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Faculty of Business and Law


MODULE: STRM042 Critical Issues in Business

Module Leader: Dr Navid Nasirpourosgoei

Literature Review on

“Leading innovation and strategic development of organizations in the 21st century.”

Student Name: Pradeepa Dhanushka Eswaran

Student ID: 19434478

Assignment word count:

Lecturer Name:
Submission Date: 19-04-2019

Table of content

Introduction ................................................................................................................ 3

Review of Literature

Introduction to leadership and strategic planning/development………………………. 4

Innovation & Organization……………………………………………………………. 5

Innovation & Development……………………………............................................... 6

Conclusion ................................................................................................................... 9

References ................................................................................................................... 10

Leadership considered to be main factor in any organization current business world. Always an
effective leader will lead to positive change for the organization with ethical framework. Because
leader always move along with organizational change and adapt to new innovations in the market
segment. Innovation can considered as main element to implement within an organization's
industry for change the organization process in order to restructure and achieve their goals.

Though there are several types of innovation three are crucial and followed by current market such
as product and service innovation, incremental innovation and modular innovation. Lead what type
of innovation will be beneficial to be decided by respective company by analyzing their market
and customer needs. In this paper we will discuss and critically evaluate innovation along with
strategic development.

In this paper auther will discuss innovation and strategic development in current business context
for 21st century. Furthermore, will find gaps in previous studies on innovation and give relevant
recommendations to further research. In the conclusion author will summarize main points which
will discuss throughout this paper.

Review of Literature
Introduction to leadership and strategic planning/development
Always strategic thinking and planning are most important Role in Leadership for innovation by
focusing with the effort to make important connections with business and organizational goals.
Leadership required in every organization to executive creativity directs guide and influence others
to attain specific common goals. Leader is the one who guide his followers and impact their
behaviors towards innovate for support organizational goals. Strategic planning can be described
as an organized process where leader needs to take decision of his organization’s future
development by following set of procedures and measures. To do this author suggest leader should
be more creative to provide ideas and strategic thinker by focusing future potentials.
Organizational effectiveness lies on both quantitative and qualitative measures which focus in the
organization’s sense of values, purpose, meaning, and vision. (Bouhali, 2015)

When analyzing link between leading and innovation, survey conducted for 369 business alliance
and found that there is a stronger influence by transformational leaders to the development of
innovation on than the development of operational capabilities. (Schweitzer, 2014) And this study
more focus on those alliances that are formed to facilitate strategic renewal, and to drive innovation
and diversification, and found that presence of both transformational and transactional leadership
behaviors influence innovation. Author suggest to boost innovation firms should provide facilities
to learn and create.

Innovation & Organization

As far as most of the authors reflect importance of innovation for the organizations in different
perspective, and as per previous author leader should initiate innovation for attain company goals
and he mentioned relationship between leader and innovation with strategic thinking with vision
and mission of the company in the same way another author (Ţîţu, Răulea and Ţîţu, 2015) states
Innovation is a concept, vision, strategy and also a solution and it’s mandatory to attain some
economical & social goals. And further he states that, though innovation is most important concept,
only few companies are approaching it. Unless other companies see it as an exclusive concept and
that most of the success companies doesn’t depend on production facility and on material capital

and provided several examples on reputed firms such as coca Cola are mostly on branding and the
collective knowledge of their company expertise.

There were different studies conducted by different authors in Software company and textile
company and which two industries gives different perspective of arguments, where (Vila and
Kuster, 2007), it was analyzed importance and impact of innovation in a text tile company in Spain.
Study used Univariate (ANOVA) and discriminant analysis methods and results collected from
154 mangers in the textile industry found that not all types of innovation methods required to
attract new customers but as this was conducted in mature organization limitations to apply for
young enterprises and this study partially give positive insight for the argument that
internationalization is associated with some types of innovation. And study done by (Harison and
Koski, 2010) reveals about open innovation in business strategies, of software sector. Empirical
study propose that it’s essential to have skilled people with different skills and for this firms should
provide skilled people for adopt to innovative business strategies. Author states quality of human
resource is important asset in achieving and attaining business strategy. Both sectors analyses
innovation’s impact but relationship found was totally different in both industries.

Kotler (2004), Peter Drucker states firms have only two function, Marketing & innovation, it is
the only one key it gives results. Author suggest that most of the intangible products in companies
has not taken into consideration. But for long term strategic development and to meet economic
completion innovation is important.

