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KeyFactorsAffectingStrategyMindedDecisionMakersinTheirInnovationsChoices

FernandoBarbosaandFernandoRomeroDepartmentofProductionandSystemsEngineering,UniversityofMinho,Guimares,[email protected]@dps.uminho.ptAbstract:Therapidandcontinuouspaceoftechnologicalchangeisamajorchallengeforallmanagers,whoareoftenfacedwithinnovationsadoptiondecisionsaffectingthefutureoftheircompanies.Thisisafundamentalissueonstrategy,ifweseestrategyasasetofactionstomakecriticalchoicesbetweentwoormorealternatives,inordertoachievecompetitiveadvantagesortorespondtocompetitors.Strategymindedleaderstrytopredictthevaluethattheywillcreatewiththeirchoicesintheorganization.However,formulatingstrategyisadifficulttask,duetothehighlevelofuncertaintyhamperingthe anticipation of future trends. An even harderwork is the implementation of strategy, due to its interdependentrelationship with strategy formulation, which is materialized in the organizational structure dedicated to fulfil theorganizationgoals.Inthisworkweproposetolookatthefactorsthatstrategymindedleadersperceivethatinfluencetheadoption of innovations andwe explore their relationshipswithin several academic fields, of study, namely strategicmanagement,organizationtheory,organizationbehaviourandorganizationdevelopment,adoptinganholisticperspectivethatwill allow for abetterunderstandingof strategic adoptiondecisions. This analysis is groundedon fieldwork thatinvolvedthecollectionofprimarydatafromdifferententerprises.Theresearchwasbasedonaquantitativeapproachandon an intentionalnonprobabilistic sampling strategy. The sample includes thirty fourPortuguese firms, fromdifferentsectors.Theselectioncriteriawasbasedontheinnovativeperformanceofthefirm,andontheconcomitantpresumptionthatinnovativeactivitiesarewellstructuredinsidethefirm.Thesampleincludesmicro,small,mediumandlargefirms.Aproportion of the sample includes conglomerates, and in fact, the sample represents approximately one hundred andtwentytwofirms,andasignificantproportionofPortuguesegrossexpenditureonbusinessR&D.Aquantitativestructuredquestionnairewasthemain instrumentofdatacollection,butsome interviewswithselectedfirmswerealsorealized, inorder to substantiate or consolidate some of the data thatwas obtained through thequestionnaire. In thispaperwepresent thepreliminary resultsof theanalysisof thatdata. Investmentschedulingandcostsappraisal,quantitativeandqualitativeadvantagesofthetechnologyandstrategicimplicationsofitsadoptionarethefactorsthatmostofteninfluencethe decision of innovation adoption and the less common factors include the degree of formalization of decisionproceduresandthelevel/extentofthehierarchicalchain.Keywords:strategicmanagement,strategyformulationandimplementation,innovation,changemanagement,decisionmaking,organizationalstructure

1. IntroductionIn this paper we provide an holistic perspective of the process of decisionmaking regarding technologyadoption, considering both strategy formulation and strategy implementation thatwill allow for a betterunderstandingofstrategicadoptiondecisionsbackedbyrelevantempiricaldata.Themainresearchquestionsare:Whatarethefactorsthatmostoftenstimulatefirmstoinnovate?Whatarethemostimportantsourcesofinnovation?Whatarethekeyelementsthataffectchoicesconcerninginnovation?The research questions developed out of the perception that the process of innovation adoption washampered by difficulties related to the process of innovation implementation.We begin thisworkwith acriticalreviewoftheexistingliteratureabouttheconceptsrelatedtostrategyandinnovation,focusingonthestrategicmanagementprocess and in the innovation adoptionprocess. Thenwe identify themethodologyadoptedinthisworkandfinallytheresultsareanalyzedunderthelightoftheresearchquestions.

