competitive advantage over other firms by their tangible and intangible assets (Barney, 1986; Rumelt, 1984). These may vary from human resources, managerial abilities (Isik, Arditi, Dikmen and Birgonul, 2009) and financial resources to effective marketing capabilities, building customer royalty or even effective service recovery strategies (Eren, 2018).

Although there are so many ways to gain competitive advantage and to survive for organizations, due to modern business world circumstances, innovation is accepted to be more effective than many of them (Buddelmeyer, Jensen and Webster, 2009; Cefis and Marsili, 2006; Dervitsiotis, 2010). All the organizations and even countries invest in innovation more than ever. In today’s globalized world, not only technological innovation but also social innovation ease organizations to be more effective. Although the importance of innovation for an organization is well understood in the literature (i.e. Baumol, 2002; Schumpeter, 1942), there is still lack of both empirical and theoretical researches. Besides, many of the existing papers concentrate on technological innovation of companies. This chapter is bringing social innovation and technological innovation together to gain strategic advantage for firms and their home countries in turn. After figuring out the theoretical basis of strategic advantage and social/technological innovation, secondary data analysis of innovation taking place in selected European countries will be analyzed.