Innovation strategy and firm competitiveness: a systematic literature review

Abstract

This systematic review aims to review the effect of innovation strategy on firm competitiveness and to establish a theoretical background for future studies in the innovation and firm competitiveness literature. A total of 40 studies covering the innovation strategy and firm competitiveness were from 2015 to 2023 and analysed via a PRISMA method using the descriptive content analysis. These studies were found in the Scopus, Web of Science, PubMed, and Taylor and Francis databases. The findings from this review show that a large majority of the reviewed studies has concluded that innovation strategy have a positive relationship and effect between firm competitiveness. This study offers the chance to empirically examine innovation strategy and firm competitiveness from various angles. Despite a rapid recent increase in publications and special issue calls, many opportune research avenues within the innovation strategy and firm competitiveness field require further investigation.

Introduction

Globally, strategic innovation is an important factor for organization, sustainable competitive advantage and financial performance (Nybakk & Jenssen, 2012). A good strategy is one that actually generates a competitive advantage that differentiates an organization with its competitors by giving it sustainable edge that is valuable, rare and not easy to imitate (Nybakk & Jenssen, 2012). The innovation strategy explains financial performance more than other dimensions of firm performance (Tugba, 2015). Competitiveness can be conceptualized under different perspectives or dimensions. Competitiveness can be measured according to their level of analysis: country, sector, company (Wysoki, 2003). Marketing strategies in the MSMEs sector by integrating market orientation and entrepreneurial orientation to improve business performance (Yaskun et al., 2023).

The emergence of innovations in time and its expansion in the process reveal the necessity of both innovation and expansion processes (Fongsuwan et al., 2017). According to Ungerman et al., (2018) Marketing innovation is identified as a search for creative and new solutions to problems and needs. For businesses to become more competitive and improving their performance, they must constantly develop new products as well as strategies. Globalization and increasing market competitiveness have driven financial institutions toward innovativeness in their operation to gain sustainable competitive advantage and improve their financial performance (Muigai, 2018).

To gain a competitive edge and improve performance, they need to be innovative in their modes of operations (Mohapatra & Patra, 2017). The relationship between sustainability innovations and competitiveness and to identify the contextual factors that mediate and moderate this relationship (Hermundsdottir & Aspelund, 2021). According to Srivastava et al., (2017) study reveals a positive relationship between competitiveness of the firms and innovation competence of the firm. The innovative capability of manufacturing MSMEs has a significant positive relationship with the firm’s performance (Vijayakumar & Chandrasekar, 2022).

Research gap

According to Hermundsdottir and Aspelund (2021); Sangari et al. (2023) review makes important contributions to the literature concerning the effect of innovation strategy on firm competitiveness, it has a number of limitations. Firstly, the choice of databases could have affected the number of relevant articles. Secondly, relevant studies using terms other than the keywords used were not found in the literature search. Thirdly, the inclusion criteria of keywords in abstracts could also have excluded relevant papers. Fourthly, the discovered publication year were not recent. This may be another limitation of conducting this type of study (Herrmann & Kara, 2017). Finally, the literature review approach, despite the use of inclusion and exclusion criteria, still entails making individual decisions on what is relevant versus irrelevant literature. Therefore, the main objective of this study was to determine the relationship innovation strategy on firm competiveness and to establish a theoretical background for future studies. Thus, study proposed to answer the following questions:

• 1. How are the relationship between innovation strategy and firm competitiveness?

• 2. What are the effects of innovation strategy on firm competitiveness?

• 3. What types of research approaches have been used in those articles?

• 4. Which databases were journal articles of scholars published?

Research methods

Snyder (2019) explained that there are several approaches in the literature review methodology, which commonly used in social sciences such as systematic literature review, semi-systematic literature review, and integrative literature review. This study is applying systematic literature review, which are characterized by a methodical, transparent, replicable methodology and presentation. They involve a comprehensive and systematic search to locate all relevant published work that addresses one or more research questions, and a systematic presentation and integration of the characteristics and findings of the results of that search.

