Information Technology Innovations and Business Success

This chapter reviews other literatures based on firstly theory and then empirical. The chapter gives highlights on how innovation related theories are applicable and significant in applying strategies for business growth and development. It further reflects other scholarly works related to information technology innovations and business success. The chapter entails also research gap, formulation of hypothesis and linkage between dependent and independent variables.

Theoretical Framework

Rogers` Diffusion theory of innovation

Due to changes in expertise, there are increasing varying changes in the IT sector. It has been inevitable to encounter changes in the IT industry. Literally and more precisely profound, technological ideas and perceptions are imparted in minds of many users, hence, knowledge is highly transferred. Ismail (2006) affirmed that adoption of higher education, as well as technological innovations, can well be investigated using Roger’s diffusion theory of innovation. In his theory, Rogers defined technology as design for instruments that help in reducing in cause-effect linkage affecting an expected outcome. The theory considered hardware and software. Adoption of technology is viewed as only best action one can undertake in order to fully embrace technological advancements. For innovation to diffuse, it has to be communicated in social systems using predetermined channels. For effective diffusion of technology, several elements are essential which include innovations, communication channels, time and social systems.

Decisions of the end-users are neither authoritative nor collective, hence, each individual has his or her decision. There are normally five critical stages which help in a diffusion of technology. Firstly, a creation of awareness of an innovation introduces new technological ideas in the mind system. St this stage individuals are informed of new changes in technology, as result question like what, why and, how are nor rare. Secondly, development of an attitude which may be positive or negative which is majorly built through persuasion. Old innovations are usually new to new users if they have never had experience with it. Thirdly, engagement of activities which consequently lead to decision making. This is highly influenced by attitude built up after introducing new information in the social and mind systems. At this stage, an individual may adopt or abandon the technology. Next, those who choose to adopt the innovation put it into practice. Finally, a decision made is evaluated. At this stage one judges if the innovation is worthy use or not (Gregor, 2003).

Innovation-related decisions are based of information sought and processed. Less certain innovations are usually to promote relative advantage, compactibility, complexibility, trialibility, and observability. Surenda (2001) in her study on acceptance of Web technology by professors and administrators of a college found that diffusion factors proposed by Rodgers in Diffusion of Innovation theory to be precise. Moreover, in another study by Carter, (1998) revealed that e-mail, word processing applications, and internet resources were commonly used innovations.

The model assumes that media and interpersonal communication enhance provisions of information required for decision making and influencing of opinions. Also, new ideas and products will be adopted by society, given their culture. The theory faces some limitations in its application. Firstly, differences in culture hamper how innovation diffuses into society. Some individuals may prefer their culture to innovations. Also, economic differences affect the rate of diffusion. Taking an example, a struggling economy nation or group of individual may fail to adopt wireless internet connection technology due to their inability (Gregor, 2003).

Applicability of the Rogers` Diffusion Theory of Innovation

It has been proven that this theory is applicable to IT innovations and business growth. Essential product qualities are directly related to innovation’s rate of adoption. Profitability of a firm relates to innovation’s ability of the firm to increase returns and lower costs at the same time. Undoubtedly, social status rises with a change of technology. How technology (new innovations) enters the market determine the success of the business. For instance, Skype and twitter were perceived to be working class and people with high-status quo. Facebook was perceived as effective mode of chatting and networking before WhatsApp. It was compatible as it met needs of many users. Currently, innovations have been complex but use simple interface. For instance, Facebook has ‘f’ logo and Amazon ‘1-Click Ordering’ which are simple and effective (Ferreira, Filho, Souza, & Singer, 2014).

Furthermore, Android technology has high compatibility as it can be used in many handsets from different models and brands. iOS is strictly limited to Apple products. Many people prefer then Android to iOS due to compatibility and easy to use. This implies that if the innovator targeted wide scope of clients against his competitors is well advantaged, hence, business success is guaranteed. Giving another instance, one may decide to use AppStore than Google Play due to high economic gains. The experience will market the firms as more customer get to know about it. Actually, customers spread information about products faster with a high convincing power to others.

