Applied Research Project LB5235: Literature Review
ASSESSMENT TASK 1:
Students are to prepare a research report in the form of a literature review. Broadly, this is a review of literature related to your chosen topic or area of study. This is followed by your conclusions including an explanation of how your research questions or hypotheses were formed and what areas you would propose for further study. The areas of further study are based on the ‘gaps’ that you have identified in the existing literature.
The purpose is to learn how to:
- Identify and formulate enquiry questions and or hypotheses that define the gap you have identified.
- Search and locate literature.
- Analyse secondary data and information.
- Synthesize new information into the literature review.
- Establish context for your enquiries; and
Literature Review
Master Steel Pty Ltd: How can they expand their business?
Introduction
The steel industry of Australia has seen some challenging period of time recently. Critics say that Australian steel market has bright potential in the future, but it is conditional to the adoption of new business models and technologies. The collapse of Arrium is considered as an example of this fact, which is a large steel manufacturing company in Australia. Experience from the fate of Arrium, Master Steels Australia has lessons to adopt a growth strategy which is more sustainable and effective in the long run. Master Steel Pty Ltd is not at the scale of Arrium, but it has to learn how to prevent itself from such consequences as faced by it. Therefore, the literature review would focus on how steel manufacturing companies can be sustainable by bringing a range of changes in their business model and practices (Smith, 2016).
Beckett and Chapman (2018) have conducted a study on manufacturing SMEs and concepts of a business model, and innovation orientation has been focused. The importance of networking has been focused as well. Australia has potential in the steel industry, but it is not the largest economy for the steel industry. Therefore, companies in the steel industry have to focus on innovative business model and relationship-based networking. Master Steel Australia has to work on these dimensions to expand its business (Beckett & Chapman, 2018).
Relationship Networking:
Lewrick et al (2007) have researched innovative technology-driven companies and asked about the nature and value of networking activities in these companies. The study finds that personal networking is effective and important for corporations in their start but corporations with greater maturity attract towards formal collaborations. In the case of SMEs, the importance of personal relationship has been highlighted (Lewrick, Raeside, & Peisl, 2007).
O’Donnell (2014) conducted a study to explore networking nature and its influence on the marketing activities of a small firm. Many contributions to networking have been found in the research study. The most important ones were access to new knowledge and possibilities and opportunities for more cooperation and market access for the company and its marketing activities (O’Donnell, 2014).
Ceci and Iubatti (2012) have connected the role of personal relationships and innovation facilitation in an SME. Relationships within SME have been taken based on personal and professional levels. In the presence of these types of relationships, inter-firm dynamics are modified, and the relationship increased the pace of traditional innovation in an unusual way (Ceci & Iubatti, 2012).
Alguezaui and Fillieri (2010) have noted that there are different types of social networks, and they offer support to different aspects of innovation. A social network may be sparse or dense. Sparse social networks help to cause incremental innovation in an organization while sense social networks cause innovation at a radical level because participants of the social network are strongly and deeply interdependent with each other. However, both types of innovation are needed because radical innovation or radical idea can only be sustainable and successful in the long run when it is supported and assisted through incremental innovation (Alguezaui & Filieri, 2010).
These studies on networking have the fundamental concept of networking developed for purpose or strategic purpose. The basic concept of relationship networking is that information and ideas of two persons and firms are exchanged to bring competitive position or bringing cooperative working arrangements for an organization. Konsti-Laakso et al, (2012) have made comments on networking that it has many benefits, including having leverage through new ideas or increasing the organizational capacity to accommodate and absorb new knowledge and expertise. In case of steel industry of Australia, these research studies may be effective and practical because they increase the level of competitiveness of firms and they become more integrated within the organizational environment (Konsti-Laakso, Pihkala, & Kraus, 2012).
Innovation:
In order to make innovation happen, there must be an innovation champion because, in the absence of a person pursuing innovation, the process cannot be possible. Management champions are the ones who support the process of innovation and provide resources to make innovation happen (Kelley & Lee, 2010).
Blackburn (2007) has conducted a study on SMEs in the UK and found that owner-manager with innovation and change centric attitude has the ability to stimulate growth as compared to those who do not have this expertise and attitude. It also relates growth with innovation and change in an organization. However, the study has related two factors in this relationship, which are the size of the SME and their maturity level. It shows that a company which wants to grow should be having owner-manager with innovation expertise (Blackburn, Hart, & Wainwright, 2013).
Terziovski (2010) has conducted research on Australian manufacturing SMEs and innovation process in SMEs is more organic as compared to corporations with larger size and magnitude. However, their performance may increase if they implement policies of large corporations. It is also in line with the findings of the Australian Bureau of Statistics that companies with larger size and business scale have a higher level of innovation. It also shows that SMEs can employ their organic and flexible business and management practices to reflect larger corporations, and in so doing, they can be innovative (Terziovski, 2010).
