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Table of Contents

CHAPTER 1: Literature Review

Introduction

The innovations systems have always been used as frameworks to describe the variances in innovativeness between economies, industries and firms at international, national, regional and local levels (Gupta, Gupta & Jain, 2016). The innovation researchers argue that business enterprises heavily rely on the surrounding institutions for competitiveness and innovativeness. In local and regional innovation system, business enterprises systematically involve themselves in collaborative learning culture through an institutional milieu that is categorised by the embeddedness (Abu, 2014). Based on the governance infrastructure of these innovation systems, firms can develop a typology that comprises the grass-root system with the optimum level of local embeddedness, an integrated framework and a dirigiste system with the lowermost level of local embeddedness (Villarreal & Calvo, 2015).  Review of literature highlights that much research has been done to explore the concept of embedded innovation, however, researchers have paid less attention to explore the motives, challenges and perceptions of embedded innovation (Danish et al., 2016).

The underlying study has identified this gap in innovation literature and will explore the motives, trends and challenges in integrating the embedded innovation in Jordanian telecom sector. The main reason for choosing the telecom sector to study embedded innovation is that the telecom sector has undergone major transformations due to changes in the macro-environment. The primary factors driving rapid innovation are; short service and product life cycles, advancing technology, fierce competition and changes in customer needs (Hajir et al., 2015). Hence, organisations are striving for uniqueness and originality they need to ensure their services and products are innovative so at to survive in the competitive environment. Modern telecom enterprises must engage all resources to foster the innovation and address the explicit and implicit customer needs (Danish et al., 2016).It requires an active interaction with the customers and other stakeholders. The researcher intends to highlight the challenges being faced by Jordanian telecom organisations and assess their perceptions towards embedded innovation for the accomplishment of business objectives in a highly-saturated market. Review of literature reveals that the previous researchers haven’t explored the emerging concept of embedded innovation in the Jordanian telecom market. Recent reports on the Jordan’s national innovation system also suggest that country is facing difficulties in embedding the innovation into its business environment. The underlying study will explore the perceptions of Jordanian telecom professionals about the emerging concept of embedded innovation, analyse the challenges and motives behind embedding the innovation, and ways through which telecom professionals can improve the stakeholders’ embeddedness in the service innovation deployed in the Jordanian market. This chapter will critically analyse the existing innovation literature, past empirical studies and innovation theories to extract important insights, identify a theoretical framework and set a theoretical foundation for the underlying research.

 

Accordingly, this chapter includes three sections as follows:

First section, introduces the key concepts of Innovation, the following section further describes and explains the various variables and terms in this study with reference to earlier scholars. This section contains an in-depth assessment of the concept of innovation, innovation systems and the application of embedded innovativeness.

What is Innovation?

“Innovation is widely considered as the lifeblood of corporate survival and growth”. Zahra and Covin (1994, p. 183). The term innovation has been defined in the Oslo Manual (OECD, 2005) as

“… the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.”

 

In other studies, innovation is defined as a process of enhancing business value and sustaining a competitive advantage (Hamel, 1998; Roberts 1998). Bessant et al (2005, p. 1366) extend this process towards renewing organisational processes and routines. “Innovation represents the core renewal process in any organisation. Unless it changes what it offers the world and the way in which it creates and delivers those offerings it risks its survival and growth prospects”. Organisations have always looked for improved ways of business to keep themselves highly competitive and sustainable in the market. As a result, they continually create knowledge with a view to differentiating from and gain an advantage over their competitors which may be termed ‘innovation’.Innovation gives companies a competitive advantage by increasing and sustaining high performance, and attracting new customers and retaining the existing ones (Cooper, 1998; Gopalakrishnan & Damanpour, 1997).

According to reports, successful companies produce 75% of their revenues from new products or services that did not exist five years ago (Smith, 2006). Innovation is the most fundamental activity for every company that aims for survival and long-term competitiveness (Hamel 1998, Roberts 1998). Schumpeter (1930) defines innovation as“the introduction of new goods, new methods of production, the opening of new markets, the conquest of new sources of supply and new organizational structure of any industry”. This definition addresses five aspects of innovation. These aspects include a) product (either new to consumers or with improved quality for those that were already available), b) process (methods of production either new to the world or new to the industry), c) new market, d) new sources of supply, and e) new forms of competition. This definition, although comprehensive, fails to address service as an aspect (Goffin and Mitchell 2010). One of the reasons might be the economic situation of that period when more focus was on manufacturing. However, the telecommunication service sector started to emerge in the last 30 years and there has been a substantial shift from manufacturing to the service sector.

AH Van de ven et al. (1999, p. 13) in their definition of innovation addresses service and defines innovation as “the development and implementation of new ideas and knowledge into a socially and economically successful product, process or service innovation”. Considering the importance of the telecommunication service sector in the current economy, this definition is more appropriate compared to the above-mentioned definitions and addresses the main aspects of innovation that are significant in firms’ survival. Innovation is a process in which valuable ideas are transformed into new forms of benefit for the organization, customers, employees and stakeholders. In developing countries, innovation tends to happen “behind the technology frontier” which is transmitted from developed countries (Hobday, 2005). Batiz-Lazo and Woldesenbet (2006) stated that ATMs (Automatic Teller Machines) were used in US and UK banks in the 1970s, while the majority of Jordanian banks started to use this technology in the last decade. Therefore, innovation is something new, but not always in absolute terms. It can be only defined in context with a clear insight of its inputs and outputs, which is explained further as the so called “Innovation Systems”.

Innovation Systems

The simplest definition of systems is found in the Oxford English Dictionary as “a set of things working together as parts of a mechanism or an interconnecting network; a complex whole” (Oxford University Press, 1989).A system can be defined a set of interrelated components that follow an observable attribute. A system may be defined as “a set or arrangement of things so related or connected as to form a unity or organic whole” (Webster’s Collegiate Dictionary).  Systems engineers define a system as a set of interrelated components working toward a common objective. Innovation systems (IS) can be defined as actors or entities such as firms, other organisations, and institutions that interact in the generation, use and diffusion of new and economically useful- knowledge in the production process (Edquist 1997). IS is a concept introduced by (Freeman C., 1987). Freeman defines SI as “the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify, and diffuse new technologies.” (Freeman C., 1987). Systems are made up of components, relationships, and attributes.Components are the operating parts of a system. They can be of a variety of types: actors or organizations such as individuals, business firms, banks, universities, research institutes, and public policy agencies (or parts or groups of each).  They also can be physical or technological artefacts.  They can also be institutions in the form of legislative artefacts such as regulatory laws, traditions, and social norms (Carlsson et al, ‎2002).   The function of an innovation system is to generate, diffuse, and utilize technology. The properties and behaviour of each component of the set influence the properties and behaviour of the set as a whole.  At the same time, each component depends upon the properties and behaviour of at least one other component in the set. Because of this interdependence, the components cannot be divided into independent subsets; the system is more than the sum of its parts (Blanchard and Fabrycky, 1990, p. 2).  The question raised here is, for instance – what if a component is removed from a system or its characteristics changed?  The other artefacts in the system will alter characteristics accordingly (Hughes, 1987, p. 51), and the relationships among them may also change – provided that the system is robust.

Relationships involve market as well as non-market links. Feedback (interaction) is what makes systems dynamic; without such feedback, the system is static. Put differently, the greater the interaction among the components of a system, the more dynamic it is. However, even a highly dynamic system may not be able to survive unless it evolves in the right direction.  There are different definitions of what an innovation system is, what it comprises, and that is the reason why this research posits that the innovation system lacks learning, human actor.  That is to say, the innovation system is incomplete and it should include learning, engagement, collaboration with customers, humans, the surrounding environment etc.

For instance, Nelson gives the following definition of innovation system: “a set of institutional factors that, together, plays the major role in influencing innovative performance.”(Nelson, 1993, p. 4). Carlsson et al., on the other hand, develop the concept of a technological system of innovation but give a previous account of the state of the art of innovation systems. They suggest that for analytical purposes, it is “possible, at least in principle, to view a national system of innovation as the aggregate of a set of technological, sectoral or regional systems” (Carlsson et al., 2002, p. 236). Niosi et.al. Present what they call a ‘workable concept’ of a national system of innovation and define it as: “the system of interacting private and public firms (either large or small), universities, and government agencies aiming at the production of science and technology within national borders. Interactions among these units may be technical, commercial, legal, social, and financial, inasmuch as the goal of the interaction is development, protection, financing, or regulation of new science and technology” (Niosi, Saviotti, Bellon, & Crow, 1993, p. 212).

What remains certain in the idea of the SI approach is the systemic nature of innovation where private, public and academic actors forge complex relationships to trigger technical changes to enhance business competitiveness at the national level. However, no scholar has defined innovation as a system, rather they defined innovation as the tool, a competitive advantage, idea, practice, or material artifact perceived to be new by the relevant adoption firm Zaltman et al (1973).

Service innovation

Schumpeter developed the theory of innovation and defined it as “the setting up of a new production function”, that “covers the case of a new commodity, as well as those of a new form of organization such as a merger, of the opening up of new markets, and so on” (Schumpeter, 1939, p.84).  Because of this broad meaning of innovation as introduced by Schumpeter, too often the innovation literature has taken more limited views by focusing on technological innovations.  In the case of services, particularly due to the considerable role of customer interaction and the intangibility characteristic, a bias towards technological innovations is even more inadequate.  A service innovation is a new service experience or service solution that consists of one or several of the following dimensions: new service concept, new customer interaction, new value system/business partners, new revenue model, new organizational or technological service delivery system.

The first dimension is the service concept, also named the service offering (Frei, 2008). The service concept or offering describes the value that is created by the service provider in collaboration with the customer. Service innovations are seldom born in a firm lab as a result of an isolated research activity (Sundbo and Gallouj, 2000; den Hertog et al., 2006). On the contrary, most service innovations are an answer to a perceived unmet need of actual or potential customers or translating a technological option into a service proposition DEN HERTOG (2000) and DE JONG et al. (2010).  For example, service innovation is best described as a process of collective problem-solving in which learning within organizations and connection between organization play a key role. LOVE and MANSURY (2007) for example, suggested that firms’ external linkages, particularly with customers, could significantly enhance service innovation performance. In this research, the definition of service innovation was adopted from LEIPONEN (2005) and defines service innovation as the completely new services most often introduced by firms that engage in external knowledge sourcing, particularly from customers and competitors.