Smartphone technology has highly diffused in the society due to its compatibility, relative advantage, complexity, and observability. It can be used as either mobile phone or mini-computer. Currently, users control them not mobile operator. This kind of technology is inexpensive and universal. Additionally, it uses various applications making it fitting to social entertainment trend. This accounts for its rapid diffusion (Zheng, 2011).

Recently, this theory has been adopted in healthcare facilities while adopting new technology. Diffusion of innovation can be used to assess and forecast use of telehealth program in a specific area (Zhang, Ping, Yan , & Spil, 2015). Also, the theory is significant in usage of internet healthcare service by physicians. Additionally, adoption of computerized nursing care plan by nurses in Taiwan is a contribution of this theory.

Porters’ Theory on Competitive Advantage

In 1974, Michael Porter was inspired to investigate industrial organization which was a new section of the economy. Porters highlighted that there were five forces which determined business strategies to be made. A firm has to consider the five factors in making their strategic decisions in a given industry (Namchul, 2001). Firstly, he asserted that degree of rivalry assists in determining how value will be created in an industry. This too leads to increased competition. This is one of the contributions which Porter made. He disclosed that rivalry among organizations created their value in the economy. The higher the level of rivalry among few organizations, the higher the levels of attractiveness, hence, business strategy formulation becomes challenging. Secondly, he considered the threat of entry as a determining factor in formulating business strategies. Average industrial profitability is influenced by presence of both potential and current players in the market. Variations in market operations due to threat by new entrants prevent overcrowding of firms. Moreover, there are exit barriers whenever the market is not economically feasible for non-participants. Furthermore, despite entry barriers such as physical or legal obstacles, new entrants face scale and investment required setbacks in effort to join that particular economy (Karagiannopoulos, Georgopoulos, & Nikolopoulos, 2005).

Thirdly, business strategy formulation is determined by threats of substitutes. New technologies may pose substitutes to be more favorable, thus, affecting profitability of competing firms. When implementing new strategies and innovation, there are scanty costs incurred which may highly affect general performance of the company. This is related to case whereby the innovated product become more expensive than substitutes and quality remain not fully trusted by end-users. Fourthly, estimation of value created is subjective to buyer power. Power of a buyer is determined by size of customer base and their concentration.

Finally, business strategies may be made based on supplier power. This is reflection of buyer power. Supplier power is basically determined by relative magnitude and concentration of supplier with respect to number of players in the industry. Superiority of suppliers is valued at ability of suppliers to price discriminate.

Competition in an industry is influenced by several factors. These factors may include physical resources (water and land), human resources (skills and number and cost of personnel), knowledge resources, capital resources and infrastructure. Furthermore, degree of effectiveness and efficiency greatly determine the level of influence of the mentioned factors towards competitiveness.

Domestic rivalry in an industry puts pressure on innovation and improvements. Availability of strong rivals in a sector led to the creation of competitive advantage. In the information age, competitive advantage is created through, for instance, firm’s potential to apprehend unstructured and structured data (Walton, 2017). This is a significant source of competitive advantage which firms like; Facebook, Alibaba, Microsoft, and Amazon have adopted. Pisano (2015) affirmed that microprocessor business has intense competition in the stable sector. The market is oligopoly which tends to behave like a monopoly. Intel has maintained its dominance in the market due to rapid and continuous innovations.

Empirical Literature Review leading to Research Gap

Technologies Adopted

Competitiveness and development of key industrial sectors are paramount for growth of business. Business conditions should be favorable for both domestic and foreign investors. This should be triggered and driven by strategic innovations that transform business environment. Innovation ecosystems need to be developed that support acquisition of skills and capital. Innovations are viewed as economic factor of developing all sectors of the economy. This implies that innovations are crucial in development of economy. World widely, there has been formulation of strategies for creating and sustaining innovation economies. Notable success can only be achieved through stable early planning and commitment. Also, culture of innovations need to be nurtured with intentions of creating knowledge, competing internationally and improved productivity.

