EXPLORING FACTORS AFFECTING PRODUCT INNOVATION: OSCAPOWER SDN BHD IN MENGGATAL, SABAH.
1.1 Background of Study
The role of product innovation management has been placed as a potential source of competitive advantage which ranges from the example of successful practices; new approaches to product innovation emerged calling for an enlargement of the standard boundaries of product innovation (Corso & Pavesi, 2000). However, it is a challenging task because it requires new skills and competencies at all levels within the organization. The fast changes in the international market and technological trend causes pressure to scholars and practitioners to become aware of the price, quality, and speed in the product development.
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Khin et al. CITATION Khi10
l 17417 (2010) found that it is important to have innovative products within the industry, and customers gain advantages either from the edges of the new style, function or feature. This will become the company’s differentiation in order to create innovation and gaining a competitive advantage over competitors. Innovation strategy can also be inspired by customers, method or pioneer CITATION Lyn98 l 17417 (Lynn ; Akgun, 1998).
Besides, globalization conjointly permits companies to allocate their internal resources as the source of competitive advantage CITATION Bar99 l 17417 (Barney, 1999) that will produce uniqueness for the companies to compete with competitors and may directly assure the superior corporate performance. Further, low-cost advantage and differentiation advantage is the two main dimensions of a competitive advantage CITATION Por80 l 17417 (Porter, 1980). In order to realize a competitive advantage, an organization needs to have their own capability which will become their core competency. Companies need to fight for competitiveness by benchmarking their assets, method, and performance associated with the superiority of the best product in their industry CITATION Nur18 l 17417 (Nuryakin, 2018).
A company first must learn what factors are needed to produce a new product. Companies need to understand that the range of acceptance or applying new ideas to their businesses will determine the level of innovation. Thus, it will contribute to the success of the organizations.
This study will look at what factors that motivate product innovation in OSCAPOWER SDN BHD. The companies headquarter is located at Menggatal, Sabah. It provides telecommunications network engineering services to network operators and telecommunication vendors in nationwide Malaysia. Furthermore, OSCAPOWER provides technological upgrades such as diesel generator sets rentals (also known as Genset) to cellular network providers like Digi, Celcom, Maxis, E.CO, and Webe.
Therefore, this study will explore the factors that affect product innovation of OSCAPOWER SDN BHD in Menggatal, Sabah.
1.2 Company Background
Oscapower Sdn Bhd was incorporated in 1999 with the aim to contribute to the construction industry in Malaysia by providing professional services and quality work. The company provides expertise in the field of construction in civil and structural engineering, mechanical and electrical engineering that meets the needs of telecommunication companies and service providers.
Since their establishment, they have been involved in telecommunications, industrial and commercial projects throughout Sabah, Sarawak and Peninsular Malaysia. They are also the turnkey contractors for leading telecommunication operators and telecommunication equipment vendors throughout Sabah, Sarawak and Peninsular Malaysia.
Their mission is to contribute to the construction industry and in the field of telecommunications services in Malaysia by providing professional services in Civil, Mechanical and Electrical engineering (CME), to ensure their work meets the clients’ specifications and industrial standards.
Their Core Business:
Telecommunication Network Engineering Services
BSS and Microwave link implementation for telecommunication providers such as DIGI, Celcom, Maxis, Packet One, U Mobile and YTL nationwide in Sabah, Sarawak and Peninsular Malaysia.
BTS: Installation, Commission and Integration (ICI) for vendors – Motorola, Alcatel-Lucent, Nokia-Siemens, HuaWei and Ericsson.
Microwave: Installation, Commission and Alignment for vendors – Alcatel-Lucent, Nokia-Siemens, HuaWei, Ericsson, NEC and SiaeMicroelettronica.
Antenna and Feeder installation (AFS)
Indoor building coverage
Telecommunication site maintenance
Mobile telecommunication full turnkey solutions
They provide extensive support and expertise in cellular site construction and tower works.
Road access construction
The groundwork for projects Civil, Mechanical and Electrical Engineering (CME)
Power supply and electrical cabling
Diesel generator sets rental for telecommunication companies
Diesel generator sets rental for cellular sites throughout Malaysia
Service and maintenance of diesel gen-sets
Standby operation services
Oscapower Sdn Bhd consists of a dedicated team of engineers, project managers, and professionals within its field. With the ability to carry out projects on a fast-track basis, they provide professional services at the highest level.