The current status of telecom sector

 

This section explains different factors, including technological and economic changes that shaped the telecoms industry during the last decade. In doing so, why address these changes at the global, Macro, and Meso levels It also discusses of this sector that the recent facts based on current theoretical and empiricalstudies to prove the accelerating changes and competitiveness in this sector.

Telecoms at the international level

The global telecommunication market has experienced a continuous growth due to interconnected economy and digital sharing during last few decades.  The technological advancements and ongoing innovations are mainly driving the ongoing transformations (Thamarapani, 2016). However, various telecom markets are struggling hard to keep the pace with changes as the convergence witnessed in last two decades is mainly driven by disruption instead of well-thought and well-planned strategies (Ojanpera et al., 2017). The current reports suggest that the intensifying competition has made the growth stagnant in various regions and profitability can only be earned by adopting innovation techniques to cut the cost and maximise the value of the offered services (Thamarapani, 2016). Although, the technological advancement is assisting organisations in integrating innovative business practices, still the organisations are facing difficulty in dealing with multifaceted challenges that require to embed innovation in each business process (Danish et al., 2016). The growing contribution of the telecom sector in global and regional economic development makes this industry an interesting case-study while exploring the effectiveness of innovation embeddedness. Here is the graphical presentation of revenue earned by global telecom market during last few decades. The analysts have forecasted the revenue growth during next two years also based on previous trend:

Table 1: Revenues analysis of mobile telecoms (2005-2019)

Litrature-review-sample-picture-1

Source:

The graph shows that the global telecom industry has experienced a profitability growth from 851 (billion euros) in 2005 to 1,196 (billion euros) in 2019 (expected). However, compared to the profitability, the mobile subscriptions have experienced more tremendous growth. In 2011, the mobile subscriptions were around 5.86 billion (around 62.9 percent of whole world population), whereas, the percentage is expected to reach 67 percent in 2019 (Statista, 2017). The slower profitability growth compared to the subscription rate suggests need to embed the innovation that can increase the business model effectiveness, resulting into a shared value for business as well as community.

Telecoms at the Macro and Meso

The Jordanian telecom sector is considered as one of the highly competitive telecom markets (Qawasmeh & Bataineh, 2010). However, it has been reported that Jordanian telecom sector lacks innovation as Jordanian telecom organisations  mainly offer basic telecom services like airtime calls, messaging, airtime balance transfer and internet allowance unlike the Western telecom organisations  that offer highly advanced services to their customers (Hajir et al., 2015). Currently, the sector is changing radically due to the combination of globalisation, market forces, and innovative technologies. Jordanian telecom sector plays a significant role in the national economic development (Qawasmeh & Bataineh, 2010). However, results of some empirical studies suggest that industry is currently facing challenges related to the innovation and knowledge management (Hajir et al., 2015). Hence, the results of underlying research will be helpful in assisting the Jordanian telecom organisations in embedding the innovation into existing business model as a tool to wine such a competitive market and sustain.

Innovation in telecom sector

The business environment of global telecom sector is characterised by the challenging tasks and high competition. Telecom enterprises need to foster innovation in the form of solutions, processes, services and products to ensure their long-term survival in a highly turbulent scenario (Danish et al., 2016). A strong collaboration between different organisational units and external stakeholders is required to integrate a pro-innovation culture. An active interaction with the internal and external factors influencing the firm innovation can serve as themain engine for the innovation development (Gupta, Gupta & Jain, 2016). Innovation literature highlights the need to align with R&D with other departments as R&D managers face difficulty in integrating the innovation and managing innovation projects that are surrounded by risk, uncertainty and complexity (Parveen, Senin & Umar, 2015). In such a complex and competitive environment, an effectively diffused, integrated and embedded innovation can strengthen the competitive position of telecom organisations operating at local, regional, national or international level. The innovation system involves the creation, diffusion and use of knowledge to get and sustain and distinctive competitive edge over rivals (Abu, 2014).

Innovation drivers in global telecom industry

Various drivers are inducing the telecom organisations to embed innovation into their organisational structure. Based on the Goffin and Mitchell (2010) findings, the first driver towards innovation is the technological advancement that includes the usage of existing technologies in new applications as well as using new technologies in services and products. Companies are required to respond to the technological advances quickly to be able to employ them in their products/services and stay ahead of their competitors. This proactive approach will enhance the organisational ability to identify and exploiting the new opportunity in the market (Habibi et. al., 2016).

 The second driver that induces the telecom organisations to embed innovation in their business practices is changing demographics, attitudes and needs of customers. For example, markets with older populations have different requirements than those dealing with younger populations (Olla and Patel, 2002). The third driver is intensified competition which is particularly challenging in Jordan where the telecommunications sector is dominated by three mobile phone providers.  Despite the monopoly, Jordan has steadily increased competition due to its regional superiority in communications development, low start-up costs and business-friendly environment attracting considerable investment in its ICT industry from Microsoft, Dell, IBM and France telecom (Export.gov 2016).  The fourth driver is the turbulent business environment.  The shift in the mobile telecommunication industry and transformations have changed the business rules. The major challenges faced by telecommunication providers are the shifts from one simple voice service to a portfolio of mainly convergent data services (e.g. integration of voice, data, and Internet), from no or a few affiliations to multiple partnerships (Olla and Patel, 2002), from simple and linear links in the form of value chain to complex relationships in the form of value network (Peppard and Rylander, 2006), from homogeneous to heterogeneous customer demands, and from customers consuming modest services to customers continuously presuming advanced, high qualities services.

The Quadruple Helix Model and Open Innovation

Open innovation denotes the organisations’ ability to make optimal use of external technologies and ideas to improve business performance and get a sustainable competitive advantage while letting the external organisations capitaliseon their unused innovative ideas (Villarreal & Calvo, 2015). In thetelecom sector, open innovation enables the organisations to shorten the product lead time, de-risk the business model and inculcate innovation at a substantially low cost. The Quadruple Helix Model reflects different features of emerging innovation paradigm (Leydesdorff & Ivanova, 2016). The innovation policies in the telecom sector have confronted intense environmental pressure because of internal policy issues and external developments (Abu, 2014).

Response from the telecom organisations to these challenges includes abehavioural and structural renewal in innovation strategies having regional and local consequences (Danish et al., 2016).Parveen, Senin & Umar (2015) investigated the factors affecting the quadruple helix open innovation model in thetelecom sector. The researchers also analysed the employees’ organisational commitment as moderating variable while investigating the open innovation. The study confirmed a significant influence of organisational culture on the telecom organisations’ open innovation practices. Researchers further proposed that the integration of open innovation in the telecom sector depends on the commitment of organisation, industry, society and government. It implies that the successful integration of innovation relies on the multi-actor organisational learning (Parveen, Senin & Umar, 2015).

Knowledge management Perspective

Various empirical studies on telecom sector confirm that organisation’s ability to learn from the multiple actors and extract important knowledge from them act as alever for open innovation (Schaarschmidt & Kilian, 2014). This lever connects the people and technology by interconnecting various organisations and innovation eco-system (Hafkesbrink & Schroll, 2010). Such interconnectedness highlights the importance of organisational learning (Hafkesbrink, Hoppe &Schlichter, 2010).Open innovation starts with the organisation’s learning of radical and incremental innovation. During the opening-up process, the organisation depends on the prevailing macro-environmental structure that determines the self-organisation capabilities and borderline for the organisation, the ruling culture, reputation, open-mindedness, knowledge friendliness and mutual trust (Berkhout & Van Der Duin, 2007).

 

Hajir et al (2015) assessed the role of knowledge management in integrating the innovation in Jordanian telecom industry. Based on empirical research, the researchers proposed that effective knowledge management practices have a statistically significant impact on the firm’s innovation practices. The study explored different dimensions of knowledge management including physical environment, information technology, human resource, organisational structure and organisational culture (Hajir et al, 2015) the empirical findings further revealed that information technology dimension had the strongest impact on the innovation integration. It implies that Jordanian telecom firms can integrate the innovation by improving the knowledge management infrastructure and should invest heavily in the information technology. It will increase their ability to sustain a distinctive competitive advantage based on innovative organisational practices.

Organisational ambidexterity, trust and innovation

Innovation literature has extensively discussed a shift from close to open innovation in different contexts. However, less attention has been paid to analyse the trust element in such innovation culture (Andriopoulos & Lewis, 2009). Probst, Raisch, and Tushman (2011) discussed the basic characteristics of the organisations’ ambidextrous thinking and regarded the trust as an essential element for building healthy, professional relationships with stakeholders. An autonomous teamwork signifies the framework that operates under a trust-based, open friendly environment and nurtures effective and constructive relationships (Raisch & Birkinshaw, 2008). Such trustworthy, creative and participatory style creates a cohesion among different organisational actors, consequently creating a sense of commitment and belonging. Organisational ambidexterity relates to the dynamic associations leading towards mutual exploitation and exploration of knowledge to set the basis for an innovative organisational culture (Ferrary, 2011). These interconnected associations are construed in a cooperative attitude integrating current and new knowledge into innovative process, service and product development. Salampasis, Mention & Torkkeli (2014) argued that role of trust in the propensity and openness to innovation is inevitable. It breaks the barriers within the organisation and facilitates the knowledge transfer through informal and formal communication channels. The creative communication with the internal and external organisational partners result into theestablishment of a collaborative culture, which is a step towards embedded innovation (Salampasis, Mention & Torkkeli, 2014).

The next section will critically analyse the previous firm innovation models to identify the limitations and suggestions made by past studies to improve inclusive innovation.

Critical evaluation of previous models in embedded innovation:

Review of literature reveals various studies that proposed innovation models to support the firm innovation and enhance their competitive position in a highly turbulent market (e.g. Phelps, 2010). For example, Seddighi (2015) assessed how firms operating in contemporary knowledge-based economies use the knowledge as competitive tool and an essential input to foster the innovation (Seddighi, 2015). In contemporary knowledge-based economies, the growth of firm relies on its ability to accumulate the knowledge through effective communication and collaboration with the stakeholders and integrating the technical change that consequently results into highly innovative activities (Hogan et al., 2011). The ability to foster the innovation on continuous basis has become a must for survival of firms operating in competitive markets (Phelps, 2010). The concept of embedded innovation also emerges from this need of firm innovation. Continuous refinement and development of firms’ core competencies play highly critical role in transforming the organisation into an innovative firm (Simanis & Hart, 2008).