Data collection

This study was started by setting review procedure, adopted Rethlefsen et al. (2021) from Fig. 1 that displays the PRISMA obtained based on the research objective. PRISMA involves a four-phase process of minimum “evidence-based” analysis and reporting existing literature through “systematic reviews and meta-analysis” (David et al. 2019). As displayed below, only 40 of the original 594 articles were ultimately included in the investigation, which enables to precisely outline and plan to be followed in the process of review. The review procedure enables this study to create a systematic, replicable, and transparent analysis and the paper followed a systematic article selection process as summarized.

Fig. 1

Source: by authors (2023)

Displays the PRISMA that were obtained.

Selection of databases

All studies in databases that have been included in the scope of the research to provide a high-quality peer-reviewed journal range. Studies on innovation strategy and firm competitiveness in the databases were scanned together with the key in the systematic review, databases were systematically searched for eligible studies and the data were derived from the databases Scopus, Taylor & Francis, Web of Science and PubMed. Based on this review, the researcher selected 40 articles from amongst 594 papers that were uncovered in the databases.

Inclusion and exclusion

The current study used some inclusion and exclusion criteria. Three inclusion criteria were employed such as search boundary, time of publication, language and keywords. As per the recommendation of Tasdemir and Gazo (2018), to ensure search completeness some additional journals were added to the list but were published in international peer-reviewed journals which are considered to be the most reliable sources. The results of the search were obtained from English-language journal articles published from 2015 to 2023 in peer-reviewed journals. For the initial search, the search keyword terms of Boolean technique were as follows:

TITLE-ABS-KEY (innovation) AND (LIMIT-TO (PUBSTAGE, "final")) AND (LIMIT-TO (OA, "all")) AND (LIMIT-TO (PUBYEAR, 2023) OR LIMIT-TO (PUBYEAR, 2022) OR LIMIT-TO (PUBYEAR, 2021) OR LIMIT-TO (PUBYEAR, 2020) OR LIMIT-TO (PUBYEAR, 2019) OR LIMIT-TO (PUBYEAR, 2018) OR LIMIT-TO (PUBYEAR, 2017) OR LIMIT-TO (PUBYEAR, 2016) OR LIMIT-TO (PUBYEAR, 2015)) AND (LIMIT-TO (DOCTYPE, "ar")) AND (LIMIT-TO (SUBJAREA, "SOCI") OR LIMIT-TO (SUBJAREA, "BUSI")) AND (LIMIT-TO (EXACTKEYWORD, "Innovation")) OR LIMIT-TO (EXACTKEYWORD, "Competitiveness")) AND (LIMIT-TO (LANGUAGE, "English")) AND (LIMIT-TO (SRCTYPE, "j")).

Besides, the study used a series of inclusion criteria to screen papers for the review. These factors included: English language, years of papers publication ≥ 2015, papers that had been published in peer-reviewed journals and dealt with innovation strategy and firm competitiveness as the main aim of the study. The earliest date of interest was based on 2015 since, in that year, several publications made an effort to stress concerns of innovation strategy and company competitiveness.

The exclusion criteria include relevance, quality and duplication. It was done via reading of abstract and conclusion of downloaded articles from different databases. The relevance was determined by deciding whether articles fit to keywords used as search string and to ensure the quality, the study excluded unpublished articles, books, reports, thesis, dissertation, different reviews, working papers and conference papers to enhance the findings from this review. Duplicated articles were excluded by assigning ID code for each article and manual detection.

Data analysis

To this study, PRISMA is a process of evaluating literature studies that focus on this study and descriptive content analysis, as well as review questions that were established at the start of the review process. The descriptive content analysis was carried out using the data extraction form's categories (Snilstveit et al., 2012). It was accomplished by tabulation, specifically for the discussion of research characteristics results using SPSS Version 25.

Study characteristics

Aiming to provide readers with a brief introduction regarding the reviewed articles in Table 1, the study used points such as databases characteristics as follows.

Table 1 Summarized review on innovation strategy and firm competitiveness

The below Fig. 2, pie chart shows that 40 of articles used for review, in this study, were accessed from Scopus 72% followed by Web of Science 15%, Taylor and Francis were 8% and PubMed were 5%. This shows database of Scopus indexed journals were used more published article on innovation strategy and firm competitiveness related issues that was indicates strong peer-reviewed and reputable articles selected for review.