2. ConceptualframeworkCompaniesareencouragedtomakedecisionstosurviveinahypercompetitiveworld,withrapidtechnologicalchange,and thestrategicchoices that theymustdoand integratearerelatedwithgoals,rangeofproductsand services, competitive strategy, appropriate level of coverage and variety, organizational structure,administrativesystemsandlabourpolicies(Rumelt,Schendel&Teece,1991).Thesurvival inthepresentcompetitive landscape isassuredby large investments,andtheconsequencesoffailurearesevere,sothesuccessfulimplementingofstrategyisacrucialelementoftheprocess.

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mailto:[email protected]:[email protected]

FernandoBarbosaandFernandoRomero

ToRumelt,Schendel&Teece(1994)strategicmanagement(alsocalledpolicyorstrategy)isrelatedtothecourseofanorganization, includingthe issuesthatareattheheartoftopmanagementpreoccupationsandthosewhoareassociatedwiththereasonswhyabusinesssucceedsorfails.Hitt,Ireland&Hoskinsson(2011)statethatthestrategicmanagementprocessisthefullsetofcommitments,decisions, and actions required for a firm to achieve strategic competitiveness and earn aboveaveragereturns,or inotherwords, it is the successful formulation and implementationof a strategy that createsvalue.AccordingtoChaffee(1985),thereisnoagreementontheliteratureaboutthedefinitionofstrategy,inspiteof the agreement on its existence. Volberda & Elfring (2004) states that its definition andmanagementtechniquesdependsontheresearchersidentificationwithsomeparticularschoolofthought.Strategicmanagement is adiscipline that is influencedby various fields of knowledge,namely economics,organization theory, organization behaviour and organization development, where research has beeninterpretedaccordingtothedominantapproach(Hrebiniak&Joyce,2005).Thoseapproacheshavebeenclassifieddifferentlybydifferentauthors.ThemostimportantclassificationisthetenschoolsofthoughtofMintzberg (1990),which,accordingtoVolberda&Elfring (2004)providesabetterinsightabouttheimportanceofeachonetotheareaofstrategy.Eachoftheseschoolshasalimitedapproach,butthewholesetprovidesacomprehensiveviewoftheirinfluenceonstrategicmanagement.Theschoolsaredivided in threeclasses: (1) the first three schoolsare...prescriptive innature,whicharemoreconcernedwithhow strategies shouldbe formulated thanwithhow theynecessarilydo form; (2)The following classincludesthenextsixschools,whichhaveafocusonspecificaspectsoftheprocessofstrategyformationandareconcerned lesswithprescribing idealstrategicbehaviour thanwithdescribinghowstrategiesdo, infact, getmade.; (3) the last class includes just one school that integrates the other schools in a uniqueperspective(Mintzberg,1990).Hitt, Ireland and Hoskinsson (2011) argue that the strategic management process has three strategicdimensions: Strategic Inputs, Actions and Outcomes. After a company determines its key competencies,resources and capabilities, based on internal and external environment analysis, it defines itsmission andvisionstatements(Strategic Inputs).Then, inordertoachieveprofitableresults(StrategicOutcomes) itmustestablishasetofactions,integratingstrategyformulationandimplementation(StrategicActions).Strategy formulation issues are related to competitive rivalry and competitive dynamics, business andcorporate level analysis, the international dimension, and cooperative issues andmergers and acquisitionstrategies, while strategy implementation issues are related with corporate governance, organizationalstructureandcontrols,strategicleadershipandstrategicentrepreneurship.Firmsusuallyusetwomodelstochooseand implementstrategies:theI/O(Industrialorganization)ModelofaboveAverageReturnsModelandtheResourcesBasedModelofaboveAverageReturns.Theestablishmentofthebasistostrategyis,intheI/OModel,theexternalenvironment,whileintheResourcesBasedModel,itistheinternalorganization(resourcesandcapabilities).Resourcesaretheinputstoproductionprocessesandthey can be tangible (financial, physical and technological) or intangible (human intellect, innovation andreputation).Capabilitiesareasetofresourcesthatneedtobeintegratedtofulfilaspecifictask,andthecorecompetenciesarecapabilitiesthatserveasasourceofcompetitiveadvantageforafirmover itsrivals (Hitt,IrelandandHoskinsson,2011).However, formulating strategy is a difficult task, due to the high level of uncertainty hampering theanticipation of future trends. An even harder work is the implementation of strategy, due to itsinterdependent relationshipwith strategy formulation,which ismaterialized in theorganizational structurededicatedtoaccomplishtheorganizationgoals.In the literature there isnotaclearagreementconcerning thedominant frameworkrelated to thestrategyimplementationprocess.Bycontrast,onthefieldofstrategicformulation,wecanencountersomedominantframeworks,likeSWOTandindustrystructureanalysis(Okumus,2003).