While exploring the need to integrate the innovation for sustained success, Seddighi (2015) developed a conceptual framework for firm innovation. The researchers empirically evaluated and tested the model by collecting data from 128 firms. The study was executed in the North-East England. Based on empirical results, the researchers concluded that mostly the innovative firms spend heavy expenditure on the research and development activities (Seddighi, 2015). The conceptual model highlighted different factors affecting the firm innovation, including development and refinement of core competencies through informal and formal cooperative research and development activities within an incubator research and development cluster. The researchers based their model on the resource based view theory (Seddighi, 2015).

 It implies that firms must develop close ties with the external environmental actors to support their research and development activities and inadequate communication with external stakeholders cannot facilitate the innovation integrate within firm R&D (Ayuso et al., 2011). The literature also suggests the need to form the knowledge clusters to improve firm innovation. Today, knowledge is acting as an important innovative input for productivity growth (Dasgupta & Gupta, 2009). Firms operating in isolation find it difficult to extract meaningful knowledge that can support the research and development activities (Child and Faulkener 1998). Cooperation among stakeholders and clustered firms results into high return through open sharing of knowledge and resources such as research and development activities, specialised labour and technology (Hill and Brennan 2000; Schmitz 2000; Ayuso et al., 2011).

Despite numerous models proposed by the innovation researchers and massive investment on research and development activities, innovation remains a challenging issue for various organisations and Jordanian telecom industry is one of them . The firms lack innovative practices, and frequently fail while integrating and promoting an innovative culture. Those who succeed, strive hard for sustenance (Ayyagari, Demirgüç-Kunt & Maksimovic, 2011).  It indicates a need to shift to a new paradigm that can guide business organisations’ innovation activities by adopting a holistic view. Pisano (2015) cites the inadequate innovation strategies as main reason behind failed or less successful execution.

A brief historical overview of firm innovation models

The innovation literature is filled with the firm innovation models since the 1950s. The proliferation of innovation models suggests that each model purports to guide or explain the innovation process within industrial firms (Hobday, 2005). In this regard, the current research found a seminal study conducted by Rothwell. The researcher argues that the post-war era is defined by a series of technological innovation that occurred with the evolution of corporate innovation strategies (Rothwell, 1994). It is important to note that the evolution to the next innovation model didn’t occur by simply replacing or substituting the previous model. In most cases, models existed at the same time, while in other cases, components of two innovation models were mixed to introduce a third model that can better meet the innovation needs of corporate firms (Brem & Voigt, 2009). Rothwell (1992) contends that these innovation models were the simplified presentations of the complex organisational processes. The development from one innovation model to the other is the reflection of transformations in the central perceptions of what defines the best business practices instead of the actual development (Brem & Voigt, 2009). Rothwell (1994) argues that the model appropriateness reflects into its ability to vary from industry to industry and among various innovation categories (such as incremental or radical).  Researchers further argue that the organisational processes occurring within the organisations rely on the exogenous factors like speed of the technological development, prevailing competition and support from government and other legislative institutions (İzadi, Zarrabi & Zarrabi, 2013).

The earlier firm innovation models in 1950s were basically simple linear models as regarded the innovation as a sequential process rather than a complex process involving multiple relationships (Brem & Voigt, 2009). In 1960s and 70s, the demand pull firm innovation models appeared on screen that resulted into development of various market led innovation theories. However, the major limitation of these models was their linear approach towards innovation integration like their predecessors (Mowery & Rosenberg, 1979). The demand-pull innovation models focused on the market research in identifying the viable opportunity and incurring the research and development expenditure to satisfy the identified need (Rothwell, 1994). The management’s approach was short-sighted as they considered the marketplace as key source for ideas worthy of research and development but didn’t focus on developing meaningful relationships with all stakeholders to establish a strong basis for innovation (Rothwell, 1992).

Later in 1970s, the demand-pull innovation models were succeeded by the interactive models. Now, management slowly started recognising the need to develop and strengthen the interactions with important environmental actors (Moulaert & Sekia, 2003). The results of empirical researches of that time proposed that the market pull and technology push linear innovation models were atypical and extreme cases of industrial innovation (Lundvall, 1988).  However, the new interactive innovation models also adopted a myopic view as per Rosenberg and Mowery. The researchers contend that these firm innovation models were characterised by the interaction between technology and marketplace. The models lacked the focus on building meaningful relationships with stakeholders and society (Mowery & Rosenberg, 1979).  Rothwell regards these models as linear, though they claimed to be non-sequential and non-linear (Rothwell, 1994). In 1980 decade, the innovation researchers proposed the integrated innovation models that still lacked the non-linear characteristic despite non-sequential processes along with feedback loops (Moulaert & Sekia, 2003).

The post 1990 innovation models were the initiation of truly non-linear innovation approach. The networking and system integration models focused on the knowledge management and building relationships and networks to facilitate the firm learning process (Hobday, 2005). The management started realising the importance of developing close ties within and outside the firm to develop and sustain the competitive advantage (Rothwell, 1994).  These models suggested that the innovation was fundamentally and generally a disseminated networking process (Moulaert & Sekia, 2003). Researchers suggest that these integrated networking innovation models were formulated based on the critical observations (during the decades of 1980s-1990) of an upsurge in partnerships, corporate alliances, research and development consortia and various types of joint ventures (Brem & Voigt, 2009). These observations resulted into meaningful extensions to the previous generation integrated innovation models, and focused on developing the vertical relationships, such as making strategic alliance with the customers and supplies, and making effective collaborations with the key competitors (İzadi, Zarrabi & Zarrabi, 2013). Rothwell argues that these extensions to the previous linear innovation models were made due to the time pressure for increasing the efficiency and speed to successfully launch new products to satisfy the ever-changing customer needs (Rothwell, 1994). The environmental turbulence further pressurised the management to enhance the efficiency of overall innovation network, including external collaborations, customers, suppliers and in-house functions (İzadi, Zarrabi & Zarrabi, 2013).

Inclusive innovation

Inclusive innovation is a socially focused innovation type that enables people from the lower social class to access quality products and services (Henkel, 2006). Many countries are encouraging service and product providers to utilise inclusive innovation to reach the entirety of their population and promote equity (Altenburg & Lundvall, 2009). The concept of inclusive innovation is getting popular in the global telecom sector due to increased competition. However, inclusive innovation requires good planning, otherwise, companies may end up shutting down that part of business due to lack of enough sales to sustain the continued growth (Goyal, 2016).  One of the main disadvantages of inclusive innovation is the need for high sales to sustain production (Henkel, 2006). Inclusive innovation feeds inconsistency, which is detrimental to a business venture. It consequently slows down decision-making practices in a firm due to the increased number of people involved (Altenburg & Lundvall, 2009). There are some common pitfalls to be avoided to increase the chances of success of inclusive innovation, including lack of support from the top management, focus on the wrong performance metrics, failure to hire talented executives, apartnership with the wrong organisations and using old models of business (Henkel, 2006).

Innovation diffusion

The theory of DOI is useful in describing the adoption of a certain technology. Diffusion happens when opinions and information about a new technology are spread to potential users through various communication channels (Henkel, 2006). Rogers highlighted some factors that prevent the successful adoption of a new technology, including ineffective or poor communication channels and personal limitations of a potential client (Rogers, 2010). Diffusion theory doesn’t enable corporations to predict the extent to which an innovation is likely to be adopted which could lead to massive losses for the firm in case of over production. Another disadvantage of diffusion theory is its lack of catering to the flow from the customer (Sahney, 2015).  Unlike open innovation, diffusion theories encourage the flow of the message from the receiver. This means that it does not consider user feedback. It instead focuses on persuading a user to adopt the product (Islam & Meade, 2015).

Service innovation in the telecom sector

Service innovation involves a unique service experience that consists of different dimensions such as a new customer interaction, a new service concept, a new business partner, an innovative business system, new technological or organisational service delivery system or a new revenue model (Skålén et al., 2015). Service innovation is best described as a process of collective problem-solving in which learning within organisations and connection between organisation play a key role. Love and Mansury (2007) suggested that firms’ external linkages, particularly with customers, can significantly enhance service innovation performance. This research adopted the definition of service innovation from Leiponen (2005) and defines service innovation as the completely new services most often introduced by firms that engage in external knowledge sourcing, particularly from customers and competitors.

Various studies have analysed the management practices of service innovation within the telecom sector. For example, Rahman et al (2015) proposed a framework and empirically validated the successful service innovation practices in telecom sector of developing regions. The proposed framework highlighted the significance of relationships between cross-functional communication, technological tools’ implementation, overall innovation process, organisational culture, competitive pricing and performance. The empirical research results proposed that organisational culture and implementation of technological tools have a significant influence on the innovation process, cross-functional organisation and competition informed pricing. The researchers stressed the need to conduct further research for assessing the innovation management practices within the telecom sector of developing countries (Rahman et al, 2015).

This study has chosen the Jordanian telecom sector to analyse how embedded innovation enhances the overall service innovation in selected telecom industry. Firstly, the research will critically analyse the embedded innovation literature to identify and discuss a comprehensive framework. Later, empirical research will be executed based on this framework in thecontext of Jordanian telecom industry.

Embedded innovation in telecom industry

In thecontemporary era, the world has transformed from the innovation 2.0 (open innovation) to the innovation 3.0 (embedded innovation) to deal the environmental complexities (Simanis & Hart, 2009). The emerging embedded innovation paradigm has not been thoroughly discussed in the innovation literature in thecontext of thetelecom sector. This paradigm adopts a new approach to understand how modern business enterprises integrate the sustainability (Baldwin & Von Hippel, 2011). The embedded paradigm stresses the need to integrate the whole community while fostering the innovation. This unique perspective allows the organisations to get a distinct competitive advantage by developing the trust and long-term relationships with the customers (Ferrary, 2011).

