This chapter provided the research background, purposes, questions, and the significance of the research. It was then followed by the delimitations and limitations of the research, along with definitions key terms. All of these were to provide a comprehensive focus of the entire research.
Background of the Study
It is a world of knowledge-based economy, and there is no doubt that resources and competencies are essential for organizations to survive and thrive in this competitive world (Subramaniam & Youndt, 2005; Teece, Pisano, & Shuen, 1997). Knowledge becomes increasingly important for organization. In the past, information, products and services spread from other continents is difficult and slow. But globalization and technological advances have changed the way how to run the business nowadays. Information, products and services can be quickly spread out by technology. Customers can use internet to get information easily to compare the value of products or services. For example, Google, Facebook or Twitter can be one of way to get information. Organizations can also get feedback immediately through technology. Globalization and technology makes market becomes more and more competitive.
In order to increase organizations’ competitiveness, it needs to face the new challenges and use its own resources and competencies to suit to the external environment for creating the best outcomes (Debowski, 2006).
Innovation is the key for organizations to use its own resources and competencies to create maximum profit in the competitive knowledge economy (Van der Unpublished, van Beers, & Kleinknecht, 2003). Literatures demonstrated that innovation can increase the competitive advantages of organizations and help organizations deal with the troublesome situations (Baker & Sinkula, 2002; Darroch & McNaughton, 2002; Vrakking, 1990).
Innovation not only helps organizations suit to the ambiguous environment but also makes organizations be successful for a long time. It makes organizational innovation be critical in the competitive market. Innovation has become more and more important for organization to create value on its’ products or services (Hitt, Hoskisson, Johnson, & Moesel, 1996).
According to Brown and Eisenhardt (1995a), organizations with innovation can create newer and more valuable products or services, respond with difficulties and get the opportunities easily than organizations without innovation. For example, compared to organizations’
competitors, if organizations can use less resources to invent a product or service with the same
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values as its’ competitors, organizations can get the more profit. Every time the products were sold, organizations earn more than organizations’ competitors. If organizations can use the same resources as organizations’ competitors to invent a more valuable products or services, organizations can also get the profit. Customers will choose more valuable products or services with the same expenditure, and it makes organizations earn more than organizations’
competitors. It is no doubt that innovation plays an important role on organizations, especially when it desires that adapting to or keeping its’ ahead of competitive global market.
The study of innovation has been investigated for a long time. Hundreds of studies have been investigated and contributed to the knowledge of innovation. For example, Barney (1991) stated that innovation can only make organizations have a lot of valuable, rare and special products and services, but also guide organizations to get a great of profit. Innovation helps managers to figure out the way to solve business problems and challenges, which means innovation helps organizations succeed in the complex and tough world (Hult, Hurley, &
Knight, 2004). Many models of innovation have presented to see organizational learning that can enhance the innovation. However, not many studies have investigated the big picture of relations of trust, organizational learning, innovation, successful factors towards innovation, and business performance in the ICT industry. The present study tries to link the three variables and explore the relations.
Taiwan ICT Company: Background and Challenges
In order to have a better understanding about ICT industry, the researcher needed to explain it first. ICT is an acronym which means Information Communications Technology.
To be short, ICT is to use all of the existed digital technology to help individuals, businesses, and organizations to use information. The products of ICT covered the several functions:
store information, retrieve information, manipulate information, transmit information, or receive information in a digital way. For example, one of the products from ICT is smart phones.
In order to measure the effect in ICT Company, this study choose a famous Multination Corporation in Taiwan office as its sample. The H Multinational Corporation business started at China in 1990s. In the beginning, H Multinational Corporation only had 14 employees and its’ capital was 21 thousands. However, H Multinational Corporation’s annual report in 2013 stated that they earned 240 billion RMB dollars. The products of H Multinational Corporation covered smart phones, broadband wireless, terminal for houses, and so on. Nowadays, its’
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products not only sold in the China, but also sold to most of the world. The mission of the corporation is to be responsible for developing the best intelligent terminal to bring both happy and convenient experiences for its’ customers. It’s interesting to investigate what’s successful factors in this Corporation. Moreover, it’s interesting to investigate how the H Multinational Corporation become so competitive in the market.
The H Multination Corporation settle its’ office worldwide to spread its’ services to different countries and areas, included Taiwan. The H Multination Corporation in Taiwan office started its’ Taiwan business since three years ago. The ICT market in Taiwan was full with many competitors when H Multination Corporation decided to enter Taiwan. Now H Multination Corporation in Taiwan tried to break the dilemma to thrive. Therefore, it’s important for H Multination Corporation in Taiwan understanding its’ competitive advantages to set a better strategy in order to be outstanding in Taiwan ICT market.