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Barney&Arikan (2005) suggests thatmorework is needed in the strategy implementation field from theperspective of the resourcebased theory, as strategy implementation could be a source of sustainedcompetitiveadvantageon itself,althoughdependentonother strategic resources controlledby companiesthatareusedinacomplementaryway.There is a gapon research concerning the topmanagementprocessof strategicdecisionmaking, and thecomprehensionofitseffectsonfirmsstrategiesandoperations,whichseemstobeconductingtodifficultiesin the implementationofCEOsstrategicdecisionmaking,and theopportunity toprovide themappropriateguidelines(Priem&Cyocyta,2005)Chetty (2010)points that there isa70percent rateof failureonexecutivesefforts to implementstrategy,whichhasahugecostfororganizations.Thishappens,becausetheydonthaveareliableframeworktoguidetheiractionsoverstrategyimplementation(Alexander,1991).Hrebiniak (2006)argued thatmanagers know littleof strategy implementationand theyarenot trained toimplement strategy, only to plan. Another problem is related to the general conviction that strategyimplementationplaysaminorroleontheirfunction,beingmoreadequatefor lower levelsofmanagement,forgettingthattheircommitmentisessentialtoasuccessfulimplementation.Healsoarguesthatthetopfiveobstaclesthatmanagers faceare: (1) Inabilitytomanagechange; (2)Poororvaguestrategy; (3)Nothavingguidelinesoramodeltoguideimplementationefforts;(4)Poororinadequateinformationsharing;(5)Unclearresponsibilityandaccountability;(6)Workingagainsttheorganizationalpowerstructure.Strategy and innovation are distinct concepts both in terms of definition and function, being innovation asource of competitive advantage (Dobni, 2010), although Rogers (2003) considers innovation andtechnology tobe thesame thing (Sahin,2006). Thecontinuedgrowthof the importanceof innovation isalso relatedwith is capacity tomake changes in the competitive position of firms. Thus, innovation andstrategyarecomplementary(Dobni,2010),andfeedoneachother.Innovationbeginswith signsof changes in theorganizational environment. Themajor challenges facedbyinstitutionsarerelatedtothecomprehensionofthefactorsthatarebehindthemandtodevelopappropriateresponsestrategies(Tidd,Bessant&Pavit,2008.).Theselectionandadoptionofinnovationisafundamentalprocessofstrategyimplementation.ToDamanpour(1991)theadoptionofinnovationsisconceivedtoencompassthegeneration,development,and implementation of new ideas or behaviours and is ...generally intended to contribute to theperformance or effectiveness of the adopting organization,while innovation is ameans of changing anorganization,whetherasa response tochanges in its internalorexternalenvironmentorasapreemptiveactiontakentoinfluenceanenvironment.Sincecompanieshavelimitedresources,andpropensitytoriskisalsolimited,theytendnottodevelopaloneall the technologies, and seek alternatives to internal development. Tomake the decision for one of thealternatives, it isnecessarytoevaluatethem inthecontextofthecompany (Gerhard&Voigt,2009).Hall&Kan (2002) called technology adoption the process of choice to acquire and use a new invention orinnovation.Rogers(2003)citedbySahin(2006)andTaalikka(2002),definesadoptionasadecisiontomakefulluseofaninnovationasthebestcourseofactionavailable.ToChatterjee&Eliashberg(1990)itinvolvesadeliberatechoice decision on the part of the individual and Taalikka (2002) argues that a successful adoption andimplementationneed strongcommitment from themanagersparticipating in theadoptionprocessdue tothechallengingdecisionsandresistancefromtheorganizationalactors(See&Clemen,2005).Literatureshowsthatfirmsgothroughasetofphasesininnovationadoption,whichrangesbetweenfourandten (accordingtodifferentauthors),withspecificchallengestomanagers,.There isawidespreadconsensusthat the earliest stages, namely the initiation and early implementations stages, are themost critical toinnovation adoption. The initiation stage implies a formal decision to adopt an innovation and the earlyimplementationstage,impliestheexperimentationoftheinnovation(Zeldin,Camino&Mook,2005).