Hickman and Raia (2002) have observed thinking styles leading to innovation, and they have stated that divergent thinking and convergent thinking styles should be present in order to bring innovation. However, the impact of both types of thinking on innovation is different, and this difference makes it necessary for both thinking styles to be there. Divergent thinking enables an organization to bring breakthrough innovations because creativity and passion are brought through this thinking style. On the other hand, convergent thinking style brings new and potential ideas to the organization because of the high level of perception and persistence. An organization aimed at promoting innovation should take steps to promote both types of thinking (Hickman & Raia, 2002).
Chang, Hughes, and Hotho (2011) have taken a perspective in which ideas from inside and outside of the organization have been considered, and it is need of any organization to find a balance between divergence and convergence of organizational and external environmental conditions. They have argued that SMEs have the ability to find this balance and should mediate both forces to draw positive and productive results. The difference between different ideas for an organization is that sometimes, organizations want to seek new ideas, and sometimes, organizations may desire to deploy innovative ideas. Therefore, the difference in terms of the need for different ideas should be considered in finding the balance (Chang, Hughes, & Hotho, 2011).
Growth and expansion of SMEs cannot be possible without innovation and above head on innovation states that all firms irrespective of size should develop an environment and culture to own innovative ideas. Requirements for an organization should be considered at each stage so that an enriched and well-addressed innovation strategy can be adopted. Moreover, organizations should develop a climate inside them to integrate different capabilities, expertise, and skills of employees so that innovation takes places and evolves comprehensively (Ritala, Armila, & Blomqvist, 2009). In the case of Master Steel Australia, growth and expansion can be possible if it also increases the pace of innovation as innovation increases with an increase in the size and scale of the organization, especially in the context of Australian organizations. Above literature has highlighted how innovation is necessary and easy to promote innovation within an organization.
Business Model:
The business model is very critical for implementing an idea, especially; Australian steel companies have been pointed out as having problems in their business model. Above, networking and innovation have been discussed to help the expansion and growth of companies. They may not be integrated into the functions and operations of organizations without an effective and suitable business model. Moreover, the implementation of an idea or process should be backed by business sense because any idea cannot stand on its own alone.
Chesborough (2010) has emphasized on a business model where it has been suggested that a mediocre technology can be a productive and useful inefficient and coherent business model, but a breakthrough technology may not work well in the ineffective and inefficient mediocre business model. It shows the role of the business model, and it has happened in the case of the Australian steel industry where successful organizations are facing challenges because of the absence of changes in the business model. Importance of business model is very important, and its importance can be highlighted with its definition (Chesbrough, 2010). In the words of Teece (2010), the business model is all about delivering value to customers because it enables the integrated use of logic, data, and other evidence to create value for customers. In the process of creating and delivering value, the business model considers costs and profits along with developing revenue architecture. A successful business model in one space can be adopted in another place or space, and this transfer of business model is helpful. For example, in the case of this literature review, innovation and networking have been discussed above, and now the business model is being discussed. These concepts are being discussed for all kinds of SMEs and research into one industry, and organization is considered to be effective and applicable to other organizations or industries (Teece, 2010).
Mason and Spring (2011) have concluded using extensive literature on business models that there are mainly three components of business models. The first component is technology as it works on the product or service offering and its management and delivery to the consumer. The second component is market offering because the customer would purchase market offering. The third component is network architecture, and it has been discussed above (Mason & Spring, 2011). With the help of networking, internal and external resources are well integrated with each other, and knowledge and expertise sharing get possible at the inter-firm level. There are research studies, e.g. Loss and Crave (2011) those have noted that dynamic alliances and collaborative networks between different corporations are also a very important part of the business model (Loss & Crave, 2011).
Zott and Amit (2010) have stressed the importance of the business model that interdependent activities of an organization should be weaved together. These activities may be interdependent activities of an organization, or they may be of its suppliers, partners, and customers. This is how; business model design takes shape (Zott & Amit, 2010). Osterwalder and Pigneur (2009) have highlighted the importance of business model that it is embedded in the routine activities of an organization and the way each activity is related with the other should be understood and discussed. It means that there should be a clear understanding of how activities are interlinked and integrated with each other (Osterwalder & Pigneur, 2009).
Above literature has focused on ways through companies can expand their business, and the literature has taken the modern approach to identifying opportunities for companies to grow and expand. The literature has been written by keeping Master Steel Australia as the company is a small company in the steel industry, and it seeks to grow and expand. The literature has taken SMEs and concepts of networking, innovation, and business model have been implemented on SMEs. Findings of research studies can be implemented on any organization and situation. Effective implementation of these concepts can put an organization on the path towards successful expansion and growth.
