Management approaches in the field of smart
Soroush Ghazinoori; Sohrab Aghazade Masroor; Mohamad Naghizadeh; Mojtaba Hajian Heidary
Abstract
AbstractThe reduction of profit margins and the disappearance of past competitive advantages have pushed companies in Petrochemical industries toward innovation by utilizing digital capabilities. This necessitates the establishment of a strategic alignment between digital capabilities and innovation ...
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AbstractThe reduction of profit margins and the disappearance of past competitive advantages have pushed companies in Petrochemical industries toward innovation by utilizing digital capabilities. This necessitates the establishment of a strategic alignment between digital capabilities and innovation strategies and decisions. This research aims to examine the dimensions of alignment between digital capability variables and innovation strategies and create a framework for its assessment. Initially, by reviewing the background of studies, a framework for assessing each of the variables was developed. Subsequently, a questionnaire for confirmatory structural analysis of the identified concepts and dimensions was formulated. This questionnaire was completed by 99 experts in innovation management, digital technologies in the industry, and academia. As a result, it was determined that to assess the level of alignment between digital capabilities and innovation strategies, creating digital value and digital innovation processes for innovation strategies, digital innovation infrastructure and digital innovation capabilities for digital capabilities, and complementarity, balance, and coordination for alignment were considered as assessment dimensions of the variables.IntroductionToday, the advantages of the past in the petrochemical industry are diminishing, and the competitive landscape is changing. It can be noted that one of the main challenges encompassing the petrochemical industry today is enhancing competitiveness and reducing operational costs, which require innovation in the use of new technologies (O. V. Zhdaneev, V. Korenev, and A. S. Lyadov, 2020).Most organizations in this industry use structures and organizational procedures that are not well-suited for utilizing innovative capabilities, including digital capabilities (Alexey Shinkevich, Naira Barsegyan, Vladimir Petrov, and Tatyana Klimenko, 2021). On the other hand, organizations are striving to create complementarity between their different capabilities to strengthen potential innovation capacity (Rogier van de Wetering, Patrick Mikalef, 2017).Therefore, one of the crucial questions for companies in the petrochemical industry can be how to assess the alignment between digital capabilities and innovation strategy. Consequently, the goal of this research is to identify appropriate dimensions and components for assessing the alignment of digital capabilities and innovation strategy in the petrochemical industry. To achieve this, the relevant concepts related to the main variables are identified and examined, and based on this, the dimensions and components under these variables will be confirmed through a validation process to create an assessment tool. Literature ReviewIn the examination of digital capabilities in the petrochemical industry, it can be noted that new processes and patterns are emerging due to adaptation to new technologies, (Amankwah-Amoah, J., Khan, Z., Wood, G., & Knight, G., 2021). Studies conducted on dynamic capabilities (Loureiro, R., Ferreira, J. J., & Simoes, J., 2021) claim that the proper combination of resources and capabilities allows organizations to gain a competitive advantage and improve their performance. (Torres, R., Sidorova, A., & Jones, M. C, 2018). From automating data movement to leveraging processes, all of these have a significant impact on creating added value and generating income (Oztemel, 2018). Based on this, to assess the digital capability variable, one can consider the effective use of digital innovation resources, the management of digital innovation networks, the capacity for absorbing and accepting digital innovation, predicting trends and technologies, managing digital innovation risks, access, transparency, and information security, advanced analysis, and artificial intelligence, as primary components.Pisano introduces three key questions as the pillars of innovation strategy: The first question is how the organization's innovation creates value for potential customers. The second is how the company gains a share of the value it creates due to its innovation. The third question returns to the type of innovations that enable the company to create and gain value, and what resources each innovation requires (Pisano, 2015). The role and position of digital technologies in addressing these key questions seem crucial. Since digital technologies have significantly influenced technical and social changes for individuals and societies, including organizations, they have caused products, services, processes, and business models to have a more substantial impact (Ciriello RF, Richter A, Schwabe G, 2018).The concept of alignment implies the existing collaboration between different organizational units based on environmental needs. Organizations with greater alignment perform better in various performance standards, and an aligned organization has internalized directions (Labovitz, G. H., & Rosansky, V., 1997). Growth and profitability are ultimately the results of alignment between employees, customers, strategies, and processes (Labovitz, G. H., & Rosansky, V., 1997). It is necessary for organizations to prepare for changes by creating structures and processes that can easily be adjusted and realigned (Galbraith, 2002). Alignment should exist at all levels of the organization (individuals, projects, systems, and the company). In recent studies, digital platforms and the ecosystem around the company have been added to the scope (Coltman, T., P. Tallon, R. Sharma, and M. Queiroz, 2015). MethodologyThis research was conducted with an applied approach using quantitative methods and confirmatory factor analysis. The main question in this study relates to the components and dimensions of