When it comes to strategic development as it’s a long term plan different authors linked it to TQM
and organization’s strategic performance (Antunes, Quirós and Justino, 2017), finding says that
companies that uses process innovation strategies achieve performance in both operationally &
financially but when they only adopt for Product innovation it may give only financial
performance. There was a significant relationship between Total Quality Management and
innovative process in companies and innovation will promote TQM practices. Another author
explains about TQM and he suggest (Skarzynski, Crosswhite and Jones, 2014) that committing
resources and enhancing capabilities only will not sufficient to breakthrough opportunities and
innovation should not functionalized solely as other TQM practices unless without proper
guidance by CEO or top management of the company. Leader should provide strategic flow and
guidance alignment to prevent innovation portfolios from burden, though these studies speak about

TQM and innovation both are different output when considering TQM. As (Antunes, Quirós and
Justino, 2017), Innovation will help to practice TQM and (Skarzynski, Crosswhite and Jones,
2014) proves innovation should not function soles as other TQM practices such as lean or six

Another author (Thai Hoang, Igel and Laosirihongthong, 2006) investigate relationship between
total quality management (TQM) practices and innovation , confirmatory factor analysis was done
and as a result found that TQM has positive impact on the firm’s innovativeness and open
organization, innovation performance, leadership and staff management, process and strategic
management showed a positive impact.

Innovation & Development

Innovation and sustainable development is anoter big concept in strategic development phase
author (Sai Manohar and Pandit, 2013), states key driving force for sustainability and growth in
the current economic global decline is innovation. Author investigated core values and beliefs of
leading innovative companies in India. Innovation is fuel organizational growth as well as drive to
future success and to face competition continuous innovation is crucial. Most successful
companies build synergies to succeed in innovation rather than let only R& D plays the role. This
study revealed twelve core values for unique innovation. And results found that innovative culture
plays major role in developing ability to innovate. To have a unique and solid innovation culture
highly innovative companies cultivate and share core values. These companies have highly
committed workforce who love to work and excessively care to provide prominent customer care
and service. This was a different argument in innovation and sustainable development in

Other two studies conducted on innovation in organizations link with market, competitiveness and
customer need and as per (Martin-Rios and Parga-Dans, 2016) excellence in innovation will occur
when company responds quickly to new market situations and customer needs or problems, and
forecast the possibilities. And should look for continuous improvements and creative solutions in
order to make products and innovation processes more success. Authors suggest to apply European
Business Excellence Model and for planning and strategic development application of extended
PDSA loop model. Ability of fast learning and creative toward the competitors creates competitive

advantages and advanced knowledge should be transferred one to another. And (Keathley., 2013)
success factor for innovation is the degree which we link project management review and it should
be customer driven. When it comes leading innovation always a leader will looking for future and
concern about customer problems and being proactive. When leading for innovation comes
marketing and sales department should function separately as they have to harvest ideas from their
own respective team. Every business should conduct environmental scan to determine effect of
market change on the customer. Always innovative leader goes beyond the new offering and will
think of future utilization in effective manner. Both authors suggest to generation of new ideas
based on market and environment.

Based on Research conducted in education industry (Milosavljevic, Tanaskovic and Acimovic-

Pavlovic, 2012) research on strategic development in company and E-education, most companies
are concentrated in two types of knowledge, such as scientific research and creative knowledge.
Result states that Vocational education are increasingly being employed voluntarily in innovation
process and this process Information and communication technology and e-learning is a powerful

Both authors suggest in diffent studies (Martin-Rios and Parga-Dans, 2016) and) (Choudhary,
2014), firms should implement innovative actions to survive and grow in long term. And firm’s
renewal was facilitated by amalgam Organizational innovation capabilities into rejuvenate.
(Choudhary, 2014) in order to have strategic sustainable success an organization needs to be
innovative. Innovation is a difficult package for setup but focusing and paying attention on joyful
and motivated employees, effective customer relationship and committed leadership to innovation
and creating fear among the staff force lead to sustainable innovation and success for any

Innovation is the most powerful brand for companies like AirBNB, Apple BMW, Netifix.the core
of most powerful companies is innovation. Author argues that innovation & powerful marketing
made these companies challenge to other competitors. (SapientNitro, 2014) and Research has revel
that the average U.S. employee's suggestions whether it is big or small, will be implemented only
once every six years and More innovative companies typically apply far more employee ideas and
suggestions. There should be forward thinking leaders. Companies like Google give time for
employees to some un-official activity and to set some creative ideas. Engineers of Google spent

20% of their time to choose company related product. Innovative ideas in most of the companies
like P&G doubled its sales by 24 billion dollars but they spent $2 billion annually on research and
development and out of that only 15% ideas are developed in ad-hoc manner. (Silverman ,2011)

Finally recent research (Khan and Naeem, 2018) analyses the gap in recent research in innovation
and contributed factors and it was found that existing studies lack of sustainability context and
connected to innovation. Results reflects that innovation capabilities are directly affected by
strategic quality orientation and strategic business growth. Author suggested structured approach
will be most suitable to use with strategic quality orientation in service organizations.