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Goktan (2005) citingGreve (2003) states thatmore than create a new innovation, innovation adoption isrelatedtothedecisionforanindividualororganizationtoestablishtheuseofanexistinginnovation.Organizationswithmechanisticfeaturestendtobeslower,ormoreresistant,totheadoptionofinnovations,andorganicorganizationstendtobeearlieradoptersorimplementers.Thefunctioningandstructureofafirmisaffectedbytheadoptionofinnovations,andtheextentofthatinfluencedependsonthedegreeofnoveltyoftheadoptedinnovations(Damanpour,1991).Thereasonswhyfirmsadoptinnovationsisconnectedtotheexpectationofthedevelopmentoforganizationalproductivity and performance. However, the decision to adopt does not guarantee its implementation,because there is an organizational challenge to create conditions to its implementation and to fit theinnovationtothevaluesoftheorganization(Klein&Sorra,1996).Smallcompaniesusepreferentiallyproduct innovationstoachievecompetitiveadvantages,while largefirmsuse other tools, such as economies of scale, learning curve effects, diversification and investment in newprojects(Salavou,BaltasandLioukas,2004)Firms thatadoptedan innovation,have interest in identifying theobstacles thatmayencounterduring theimplementationprocess. In the literaturewe find strong connectionsbetweenorganizational issuesof theadoptionof innovation,organizational structure, leadership,market structure,organizationaldeterminants,expectations, andorganizational climate and it is suggested thatorganizational structure is responsible forabout60percenton firms innovationadoption.Researchonadoptionofone innovation isscatteredoncetherearefewercomparisonstudiesorinnovationexperiences(Cooper,1998).To Nemoto (2010) the most relevant factors influencing the adoption decision are: (1) Organizationalcharacteristics; (2) Influence of employees; (3) Management Model; (4) Profile Manager; (5) Market;(6)TechnologicalAspects;(7)Competitiveness;(8)Resources;(9)Compatibilitywithadministrativeguidelines.Sultan&Chan (2000) identify factorsthat influencetheadoptionofnewtechnologies: (1)Characteristicsofsubjects; (2) Factors of theGroup and company; (3) Perception about the characteristics of the individualtechnologies.Despite his importance, companies do not allocate enough time, resources and staff to fulfil the firmsinnovationgoals,andthere isa lackofsystematic innovationprocesses,whichseemstoreflectfirmsshorttermorientationfocus,whileinnovationimpliesalongtermapproach.Researchsuggeststhatmajorbarrierstoinnovationarerelatedtointernalaspectsoftheorganizations,namelythelackofresources,lackofmarketintelligence, unsuitable corporate culture, poor incentives, and badly defined innovation strategy, unclearresponsibilities or badly defined innovation strategy, employees through the absence of market andinnovationknowledge(Dobni,2010).Dobni(2010),alsoarguedthatisnecessarytointegrateinnovationandstrategypractices,inordertoachieveabetterperformance.