assessing the alignment between two variables: digital capability and innovation strategy. Therefore, it was necessary to identify and categorize concepts, indicators, and main dimensions of each of the three variables (alignment, digital capability, and innovation strategy) based on previous studies, and this formed the basis for analysis in the confirmatory factor analysis. Based on the identified concepts and indicators for the variables, a questionnaire was developed. A total of 120 individuals were identified. A purposive sampling method was used to collect their opinions, and questionnaires were distributed. In the end, 110 responses were received, of which 99 were usable. The reliability of the questionnaire was calculated for each of the variables, and all of them had values above 0.7 (as reported in the findings). Then, using the smart PLS software and the confirmatory method, the sub-structures of each of the variables were modeled. ConclusionBased on a review of the literature and relevant concepts and topics related to the research question, a comprehensive understanding was developed. Previous alignment models in organizations have mostly focused on information technology and high-level business strategies.Regarding the assessment of the innovation strategy variable, it's important to note that, given the decreasing profit margins and the increasing operational costs of companies, a shift toward value-oriented strategies (economic, social, etc.) is becoming more prominent. The realization of value can be achieved through customizing products, improving industrial processes, automating decision-making, and increasing the speed of decision-making in innovation. On the other hand, digital technology has brought fundamental changes to innovation management processes, requiring companies to be attentive to new tools and approaches when formulating innovation strategies. Artificial intelligence aids in identifying new opportunities, while big data analysis helps organizations make decisions based on their past records and experiences.Furthermore, as companies in the petrochemical industry need to create digital capabilities for success in the field of digital innovation, some of these capabilities will be focused on changing historical business routines. In this context, businesses strive to continuously evaluate the returns on their digital projects and optimize resource allocation. Additionally, the enhancement of digital literacy, thinking, and human capital competencies, often referred to as digital talent, is essential.In the context of digital capability and innovation strategy, there are three main dimensions. The first is coordination. If the path to digital innovation is pursued in a fragmented and uncoordinated manner within the organization, it is unlikely to enhance organizational performance and alignment. Therefore, organizational goals and needs in the digital innovation and digital capability domains should be coordinated, and the organization should be able to establish new processes to create dynamism in the problem-solution and digital innovation processes. Moreover, stronger attention and balancing are required, as unbalanced attention to digital capability or innovation strategy can disrupt alignment and equilibrium between organizational capabilities. This indicates the importance of flexibility and transparency regarding resource allocation. The illustration of model is showed in figure 1.Figure 1. Dimensions of alignment of digital capability and innovation strategy Keywords: Digital Capabilities, Innovation Strategy, Alignment, Digital Innovation. v
Management approaches in the field of smart
Mehdi Elyasi; Maghsoud Amiri; Seyed Soroush Ghazinoori; Neda Jomehri
Abstract
The current digital revolution has given rise to a new organizational form, the Platform company. Today, the most valuable companies in the world and the first ones with a market value of more than a trillion dollars are platform companies. The Platform Economy is developing at an exponential rate and ...
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The current digital revolution has given rise to a new organizational form, the Platform company. Today, the most valuable companies in the world and the first ones with a market value of more than a trillion dollars are platform companies. The Platform Economy is developing at an exponential rate and has become a top priority for governments across the world. The present study aims to provide a framework for evaluating the Digital Platform Economy at the international level. Utilizing a systematic review and meta-synthesis approach, the Platform Economy dimensions are identified as Digital Users, Digital Entrepreneurs, Digital Platforms, Digital Infrastructure, Innovation Capacity, and Institutional Environment and by extracting relevant indicators from international reports, the Platform Economy Composite Index is developed. Using the Partial Least Squares-Path Modelling (PLS-PM) method and specifically the Higher-Order Construct model, the measurement model is validated, and by employing a non-compensatory aggregation method, the Platform Economy Composite Index ranks 128 countries. The study is concluded by scrutinizing Iran’s current status regarding the enabling factors of the platform economy and identifying its strengths and weaknesses and providing recommendations for improvement. The results indicate that although Iran’s current status in terms of demand-side enablers is relatively good, it faces serious issues in terms of supply-side enablers.IntroductionThe emergence and proliferation of the application of big data, cloud computing and new algorithms have led to the formation of a platform economy built around platform companies. This new generation of digital businesses has disrupted several industries and often are startups that have become new market leaders (Acs et al., 2021).Companies like Apple, Microsoft, Google, Amazon, and Meta are examples of such businesses. The market value of these five companies was close to 9 trillion dollars in December 2021 (Companiesmarketcap, 2021), equivalent to 9.5% of the global GDP (O'Neill, 2021).The immense value creation power of the platform economy has made its the