1.3The Problem Statement
The rapid changes of the market environment motivate a company to fit itself in these changes in order to face the aggressive competition and maintain its marketplace. This is because of they perceive the requirement of the importance of learning because it is discovered as an input that can gain the capability of firm’s innovation CITATION Cal02 l 17417 (Calantone, Cavusgil, ; Zhao, 2002), CITATION Hul04 l 17417 (Hult, Hurley, ; Knight, 2004). In addition, creativity is also needed to solve problems and to discover new innovative ideas which will distinguish the company from others as well as to achieve efficient competitiveness.
In the personal interview with the founder of this company Mr. Huang Hwa Yong CITATION Yon18
l 17417 (2018), he said that in the beginning, they bought second-hand Japanese genset. He obtained the supplier information from the internet and through yellow pages. The factors to consider when choosing a supplier are price, brand followed by payment scheme. He added that price negotiation, stock availability and payment terms are the processes involved when purchasing the genset. Furthermore, Oscapower Sdn Bhd also had the difficulties in the supplier selection process and purchasing of genset which are optimum price vs payment terms, and credit facility.
As time goes by, the founder of this company Mr. Huang Hwa Yong, realized that they need to increase the company’s performance by making an improvement and thus develop a new genset model. Mr. Huang went to China to make their customized genset model which called YD385. However, the YD385 does not have copyright because it’s still in the testing phase, to observe its performance.
This proofs that the success of innovation permits the companies to keep up and expand the buyer and product markets CITATION Bak09 l 17417 (Baker ; Sinkula, 2009) and is additionally recognized as an important factor for the long-run success of the organization CITATION Tro01 l 17417 (Troy, Szymanski, ; Varadarajan, 2001) as well as to influence the performance of the product innovation.
Therefore to have a deep understanding of the factors affecting product innovation in engineering’s company point of view, this study needs to be conducted to provide unique information to readers about this topic.
1.4 Research Question
This study will answer the following questions:
RQ1: How is the product innovation in Oscapower Sdn Bhd?
RQ2: What are the motivating factors that affect product innovation in Oscapower Sdn Bhd?
1.5 Research Objectives
The aims of this study are:
RO1: To understand the product innovation in Oscapower Sdn Bhd.
RO2: To explore the motivating factors that affect product innovation in Oscapower Sdn Bhd.
1.6 Scope and Limitation of the Study
This study will reports and documents analysis of responses from selected respondent from OSCAPOWER SDN BHD which located in Menggatal, Sabah. The main difficulty that may be encountered is due to the limited number of people to choose as respondent that have the expertise and would be appropriate for this study. The study will be conducted from 06 August 2018 to 22 November 2018. Besides, time constraints will also become the limitation of this study to conduct this research.
1.7 Significance of the Study
This study will give readers to dive deeper into the topic of factors affecting product innovation. It will also help another sector to understand and implement the identified factors in terms of their management towards innovation.
In order to make changes or improvement, it is a must for an organization to learn something that is new which can give benefits to their company’s performance which this will also stimulate and form a new idea towards an innovation either in products or services. Besides, the company’s capacities will help them to maintain its marketplace while facing the intense global competition. Each company had similar opportunities to present their products at low cost but again as mentioned before it depends on their capability to one step ahead to grab that opportunity.
2.2 Product Innovation: Definition
Innovation is fundamental for an organization that needs to stay focused within the market, as it is the basis for economic growth and may be a source of sustainable competitive advantage that leads to increased value.
According to Freeman CITATION Fre82
l 17417 (1982), product innovation is a method that features the R&D, manufacturing, management, commercial activities and technical design involved in the marketing of a brand new or improved product. Moreover, it tends for being the first that is easily observed and advantageous in the process innovation. Product innovation may be intangible service, tangible product, or a combination of both of it.
The company that emphasizes and owned the innovation competencies is turning into more relevant and important to be used in competing with their competitors as this is also their weapon to face the global change in the market. Further, this idea has been investigated through completely different approaches starting from product, market, organization, and process CITATION Toi09 l 17417 (Toivonen & Tuominen, 2009).
2.3 Purpose of Product Innovation
According to a previous study CITATION Com10 p 2 l 17417 (Commision, 2010, p. 2) companies responded that the purpose they engaged in innovation projects is because of:
To increase the market share
To able meet the buyers’ requirements or standards
To introduce new products to their existing line of products, and
To improve their productivity or reduce production costs.