Litrature-review-sample-picture-2

The above model shows how an organisation creates the relationship based value through shared identity and ensures a transformational stakeholder engagement through joint commitment (Ferrary, 2011). The business organisation develops a sense of mutual responsibility and focuses on the latent needs of the customers through effective communication (Baldwin & Von Hippel, 2011). The embedded innovation paradigm suggests that current diversified economies have a potential that must be explored to capitalise the opportunity. It suggests to build the close ties with the local community and build the customer loyalty based on mutual trust (Ferrary, 2011).It is amost important process for building customer loyalty at initial stage will guarantee the success of new product or service that has been designed to meet the latent customer needs (Simanis & Hart, 2009). The model suggests the business develop and maintain a healthy relationship with thecommunity. The model presents a strategically wise give and takes relationship with the customers and local community (Baldwin & Von Hippel, 2011).

Here is the traditional structural innovation paradigm:

Litrature review sample picture 2

Instead of business intimacy, here the core focus of thefirm is to provide the consumer solutions. The model is based on a transactional rather than transformational stakeholder engagement, where, thefirm generates the consumption based value through innovative product design (Baldwin & Von Hippel, 2011). This model doesn’t ensure the business sustainability in the long-run due to lack of interaction with the community (Simanis & Hart, 2009).

 

Recent trends in embedded innovation

Simanis & Hart (2009) contended that various industries such as military weapons, biotechnology, pharmaceuticals, semiconductors, disk drives, computers and telecommunication equipment are transforming from close to open innovation system. However, Anderson & Billou (2007) argued that the transformation from close to open ended innovation has complete and proactive organisations operating in highly competitive industries are heading towards embedded innovation system. These businesses are seeking the innovative knowledge from unlikely sources, and are making a strategic use of this knowledge to sustain a distinct competitive advantage (Simanis & Hart, 2009). In these organisations, the innovation locus has shifted outwards the centre of research and development department and has diffused into the web of interconnections that link these organisations to the outer world (Pitta, Guesalaga & Marshall, 2008).

Embedded innovation takes on a different approach to organisational development focused on creating sustainability (Doloreux, 2002). Embedded innovation aims at integrating an organisation with the society of the targeted population. Integration into the community enables an organisation to achieve a competitive advantage since it builds trust with the client that is key to the development of a long-term relationship and loyalty to the company (Pitta, Guesalaga & Marshall, 2008). The structural innovation model is the much older model that has been employed prior to the development of embedded innovation. Hence the two share some similarities that are essential to the understanding of the application of embedded innovation. The structural innovation model is guided by latent need. This means that it is market driven and focuses on the development of products that satisfy consumer needs. This model is very efficient in environments where the driving factor is consumption. However, the structural innovation model fails when it comes to the developing market or in traditional markets (Simanis & Hart, 2009).

Challenges influencing the embedded innovation

The embedded innovation is a new term that has recently emerged in the innovation literature. The innovation researchers have not adequately explored the hurdles and challenges faced by the management in fostering an embedded innovation culture in their organisations (Noordhoff et al., 2011). This is the prime reason for conducting this research to fill the gap and make a substantial contribution to the existing innovation literature (Hassink, 2001).  Review of literature has highlighted some studies that highlighted factors affecting the firms’ efforts to collaborate with the community (Boyer, 2003). The main challenge in embedding the innovation is building a common understanding that mostly doesn’t exist at an initial stage. However, a persistent effort to collaborate and facilitate the knowledge flow results into gradual evolution of mutual trust and shared understanding (Edquist, 2010).

Researchers also contend that existing organisational structure hinders the innovation embedding process as strict hierarchy and inflexible structure strongly resists the collaboration with the external stakeholders through formal and informal communication channels (Simanis & Hart, 2008). Hence, a strong alignment between the organisational structure and innovation culture is a prerequisite for the embedded innovation (Noordhoff et al., 2011). Leal-Rodríguez et al., (2014) argued that the resistance from the inner organisational forces is stronger than the external environment while integrating innovation and creativity within a traditional organisation. It implies that before heading towards an embedded innovation culture, a firm should create an awareness among employees to minimise the internal resistance (Edquist, 2010).Insufficient research has been done by the previous researchers in the context of the telecom sector. The underlying research will empirically analyse the challenges faced by Jordanian telecom sector in embedding the innovation and enhancing overall performance.

Factors affecting the firm innovation

Telecom industry’s highly competitive environment seeks an innovative culture to strengthen the competitive positioning atnational and international stage (Abu, 2014). Various factors affect the shift towards an embedded innovation culture, including the organisational structure, customers, banks and financial institutions, research expenditure and public policy agencies (Getz et al., 2016). The innovation system also comprises technological or physical artefact, or institutions in the form of legislative artefacts such as regulatory laws, traditions, and social norms (Carlssona ‎2002). The function of an innovation system is to generate, diffuse, and utilise technology.

The properties and behaviour of each component of the set influence the properties and behaviour of the set as a whole (Mittal, Momaya & Agrawal, 2013).  At the same time, each component depends upon the properties and behaviour of at least one other component in the set. Because of this interdependence, the components cannot be divided into independent subsets; the system is more than the sum of its parts (Getz et al., 2016). This complex understanding of the interconnectedness sets the basis for the embedded innovation culture within an organisation (Mittal, Momaya & Agrawal, 2013).

Overview of Jordanian telecommunication market

Jordan is a small country with limited natural resources. However, the Jordanian people are highly educated and Jordanian successive organisations have made a substantial contribution to the economic development of the country. Various improvements have been made during last few years in different fields, including information technology, computerisation, e-government and expansion of the private sector. Jordanian telecomsector is considered as one of the highly competitive business sector (Zabadi, 2016). Jordanian telecommunication regulatory commission was formed in 1996. The TRC is mainly responsible for ensuring the compliance of telecom organisations with government policy, developing and monitoring regulatory policies, and accomplishing ICT objectives set out by the government. Sources have reported that Jordanian telecom sector is having a speedily and substantial growth from last few years (Inta, 2014).

 In the Middle East region, the Jordanian telecom sector is considered as one of the highly competitive telecom markets. A recent index developed by Arab advisory group has reported that Jordanian telecom market in the second highest competitive sector in the Middle East region.  The market is mainly divided into different market players, including Zain telecom with a 40 percent share in the industry, Orange telecom with 36 percent share in the market and Umniah with 29 percent share in the industry (Jordan, 2014).  Analysts contend that increased competition in the telecom sector has resulted in reduced pricing, which has benefitted Jordanian telecom customers (Al-Zoubi, 2013). Jordan possesses a high smartphone penetration of over 60% and most users access Over-The-Top (OTT) messaging apps through this device. This has led to declining Short Message Services (SMS) revenues in recent years. Jordanian telecommunication is a billion-dollar sector. Analysts estimate that data service, mobile and fixed line’s core markets produce an annual revenue of approximately $1.18bn (JD836.5m) on annual basis. It equals to the 13.5 percent of the gross domestic product (Inta, 2014).

However, it has been reported that Jordanian telecom sector lacks innovation as Jordanian telecom organisations  mainly offer basic telecom services like airtime calls, messaging, airtime balance transfer and internet allowance unlike the Western telecom organisations  that offer highly advanced services to their customers (e.g. TV channels etc.).  Currently, the sector is changing radically due to the combination of globalisation, market forces, and innovative technologies. Unlike many Arab countries, the Jordanian government has a relatively liberal attitude towards Internet access (Al-Zoubi, 2013).  Jordan possesses a high smartphone penetration of over 60% and most user’s access OTT messaging apps via these devices. This has led to declining SMS revenues in recent years, similar to trends witnessed worldwide. (Budde.com 2016).  Meanwhile, ‘liberalisation’ and ‘privatisation’ represent two prominent developments (Chan-Olmsted & Jamison, 2001) of the telecommunications global environment in recent years. Over the past two decades, the telecommunications sector has undergone extensive changes (Zabadi, 2016).

Traditionally, telecommunications services were provided under monopoly conditions through government entities that represented the role of operator and regulator at the same time (Al-Zoubi, 2013). Fueled by the increasing competition and the rapid pace of innovation in information and communications technologies (ICT), development attained by telecommunications regarding the transition from monopoly towards a competitive market model has witnessed different levels of liberalisation  (Conchado Peiró et al., 2016).

Jordan began liberalizing its telecommunications sector in 1995 when a new ‘Telecommunications Law’ was passed creating the ‘Telecommunications Regulatory Committee’ (TRC) (Qawasmeh & Bataineh, 2010). Compared to other Middle Eastern and North African (MENA) markets, the provision of telecommunications services in Jordan (PTSJ) is viewed as an advanced one regarding several related criteria (Conchado Peiró et al., 2016); these include the distinct base of information technology and the professional and experienced skills the PTSJ possesses, foreign investments, number of mobile network operators (MNOs), penetration rate (1) that exceeded 120% (TRC, 2012), and market liberalisation. The current stage of deregulation that PTSJ has witnessed may reflect an advanced level of liberalisation  in which PTSJ is viewed as “one of the most open telecommunications markets in the Middle East” (Qawasmeh & Bataineh, 2010, p.30).

The analysis of the Jordanian telecom sector reveals it has undergone tremendous development in recent years. In Jordan, telecom is one of the highly competitive industries (Almasri, et al., 2011). Jordanian telecom sector plays a significant role in the national economic development (Qawasmeh & Bataineh, 2010). However, results of some empirical studies suggest that industry is currently facing challenges related to the innovation and knowledge management. For example, Hajir et al., (2015) conducted an empirical investigation to analyse the recent innovation and knowledge management trends in the Jordanian telecom market. The study proposed that there is need to increase the investment in implementing the innovation and knowledge management practices and develop an innovation supportive infrastructure to manage and utilise the extracted knowledge in firms’ best advantage (Hajir et al., 2015). It is important for the Jordanian telecom organisations to embed the innovation into their culture for preserving the competitive position in a highly turbulent scenario (Almasri, et al., 2011).

