Definitions

This research covers a broad spectrum of issues relating to the utilization of external information in continuous innovation processes and the impact of managerial IT skills on innovativeness of international companies. The research title, “Utilizing External Information in Continuous Innovation

Processes: The impact of managerial IT skills and supportive capabilities on the innovativeness of multinational companies” includes a number of

terms that warrant explanation.

The word, “utilizing” used in the title, sets the scene for the research, which is to contribute to the understanding on how firms can utilize the information it has access to. It follows a definition in a number of many dictionaries, such as “put into service; make work or employ for a particular

purpose or for its inherent or natural purpose”. The objective is to

investigate how the firm can make use of external information to support their innovation processes. It includes the identification of the means through which the firm has access to it, the features of organizational processes, forms and customs that have an impact on the extent to which the information is transferred, and factors that have an impact on the effectiveness of using the information for innovation processes in international firms.

External information refers to all information that is originated outside

the boundaries of the firm and is accessed through relationships employees or stakeholders have with the external environment. Once the firm has accessed the information and learned from it, the information is no longer external. External information does therefore only relate to information from external source that is new to the firm at the time it is accessed. The definition therefore relates to the specific firms‟ perspective, but not to the

external environment of all firms. The information can therefore still be new and external to other firms that have not yet accessed it.

Managerial IT skills (managerial information technology skills) refers to

the extent to which managers are aware of how the use of information technology (including information systems) contributes to the improvement of business processes. More specifically, they refer to the extent to which line managers understand the potential use and benefit of utilizing information technology in the firms‟ processes and the extent to which information technology managers understand business opportunities and priorities (Bhatt & Grover, 2005).

Further to managerial IT skills, a number of supporting capabilities contribute to the innovativeness of firms. They relate to capabilities that support the innovativeness of firms, including the transfer of external information and may enhance the impact of managerial IT skills on the firms‟ performance. This research will aim at identifying capabilities that support the utilization of external information and their impact on the innovativeness of firms.

One of the most important definitions is the innovativeness of firms. Several issues make the concepts of innovation capability and innovativeness extremely challenging and difficult to analyse. Firstly, the literature appears to use the concepts interchangeably and does frequently not distinguish between them. Secondly, some articles are focused on product innovativeness which has been defined as the product's degree of novelty, that is, its level of newness in relation to the firm and the outside world (Song & Montoya-Weiss, 1998) as opposed to the firms‟ innovativeness which refers to the notion of openness to new ideas as an aspect of a firm's culture (Hurley & Hult, 1998). One of the early definitions of the firms‟ innovation capability is the ability of the organization to adopt or implement new ideas, processes, or products successfully (Burns & Stalker, 1961). When combined with resources and other organizational characteristics, innovativeness creates a greater capacity to innovate as it has an impact on the generation and utilization of new ideas.

Although external information will have an impact on many facets of the firms‟ innovation capability, innovativeness appears to be a more suitable construct to measure how effectively the firm utilizes external information. The main argument is that although innovativeness is reflected in the firm‟s innovation performance, its relationship with the overall performance in innovation processes is less direct, including the number of new products introduced to the market due to various other phases of the innovation process which do not necessarily benefit as much from external

The structure of the dissertation

information. As an example, even if the firm is open towards new ideas, it may not be reflected in its overall innovation performance if lack of capabilities related to the other phases of the innovation process prevents new ideas to be utilized. However, if the firm is not open to new ideas, its innovation performance will be limited, even if the firm‟s capability in later phases of the innovation process is high.

A multinational company has been defined as an enterprise that owns and

controls value adding activities in more than one country and takes full advantage of the geographical distribution of natural and created assets (Dunning & Various, 2000). For this research, the multinational company is assumed to be an organisation with one or more business units operating in different markets.