Innovation, Adapt to change and Productivity interrelationship in Telecommunications Industry.| Article Summary|
for Economic Analysis(ECO740)|
Prepared by:2011113021MOHD RIZAM BAKAR
Prepared for:ASSOC. PROF. DR. AZIZ SULAIMAN
The Telecommunications industry is currently undergoing changes due to globalization and new technological developments. Links between technologies within the technological system will change over time and affect the structure of the industrial network and firm behavior. Thus, organizations that successfully align service roles with advanced information technology can achieve comparative advantages in the marketplace (Youngdahl and Loomba, 2000). The deregulation and privatization of Malaysia’s telecommunications sector leads to technological innovation in the sector. Two forces drive the sector, namely technological innovation which drives the developed or matured markets; and technological diffusion which drives the developing or emerging ones (Telekom Malaysia Berhad, 2006). There is a need to adapt to developments in the global economy and local environment to strengthen the financial position and enhance service competitiveness (Telekom Malaysia Berhad, 2004). Thus, achieving the right service quality is important as it is the driving force for productivity and profitability. Good service could be achieved through empowerment (Tschohl, 1998) and the staff ability to produce more, adapt to changing technologies and to be more innovative. Innovation, productivity and adapt to change is very important for a firm in order to be competitive in telecommunications industry. These three elements are somehow interrelated to each other and it is proven in this article.
Innovations make industry more productive
The rapid increase in the usage of mobile telephony and the Internet has also contributed to the increasing importance of telecommunications and the need for speed and innovation in technology. Innovation is a continuous process of discovery, learning and application of new technologies and techniques from many sources. Many of the techniques and processes are cumulative and interdependent, and the technological capacity of a firm may also be influenced by external factors such as the educational system, the research infrastructure and the functioning of the capital markets.( Someshwar, 2001)
Telecommunications services companies are very dependent on human intellectual capital. Adequate training must be given to new staff so that they possess the right knowledge and skills. The staff must possess the right attitude and develop critical thinking and innovativeness. Telecommunications’ players need to be innovative and creative in order to be world class Telecommunications providers. Firms innovate to increase their productivity and profitability, which can occur via reductions in costs, improvements in sales, or a combination of both. The outcome of product innovations should be observable in increased sales and market shares. Process innovation are undertaken mainly to reduce production costs but often also pursue other objectives such as better service to customers, more flexible production, reduce pollution, satisfy safety norms and other regulations (Petr Hanel, 2008) Harris’ (1999) literature survey identifies three key productivity drivers: investment in machinery and equipment; human capital; and openness to trade an investment, all within an overall framework where innovation creates the opportunities for growth. Through innovation, Malaysia had increased in level of productivity. In 2010, Malaysia registered the highest productivity growth of 5.8% compared with Organization of Economic Cooperation and Development (OECD) countries, like Republic of Korea (4.9%), Japan (4.1%), Sweden (4.4%) Germany (3.5%), USA (2.7%) and Finland (2.7%). The average productivity growth of the OECD countries was 2.8% in 2010. During the...