The research gap is towards mapping the mechanisms, process, actors that shape the embeddedness:

Litrature review sample picture 4

 

Normative Theories of Innovation

The main origin of the innovation can be considered as exogenous or even indogenous which implies social construction of knowledge (internal). Regardless of the origin, the attempt for implementing the innovation within the organization may encounter the innate resistance for the normative evaluation. According to McAdam (2005) the constructs for the normative evaluation or normalization is basically referred as functionalist in comparison to the set of norms, routines and standards which mainly conforms to the corporate agenda and also requires the obedience from groups and individuals in prescribed manner. Hence, the normative evaluation is also considered as judgmental and multi-level. Furthermore, it is also considered as the espoused “normalized knowledge” or “common sense” that is specifically recognized by experts within an organization. In light of Guler et al. (2002) it also refers to the isomorphism for normalization which depicts pressure for homogeneity through atavism and replication within the organization. However, it was concluded by Finnegan (2000) that the perspective of employees for the organizational values is rather encouraged to be normative. At the strategic level, the innovative plans and ideas are likely to challenge the wisdom of the senior management for the company. However, it is contended by Alvession and Deetz (2002) that the company’s propensity for arriving at the robust truth is mainly institutionalized by the homogenous norms which claims the innovative implementation. It has further been presented that the normative evaluation if innovation is focused on the effectual role which is exerted is the discipline of normalization and hence generated conflict with the innovators. Eventually the situation is exacerbated within the organization where the decision makers and owners are overly top-down with the approach that lead to further embedding for the normative culture.

Information System

The information system is a concept which stresses on the flow of information and technology among enterprises, institutions and people is the key towards the innovative process. According to Jacobsson, & Bergek (2011), it also contains the collaboration between the actors which are required for the purpose of turning ideas into services, product and process within the market. Furthermore, the innovation system and the frameworks are focused on comprehending innovation which has become a renowned concept for the policymakers along with the innovation researchers in Europe. In addition, the concept of innovation system is the result of complex relationship among the organizational systems and the research institutes. Furthermore, the innovation systems are categorized into regional innovation systems, national innovation systems, technological innovation systems and local innovation systems. According to Lundvall et al., (2011), the innovation system stresses on information and technology among enterprises, people and institutions which is the key to innovative processes. Furthermore, technology and innovation developments are mainly resulting in complex relationship among the actors.

Chapter 2: Theoratical Framework

The information system is a concept which stresses on the flow of information and technology among enterprises, institutions and people is the key towards the innovative process. According to Jacobsson, & Bergek (2011), it also contains the collaboration between the actors which are required for the purpose of turning ideas into services, product and process within the market. Furthermore, the innovation system and the frameworks are focused on comprehending innovation which has become a renowned concept for the policymakers along with the innovation researchers in Europe. In addition, the concept of innovation system is the result of complex relationship among the organizational systems and the research institutes. Furthermore, the innovation systems are categorized into regional innovation systems, national innovation systems, technological innovation systems and local innovation systems. According to Lundvall et al., (2011), the innovation system stresses on information and technology among enterprises, people and institutions which is the key to innovative processes. Furthermore, technology and innovation developments are mainly resulting in complex relationship among the actors.

Theory of open innovation

The information system is a concept which stresses on the flow of information and technology among enterprises, institutions and people is the key towards the innovative process. According to Jacobsson, & Bergek (2011), it also contains the collaboration between the actors which are required for the purpose of turning ideas into services, product and process within the market. Furthermore, the innovation system and the frameworks are focused on comprehending innovation which has become a renowned concept for the policymakers along with the innovation researchers in Europe. In addition, the concept of innovation system is the result of complex relationship among the organizational systems and the research institutes. Furthermore, the innovation systems are categorized into regional innovation systems, national innovation systems, technological innovation systems and local innovation systems. According to Lundvall et al., (2011), the innovation system stresses on information and technology among enterprises, people and institutions which is the key to innovative processes. Furthermore, technology and innovation developments are mainly resulting in complex relationship among the actors.

Open innovation limitations

Open innovation leads the organisations, and particularly the small and medium organisations towards uncertainty. Organisations must seek a right balance between negative consequences and possible positive effects. Ullrich & Vladova (2016) mentionthat the dark side of the open innovation has been less studied and less discussed. Moreover, inadequate discussion about the negative effects has resulted into lack of appropriate methods for minimising the associated limitations and finding a right balance, indicating a gap in the innovation literature. Diener, Piller & Brettel (2015) contendthat despite the high popularity of the open innovation, the theory’s conventional approach is unable to meet the contemporary challenges of sustainability, accountability attribution to informal and formal actors, knowledge asymmetry and environmental transformations actively shaping the business conditions (Diener, Piller & Brettel, 2015).  A substantial evolution of open innovation is required to address the increasing complexity and transforming needs for circularity and higher frugality. The openness degree among different formal and informal external actors in various domains and at different community levels influence the firm’s ability to harness the power of network management and co-creation for development of a distributed knowledge system (Veer, Lorenz & Blind, 2012). Based on the review of innovation literature, the researcher has found certain open innovation limitations.

Firstly, the integration of open innovation practices arise issues related to intellectual property rights. The intellectual property rights violation issue can affect the innovation development submitted by external actors. Moreover, it can also cause substantial costs because of any legal action taken against the firm. Secondly, the open innovation can result into a sheer volume of ideas (Veer, Lorenz & Blind, 2012).  Although, it is the strength of open innovation that it offers wide-ranging innovative ideas that can be used to maximise the value, however, the massive volume can hinder the reviewing process and make the decision process time consuming and difficult. Lack of appropriate collaboration strategy can lead the firms to abandon the open innovation practices (Veer, Lorenz & Blind, 2012). Thirdly, the firms seeking to integrate the open innovation practices are required to develop a strong internal structure built over an organised mechanism for acting and accepting unsolicited and solicited submissions (Veer, Lorenz & Blind, 2012). Mostly, the firms lack such understanding that leads them towards failure, and ultimately rejecting the open innovation practices (Lazzarotti and Manzini, 2009). Other open innovation challenges include high process coordination and implementation costs, heavy reliance on the external knowledge that results into a loss of knowledge control (Lazzarotti and Manzini, 2009), loss of strategic power, creativity and flexibility (Grimaldi, Cricelli, Rogo & Iannarelli, 2012).

From open innovation to open-inclusive innovation

The limitations of the open innovation have motivated the innovation researchers to propose different strategies and concepts that can minimise the weaknesses associated with the open innovation and maximise its strengths. The concept of open-inclusive innovation has also emerged in an effort to overcome the open-innovation limitations.

Open-inclusive innovation

The escalating economic pressure and increasing environmental complexities have intensified the quest for frugal grassroots innovations in an interconnected world. The innovation researchers are introducing various models and concepts, such as open innovation, reverse innovation model, inclusive innovation, low-cost frugal innovation, embedded innovation etc. to quench the innovation thirst of proactive firms operating in highly turbulent markets (George, McGahan & Prabhu, 2012). The open-inclusive innovation model involves the different dynamics of relationships between knowledge seekers and knowledge providers that make the whole system responsive, responsible and reciprocal (Gupta, 2016). The model further suggests that in open systems, the inclusive innovation costs go down, resulting into a more inclusive and symmetrical knowledge system. The innovative solutions help in addressing social, skill, sectoral, seasonal and spatial factors (Gupta, 2014). The open inclusive innovation system makes the resources affordable, accessible, adaptable and available to differentiated and varying user needs and endowments besides having a circular nature. However, the successful integration of the open-inclusive innovation requires a comprehensive understanding of the multifaceted interaction between intellectual, ethical, social and natural capital that lies in the innovation’s institutional context (Gupta, 2016).

Before understanding the need to shift the focus from open innovation to embedded innovation paradigm, it is necessary to understand how previous innovation models facilitate the communication flow within the organizations, and whether these models offer adequate guidance to develop effective communication channels that can facilitate the knowledge flow from within and outside the organization, and how acquired knowledge can be used to set the basis for sustainable competitive advantage.

Open innovation allows the open sharing of knowledge, whereas, inclusive innovation ensures the inclusion factor by collaborating with the poor communities. This innovation exchange among communities and corporations is guided by different efficiency and ethical considerations (George, McGahan & Prabhu, 2012). The available literature regards the openness of corporation to seek ideas from the outside with open-innovation policy, irrespective of that fact whether the organizations disclose how the collected information was used to strengthen the innovation foundation (Gupta, et al., 2016).

Von Hippel has disagreed in this regard as the researcher regards the willingness to use the obtained knowledge and openly share the innovation derivations as open innovation (Bogers and Bastian, 2010; von Hippel, 2005). Gupta et al (2016) have characterized the information exchanges into four different strands, low inside out and low outside in, high inside out and low inside in, low inside out and high outside in, and finally the high inside out and high outside in. The open inclusive innovation supports the high inside out and high inside in strand, but the theory doesn’t provide adequate guidance to organizations about how such innovative culture could be crafted within the industry (Fleming & Waguespack, 2007). The emerging concept of embedded innovation best serves the purpose in this regard. However, before discussing how a shift from the dis-embeddedness to embeddedness can improve the innovation practices of Jordanian telecom organizations, this section will briefly describe four above mentioned innovation exchange strands:

The close innovation theories cultivated the low inside out and low outside in innovation culture. Within this culture, the organizations acted like an ostrich and management strongly resisted to share the information as knowledge was regarded as a source to get a sustainable competitive advantage (Baden‐Fuller, 1995). This innovation culture lacked the resilience and consequently the enterprises were highly vulnerable to market, institutional and climatic risks. However, the increasing environmental complexities made the survival of these organizations almost impossible and they either disappeared, or acquired by proactive market players (Simanis and Hart, 2009). The low inside out and low outside in was eventually replaced by a new strand, low inside out, and high outside in. As the name indicates, the organizations realized the importance of two-way innovation exchange. However, the enterprises were still unwilling to openly share their innovation derivations. Now, the organizations adopted a sponge like behaviour (Poetz and Schreier 2012), and showed higher willingness to learn from outside and low willingness to share the way they convert knowledge into innovative organization capabilities (Laursen & Salter, 2004).

These crowdsourcing strategies are used by many large enterprises. However, these enterprises don’t fully follow the open innovation principles due to their unwillingness to share information with external community. The innovation providers seldom know how their provided information was used by the company (Gupta et al 2016). Such kinds of institutional arrangements don’t last very long as innovation providers lack the motivation to share when they don’t know how provided knowledge will be used and to what extent the provided knowledge is useful. Eventually, this lack of motivation drives the innovation providers somewhere else (Gupta et al 2016).

