A study of innovating and non-innovating firms’ perception of environmental dynamism and innovation in a mature regulated industry

• Main Author: TAN, Patrick Siong Kuan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: innovation; environmental dynamism; mature industry; regulated industry; Place and Environment; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/etd_coll_all/37; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1039&context=etd_coll_all
• Institution: Singapore Management University

Can large firms be innovative in an industry that is mature and regulated?” Business managers in mature regulated industries, like new and unregulated industries, operate under very challenging conditions, albeit a bit different, and need to create competitive advantages. One potential route to do this is through innovations. The strategic direction and choices which the firm takes and whether to innovate or not innovate are largely influenced by its environment. And, in mature regulated industries, large incumbents face a triple challenge. Its size, the maturity of the industry and regulations governing the industry are three conditions that are generally deemed by researchers to be unfavorable to innovation. Yet, some firms continue to innovate, while many others failed or have mixed results. Our research addresses the question of whether large firms in mature regulated industries have a source of advantage that enables them to be innovative. Our study indicated a positive relationship between organizational innovativeness and perception of environmental dynamism. Firms that perceived the environment as dynamic have a higher propensity to innovate than firms that do not, even though the firms were in the same industry. In other words, innovating firms have a dynamic mindset in which they perceive of their market as dynamic. This suggests that the firm’s perception of the environmental dynamism of its industry plays a critical role in their innovativeness.