Companies must be able to adapt to change and must keep up with the market conditions, global economies, business landscape, and technological advances that is always evolving. This is because as an effort to succeed in their targeted market whether it is a local, national or international market.
2.4 Advantages of Product Innovation
Today’s organizations gain their economic benefits and competitive advantage mostly from innovation. According to Reguia CITATION Reg14
l 17417 (2014), the advantages of product innovation both to the company and to the industry can be stated like the following:
Reducing production costs and time of production process which will result in increasing of investments return and production efficiency
Increasing products quality and makes the product to be more competitive in the markets
Increase companies’ information stock
Contribute to company output that will be measured by sales and profits of the new products or services
Customers of innovative products gain an advantage in terms of the variety of selection and higher services.
2.5 Risks and Challenges of Product Innovation
There are many companies that do not have enough financial resources to invest in product innovation project. This is because a lot of money is needed to be allocated along the process of product innovation. Besides, other challenges that company faced includes lack of marketing capability, shortage of expertise or skilled workers, lack of access to the distribution channels or lack of acceptance of retail, lack of debt in financing, management that resist to go for innovation and lastly the lack of creative idea that is unique and out of a box but still fulfilling the customer’s requirement CITATION Com10 l 17417 (Commision, 2010).
2.6 Motivating Factors of Product Innovation
Before venturing to the application of product innovation, companies need to know what factors that can motivate them towards the plan. This factors will stimulate their focus in order to achieve successful product innovation that is superior compared to competitors.
The first-factor feature is the commitment to learning whereby it is the readiness of the company to vary the method it does things by incorporating new information or combining existing information. In another word, it means encompasses the acquisition, communication, acceptation, and assimilation of the knowledge within the company CITATION Jol07 l 17417 (Jolly & Therin, 2007). An additional learning is a vital investment that is needed for the survival of a committed company and which may lead to higher product innovation performance. Lages, Silva and styles CITATION Lag09
l 17417 (2009) state that company’s learning capabilities for innovation, such as commitment to learning, shared vision, and open-mindedness to innovation were significant predictors of product innovation, that successively affected the economic performance. A company that encourages the development of knowledge can motivate staff to pursue learning activities.
Next factor is the shared vision. A clear direction for learning is probably going to make a company’s strength or maybe a core competency CITATION Sin97 l 17417 (Sinkula, Baker, & Noordewier, 1997). In step with the direction, the shared understanding of the longer-term direction permits the businesses to determine which new product or service to develop. Garcia-Morales, Llorens-Montes, & Verdu-Jover CITATION Gar06
l 17417 (2006) found that strategic factors like transformational leadership, shared vision, personal mastery, environment, and proactivity have positive effects on each company’s innovation and company’s performance that successively have an effect on organizational performance. A shared vision will coordinate the main focus of various departments in the organization and also enhances learning standard.
Lastly, the open-mindedness. It is the willingness to evaluate the company’s operational routine and to simply accept new concepts CITATION Sin97 l 17417 (Sinkula, Baker, ; Noordewier, 1997). Companies should address speedily dynamics technology and turbulent markets. Open-mindedness can enhance valuable operations with new ways of business processes and achieves the company’s competitiveness, performance, survival, growth, sustainability, and success. More open-mindedness promotes companies to realize a competitive advantage and gain better company’s performance CITATION Uss11 l 17417 (Ussahawanitchakit, 2011). UssahawanitchakitCITATION Uss08
l 17417 (2008) found the numerous effects of open-mindedness, shared vision and intra-organizational knowledge sharing on innovation orientation. It is confirmed by Hernandez-Mogollon, Cepeda-Carrion, Cegarra-Navarro, ; Leal-Millan CITATION Her10
l 17417 (2010) about the numerous impact of open-mindedness on company’s originality for brand new product and services by collecting information from small and medium enterprises in Spain. To add in, the company should have the open-mindedness to question the lesson learned in the past and even as necessary to unlearn recent ways because it is to renew or update the knowledge base CITATION Cal02 l 17417 (Calantone, Cavusgil, & Zhao, 2002).