3. MethodologyThedataonwhichthisstudyreliesconsistsofprimarydatacollectedfromthePortuguesebusinesssector.Theresearchwasbasedonaquantitativeapproachandonanintentionalnonprobabilisticsamplingstrategy.ThesampleincludesthirtythreePortuguesefirms,fromdifferentsectors.Theselectioncriteriawasbasedontheinnovativeperformanceof the firm,andon theconcomitantpresumption that innovativeactivitiesarewellstructuredinsidethefirm.Thirtyfouranswerswerereceived(17%responserate)andthesampleincludesfivemicroenterprises,sixsmallcompanies,twelvemediumcompaniesandeleven largecompanies.Aproportionof the sample includes conglomerates, and in fact, the sample represents approximatelyonehundred andtwenty two firms. Although being a nonprobabilistic sample, its scope and creditworthiness is important,since,accordingtoofficialPortugueseR&Dstatistics(GPEARI,2011),itrepresents27.07%oftotalPortugueseinvestment inbusinessR&D.Aquantitativestructuredquestionnairewasdevelopedbasedonkeyconceptsextractedfromthescientificliterature,onexploratoryinterviewsconductedwithsomecompanies,andonthebusinessexperienceof the researchers,and itwas themain instrumentofdatacollection.Some interviews

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with selected firmswere also realized, in order to substantiate or consolidate some of the data thatwasobtained through the questionnaire. The extent and depth of the questionnaire limited the number ofresponses,but itprovidedarichsetofdata.Thispaperpresentsonlysomepreliminaryresultsthatsupportourarguments.Workisinprogressregardingadetailedstatisticalanalysis,andtheformulationofadditionalexplanatorymodels.

4. AnalysisanddiscussionTheresultspresentedinthissectionarerelatedtotheinquiryonthefactorsthatdrivefirmstoinnovate,theimportanceofseveralsourcesofinnovationandfactorsaffectingtheadoptionofinnovation.Thoseresultswillbeinterpretedhavinginmindstrategyissues.Theneed to innovate is common tomost companies, regardlessof size and sector.Companies aredriventoward innovationbymany signs coming from theorganizational environment, internalor external, and itcouldbeasourceofcompetitiveadvantagethetypeofsourcesthatfirmsuseintheirinnovation.Technologyevaluationprocesses enable the formulationof anopiniononwhat are thebestoptions for technologicalinvestment,but in spiteof that,managersdonotalwaysdecide toopt for thebest investment.Thereareseveralfactorsthat influencethe investmentdecisionandtheyare importanttoknow.Thus, it ispossibletodesignstrategiesandformsofactionforthepromotionoftechnologyadoptionactivity.Thedecisiontoadoptor rejectan innovationcouldbeexplainedby the typeofneeds thatmoreoftenstimulateorganizations toinnovateor it canbe related to the existenceor inexistenceofobstacles causedby aparticular sourceofinnovationestablishedbystrategy.Inthissectiontheaggregatedresultsarepresentedinaseriesoftables.Alltablespresentonlythefivemostvaluedand the five leastvalued factors.Foreach tableandquestion thereweremanymore factorswhoseimportancewasaskedtotherespondents.Table 1 presents the factors thatmore often stimulate firms to innovate.We found that the threemostcommonare, indescendingorderof importance, improvethequalityofproductsorservices(4.03),increasenetsales(3.88)andthesatisfactionofaspecificrequestfromaclient(3,56).

Table1:Factorsthatmoreoftenstimulatefirmstoinnovate

Fivemostvaluedfactors Mean(n=34)

Improvethequalityofproductsorservice 4,03

Increasenetsales 3,88

Increaserangeofproducts 3,56

Satisfactionofaspecificrequestfromaclient 3,53

Improvingproductionprocesses 3,53

Fiveleastvaluedfactors

Enteringinanewmarketdomestic 3,09

Compliancewithlegislation 3,09

Reduceenvironmentaldamage 2,94

Reduceenergyconsumption 2,82

Satisfactionofaspecificrequestbyasupplier 2,53

1=Never;2=Rarely;3=Usually;4=Veryfrequently;5=Always

The factors that lessoftenencourage companies to innovateare the satisfactionofa specific requestbyasupplier(2.53),toreduceenergyconsumption(2.82)andtoreduceenvironmentaldamage(2,94).