Amazon in 2017 report noted that increased use of machine learning and Al behind the scenes at Amazon. Much of what is done with machine learning is usually undertaken underneath. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type, thus, significantly improving core operations. Thought the technology is at its infancy, several strides have been taken to adopt it. An example of artificial intelligence technology is neural networks by Google’s DeepMind. This kind of system can get meanings after various connections independently without depending on established behavioral algorithms. Technology has become a vehicle of improving lives and businesses. Artificial intelligence innovation is serving as brain of superhuman machines. In other words, AI is transforming databases into reliable Intel. Moreover, HANA which a SAP’s platform, is used in managing databases of organizations. Mainly, it processes structured data such as customer information and sales transactions.

Technology incorporates all team members of organizational processes, their decision-making, and way to the decision. Innovation is deeply connected into everything they undertake. Amazon for instance uses high-performance transaction systems, workflow and queuing systems, business intelligence, data analytics and complex rendering. Also, they have adopted machine learning and pattern recognition, probabilistic decision making and object caching among other techniques. Many problems they face do not draw solutions form textbooks but research and development. Assuredly, application of new technologies has given Amazon competitive edge. A reliable example of recent techniques adopted by Amazon is provision of infrastructure to deliver the Kindle “Whispersync” update to ebook readers. Kindle apps are only available on Apple iOS, android devices and PCs. Through this technology services, goods once bought they can be used anywhere.

Both academicians and book readers can now smile with new innovations that make reading more than a hobby. Emergence of monochrome screen to read through digital revolution and eReaders enables one to access and read books from anywhere comfortably. The eReaders utilizes e-ink and monochrome which is far better than lighting from a tablet. This encourages and promotes accessibility of information, thus, flow of knowledge and innovative ideas.

Currently, technological development is resulting to changes of way of working and life. Technological advancements are affecting all disciplines, industries as well as economies. Production processes and activities are fully altered to envisage transformation of inputs, design of product, distribution, and elements of the economy involved. Some of the technologies adopted in the current economy are artificial intelligence, robotics, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing (Kearney, 2017). In 2016, there were five technologies which were being focused. These technologies included the internet of things, artificial intelligence, 3D printing, advanced robotics and wearable technologies.

Innovations are widely impacting society and business. Some of the innovations such as autonomous vehicles are catching up at their early stages. Google are leading in owning patents on artificial intelligence while Apple is the last. Moreover, Google and Amazon are currently venturing in healthcare sector.

Business leaders and policymakers should keep a trajectory of vast range of technologies impacting production. High level information and communication technology powered technologies include analytics and intelligence, connectivity and computing, human machine interface and digital physical transformation.

Growth and Success

For growth and sustainable performance to be attained in an organization it calls for creativity and innovation. Innovation strategies give track and concerted efforts of an organization on a certain innovation. This kind of strategy as result become source of competitive advantage as the firm strives to high levels of innovation. Definitely, there is call for innovation in a progressive and competitive environment (Kiiyuru, 2014).

Ulrich (2017) asserted that information technology with aid of internet has transformed access to information, communication, and networking of media. The IT firms have differences in search engines, e-commercial markets, as well as social media services. This has led to increased competition and acceleration of business activities among them. Moreover, more innovations have been birthed from stiff competition in the industry. Ulrich investigated and discovered that there has been multi-function and wide usage of mobile gadgets. Consequently, mobile phones are now serving as computer and even better due to their portability and convenience. Amid technological barriers, technology has made life more comfortable among many people due to ease to learn how to use the devices and compatibility with other devices such as printers and related accessories. Success and growth in this sector is normally contributed by information technology innovations that are been brought up. Every firm is always going for user-friendly technology for its clients thus making it grow and succeed in the enormous competitive sector.

Internet offers a space for a few but rather wide spectrums of activities ranging from publicity, commerce, facilitation services and sale of multi-functional devices. Google and Facebook have grown tremendously economically due to large numbers of the users who have high confident on the service product. This has been contributed by constant review of their product technologies, thus, making their product attractive. Also, giants in commercial and mediation services Amazon use similar principle to hold back and increase their clientele (Rochet & Tirole, 2003).