key to inclusive economic growth for both advanced and developing economies, and a catalyst for economic and social leapfrogging opportunities in developing countries (Chakravorti et al., 2019). However, platform economy literature has neglected the assessment of the national factors that have given rise to the platforms and therefore, it is necessary to identify the national factors that enable the emergence and growth of digital platforms (Hermes et al., 2020).However, a review of the research literature indicates that the evaluation of platform economy at the national level has not made much progress and the few studies that have attempted this (Chakravorti et al., 2019; Morvan et al., 2016), have been primarily focused on the developed countries and therefore are more compatible with the conditions of these countries. Consequently, policymakers in developing countries, despite having different conditions, must refer to the experiences of developed countries for the development of platform economy policies. Since there is a limited understanding of the effectiveness of such policies on enhancing the efficiency of the platform economy, this approach can be challenging (Szerb et al., 2022).Against this background, this study aims to develop a comprehensive framework for evaluating the platform economy of countries at different levels of development. Utilizing a systematic review and meta-synthesis approach, the enabling dimensions of the platform economy are identified as Digital Users, Digital Entrepreneurs, Digital Platforms, Digital Infrastructure, Innovation Capacity, and Institutional Environment. Based on this framework and by extracting relevant indicators from international reports, the Platform Economy Composite Index is constructed. The study concludes by closely examining Iran's current situation in terms of the enabling factors of the platform economy. It identifies the country's strengths and weaknesses and offers recommendations for improvement. Research Question(s)The main question of this research is defined as follows:What are the dimensions and components of a comprehensive framework for evaluating the platform economy and how can a composite index be developed using this framework?Literature ReviewDigital platforms serve as intermediaries that facilitate interactions and exchange of values between at least two different and interdependent user groups in platform ecosystems (Drewel et al., 2021).There is no consensus on the definition of the platform economy, and different terms such as Sharing Economy, Collaborative Economy, Access Economy, and Gig Economy have been used to refer to this phenomenon in academic and policy research (Riso, 2019). However, the term Platform Economy has gained more prevalence due to its more inclusive connotations. Kenney and Zysman (2016) consider the term Platform Economy a “more neutral term as they believe it encompasses a growing number of digitally enabled activities in business, politics, and social interaction”. Here, the platform economy is defined as a value creation system consisting of platforms and platform ecosystems (Dufva et al., 2017).A review of the research literature indicates that the evaluation of platform economy at the national level has not made much progress (Szerb et al., 2022), and the few studies that have evaluated the platform economy at the national level, have been primarily focused on developed economies e.g., Morvan et al. (2016) developed Platform Readiness Index to evaluate readiness level of 16 countries of G20 countries in the development of platforms. Furthermore, to the best of our knowledge there is no systematic review focused on the identification of platform economy enablers at the national level. Therefore, utilizing a systematic review and meta-synthesis approach, this study aims to develop a comprehensive framework for evaluating the platform economy of countries at different levels of development.MethodologyThe main steps for developing a composite index include developing a conceptual framework, selecting individual indicators, imputation of missing data, multivariate analysis, normalization, aggregation, and composite index validation (OECD, 2008).The first step of constructing a composite index is the development of a conceptual framework that encompasses the dimensions and components of the phenomenon being measured. To this end, based on a meta-synthesis approach, a systematic review was conducted. The meta-synthesis approach was implemented using the Noblit and Hare (1988) seven-step method: 1. getting started; 2. deciding what is relevant; 3. reading the studies; 4. determining how the studies are related; 5. translating the studies into one another; 6. synthesizing translations; 7. expressing the synthesis. This resulted in the extraction of 6 dimensions and 16 components as platform economy enablers which are presented in the proposed conceptual framework for the platform economy evaluation.Based on this framework and by extracting relevant indicators from international reports, the Platform Economy Composite Index is constructed. Using the Partial Least Squares-Path Modelling (PLS-PM) method and specifically the Higher-Order Construct model, the measurement model is validated, and by employing a non-compensatory aggregation method, the Platform Economy Composite Index ranks 128 countries.ConclusionThis study attempted to develop a comprehensive framework for evaluating the efficiency of the platform economy of countries at different levels of development. Using a systematic review and meta-synthesis approach, Digital Users, Digital Entrepreneurs, Digital Platforms, Digital Infrastructure, Innovation Capacity, and Institutional Environment were identified as the evaluating dimensions of the platform economy.Furthermore, Iran's current situation in terms of the enabling factors of the platform economy was closely examined and country's strengths and weaknesses were identified. The results from the Platform Economy Composite Index indicate that while Iran is in a relatively good position regarding demand-side enablers, it is facing significant challenges with supply-side enablers.Keywords: Digital Platform, Platform Economy, Composite Index, International Ranking.