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Table2presentstheimportanceofinnovationsources.Wefoundthatthethreemostimportantsourcesareclients(3.85),otherdepartments(3.56)andthe internalR&Ddepartment(3.47).The less importantsourcesareapplications forpatents (2.41), technological surveillance (2.74)andacquisitionofpatents, licensesandknowhow(withthesamemean2.74).

Table2:Importanceofinnovationsources


Customers 3,85

Otherdepartmentsofthecompany 3,56

InternaldepartmentofR&D 3,47

Universities 3,24

Competitors 3,15


Businessconsulting/Consultants 2,79

Technologytransferorganizations 2,76

Acquisitionofpatents,licensesandknowhow 2,74

Technologicalsurveillance 2,74

Patentapplication 2,41

1=Unimportant;2=Oflittleimportance;3=Moderatelyimportant;4=Important;5=Veryimportant

Table3presents the factors influencing theadoptionof innovations.We found that the threemostvaluedfactors thatare relevant in influencing thedecision toadopt the innovationare thedefinitionof termsandcosts(4.06),qualitative/quantitativeadvantagesoftechnologyobtainedbythecompany(4.03)andstrategicimplications(4.00).Theleastvaluedfactorsareageofthedecisionmaker(2.15),theresistanceofemployees(2.85)andthelevel/extentofhierarchicalstructure(2.88).