Purposes of the Study
The purpose of this research is to build an integrated model that explores the relations between trust, organizational learning, innovation, successful factors towards innovation, and business performance in the ICT industry. Therefore, the purposes of this research are formulated as follows:
1. Examine and analyze the effect of trust on innovation.
2. Examine and analyze the effect of trust on organizational learning.
3. Examine and analyze the effect of organizational learning on innovation.
4. Examine and analyze the effect of successful factors towards innovation on innovation..
5. Examine and analyze the effect of innovation on business performance.
6. Examine and analyze an integrated model to measure the effect of trust on innovation, trust on organizational learning, organizational learning on innovation, successful factors towards innovation on innovation, and innovation on business performance by using SEM with Smart PLS software.
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Research Questions
Drawing from the research purposes, the research questions are formulated as follows:
1. Does trust influence innovation in the ICT industry?
2. How trust influence organizational learning in the ICT industry?
3. How organizational learning effect on innovation in the ICT industry?
4. How successful factors towards innovation influence innovation in the ICT industry?
5. How innovation influence business performance in the ICT industry?
6. What are the path parameter of trust on innovation, trust on organizational learning, organizational learning on innovation, successful factors towards innovation on innovation and innovation on business performance and the total effect of this integrated model?
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Significance of the Study
This present study is significant for both practitioners and academics. There are four primary points of significances for this study. First, it adds to the existing innovation knowledge a more comprehensive picture on the relationship between trust, organizational learning, successful factors towards innovation, innovation and business performance.
Hundreds of researches investigated and contributed to innovation. Many models of innovation are proved in the academic world to show the characteristics of innovation.
However, not many studies have investigated the relationship of trust, organizational learning, successful factors towards innovation, innovation and business performance. This research tries to bond the five variables and explore the relationship. Therefore the present study is significant for the academics as it provides the new perspectives of trust, organizational learning, successful factors towards innovation, innovation and business performance.
Second, it adds to the existing innovation knowledge the relationship between innovation and business performance in the context of the ICT industry. There are many studies have conducted the relationship between innovation and business performance, in which business performance is only measured by market performance and financial performance. However, seldom of them considered the variable of partnership performance.
This research tries to link the partnership performance to be one of measurement in the business performance. Therefore, the present study is significant for the academics as it provides the specific study of relationship between innovation and business performance within the ICT industry.
Third, innovation can have positive or negative outcomes on the company. The positive outcomes include good quality, fast response to the market, valuable products or services, competitive advantages, better job satisfaction, better recruitment, better business performance and so on. The negative outcomes include unprofitable innovation, product failures, customers’ confusions, employees’ pressure, increased turnover, increased costs and so forth. However, not many researches have investigated how trust, organizational learning, successful factors towards innovation affect innovation to cause positive outcomes. Therefore, the present study is significant for the academics as it provides the specific study of relationship between knowledge management, innovation and business performance.
Fourth, in the practical side, this research measures the relationship between trust, organizational learning, successful factors towards innovation, innovation and business performance in the H Multinational Corporation to see whether the H Multinational
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Corporation has good knowledge management to enhance innovation or not, and how innovation enhance the business performance. These factors can help the practitioners for their strategies development, in which they can put attention to the factors that improve innovation. The findings of this study also have the potential to assist and investigate knowledge management within ICT industry, and therefore give reliable feedback about the knowledge management inside the organization. Therefore, the present study is significant for the practitioners in relations of innovation.
Delimitations and Limitations
Delimitations of the study are the scope of the investigation in order to make research feasible; while limitations are barriers of the study including restrictions of time and resources.
Delimitations
This research would be conducted in the H Multinational Corporation in Taiwan office to investigate the relationship among trust, organizational learning, successful factors towards innovation, innovation, and business performance. Furthermore, the relationship among variables explored using the framework Model only.
Limitations
The sample will include employees from the H Multinational Corporation in Taiwan.
Therefore, the result results can’t be generalized to all the institutions that operate in Taiwan.
The questionnaire designed for this research may not be rigorous enough, despite the question items and designed based on theories and previous research. This research has difficulty including all factors that can have influence on the result.
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Definition of Key Terms
In order to avoid conceptual confliction of key terms between researcher and readers, this section gives the reader with definitions of the key terms of this research.
Trust
Trust is the positive expectations that others’ actions or behaviors were based on people’s experiences, roles, interdependencies and relationships (Shockley-Zalabak, Ellis, &
Cesaria, 2003).
Organizational Learning
According to the common experiences of members in the same organization, organization can develop its’ new knowledge and visions, and it has the potential to affect members’ behaviors and enhance the organizational capability (Huber, 1991; Slater & Narver, 1995).
Successful Factors towards Innovation
In the research, the successful factors was separated into five dimensions, which are organization-related factors, project-related factors, human-related factors, market-related factors, and demographics-related factors. (Shih & Gutierrez, 2011)
Innovation
Innovation is the adoption of a new idea and behavior (Jiménez-Jiménez & Sanz-Valle, 2011; Zaltman, Duncan, & Holbek, 1973).
Business Performance
Organizations use its' own standard to measure the whole outcome of the previous goals it made (Emden, Yaprak, & Cavusgil, 2005).
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