Fig. 2

The databases for article search Source: by authors (2023)

As presented in Fig. 3, in year of 2023 were more articles selected for review, which is 25% and followed by year 2021 were 15% and small number of selected articles were published in 2018% are systematically reviewed articles.

Fig. 3

Source: by authors (2023)

Year of publication.

As shown in Fig. 4, majority (64.9%) were quantitative research article followed by (21.6%) were mixed research articles with next follow (10.8%) were mathematical approach and small number methods were (2.7%) were bibliometric.

Fig. 4

Source: by authors (2023)

Type of article.

As shown in Fig. 5, pie chart above, majority coverage of the selected article case area was (57%) in Asia, followed by (24%) were Europe and Africa areas were 19% covers in each of the selected article for review.

Fig. 5

Source: by authors (2023)

Geographical regions of the article covers.

The results of this descriptive study found 40 relevant articles that demonstrate databases for article search, year of publication, type of article and geographical regions of the article covers.

Conclusion

In this systematic review, 40 articles were reviewed with the goal of mapping the current state of the research on the relationship between innovation strategy and competitiveness and identifying the factors that influence this relationship. By reviewing systematically, several contributions are made. First, the findings from this review show that a large majority of the reviewed studies has concluded that innovation strategy have a positive effect on firm competitiveness. This review has proposed several recommendations for future studies, such as increasing the study of innovation and firm competitiveness. Another recommendation proposed by this review was to have more studies on SLRs and the applications of PRISMA methods were deployed. This study is the only one currently applied SLR and PRISMA based on four central databases (Scopus, Taylor Francis, Web of Science and Pubmed) to review. The third recommendation suggested by this study was to explore in the context of innovation strategy and competitiveness, which researchers currently prefer.

Managerial implications

The study has implications for the managers to identify the relationship of innovation strategy and firm competitiveness that were devoted to the future thinking needed in solution firms and explore different models. This review would be relevant from a particular manager’s viewpoint but does not seem to exist. Additionally, there do not seem to be any existing studies focusing specifically on the innovation strategy and firm competitiveness. Implications should be targeted more specifically, not only “for the firm” or “to managers” but to a particular manager, to explore models on innovation and firm competitiveness even if the only result of the study is a clearly described and its value for a manager should be discussed and shown clearly. Finally, reviewed studies have concluded that innovation strategy has a positive effect on firm competitiveness.

Implications for future practices

The study depicted that the current literature deals with the relationship between innovation strategy and firm competitiveness. I hope that there is an increasing interest and trends for more research on the link between different innovation strategies and firm competitiveness with their effects. The findings from this review show that a large majority of the reviewed studies has concluded that innovation strategy have a positive relationship and effect with firm competitiveness. Therefore, a great deal more research will be needed to examine the relationship between the consequences of various innovation strategies on company competitiveness.

Limitation of the study

This study included in this paper are those that used the keywords "Innovation", "Strategy", and "Firm Competitiveness" that were published between 2015 and 2023. The use of descriptive analysis as a form of data analysis places still another restriction on this investigation. Even though the researcher used a systematic approach to ensure there were no potential biases in the study, this method of data analysis is subject to potential subjectivity. Future research can therefore lessen the subjectivity issue by utilizing a variety of software tools, as these tools allow a researcher to lessen the subjectivity that frequently arises when using traditional content analysis and in the implementation of manual codifications done by an academic. Additionally, not used software allows researchers to find structures, recurrences, and patterns in the text that may not have been anticipated beforehand. Finally, this systematic review does not incorporate sector categories in their analysis to determine the unique finding implications.

Future research direction

This study is thought to present a number of opportunities for future innovation strategy and firm competitiveness research. First, this study offers the chance to empirically examine innovation strategy and firm competitiveness from various angles. Therefore, this study suggests to review all models with different industries. Despite a rapid recent increase in publications and special issue calls, many opportune research avenues within the innovation strategy and firm competitiveness field require further investigation.