The third innovation exchange strand “high inside out and low outside in” works in an opposite direction. Here, the enterprises adopt a pollinator behaviour. This innovation exchange model shares some resemblance with the open innovation theory. Tesla is an example of this innovation exchange strand (Quinn and Brachmann 2014; Dahlander & Gann, 2010). Within this innovation environment, the knowledge public goods are created without reciprocity expectations. The research and development institutions share the produced innovative knowledge with outside world to let the whole community benefit from it. However, the abundance of knowledge cause some organizations to avoid learning from outside that could be fatal for long-term business survival (Dahlander & Gann, 2010). Lastly, the high outside in and high inside out is the most favourable and ideal innovation exchange strand that results into development of highly innovative culture. It lets the innovation embed into each business process and drives the organizations to develop meaningful relationships with innovation providers and overall community (Gupta et al 2016).

However, the cultivation of such innovative culture within any sector requires an open mind and heart. The enterprises adopting this innovation exchange strand survive in the long-run and their development and growth relies on the continuous iterative cycle of sharing and learning (Abrol & Gupta, 2014). One example of this innovation strand is the Honey Bee network, where like-minded individuals such as non-governmental organizations, entrepreneurs, policy makers, academicians, farmers, scholars and innovators connect and share the innovation derivations for collective betterment. It connects the people and facilitates the information flow by hybridising the open source model with closed stratified, IP-based innovation model (Abrol & Gupta, 2014).

The above discussion suggests that corporate leaders must consider the value of sharing ideas from outside and adopting a holistic view emerging from the grass-root level. However, it requires mutual responsibility and respect that can monitor the innovative ideas exchange between informal and formal sectors. The researchers have introduced the notion of embeddedness to mark this transformation of integrating firms into communities to ensure high outside in and high inside out knowledge flow. Such community integration can assure the absorption of exploitable knowledge. It is important to note that notion of embeddedness is not a new term. It was introduced by Granovetter (1985) when the researcher emphasized the need to go beyond the open innovation to tackle the changing environmental needs. This notion conceptually embraces the particular ambidextrous capabilities of leveraging the institutional arrangements for accomplishing embedding process (O’Reilly and Tushman, 2008). Such institutional arrangements maybe mechanic, organic, exploitative, explorative or explicit in nature (Hafkesbrink and Evers, 2010; Tushman et al., 2002), considering the phase and nature of innovation process and relationship characteristics. After discussing the limitations of the open innovation theories, now the researcher will discuss how inclusive innovation theories provide the guidance for crafting a high outside in and high inside out innovation exchange environment.

                            

The last two decades have witnessed the uncoupling, escalating social and economic development at global stage. However, despite the tremendous development, a large number of people are living below the poverty line (Chataway, Hanlin & Kaplinsky, 2014). The proactive organizations have taken the poverty alleviation as a challenge as well as a viable opportunity that could be beneficial for organization as well as overall society (Foster and Heeks, 2013). The emergence of “inclusive innovation” notion reflects this major shift from dis-embeddedness and exclusion to inclusiveness, a benign and partial form of embedded innovation. The main reason behind this shift is that enterprises are increasingly realizing that capital intensive nature of innovation trajectory that is destructive to environment, and only creates values for the organization is one of major reasons behind escalating poverty and exclusion (Chataway, Hanlin & Kaplinsky, 2014).

Although, a re-orientation towards the inclusive innovation path can play highly important role in overcoming the escalating poverty and exclusion, the current inclusive innovation theories offer a partial and weak understanding of underlying phenomenon (Foster and Heeks, 2013). The inclusive innovation researchers have offered limited explanation of dynamics and nature of inclusive innovation and this conceptual gap has motivated the researchers to combine the open and inclusive theories for broadening the understanding. The current inclusive innovation theories must be developed and understood in context of innovation cycle (Foster and Heeks, 2013). The roles played by poor people as consumers and innovation providers, and distinction between product and process innovation must also be clarified to maximize the effectiveness of inclusive innovation (Chataway, Hanlin & Kaplinsky, 2014). The innovation researchers must recognize the changing innovation needs of organizations and their increased interest towards exploring the bottom of the pyramid. Moreover, the consideration must also be given to understand the role played by growth trajectories in determining the innovation direction, and in facilitating the associations between poorest world community and rest of the world (Foster and Heeks, 2013). Chataway, Hanlin & Kaplinsky (2014) emphasized the need for an effectively balanced and holistic approach to the inclusive innovation that could facilitate the active innovation exchange among all stakeholders, resulting into effective deployment of resources to assist the recoupling of development and growth.

Based on the in-depth theoretical research, Altenburg & Lundvall (2009) proposed that positive developments in the innovation exchange environment requires the organizations to think beyond the inclusive innovation. Although, the inclusive innovation trajectory is positive, the scope is limited and there is considerable opportunity to broaden the scope and enhance direction and pace of inclusive innovation (Fressoli et al 2014).  The researchers further proposed that current inclusive innovation theories have not clarified the set of objectives for each innovation actor and there is a non-existent or weak grasp of different inclusive innovation elements, resulting into inability in introducing the collaborative synergistic innovation policies and accessing the low hanging fruit (Chataway, Hanlin & Kaplinsky, 2014). There is a need to develop a supportive and appropriate national innovation system that can direct the scare innovation resources in cost-effective manner. To overcome the limitations of open and inclusive innovation, the theory of open-inclusive innovation has been introduced (Fressoli et al 2014). 

However, it is not a new theory or paradigm, but only a combination of previous innovation theories with an aim to minimise the weaknesses and leverage the strengths of both theories. The open-inclusive innovation paradigm suggests the organizations to ensure a high outside in and high inside out flow, however, this concept requires further refinement to overcome the conceptual limitations. This section has highlighted the major reasons for shifting the focus beyond open innovation. The researcher has analysed different arguments made by past researchers that stress the need to re-visit open and inclusive innovation theories due to their associated limitations. Next section will discuss the emerging embedded innovation paradigm and how this emerging concept helps the innovation researchers in overcoming the conceptual and practical limitations of open and inclusive innovation theories.

Embedded Innovation: Beyond open and inclusive innovation

The embedded innovation paradigm is a transition beyond the open and inclusive innovation theories. However, at this stage, the concept requires rigorous refinement and exploration to transform into a new innovation-theory (Simanis & Hart, 2009). The embedded innovation concept overcomes the conceptual limitations of past innovation theories. It is a step ahead than close, open and inclusive innovation theories (Hafkesbrink, Krause and Westermaier, 2010). On the continuum of embeddedness, the close innovation theories lie at one end of spectrum, open innovation theories lie somewhere in middle, and embedded innovation concept lies at the opposite end. It fosters an innovation embedded environment that results into a meaningful innovation exchange between innovation actors (Noordhoff et al., 2011).

A shift from dis-embeddedness to embeddedness

With the passage of time, the shift from dis-embeddedness to embeddedness has become visible (Hafkesbrink, Krause and Westermaier, 2010). The organizations are increasingly seeking to embed the innovation exchange into organizational processes so that meaningful collaborations with the stakeholders and innovation actors could be made (Rutten & Boekema, 2007). Schweisfurth (2012) proposes that embedded innovation paradigm assists the organizations in leveraging its relationships with community to its maximum potential (Schweisfurth, 2012). However, review of literature has revealed that innovation researchers have underexplored the potential of embedded innovation, and there is need to conduct in-depth exploration for refining and broadening the understanding about underlying phenomenon (Rutten & Boekema, 2007). The embedded innovation stresses the importance of developing close ties with the local community and builds the customer loyalty based on mutual trust (Ferrary, 2011). Embedded innovation model guides the modern business enterprises to develop and sustain the meaningful relationships with all stakeholders and innovation providers, and presents a strategically wise give and takes relationship with the customers and local community (Baldwin & Von Hippel, 2011). This model views the engagement with stakeholders as transformational rather than transactional, and guides the organizations to develop a sense of mutual responsibility by focusing on the latent customers’ needs through effective communication (Baldwin & Von Hippel, 2011). However, the lack of adequate exploration has limited the organizations’ ability to adopt embedded innovation model in real world settings (Hafkesbrink, Krause and Westermaier, 2010). 

The underlying research intends to explore the potential of emerging embedded innovation paradigm in improving the organizations functioning in highly competitive markets. Hafkesbrink & Schroll (2011) explored the embedded innovation concept and proposed that this emerging notion is particularly meaningful for small and medium business enterprises, or industries facing the resource constraint issues. Today, the digital economy along with a huge influx of small and medium organizations require innovation researchers to take a step ahead open innovation theories (Hafkesbrink & Schroll, 2011). Mostly, the open innovation has been discussed in context of large organizations that have enough resources and capacity to absorb the knowledge from outside and ensure the inside-out knowledge exploitation and technology transfer. Various successful examples of knowledge absorption strategies from external sources have been discussed by the past innovation researchers (Chesbrough, 2004). Contrarily, the embedded innovation focuses on the knowledge transfer abilities of small and medium enterprises (Hafkesbrink, Krause and Westermaier, 2010).

This innovation model leverages the collaborating nature of organizations during the innovation process when knowledge cycles are highly dynamic and knowledge is widely distributed among innovation actors. Diener and Piller (2010) contend that embedded innovation offers more holistic view as it suits both large and small organizations. On the other hand, open innovation only suits large business enterprises, where management can sophisticatedly manage the whole open innovation process by using open innovation toolkits and lead-user approaches. Big enterprises use the innovation contests to create the adequate gravitational force for attracting innovation providers, whereas, small and medium enterprises lack sufficient resources to leverage the benefits offered by open innovation (Hafkesbrink, Krause and Westermaier, 2010).

The knowledge sharing within the open innovation context relies on the multiple interactions between the innovation actors (Diener and Piller, 2010). On other hand, decentralized and individual small and medium enterprises that share the knowledge must develop multiple interactions with the local community to foster innovation. The organizations seek for a win-win situation by collaborating with the community (Hafkesbrink, Krause and Westermaier, 2010). The knowledge is collectively exploited within communities and networks etc. Diener and Piller (2010) regard the open innovation as a transition from the dis-embeddedness to embeddedness, that is, from close innovation to the embedded innovation. The emerging innovation paradigm develops a collaborative network or cluster of organizations with the local community that is adequately stable and flexible to embed the innovative knowledge and ensure the effective exploitation of collaborative learning within multi-agent system (Diener and Piller, 2010).