2.7 Measuring Success of Product Innovation / Performance
A company that committed to learning can enhance and achieve its target on product innovation performance. According to Yang, Wang and Cheng CITATION Yan09
l 17417 (2009) the definition of product innovation performance is the market rewards for new product in terms of monetary outcomes (product’s contribution to sales or profits) and non-monetary outcomes (the number of innovations, the speed of innovation, the extent of originality and being the “first” or the market leader). The non-monetary outcomes became an additional standard to overcome the limitation in accessing the confidential monetary data of the businesses CITATION Bak10 l 17417 (Bakar ; Ahmad, 2010). The dimensions of product innovation performance are efficacy and efficiency CITATION Ale06 l 17417 (Alegre, Lapiedra, ; Chiva, 2006):
Product innovation efficacy is the degree of the success of an innovation while product efficiency is the effort made to achieve that degree of success CITATION Ale09 p 217 l 17417 (Alegre ; Chiva, 2009, p. 217)A previous study CITATION Cal13 l 17417 (Calisir, Gumussoy, ; Guzelsoy, 2013) state that the factors in product innovation efficacy are the replacement of products being phased out, an extension of the product range, market share evolution, and opening new markets. While factors in product innovation efficiency are innovation project development- time and cost, number of working hours on innovative products and global degree of satisfaction with innovation project efficiency.
Research methodology is important because this part will act to support researcher idea in doing research. Besides, it gives specific detail of information on how this research will be conducted. In this paper, the researcher will explain about the selection of the type of research methodology that will be used in this study which covers source of information, data of collection method, and list of interviews from staff in OSCAPOWER SDN BHD.
3.1 Research Design
This research paper is using a qualitative study. The study will be conducted by interviewing staff from OSCAPOWER SDN BHD to gain the information needed to answer the research question of this study. The data collection for this study will be taken during the internship period.
3.2 Sources of Information
Researcher uses primary data in this study which mean original data will be collected first-hand sources from respondents. The researcher will collect primary data through an interview with the staff in OSACAPOWER SDN BHD. Besides, the researcher also use secondary data which classified into two types mainly:
The information retrieved from within the organization is called internal sources. The information collected is based on the operational activities of the company which is the schedule of genset service and maintenance, report of diesel usage, and the list of genset model available in the company. This will be used to understand the nature of the company as well as to back up the study.
The information obtained from outside the organization sources is called external sources. This research collects information through journal articles that relate to product innovation and, websites of the company that might be relevant for the purpose of this study. The previous studies (which from journal articles) help the researcher to understand the nature of research and are helpful to understand the concept involved in this paper.
3.3 Data Collection Method
In this study, the researcher will conduct personal interviews with the selected person from OSCAPOWER SDN BHD. They will become the respondents that will answer the research questions.
3.4 List of Interviewees
No. Name of Respondent Position Working Experience
1 Mr. Huang Hwa Yong Director 19 years
2 Jerome GombungSupervisor 13 years
3 Mhd. Kadir Bin Haji Alih @ Totoh Staff 16 years
3.5 Interview Protocol
Personal interviews will be conducted between researcher and the selected respondents that have experience and knowledge in OSCAPOWER SDN BHD. During this interview, all the information given by the respondents will be recorded.
3.6 List of Interview Questions
Research Objective Questions
Can you introduce about yourself and what is your position? How long you have been working in this company?
RO1: To understand the product innovation in Oscapower Sdn Bhd.
1. Based on your understanding, what do you know about Product Innovation?
2. Do you think Product Innovation is important to enhance the company’s performance in Oscapower Sdn Bhd?
3. What product innovation has Oscapower Sdn Bhd done so far?
4. What product innovation will Oscapower Sdn Bhd do in the future?
RO2: To explore the motivating factors that affect product innovation in Oscapower Sdn Bhd.
5. Why product innovation is important in Oscapower Sdn Bhd?
6. What motivates product innovation in Oscapower Sdn Bhd?
7. What are the benefits of product innovation to Oscapower Sdn Bhd?
3.7 Data Procedure
3.7.1 To understand the product innovation in Oscapower Sdn Bhd.
To understand what kind of product innovation that OSCAPOWER SDN BHD has done so far. Several interview sessions with the selected respondent will give a fresh and specific information for this objective.
3.7.2 To explore the motivating factors that affect product innovation in Oscapower Sdn Bhd.
To find out what motivates Oscapower Sdn Bhd to do product innovation. Literature has confirmed that company that does product innovation are more competitive that than their competitors and thus enhance the company’s performance. The interview method with selected respondents will be conducted to collect information for this objective.
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