Strategic Complexity of Impactful Innovation in Automotive Component Manufacturing in an Emerging Economy

Abstract

This research was directed at the impact of innovation strategy complexity on the breadth of innovation strategy objectives achievement. The context is automotive component manufacturing in developing economies. Given the risk associated with innovation activity, the question is whether firms can improve their success by adopting a complex market access strategy. The methodology was survey based, utilizing data on the innovation activities of some 530 automotive component manufacturing firms obtained by a questionnaire applied in the Pune region in India, Beijing region in China and in South Africa. Path analysis by structural equation modeling was applied to analyze the data for the hypothesized relationships. It was found that strategic complexity in the larger combined country data set is positively and significantly related to a greater breadth of impact of innovation in terms of the market access strategies implemented. It was also observed that diversity of technology and knowledge sources, and innovation types, play a fundamental role in this relationship. The results for individual countries are different from those of all countries combined and yielded varying conclusions. The SA data set was unfortunately too small to meet the requirements for reliable results on its own, but served to support understanding of the influence of its different environment. The findings support the proposition that a diverse innovation strategy should be developed and executed in a business strategy directed at innovation.