Conclusions:
Above literature has identified ways organizations may employ to growth and expansion. The literature review has been conducted by keeping Master Steels Australia in view. The company is progressing, and it is already growing. However, it is still a small company and has plenty of room to expand further. Moreover, this literature review has considered the case of Arrium as well which prominent steel company in Australia is, and it is a large company. Recently, the company has faced critical challenges, and it’s business worth has declined fast. Some news reports have identified that the company has a problem with its business model where the company has not brought changes in its business practices and model. Therefore, the case of Master Steels for expansion has been taken in light of mistakes and problems committed by Arrium. Moreover, increasing the level of networking, communication, sharing, and innovation in the business model guarantees success, and the literature has identified these secrets for the expansion of the company.
How research questions and hypotheses were formed
The literature review started with the basic purpose to find how Master Steel Australia can expand its business. To find ways, research questions formed. Some of the research questions are as follows:
- How can a company expand its business?
- What are the reasons for the failure and collapse of companies in the steel industry of Australia?
- How much traditional networking and innovation is effective or ineffective for a business expansion?
- What are the shortcomings and limitations of the traditional approach to innovation?
- How can innovation and networking be integrated into the business model?
The following hypotheses have been formed:
- Networking increases the success rate of an organization because it enables sharing and collaboration of resources for an organization internally and externally.
- Innovation increases the success rate of an organization because it brings new ideas to the organization.
- Networking and innovation enable the business model to perform the best.
- Well-integrated business model through innovation and networking leads to expansion of the business.
Areas proposed for further study:
Based on the literature review, further study may be proposed in the areas of innovation, networking and collaboration, and business model. Moreover, current failure in the steel industry in Australia should be evaluated as well. Moreover, the competitiveness of the Australian steel industry should be discussed so that the secret of growth and expansion can be discovered. Master Steel should adopt the strategy of developing collaboration with foreign steel companies as well so that it can expand.
References
Alguezaui, S., & Filieri, R. (2010). Investigating the role of social capital in innovation: sparse versus dense network. Journal of Knowledge Management, 14(6), 891-909.
Beckett, R. C., & Chapman, R. L. (2018). Business model and innovation orientations in manufacturing SMEs: An Australian multi-case study. Journal of Innovation Management, 6(1), 111-134.
Blackburn, R. A., Hart, M., & Wainwright, T. (2013). Small business performance: business, strategy and owner-manager characteristics. Journal of Small Business and Enterprise Development, 20(1), 8-27.
Ceci, F., & Iubatti, D. (2012). Personal relationships and innovation diffusion in SME networks: A content analysis approach. Research Policy, 41(3), 565-579.
Chang, Y. Y., Hughes, M., & Hotho, S. (2011). Internal and external antecedents of SMEs’ innovation ambidexterity outcomes. Management Decision, 49(10), 1658-1676.
Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning , 43(2-3), 354-363.
Hickman, C., & Raia, C. (2002). Incubating innovation: Companies must leverage the full spectrum of innovation, from the incremental to the revolutionary. Journal of Business Strategy, 23(3), 14-19.
Kelley, D., & Lee, H. (2010). Managing innovation champions: the impact of project characteristics on the direct manager role. Journal of Product Innovation Management, 27(7), 1007-1019.
Konsti-Laakso, S., Pihkala, T., & Kraus, S. (2012). Facilitating SME innovation capability through business networking. . Creativity and Innovation Management, 21(1), 93-105.
Lewrick, M., Raeside, R., & Peisl, T. (2007). The Innovators Social Network. Journal of Technology Management & Innovation, 2(3), 38-48.
Loss, L., & Crave, S. (2011). Agile Business Models: An approach to support collaborative networks. Production. Planning and Control, 22(5-6), 571-580.
Mason, K., & Spring, M. (2011). The Sites and Practices of Business Models. Industrial Marketing Management, 40, 1032-1041.
O’Donnell, A. (2014). The Contribution of Networking to Small Firm Marketing. Journal of Small Business Management, 52(1), 164-187.
Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation. ISBN: 978-2-8399-0580-0.
Ritala, P., Armila, L., & Blomqvist, K. (2009). Innovation orchestration capability—Defining the organizational and individual level determinants. International Journal of Innovation Management, 13(4), 569-591.
Smith, J. (2016). Arrium’s collapse shows Australia must get a lot smarter about steel. Retrieved August 20, 2019, from https://theconversation.com/arriums-collapse-shows-australia-must-get-a-lot-smarter-about-steel-57436
Teece, D. J. (2010). Business Models, Business Strategy and Innovation. Long Range Planning, 43(2), 172-190.
Terziovski, M. (2010). Innovation practice and its performance implications in Small and Medium Enterprises (SMEs) in the manufacturing sector: a resource-based view. Strategic Management Journal, 31(8), 892-902.
Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. Long range Planning, 43(2-3), 216-226.