Table3:Factorsinfluencingtheadoptionofinnovations


Definitionoftermsandcosts 4.06

Quantitativeorqualitativebenefitsoftechnologyachievedbythecompany

4.03

StrategicImplications 4.00

Quantitativeorqualitativebenefitsoftechnologyachievedbycustomers 3.88

Managementsupport 3.85


Lawsthatregulatingtheuseoftechnology 3.03

Workingtimeofthedecisionmakerinthecompany 2.94

Extensionoflevelorchainhierarchy 2.91

Employeesresistance 2.88

Decisionmakerage 2.18

1=Never;2=Rarely;3=Usually;4=Veryfrequently;5=Always

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Referringtotable1,wecanseethatthemainfactorthatdrivescompaniestowardsinnovationistoimprovethe quality of products or service. This result is somehow familiarwith several studies that highlight theimportance of this factor and demystifies the idea that innovation is mostly related to new productdevelopment(SullivanandDooley,2010),stressingtheimportancethatcompaniesassigntoachieveprofitsonashortterm,anideathatisreinforcedbythescoreattributedtootherfactors:increasenetsales,therangeofproductsandtheimprovementofproductionprocesses.Innovationisrealizedinaincrementalway,inorderto increaseorganizationalproductivityandperformance,wherecostreductionsassumeaprincipalrole.Thisfocusmay hamper the innovation process, particularlywhen amore long term perspective is taken intoaccountinordertocompeteataglobalscale.Referringtotable2,wecanseethatthemainsourcesof innovationarethecustomers.Thisresult is in linewithseveralstudiesthatstressthe importanceofthe interactionofcompanieswithcustomers,whomaybeengagedintheideageneration,avoiding,inthisway,theuncertaintyassociatedtocustomeracceptance.Thisalsocouldrevealthe inabilitythatPortuguesecompanieshavetodealwithriskanduncertainty. Itseemstoreflect thehypothesis thatPortuguesemanagershaveahighrateofuncertaintyavoidance,searchingmorestructuredsituations,associatedatrules,safetyandpredictability,witha low levelofnoveltyanddifferenceacceptance.It is alsoworthmentioning themanagers perception of the importance of technological surveillance as asource of innovation. Despite being considered a key procedure and a best practice in innovationmanagement,managers apparently do not value it. This fact, associatedwith the importance assigned tocustomers as themain innovation source, could reveal some lack of commitment from topmanagementand/orthelackofcompanyscompetenciesorskillsconcerninginnovationstrategyimplementationefforts.Analyzingtable3,wecanseethatthemainfactorsthatinfluencetheadoptionofinnovationarethedefinitionof termsandcosts, followedbyquantitativeorqualitativebenefitsof technologyachievedby thecompanyandstrategicimplications,whichareinlinewiththestrategicactionsrelatedtostrategyformulation.It seems that Portuguese companies are driven by a short term perspective, using incremental productinnovation to achieve competitive advantages. This may be caused by the lack of human and financialresources regarding the challenges related to the implementation of strategies. Strategy implementationactivities have longer timeframes than strategy formulation, involving more people, which increases thecomplexityofthetask.Ontheotherhand,thelongerthedurationthegreaterthepossibilitythatcompetitorsactionschange,andthatthecompanyadjuststothosechanges.Theseresultscouldalsorevealthedifficulties in implementingbusinesslevelcooperativestrategies,vertical(combinationofcompetenciesatdifferentstages)orhorizontal(combinationofcompetenciesatsamestages)businesslevelcomplementaryalliances,namelythroughsubcontractorsorthelackofcompetenciesinprojectmanagement.Topmanagersdonot seem to appreciate two important issuesof the innovationprocess,which couldbestrong inhibitors to the adoption process: employees resistance and the extension of the level or chainhierarchy.Regardingtheextensionofthelevelorchainhierarchystructureandtheemployeesresistanceitseemsthatformalization and the socalled technostructure dominates the picture. It suggests that firms have a highdegreeofrulesandproceduresformanagingthebehaviourofemployees.Thisissueisaveryimportantoneregardingthefirminnovationprocess,becausethegreaterthenumberofhierarchicallevels,thehigheristheprobabilityoftheemergenceofthephenomenonknownas'mentalityelevator':theconformationtoruleslaiddown, encouragedby the chainof command,which cherishesmore respect for the rules than the resultsobtained.Theanalysismadeabovemayseemoddbecauseitrunscountertosomeinterpretationsofrelatedempiricalresults.Theconnectiontocustomerssisusuallyinterpretedasapositivething,whileinourinterpretationitisconsideredassomethingthatreflectssomenegativetraits.Thetendencyforincrementalproductinnovationisalsoviewedasaconsequenceofspecificflawsintheinnovativecapabilitiesoffirms.Theaboveperspectivesis a result of systematic personnel observations of the Portuguese realitymade by the authors, and the

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realizationthattheempiricalresultsobtainedbystructuredquestionnairesmaybe interpreted inadifferentway, when considering the connection between strategy and innovation. We also believe that theseinterpretationsmaybeeventuallyappliedtorealitiesotherthanthePortugueseone,particularlyattheSMElevel.

5. ConclusionIn this paperwe provide a perspective of the process of decisionmaking regarding technology adoption,consideringboth strategy formulation and strategy implementation.A key finding or interpretation of thisresearchwastherealizationthatcompaniesseemtobemostlyconcernedwithshorttermprofits,ratherthancreating longterm value. The lack of resources, namely financial and human resources, could explain themanagersfocusonshorttemprofits.Therateof innovationfailures ishigh,withhighcoststofirmsand it isrelated to implementationmatters.To face those constraints, it seems that aPortuguesemanagerprefersproductinnovationsasthepathwaytoachievecompetitiveadvantagesinanincrementalway.Thisfocuscouldleadmanagerstotakeharmfuldecisionstothefutureofbusiness,namelyintheestablishmentofmechanisticorganizationalstructureswherecommunicationisdoneinaformalwaythroughhierarchieswithahighlevelofchainextensioncommand,wherepowerandauthorityarebasedintheseniorityandtheresponsibilitiesarerigid.

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