Through advancements in technology, other industries have vastly grown leading to subsequent growth of IT firms. This is because of high facilitation assistance accorded to the businesses for them to thrive. It companies have innovated enterprise wearables which have led to the fastest growth according to market projection from $700 million as at today up to $5 billion by 2020. These devices keep on changing in comfortability, functionality, and safety. Prior studies have indicated that leading companies have proven good returns with 25% improvements in operator productivity and reduction in time needed for training and increasing skills. For instance, a reduction of time for training and upskilling, among staffs of DHL Company from two weeks to one hour indicate improved performance. IT innovation of connecting unconnected things together is improving performance of organization leading to its growth and success. Also, 3D printing innovation is changing traditional production processes. It is viewed to be best for companies with customization and time to market. As time goes by, economics and industry dynamics may not support 3D technology which is replacing conventional manufacturing for long run production.

Pires & Aisbett (2003) asserted that E-commerce facilitated long-term relationships intermediaries. This was achievable due to shared databases and processes which resulted to close relationships with customers. Consequantly, it replaced traditional intermediary processes through concetrating on process-focsued technology. As aresult, there was increased contact between buyers and suppliers. However, this may lead to incurring more costs.

IT related companies such as Google, Facebook, and Amazon among others have huge capital for reinvestment which makes them grow and vastly develop. More likely it is assumed they can be venturing in server architecture, collection of data, search algorithms and integration of extensive ecosystems. This is quite challenging for new entrants in the sector. In such a dynamic sector or industry, price do not determine level of competitiveness but rather the strategies adopted in an innovation and which firm leads in innovations (Ilrich, 2017).

Last but not least, big IT firms have been able to not only remain in their area of operation but also entered into other sectors through expensive acquisitions and partnerships. This has been contributed by the urge to acquire knowhow and technology advantage from well-established companies in regard to their fundamental business. For instance, recently there has been acquisition of Skybox Imaging, Nestlabs and Deep Mind by Google. Another case is an acquisition of Double Helix and Lovefilm by Amazon. Not forgetting Skype technologies, Nokia devices and LinkedIn have been acquired by Microsoft. As at now and unforeseeable future, entrant of new players will be hard since key player will advance in technology and come up with new ideas which might be hard to challenge. Notably, between 1997 and 2015 Google acquired various companies in the sector such as Picasa, Youtube, Motorola Mobility, and Android. Likewise, Facebook acquired Instagram, Hot Potato, FriendFeed, WhatsApp, and Beluga among others. On the other hand, Microsoft took over management of various companies which include Hotmail, Vision Corp, aQuantive, and Fast Search and transfer among many others. This has led to growth and success of established firms due to advanced IT strategies and innovations.

There has been battle on who to win in the AI technology which is used in self-driven cars, intelligent robots and, also automated delivery drones. Moreover, Google and Facebook are competing on innovating technology which can analyze facial expressions of users. Literally, Google is intending to come up with facial recognition which will help in undertaking transactions for security purposes. On the other hand, their competitor Apple is striving to have facial recognition which will help in safeguarding access to devices. The more innovative organization and innovation strategy employed will definitely determine its future in the sector.

Improve Service Product and Comptitive Advantage

Johnson, Li, Phan, Singer, & Trinh, (2012) in IT industry critical factor of success is undoubtedly technology. Popularity of technological innovation enable big companies through competitive advantage. The innovations bring into market more competitors. Products in the IT sector depend on technology innovations. Firms in the sector are forced to come up with new products often due to high competition. Majority of the firms have research and development department to enhance product diversification. This ensure they always have unique and quality service products. The team also works to ensure that procedures are reduced by eliminating idle team in processing and underutilized resources.

Ilrich (2017) affirmed that those who seem to dorminant players are ousted out of market by other players due to IT strategies and innovations adopted by each. Competition is usually stiff in IT sector. Early 2000s famous MySpace and StudiVZ were out played by Facebook. Sametime, Yahoo who were pioneers of search engine, Altavista and Lycos were out played by Google to dorminant the market. Crossing over to transport and accomodation sector Uber and Airbnb are founders and competitors in the respective areas. It is, therefore, evident that IT plays paramount role in creating competitive advantage and exclusive service product.

