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The Role of Innovation in Achieving a Competitive Advantage

There is a statistically significant relationship between the elements of innovation and competitive advantage in businesses.

Despite of its importance, the areas of innovation are scarce in the literature globally. In the same context, previous studies indicated that ignoring the importance of innovation in the services provided for example to airline passengers, especially in the period of the Corona pandemic, which affects airlines' competitiveness. As a result, travelers started to complain about problems like exposure to traffic jams, crowdedness, cancellations, delays, as well as any other schedule adjustments with or without warning from the airline. To fill this gap, it would be interesting to understand if the context of the situation by examining innovation and competitive advantage,

Innovation (Concept, and Types)

Since there are various definitions of the term "innovation" in literature; innovation in its broadest definition, derives from the Latin verb innovate, which means "to make something new". Innovations defined as improvements to organizations, processes, and products that are independent of new scientific findings. Hence, the sustainability of a competitive advantage depends on isolation mechanisms, which may be defined as factors that prevent competitors from neutralizing a higher performance in a given company and which can be obtained by innovation, organizational evolution, and the company's domestic environment or industry position.

We can classify innovation into four groups' service /product innovation, process innovation, marketing innovation and finally organizational innovation defined as follows:

A) Services innovation:

new trends for any sustainable firm, new and creative ideas must be presented, and existing services must be developed. Innovation is a key component of business competitiveness because it enables firms to effectively alter their goods, procedures, and administrative frameworks to meet the needs of a market that is undergoing rapid change. A new product or service that has been significantly improved in terms of its features or intended applications is referred to as a "product innovation". This comprises materially better technical requirements, parts and materials, software integration, user friendliness, or other functional qualities. Service innovation aims to improve a company's offering's usability, effectiveness, and perceived value. By prioritizing the customer, a company can minimize obstacles during the customer’s journey and improve the buyer’s experience and conversion process Service and products innovations include:

  • Wi-Fi and entertainment systems

  • Online order meals & Food pre-ordering

  • Food pre-ordering

  • Providing Healthy Options

B) Process Innovation

Processes are a crucial component of every company's survival and success, despite being a frequently ignored topic. The adoption of significantly improved delivery system is referred to as a process innovation. For example, installing a new or enhanced technology, such as automation equipment or real-time sensors that may alter processes, also computer-aided product creation, is an example of a significant change in methods, apparatus, and/or software. Process innovation is described as an enhancement of the methods and techniques used in the manufacture and distribution of various goods and services. This kind of innovation examines an organization's internal operations to find methods to enhance how products and services are developed and delivered. New technologies can be launched in the transportation and travel industries, to automate unnecessary jobs or to improve other operations throughout the full customer journey. In fact, as stated by Orlikowski & Barley 2001; Ullah, et al., 2018), innovations may have an industry-wide impact, forcing airlines to perform extensive technological transformations as Big Data technologies, the Internet of Things, automation in the cloud, smart grids and renewable energy, mobility, unmanned sites and remote operations, and services like software-as-a-service (SaaS) as follows:

  • One ID (identity)

  • Biometric recognition technology

  • Mobile Applications and development new platforms

  • Robotic Applications

C) Marketing Innovation

Over the past ten years, there has been much talk about employing creative marketing techniques to gain a competitive advantage. Marketing innovation refers to the application of a fresh marketing strategy incorporating considerable adjustments to product positioning, promotion, pricing, or design or packaging. Marketing innovations can increase a company's sales by better meeting client needs, expanding into new areas. Thanks to the nearly endless possibilities that today's technology offers, companies have the ability to build innovative products and services that could set them apart from competitors . Marketing innovations are vital to technological ones and they are supported by the fact that they have effectively assisted businesses in overcoming intense competition. Marketing innovation has a positive role in competitive advantage creation.

D) Organizational Innovation

Implementing a new organizational strategy into company operations, company structure, or external relations is referred to as an organizational innovation. Organizational innovations include introducing management systems. Organizational innovation is measured by a company's capacity to consistently accept and implement administrative and technical improvements with a higher level of incorporated uniqueness than their primary rivals. The organizational or managerial methods employed by numerous institutions are referred to as organizational innovation Any Organization can adopt innovation as a basis of value creation to obtain profits via technological performance improvements, complementary assets, a reduction in environmental impacts, and the offer of additional value to the customer. An organization can be envisioned as a system with related input and output flows in the process of organizing an innovation system (logistic concept). Because it essentially appears unified methods to improve the organization's activity through the rationalization of management of financial, material, information, and service flow during the process implementing innovation projects. The logistic approach to the organization's innovation activity management is thought to be conceptual Forexample, Emirates Airlines have equipped their attendants with tablets containing its system. With which, attendants can see which previous trips a passenger has taken with the carrier before, and accordingly, know their food, wine and seating preferences as well as any issues a customer may have during their travels. In addition, an AI-enabled food waste management system will enable Emirates Flight Catering (EKFC) to improve reporting and data collection to further reduce food waste. By using a camera, a set of smart scales and machine learning technology, the system ‘learns’ to recognize the variety of food being thrown in the bin and calculates the cost of this discarded food to the kitchens. Additionally, some airlines have touchless payment methods for on-board purchases of food and drinks. The flight crew can access pre-loaded passenger profiles on portable tablets to instantly pay for food and beverages using a saved payment option. With the integration of other airlines and payment systems, customers may easily check out using a QR code on their phone. Organizational innovation has a positive role in competitive advantage creation.

Competitive Advantage concept and dimensions

The ability of a company to design and implement strategies that place it in a better position in relation to other businesses engaged in the same activity is referred to as having a competitive advantage. A company can achieve this advantage by making the best use of its organizational, financial, material, and technical resources, as well as its human, technical, and intellectual resources. When compared to rivals, a company's competitive advantage lies in the higher rate of attractiveness it provides to customers. Additionally, it has been stated that innovation-based competition serves as the foundation for long-term growth in the post-industrial knowledge economy.

 Market leadership, production, innovation, and efficiency or services are all directly tied to competitive advantage. Price advantage, products quality advantage, product differentiation, and conformity of product to customer needs were used as competitive advantage indicators. In addition, to improving the company's capabilities, production, and marketing capabilities, documenting its relationships with customers, and advancing management decisions, the importance of competitive advantage lies in the fact that it grants businesses the ability to defend their market positions and keep their competitive position among their competitors.

One of the most crucial aspects of competitive advantage is the quality of services offered, profitability, market share, creativity, and innovation.


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