The purpose of this paper is to search and identify the critical success factors related to growth of the organizations in today’s uncertain business environment. The research is exploratory and descriptive in nature. Initially, an overview of the importance of identifying the critical success factors in organizational strategy for growth is given. Later on the concept is delineated to the importance of innovation in the organizational strategy as the most revolutionary factor to gain the competitive advantage in domestic and international platform. The role of leaders in the growth prospects through fostering innovation and especially social innovation is explored from the literature. The paper also gives guidelines for advance research by identifying the research gaps.
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Globalization and its effects on business and management had led the academics to acknowledge the importance of innovation and its crucial role in the growth and sustainability of an organization (Gupta et al. 1986). Critical success factors are defined as the key performance areas which are crucial for the achievement of organizational goals. With the arrival of globalization both techno-globalization (Henderson & Clark 1990) and social globalization (ILO 2008) the need for innovation as a major critical success factor is obligatory to build and maintain competitive advantage. Different types of innovation (product, service, and business model, social) are found to be tightly integrated with the supervision top-management. Several issues related to innovative strategies regarding growth of an organization are discussed in the literature review.
Overview of the Literature
The foremost purpose of any organization whether it is big or small, local or international, profit or no-profit, is to meet the needs of its customers, employees, partners or alliances, shareholders and the communities that are going to benefit from its business. To successfully accomplish the predefined objectives a company designs a strategy which reflects the mission and vision of the organization. Tasks from top to bottom level of the organization are such divided and assigned so as to ensure the alignment of the whole organizational functions towards a common goal to be met within certain time limits. Strategy leads to the recognition of certain key factors that are immensely required for the fulfillment of the goals and without performing well in those key factors the success of the organization seems doomed. These factors are called the critical success factors. These CSFs are often completely under consideration of the top management but not often unequivocally communicated to the layers of management. Once communicated these factors help the whole organization to be well integrated and aligned towards the achievement of the common organizational goals (Caralli 2004).
Critical Success Factors
Studies on the critical success factors originated from the studies by Daniel (1961) as the important factor that must be coupled with the organizational goals in order to facilitate organizational administration and management control. Research showed that with the evolution of information technology the organizations were confronted with a information holocaust and even after having so much information the top management was unable to filter the right information needed to make important decisions (Dobbins & Donnelley 1998). Rockhart (1979) worked with his team to counter with the problem of continuous information flow in the organizations and suggested the CSF approach to filter the most appropriate and useful information in order to achieve organizational goals. Primarily focus was made on the information needs of the executives in the IT world but later on the significance of CSFs in other business sectors like Federal government program management (Dobbins 1998), Enterprise resource planning (Jang, Lin and Pan 2009, Ngai, Law and Wat 2008), manufacturing (Sherer, Susan 2003, Burns,Turnipseed and Riggs 1991), International projects (Freedman & Katz 2007, Eid, Trueman and Ahmed 2002) and Education Industry (Huotari & Wilson 2001, Mazzarol 1998) was also certified by different studies.
Rockart (1981) defined 5-specific sources of CSFs as the industry, organizational peers, organizational environment, barriers/challenges for the organization and managerial hierarchy. Moreover, the dimensions of CSFs are internal/external and monitoring/adapting. The internal CSFs are those which are controllable by the managers while the external ones are uncontrollable as they are influenced by the external forces working in the organizational surroundings. Moreover, monitoring CSFs relate to the factors needed to be scrutinized for the regulatory objectives of the organization whereof the adaptive CSFs are related to the changes occurring in the world outside the boundaries of the organization and are thus used by the organizations to keep their competitive edge over the other organizations in the industry.
CSFs, Globalization and organizational strategies
Rapid changes occurring in the technological world and burgeoning global competition has alarmed the firms to identify and imbed their critical success factors for the promotion and sustainability of growth. (Caralli 2004). Business world today is confronted by dual effects of globalization. The techno-globalization is related to the advancements in the information technology which organizations have to adapt to be in the race of competition (Henderson & Clark 1990) where of the social globalization is concerned with the impact of globalization on the lives of individuals and their families and which must be taken in account before doing businesses internationally (ILO 2008). According to Rockart (1979) the major advantage gained by working on these factors is enhanced communication among the hierarchal levels of management. Among some other benefits of inculcating the CSFs in the organizational strategy is less organizational ambiguity, dynamic nature for reflecting the ongoing operational activities, improved risk-management practices and realignment of the organizational activities when contradiction between visualized and real problems occur (Caralli 2004). The critical success factors are essential for organizations start-up phase (Boyer, Creech & Paas 2008) and growth (Freedman & Katz 2007) to have a competitive advantage over its competitors.
Further studies argued on the domain specificity of the critical success factors as they differ from organization to organization (Anthony et.al 1972). The critical success factors for growth of an organization are dependant upon the environment and industry in which it operates. Extensive research is being done in this regard such as the CSFs that are crucial in Enterprise resource planning are top management support and training and education (Ngai, Law & Wat 2008). In international business and “coopetition strategies” the strongest CSFs are found to be management leadership and trust development (Chin, Chan & Lam 2008) and those of environmental and social enterprises are leadership, partnerships, innovation, social and economical benefits alignment, long-term & short-term planning management , community involvement and risk management (Boyer, Creech & Paas 2008). In Strategic management however a great deal of change in defining the critical success factors is seen since 1990’s. With the advent information technology and gust of globalization the organizations need to modify their mission statements in regard of organizational business strategy (Strong 197), stake holders (internal and external) concerns (Greenley & Foxall 1996) and identifying the critical success strategies (Strong 1997, Gupta et al. 1986). The ultimate goal of an organization has been to attract and retain its customers (Ennew and Binks 1996) but today the focus of organizations is having a dual nature of being environmental and societal friendly also to sustain their image and growth in global industry (David 1989, Strong 1997).