            Considering the importance of embedded innovation for tackling the innovation needs of modern enterprises, this study intends to assess the embedded innovation practices of Jordanian telecom organization. The researcher will assess the willingness of telecom management to collaborate with a community and build a network that can facilitate the innovation exchange among different actors. For this purpose, the underlying research has adopted the theoretical framework proposed by Hassink (2001). This framework will be based to conduct the Jordanian telecom sector specific empirical research. The section will also analyse different components of theoretical framework considering existing literature. Here is the graphical representation of theoretical framework adopted by the underlying research:

Proposed theoretical framework of embedded innovation in telecom sector

The theoretical framework has been adapted by the study conducted by Hassink (2001), upon the understanding and nature of the topic which is focused towards evaluation of trends and challenges of the telecommunication sector of Jordanian Telecommunication sector. The main variables of the study were research and development, skill qualification and core competency, business environment and innovation support system. Therefore, upon the understanding of the variables, the following theoretical framework has been designed, where the variables has been discussed in an in-depth manner in literature review section.

Litrature-review-sample-picture-5

Source: ( Adapted Hassink, 2001)

Critical Evaluation of Hassink Model

The Hassink framework is based on regional innovation support systems which have been adopted in South Korea. The framework was focused around four factors termed as product environment, internal factors, research and development and lastly the innovation support system. This framework has been used in the country of South Korea for the regional innovation. This framework was applicable for different industries who are operating as the SME-oriented companies focused on innovation support policies in South Korea. The framework emphasized on strengths of Korean SMEs and their innovation support which has been previously judged in the study Nugent (1994). The central idea which has been proposed in this framework is focused on the innovation and the spatial level of influences which innovation had on its sub-factors. The positive thing about the model is that it highlights that regional authorities plays a significant role as compared to international and national authorities when it comes to the embedded innovation. Furthermore, the author has highlighted that the embedded innovation support system is clearly related to the regional development in South Korea along with their SMEs. Moreover, the framework has presented that the dirigiste system can be successful for the investment-driven stages when the country can achieve economic development which is mainly dependent on the large enterprises. Furthermore, the support for South Korean SMEs towards embedded innovation is focused on replacing the outdated systems from the country. However, the framework is only focused on South Korean region which can further be intensified by considering other countries with respect to their SMEs. However, this framework has helped in understanding overall significance of embedded innovation because it covers every aspect which is related to innovation which is research and development, production factors, environment and internal factors. The most important aspect is the research and development because the innovation cannot be possible without an effective research and development which eventually leads to successful innovation of the organization. Furthermore, the model has provided with the guidance to the embedded innovation which helps in mastering the economic crisis and the factors which helps in bringing innovation driven growth of the firm. In addition to the above statement, the embedded innovation support system plays a significant role in the enhancement of innovation policies. The study has employed this framework to highlight the challenges faced by the Jordanian telecom industry in establishing diversified relationships with multiple environmental actors. This is the framework for firm-level innovation at an organisation where the main determinants are research and development, business environment, innovation support system and the competency of the company.

 

The main research aim is to enhance the competitiveness of Jordanian telecom industry and ensure its survival in highly turbulent global telecom market by embedding the innovation and developing a positive environment to facilitate the innovation. Review of literature has identified that there is lack of adequate empirical evidence to explore the factors affecting the innovation within Jordanian telecom market. Various research studies have analysed different aspects of Jordanian telecom sector, such as Shanikat (2008) analysed the change in the organisational structure after the privatisation of Jordan telecom industry. Khasawneh, Regan & Gillard (2011) analysed the adoption pattern of Jordanian telecom customers and overall diffusion of innovation in Jordan society. However, the researchers didn’t focus on the telecom organisations and challenges faced by them while diffusing the innovation into their business operations.

Hajir et al (2015) analysed the role of knowledge management infrastructure in enhancing the Jordanian telecom companies’ innovation practices. This research study has offered useful insights as researchers highlighted different factors affecting the innovation diffusion including overall physical environment, technological advancement, human resource practices, overall organisational structure and culture. The researchers concluded that Jordanian telecom organisations must develop an efficient knowledge management infrastructure and should invest in information technology for fostering such innovative environment. The researchers further contended that efficient knowledge management infrastructure is a must for integrating innovation and sustaining competitive edge in the long-run. However, the study didn’t adopt a holistic approach to understand the role of different factors affecting the innovation embeddedness in Jordanian telecom market. Moreover, researchers were unable to get an adequate response from the firms due to privacy issues. Quantitative research nature further hindered the researchers’ ability to get in-depth insights. Insights were only taken from the management that weakens the reliability element. The study suggested the future researchers to adopt a holistic view while exploring the factors affecting the innovation within Jordanian telecom sector and overcome these limitations.

Hence, the underlying research has decided to employ the framework offered by Hassink (2001) as it includes different elements and presents a 360-degree view of the overall innovation environment. The framework guides researcher to collect data from multiple environmental actors, such as management customers and government officials and avoid relying on single data source to strengthen the reliability.  The firm innovation model was basically proposed to enhance the innovation practices of South Korean businesses. The model helped the South Korea’s initiatives to foster the innovation-driven growth and develop an innovation-supportive infrastructure.  Review of literature has suggested the lack of sufficient empirical evidence for exploring the factors affecting the firms’ innovation in Jordanian telecom industry. Although, some researchers have analysed the impact of some factors on innovation system, mostly the studies have either focused on the firms’ internal factors such as organisational structure, organisational culture, or have analysed the customers’ attitude towards innovative mobile devices (e.g. İzadi, Zarrabi & Zarrabi, 2013).  It suggests the need to adopt a holistic view and analyse the effect of multiple environmental factors of firms’ innovativeness. The Embedded Innovation paradigm proposed that social embeddedness occurs because of complex linkages among environmental actors, and is facilitated by the efficient knowledge flow within the society (Simanis & Hart, 2009). Hence, the current research has chosen this model to explore the innovation embeddedness of Jordanian telecom industry. Different dimensions of proposed model will be applied to the Jordanian context to highlight the motives, perceptions and challenges faced by the Jordanian telecom market players. Moreover, application of this model will also enable the researcher to adopt a holistic view and understand the interconnectedness among diversified stakeholders.

As mentioned earlier, although, review of literature also reveals other models to study the factors affecting the firm innovation, however, they lack some important dimensions and don’t offer the complete view. For example, İzadi, Zarrabi & Zarrabi (2013) assessed different firm innovation models to evaluate the innovation system. The paper critically analysed the strengths and shortcomings of these models. Based on critical analysis, the researchers contended that chief contribution of such firm innovation models is that they assisted many countries in formulating effective, innovation-supportive strategies. However, innovation literature suggests that there is lack of adequate empirical evidence to support the theoretical underpinnings of these models. Among different models proposed by different researchers, this research has chosen the Hassink (2001) firm innovation model due to its inclusiveness of all major factors.

This section will explore the dimensions of the proposed framework in context of Jordan, and along with its application on the global level to extract important insights and widen the background information so that strong theoretical foundation could be set for conducting the empirical research. The framework can be applied to the organisations in the global level for increasing their efficiency towards the embedded innovation system.

Innovation support system

Innovation literature highlights the increasing influence of environmental factors in supporting the innovation (Lee et al., 2014). The innovation system depends on various factors such as government’s policies towards entrepreneurship, technology transfer and advice agencies, current state of entrepreneurship and country’s industrial, technological and regional development (Dutta & Lanvin, 2012).  This research will analyse the Jordanian government’s policy framework and ability of Jordanian telecom organisations to devise and implement innovative policies. Researchers propose that a shift from labour intensive, low technology, mass production industry to high-tech, skill and capital intensive industry is important to support the regional innovation system (Lee et al., 2014). In an innovation-supportive environment, government as well as organisations emphasise on a decentralised governance at national and firm level (Dutta & Lanvin, 2012).

The current pace of Jordan towards such innovation supporting environment is slow but steady. Recent studies on the Jordanian innovation support system suggest that country is facing difficulties in integrating the innovation and its national innovation system is inefficient and underdeveloped (Abuhamad, 2014). Researchers contended that country’s national innovation system is suffering from inadequate coordination among different components (Sultan & Soete, 2012). To develop an efficient innovation support system, the country requires to open-up towards global knowledge, make important reformations in the universities, invest on research and development activities, upgrade the research and development infrastructure, establish incubation systems and facilitate the knowledge transfer to embed the innovation into corporate environment (Sultan, 2010). Such innovation embedded national and organisational culture can play significant role in the national and regional economic development (Abuhamad, 2014).

Researchers also recommend that Jordan needs to build a comprehensive knowledge network, formulate an effective innovation policy, develop its human resource and promote information and communication technologies to support such culture (Sultan & Soete, 2012).  Nation’s competitiveness doesn’t rely on a single company or an industry, but on overall innovation system of all major industries. Stimulating innovation and research is one of major tasks of national economic development. An innovation embedded organisational and national culture not only enhances the performance of a single sector, but in the long run, it results into full employment, sustainable economic development and positive balance of payments (GTZ, 2009). The underlying study will empirically analyse the Jordan’s organisational and national innovation support system and its impact on the telecom industry.

Overall, the current situation of the Jordan’s national innovation support system is not satisfactory to facilitate the transformation towards the emerging innovation 3.0 paradigm. The Embedded Innovation paradigmstresses the need of collective learning and social embeddedness that mainly depends on the untraded interdependencies and tacit knowledge (Boyer, 2003). Resultantly, a dialectical association formulates between the space and innovation. However, such interconnectedness is dependent on the institutional, cultural and social realm for successful innovation (Simanis & Hart, 2009).  Various studies have identified conditions and factors affecting the socially embedded firm innovation, such as industry nature, industry competitiveness, technological advancement, communication and knowledge-sharing processes, government support and expenditure on research and development activities (Crescenzi & Rodríguez-Pose, 2011). In context of Jordan, above discussion suggests that lack of comprehensive knowledge framework, inadequate institutional support, risk averse attitude of financial institutions and inadequate research and development expenditure erect barriers towards such socially embedded innovation (Sultan & Soete, 2012). Hence, empirical research is required to highlight the benefits that this emerging innovation paradigm can offer to businesses and overall society so that Jordanian government and telecom organisations can be convinced to revise their strategies and facilitate the industry’s transformation towards new paradigm to preserve its competitiveness at local and regional stage.