Factually, technology innovation is an essential aspect that Appple Inc undertakes. Currently, there are touch screen phones which Apple company transformed to be iPhones. Similarly, Sony developed their first portable music player but eleven years later the company introduced discman in 1990. As time went by, Apple made a stride in technology by coming up with iPods. There has been sequential changes in technology in the industry leading to high level of competition. IT innovation that grasp the customers’ perception gain competitive edge.

Sustainable competitive advantage can be defined as a prolonged advantage of undertaking some exclusive value creating plan grounded on combination of available organizational resources and capacities which cannot be imitated by competitors. This is viewed as development that addresses current needs without contradicting ability of upcoming generations to meet their needs (Pires & Aisbett, 2003).

Currently, there is very high competition in mobile phone technology. Famous and long time dorminants Nokia and BlackBerry face it rough from other small firms. This is because of increased IT strategies and innovations adopted by each of the firms. The monopolistic power is been watered down by upraising innovations and strategies of new entrants (Arthur, 2012). Product markets which are consumer-oriented and offering services greatly rely on preferences of end consumers. Evidently, there has been rise in online streaming and message services which no longer existed have highly boosted performance of the firms as well creating competitive advantage. Not forgetting the new technology of e-books and tablets which optimistically offered quality and a friendly service product (Atkinson R. D., Ezell, Andes, Castro, & Bennett, 2010)

Artificial intelligence (AI) permits manufacturers to come up with devastating data relating to their factories, operations, and consumers. AI can transform this kind of information into significant decisions. Currently, about 70% of apprehended production data remain underutilized. Application of AI enables producers to organize and rationalize business procedures from desktops to machines in departments and supplier tiers. Opportunities such as quality management, predictive maintenance and supply chain optimization require application of AI. Moreover, this kind of technology is a game-changer for worth prepositions related to customers.

Internet of other things in a business helps in controlling function. The technology enables smart connection of machines in an organization, hence, making supervision smart and easier. This enhances flexibility and efficiency, thus, leading to high production and profitability of the firm. In essence, service product is highly improved. Adoption of this technology can be viewed as a mid-term or long-term strategy to remain competitive in an industry. Due to complexity in implementing this strategy, creation of new standards is essential in order to bring together IT and OT systems. IT strategies can also be adopted in asset performance management. Usage of cost-effective wireless sensors, cloud connectivity and data analytics increase performance of assets. This kind of technologies allows data to be collected with ease and converted to information in real time. Results obtained should be reliable in making business decisions and in making projections. In recent future, employees will be using mobile devices, data analytics and transparent connectivity to increase productivity. For instance, due to increase use of baby boomer retirement, only few skilled workers will be left to manage operations. Any young plant workers employed will require information at fingertips and on real time with familiarity. Through this, plants will change to more user-friendly and less machine-centric (Moghavvemi, Hakimian, & Feissal, 2012).

Due to innovations in IT there are has been increased us of wearable technology. Through IT innovation strategies service, provision in health sector is highly enhanced. Dogmatism is no longer evident at health facilities. More of human capacity in access health status of an individual is characteristics of the tech. it goes beyond doubt on accuracy of the results. Similarly, availability of wearable tech healthcare sector has brought about transformation. Service delivery and kind of service offered in hospitals have greatly changed. Moreover, for wearables to be highly useful they need not only provide data that is informative but also prescriptive (PWC, 2014).

Research Gap

IT organizations are many with unique innovation on monthly and/or yearly basis. Kearney in his study pointed out some of the technologies adopted by IT firms. Many innovations have been made up to the year 2015. Though there are many innovations made often, little has been made to shade light on that. Many innovations seemed to be known but there are other critical innovations like use of Bluetooth, among other innovations which this paper considers worthy to find out. Technology like Artificial Intelligence which is now compactible with smart phones has not been explored. Moreover, there has been increased use of internet of things which has scanty looked into.

