Relationship between competitive strategies and innovation

Abstract

Abstract

By adopting innovation firms intend to respond   to  environmental  changes   either by  introducing  new products  (differentiation strategy) or by increasing operational efficiency (cost leadership strategy), in both cases companies attempt to improve their performance. The purpose of this paper is to further our understanding of the relationships among competitive strategies, innovation types, and firm performance in a sample of Mexican companies. Results indicate that companies that scan the environment to determine if technological changes affect their products (services) prefer a differentiation strategy. Also, companies with differentiation strategy thrive to develop  new products  for their market. Implications  for managers  are included.