Innovation-an essential growth imperative
The revolutionary change in the global competitive world has introduced Innovation and quality as the most essential success factors to become market leader (Gupta et al. 1986). Innovation is defined as the act of doing something new (new method) or bringing in something novel (new product/ service) or moving into something new (new market) (Schumpeter 1968).
The burgeoning need for the adoption and implementation of innovative strategies for local and international business is thus the most recent and essential part of academic research on business and management strategies (Jeffery & Rana 2008, Haapaniemi & Seppanan 2008, Pittaway et.al 2004). The drivers for innovation are categorized as accelerating global competition, technological advancement, turbulent and diversified market needs and volatility of natural resources (Kingsland 2007).
Innovations are of different kinds like technological innovations (Henderson & Clark 1990), Business model innovations (SAP 2008) and bring in different competitive effects on the organizations. The business model innovations are radical in nature whereof those related to new customer solutions/systems are incremental (Kearney 2008). The organizations of today are focusing more on the business model innovations for its broader aspect of effectiveness throughout the organizational structure.
Key factors for innovation strategies
The business model innovations are typically classified into customer-centric innovations, supply-chain centric innovations and organizational process innovation (SAP 2008). Innovation is considered to be collective and not individual or isolated in nature. Any idea needs collaboration and collective effort both from internal stakeholders and external stakeholders for the realization of that idea (Majahan & Peterson 1985, Panzano & Roth 2006, Kearney 2008).
Research from several studies on innovation and importance of taking the external stakeholders (suppliers) in account specifically for organization’s growth sustainability through innovation has defined the importance of networking (Sherer 2003, Pittaway et.al 2004). The literature about innovation is also intimately connected to the risk management because introducing any novelty is itself a risky job (Panzano & Roth 2006). Through networking the benefits of innovation can be doubled as it fosters risk sharing thus increasing the risk propensity of the organizations in contact (Pittaway et.al 2004). Other than networking one of the most important factors influencing the development of innovative culture in the organizations to have a competitive edge in the global market is the role of leaders (Freedman & Katz 2007, Morales, Reche & Torres 2008, Fairholm 2009).
Role of Leadership
Studies from the leadership literature proves the important role of top-management in enhancing the organizational learning and thus supporting the innovativeness in the organization. The strategic thinking of leaders links the implicit knowledge of organization with its functionality by explicitly disseminating it to the layers of management and improves organizational learning (Appelbaum, Pierre & Glavas 1998, Vera & Crossan 2004, Fairholm 2009). Transformational leadership is a relatively new style in the literature of leadership. It is related to a more change-oriented attribute of the leaders thus fostering and encouraging new changes in the organization which in turn motivates the employees to be more innovative and increasing organizational performance (Morales, Reche & Torres 2008). The CEOs are considered to be the champions of making innovation and sustainability of any organization in the global market by making ways through open-innovation (involving people in innovative strategies) and co-creation (involving stakeholders and partners)(Kearney 2008).
Sustainability and innovation
Innovation has greatest effects on the sustainability of an organization. Sustainability is defined as the tendency to fulfill both functional and emotional needs of the customers in a less resourceful and more competitive environment. Organizations which take into account the sustainability as their business strategy are the ones that outperform in the global world (Kearney 2008). For this they don’t just have to focus on making profits by offering product or service innovations rather they would have to focus on social innovations (well-being of society) as well (Simmon & Eduardo 2008).The Business and Management world has benefited by introducing innovations in their products, services and business models and will continue to keep up the competitive advantage only if they keep on bringing or doing something new.
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Innovation has been globally accepted as one of the most important success factor in the sustainability of the organizations (Jeffery & Rana 2008, Haapaniemi & Seppanan 2008, Pittaway et.al 2004). The most important role regarding introducing, communicating and networking the innovation among the organization and its stakeholders is that of top-management (Appelbaum, Pierre & Glavas 1998, Vera & Crossan 2004, Fairholm 2009). The leaders are thus required to increase research efficiency, encourage open innovation, and emphasize more on sustainability and social innovation by delievering benefits on low cost and use a more structured approach to innovation and technology platforms. Moreover, with the increased competition and uncertainty in the global market the CEOs should be passionate for innovative strategies, set clear expectations and use brand-imprint methodology (pilot study) before entering into larger markets.
This literature review on the critical success factors for growth through innovation had led me to find out certain gaps in the studies till now. Firstly, the critical success factors for growth and sustainability vary from organization to organization and industry to industry (Anthony et.al 1972). Same is the case with the innovative strategies as the adoption and diffusion strategies for innovation differ in different organizations and even in the same organization according to its development phases (Moore 1999). This shows that both are greatly influenced by the global turbulent environment and it is crucial for the organizations to foster innovation as the critical success factor for sustainability even in hostile conditions. To date there is very little qualitative research done on the relationship of developing innovative strategies under hostile conditions and organizational growth. Secondly, the women-owned businesses are not sufficiently studied for defining their critical success factors as compared to their male counterparts and specifically in the developing countries (Lee et.al 2009). Although, SMEs are of prime importance in the developing part of the world very less attention in terms of women-owned SMEs is being given to help them in growth prospects through innovation. This might be due to the reason of greater gender discrimination carried out in this part of the world (Tambunan 2009) consequently having low risk propensity in them which is the main ingredient for innovativeness (Brindley 2005). Lastly, although the social innovation has gained importance in the business world still a dearth of robust empirical research is seen in this regard (Simon & Eduardo 2008).
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