International Journal of Business and Economics Volume 22, No. 3 December, 2023

Innovation Dynamics: A Framework for Strategic Competitive Positioning

Salman Ali

Indian Institute of Management Kozhikode

Abstract

This paper presents a conceptual framework from a thorough academic literature review supported by examples from real-world industrial practices. The objective is to articulate how organizations strategically approach innovation based on triggers to innovate and their intended competitive positions. The 2*2 matrix framework suggests strategic options for firms using proactive or reactive strategies based on internal and external triggers to develop their innovation efforts to gain or defend competitive advantages. Proactive strategies include (1) incremental innovation for cost-based positioning and (2) radical innovation for differentiation-based positioning. Meanwhile, reactive strategies include (3) modular innovation for cost-based positioning and (4) architectural innovation for differentiation-based positioning. Industry examples enhance the framework, connecting theoretical concepts to actual implementations and laying the groundwork for comprehending the complex link between innovation strategies and competitive positioning.

Keywords：Innovation, Strategy, Competitive Positioning, Exploration, Exploitation, Adaptation

JEL Classifications：O31, O32

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