Managing Innovation in the Service Sector in Emerging Markets

Managing Innovation in the Service Sector in Emerging Markets

Husam Awadalla (Callon Resources Limited, UK)
DOI: 10.4018/978-1-5225-2206-5.ch007
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Emerging markets are the home to most of the world's population and natural resources and as such are a high priority for both local and multinational companies. Emerging markets present attractive investment opportunities in the service sector. To pursue innovation in the service sector in emerging markets innovation managers need not only have a deep understanding of the core issues and challenges that prevail in this sector but also the understanding of the challenges inherent in these markets institutional, technological and legal and policy environments. The challenges to innovation that the service provider confront in emerging markets are varied; such as the lack of qualified labour, lack of substantial funding, risk to intellectual property and even “expropriation risk,” the possibility that host governments would seize foreign-owned assets. This chapter explores the challenges encountered when managing innovation activities in the service sector in emerging markets.
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What Is ‘Innovation’?

Innovation is a strategic option for organisations to achieve and sustain competitive edge and dominance in the market place. Tidd, and Bessant, (2013) summaries the process to scan the business horizons for change and the resulting innovation as follows: “Innovation is driven by the ability to see connections, to spot opportunities and to take advantage of them”. while Schumpeter, J. (1934) points out that “The innovative process creates market disruption causing the rise of new organisations and decline of incumbents”. Per Goffin and Mitchell, (2010) there are four drivers for innovation: technological advances, changing customers, intensified competition and the changing business environment. In my view, the technological advances are the most challenging because of the accelerated rate of change in technology. Nidumolu, (2011) argue that sustainable manufacturing will demand new equipment and processes, so sustainability should be viewed as an additional driver to Goffin’s four drivers. Senior leaders in organisations increasingly view innovation as a strategic imperative, allowing the firm to adapt and respond to competitive pressures, customer needs and technology change in a rapidly changing business environment. No wonder that Innovation strategy is a core competence any organisation needs to build, refine and invest in for sustaining competitiveness and performance improvement in the organisation.

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