There were several studies conducted on Innovation in organizations but still there is a gap in
strategic development, sustainable growth factors in 21st century. But all the study reveals that
there is a positive impact on organization growth along with innovation and it leads for good TQM
practices. And innovation can lead company more successful in their competitive environment and
also from the first author in this paper we can realize leader lead the innovation and should focus
on strategic planning/development of the organization. Other studies and authors in this paper talks
about human capital and skilled employees for innovation. As explained in (Kotler, 2004)
marketing is key and most reputed companies are innovative marketing with sustainable growth.

Future research should be conducted to amylase the impact of strategic development factors and
effect of innovation in the business as innovation plays major role in 21st century.

After reviewed literature on leading innovation and strategic development it was observed positive input
has been given towards concept in different perspectives. In this 21st century “Change” is main element to
compete in competitive environment, in order to attain sustainable growth and development in long run
below areas were identified as crucial by above literature,

 Recruiting or training more skillful employees to support company’s goal and,

 Environmental scan is important to meet customer expectation and compete in
market by innovative marketing strategy
 Leaders should focus more on guiding followers towards company goals with
strategic thinking by grabbing new ideas and opportunities.
 As Innovation is considered as key element to survive in current business it should
be more focus in any business rather than neglecting it as intangible asset.

As a conclusion to this paper above points should be considered to become more sustainable in the market.

Antunes, M., Quirós, J. and Justino, M. (2017). The relationship between innovation and total
quality management and the innovation effects on organizational performance. International
Journal of Quality & Reliability Management, 34(9), pp.1474-1492.

Bouhali et al., 2015. Leader Roles for Innovation: Strategic Thinking and Planning. Procedia -
Social and Behavioral Sciences, 181(C), pp.72–78

Choudhary, A., 2014. Four critical traits of innovative organizations. Journal of Organizational
Culture, Communications and Conflict, 18(2), pp.45–58

Harison, E. and Koski, H. (2010). Applying open innovation in business strategies: Evidence from
Finnish software firms. Research Policy, 39(3), pp.351-359.

Keathley, J. et al., 2013. Leading Innovation. The Journal for Quality and Participation, 36(3),

Khan, B. and Naeem, H. (2018). The impact of strategic quality orientation on innovation
capabilities and sustainable business growth. International Journal of Quality & Reliability
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Martensen, A. and Dahlgaard, J. (1999). Strategy and planning for innovation management –
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Martin-Rios, C. and Parga-Dans, E. (2016). Service response to economic decline: Innovation

actions for achieving strategic renewal. Journal of Business Research, 69(8), pp.2890-2900.

Milosavljevic, G., Tanaskovic, Z. & Acimovic-Pavlovic, Z., 2012. STRATEGIC
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Sai Manohar, S. & Pandit, S., 2014. Core Values and Beliefs: A Study of Leading Innovative
Organizations. Journal of Business Ethics, 125(4), pp.667–680

Santarelli, E. & Tran, H., 2017. Young innovative companies: Are they high performers in
transition economies? Evidence for Vietnam. The Journal of Technology Transfer, 42(5),

SapientNitro, 2014. A Marketing Promotion: Innovation is power. Marketing, p.44.

Silverman, R., 2011. Managing & Careers -- Theory & Practice: Allowing Innovation to Bubble
Up. Wall Street Journal, p.B.4.

Schweitzer, J. (2014). Leadership and innovation capability development in strategic

alliances. Leadership & Organization Development Journal, 35(5), pp.442-469.

Skarzynski, P., Crosswhite, D. and Jones, C. (2014). A solution for a lack of breakthrough
innovation – strategic C-suite direction and involvement. Strategy & Leadership, 42(4), pp.33-39.

Thai Hoang, D., Igel, B. and Laosirihongthong, T. (2006). The impact of total quality management
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Ţîţu, A.M., Răulea, A.S. & Ţîţu, Ş., 2015. Innovation – A Challenge for the 21st Century
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