Every firm looks forward to having stake in the economy on-going concern. But this does not go well for all IT firms in the sector. Some are acquired by big players as others are completely outplayed out of the market. This study intends to investigate whether adoption of high levels of IT innovations influence growth and development of IT organizations.

Basically, IT innovations are to improve service product and increase competitive advantage of any organization. Little has been done relating to whether high levels of IT innovations lead to better service product as well as improvement in competition levels. This study, therefore, is significant as it bridge the knowledge gap on relationship between high levels of IT innovations and provision of quality service products.

Hypothesis Formulation

Hypotheses were formulated in line with objectives of the study to provide answer to research questions at hand. A hypothesis is a tentative guess of the outcome of the findings of a study (Prasand, Rao, & Rehani, 2001). The following are hypotheses;

Case 1:

H0 There has been no new innovative strategies by IT organizations.

H1

There has been new innovative strategies by IT organizations.

Case 2:

H0 There is no relationship between adoption of IT innovations and, growth and success of IT organizations.

H1 There is relationship between adoption of IT innovations and, growth and success of IT organizations.

Case 3:

H0 There is no linkage between adoption of IT innovations and, increased service product and competitive advantage of IT organizations.

H1 There is linkage between adoption of IT innovations and, increased service product and competitive advantage of IT organizations.

Linkage of Independent and Dependent Variables

Independent Variable Dependent Variable

Fig 1: Representation of Conceptual Framework

The study aims at investigating adoption of innovative IT strategies by IT organizations to accelerate their business. The study considers innovative IT strategies as independent variables. This is because they will not be influenced by any other factor well-thought-out in the study. Additionally, innovative IT strategies are determined by new technologies they come up with for them to remain operative in the sector. These innovations include Artificial Intelligence, eReaders, cybersecurity, AR/VR and autonomous vehicles. The delimited itself to this few innovative IT tech.

These strategies are presumed to bring about acceleration in business which is measured in growth and success of the organization. Alternatively, business acceleration can be measured through service product and increased competitive advantage. The study will measure success and growth on the business using the following proxies: number of patents owned by the organization, acquisition, and partnership and diversification of products. Too, service product and increased competitive advantage will be measured using proxies such as increased customer loyalty and trust, customer satisfaction, convenience, and affordability of the products.

The study will consider moderating factors which control the influence of independent variable on dependent variables. It will take into consideration legal frameworks and memorandum of association as moderating variables. Normally, quality service products in IT industry are highly depends on innovations made. Likewise, organizations with high levels of innovations usually have high competitive advantage. For one to enjoy advantage on leadership in the industry, then, customer must be satisfied with their products. Furthermore, success of any organization in innovation path can be determined by number of patents possessed.

References

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Atkinson, R. D., Ezell, S. J., Andes, S. M., Castro, D., & Bennett, R. (2010). The Internet Economy After 25 Yeatr.

Atkinson, R. D., Ezell, S., Andes, S. D., Castro, D. D., & Bennett, R. (2010). The Internet Economy after 25 Years: Transforming Commerce and Life.

Carter, C. W. (1998). An Assessment of the Status of Diffusion and ADoption of Computer-BAsed technology in Appachian College Association Colleges and Universities (Doctoral Dissertation,Virgina Polytechnic and State University, 1998). ProQuest Digital Dissertations (UMI NO. AAT 9905169).

Ferreira, R. M., Filho, F. F., Souza, C. R., & Singer, L. (2014). An Explanatory Study of the Adoption of Mobile Developement Platforms by Software Engineers. Retrieved 3 28, 2018, from http://chisel.cs.uvic.ca/pubs/miranda-MOBILESOFT2014.pdf

Gregor, O. (2003). Diffusion of Innovations, by Everett Rodgers (1995). Retrieved 03 21, 2018, from https://cs.nyu.edu/courses/fall10/V22.0480-002/Rogers1985.pdf

Ismail, S. (2006). Detailed Review of Roger’s Diffusion of Innovation Theory an