Research and Development infrastructure and policies

Recent initiatives taken by the Jordanian government such as free trade agreements and development of strategic commercial partnerships with the neighbouring countries (Turkey and USA) have supported the national innovation system of Jordan (Sultan & Soete, 2012).  The country also availed membership of Agadir FTA and is heading towards breaking the barriers to sustainable economic development (JMoP, 2011). Moreover, the foundation of University of Jordan in 1962 and development of industrial research centre were the milestone achievements in strengthening the national innovation system. The government has also developed 5-year national research strategic plan to strengthen the research and development activities (HCST, 2011).

Last few decades have observed an increased interest of Jordanian government towards promoting information and communication technologies in different sectors (Jordan ICT Forum, 2010). These recent developments have resulted into increased digital penetration improved education and a stimulated demand for different internet services. The initiatives have directly affected the Jordanian telecommunication sector. However, more initiatives are required to address the challenges faced by the Jordanian business environment and ICT industry (Sultan, 2010). Although, mobile penetration has increased during last few years but telecommunication services are not well-developed, penetration lacks redundancy and broadband internet access is highly expensive. Many Jordanians still cannot afford to own a PC or an expensive mobile device (Moh’d Al-adaileh, 2009).Regulatory and legal hurdles also hinder the innovation and ICT integration in different sectors. The Jordanian government lacks a mature vision and understanding of ICT. UNESCO (2010) reported that Jordan’s high-tech exports are very low compared to other manufacturing exports.  High technology is an essential element for fostering the innovation, stabilising the inward foreign direct investment and overall economic development (Sultan & Soete, 2012). 

An innovation embedded environment enables the flow of information and technology among different environmental actors for the betterment of organisation, stakeholders, community and overall country (Bozzola, Swanson & Ting, 2016). The interconnectedness among institutions, enterprises and people is key to embedded innovation (Sultan & Soete, 2012).  Innovation researchers propose that technology and innovation development is the outcome of complicated web of relationships among different system components, including research institutes, government, universities, business enterprises and regional community (Antonioli, Mancinelli & Mazzanti, 2013). Results of some empirical studies suggest that Jordanian government officials are well-aware of the need to embed the innovation and improve national innovation system by facilitating the technology and knowledge flow within the system (Sultan & Soete, 2012).  The lack of coordination among different ministries and government institutions hinder the actors’ ability to implement their own innovation programs. Some analysts contend that lack of documented innovation policy can be a reason behind lack of innovation in Jordanian business environment (Sultan, 2010).

The heterogeneous research and development framework of Jordan comprises many private and public universities and the main focus of R&D projects is on ICT, nanotechnology, biotechnology, energy and water (Akash et al., 2016). Technology transfer is under-developed. Interestingly, Jordan has highest number of researchers in Arab world and is among 3 Arab countries in terms of research publications (UNESCO Science Report, 2010). However, inadequate technology transfer hinders the researchers’ innovative abilities. Current Jordanian research centres like National Energy Research Centre and Princes Haya Biotechnology Centre face financial challenges due to lack of adequate support from institutions (GTZ, 2010). Jordanian incubators network is flourishing but is only producing a moderate result. There is inadequate financial support and young entrepreneurs migrate at a later stage for better earnings (Sultan & Soete, 2012). 

Business environment and embedded innovation

Overall business environment and competition nature in different industries also affect the innovation system. When businesses adopt red ocean competition strategy, the negative competitive barriers hinder the innovation process (Sultan & Soete, 2012). Whereas, blue ocean strategy enables the businesses to cooperate with each other and develop a web of networks to foster innovation. Analysis of Jordanian business environment reveals that Jordanian economy heavily relies on the small business enterprises. Ministry of trade and industry proposes that 92 percent of Jordanian business enterprises are micro firms, 7.4 percent are small and medium firms and only 0.6 percent are large enterprises (MIT, 2011). Various studies have confirmed that Jordanian business environment lacks the innovation and small firms resist adopting innovative practices. Studies also confirm that region’s political system doesn’t support the innovation and Jordanian business enterprises mostly lack the financial support and technology oriented human resource (Sultan, 2010).

In 2010. Jordan was ranked as 100 out of 183 for business activities, it was ranked 127 for getting credit and 125 for starting business. Jordanian entrepreneurs mostly face the capital and risk related problems. Strict budget constraints discourage most of institutions from supporting the entrepreneurs. Jordanian engineers’ association and chamber of commerce experts stressed the institutional support for inculcating innovation (Abuhamad, 2014).  Some analysts confirm that Jordanian chamber of commerce provides adequate support to other institutions and arranges training programs for financial, legal and management affairs (Sultan, 2010). However, on overall environmental analysis suggests that business environment needs to embed innovation for achieving economic efficiency (Sultan & Soete, 2012).  The economy of Jordan mainly relies on its service sector that constitutes around 67 percent of the gross domestic product. Rest 33 percent is divided into industry and agricultural sector with respective proportions of 3 percent and 29 percent respectively. The Jordanian government shows a vigorous attitude towards incentivising the business and foreign investment growth. Recently, the influx of around 800,000 Syrian refugees have further increased the pressure on Jordanian economy, stressing the need to increase current business efficiency.

Talking about the business environment of Jordanian service sector, a recent report published by the Schiff, Schmidt & Troncoso (2015) suggest that despite government rigorous initiatives to promote and stabilise the business environment, the region has yet to develop an innovation supportive environment. Schiff, Schmidt & Troncoso (2015) further contended that incremental process improvements in key business sectors can push-up the Jordan’s ranking in terms of healthy business environment.  Almahamid, Awwad & McAdams (2010) report that Jordanian business environment has badly affected from last three decades due to major fluctuations in the global economic and business environment. However, the region has some core strengths whose effective capitalisation can bring major progression in Jordanian economy (Almahamid, Awwad & McAdams, 2010).

Overall, the Jordanian business environment doesn’t provide enough support for socially inclusive embedded innovation. Research evidence suggests that Jordanian business sector adopts risk averse attitude, particularly the financial institutions that consequently affect the firm innovation. The application of embedded innovation paradigmimposes significant challenges when organisations are inflexible, government is not supportive and financial institutions hold a highly risk-averse attitude. Unfortunately, the Jordanian business environment is characterised by all these factors. Analysts have repeatedly suggested the Jordanian government and market players to revise their business strategies to ensuring long-term survival. For example, Elsheikh, Cullen & Hobbs (2008) contended that Jordanian telecom sector lacks the innovation, and is still employing the outdated business practices. Such unwillingness towards innovation integration can cause serious problems for industry in future.

However, literature also identified some studies, which report that Jordanian telecom organisations have started taking knowledge creation initiatives to foster the innovation and build an effective knowledge sharing framework. For example, Kanaan & Gharibeh (2013) conducted an empirical investigation and reported that Jordanian telecom organisations are actively engaging with the employees to conduct the productive knowledge and information sharing activities. The research also reported a direct positive effect of knowledge sharing activities on the employee satisfaction, and consequently improved organisational performance (Kanaan & Gharibeh, 2013). The underlying study derives the motivation from these results as if collaboration with the employees for innovation integration and knowledge creation can offer positive results, then effective collaboration with the stakeholders for innovation embeddedness can not only enhance the firm performance, but can also improve the industry practices, consequently resulting into substantially increased contribution towards local and regional economic development. Currently, the telecom market has already achieved maximum adoption rate and opportunities for the market players have significantly declined due to decreased growth chances. Hence, the embedded innovation is not an option, but has become a requirement in highly saturated Jordanian telecom industry (Alomari & Elrehail, 2013).

Internal factors

A brief analysis of Jordanian telecom market has been described in next section to highlight the internal factors affecting the innovation embeddedness. The underlying study will conduct a comprehensive empirical analysis to understand how these factors are playing their role in heading towards innovation 3.0.

Skills, competition and strategies within Jordanian telecom market

The country has an abundance of information technology specialists whose skills are yet under-capitalised by business sector (Almahamid, Awwad & McAdams, 2010). Interestingly, Jordanian economy is considered as among most open economies in North African and Middle East region. It has resulted into emergence of non-traditional business sectors such as tourism, telecom and information technology. Despite such valuable assets, the country still needs to take effective initiatives for creating a healthy and innovation supportive business environment (Schiff, Schmidt & Troncoso, 2015).

Zabadi (2016) recommended the Jordanian firms develop multiple communication channels and integrate sustainability by collaborating with the community to ensure their survival in highly competitive global telecom industry (Zabadi, 2016). Developing telecom sector of Jordan that is already facing resource constraints should devise innovative knowledge management strategies to deal the economic and environmental challenges. Hajir et al., (2015) contended that knowledge management infrastructure has a significant effect on the innovation and recommended future researchers to conduct an in-depth investigation and explore other factors affecting the firm’s innovation practices (Hajir et al., 2015). The underlying research will fill this gap and focus on identifying different factors that affect the embedded innovation in Jordanian telecom market.

In contemporary era, the telecom sector has gained significant importance for the national economic development and makes a substantial contribution to the gross domestic product (Hardan & Shatnawi, 2013). In Jordan, the industry is among the most competitive business sectors at local and regional level. The increased importance requires market players to build multiple ties with the environmental actors and embed innovation into business processes for preserving competitiveness. The sustainability of the Jordanian telecom market depends on the telecom operators’ ability to develop a connecting web among stakeholders and ensure financial stability. Alomari & Elrehail (2013) shared the statistics of telecommunication regulatory commission, which report that Jordanian telecom market is losing its ability to grow its revenue as penetration rate has exceeded 120 percent. Considering these statistics and intensifying competition within the industry, the telecom operators must revise their traditional business strategies and embed the innovation to ensure the long-term survival. Hardan & Shatnawi (2013) reports that Jordan holds the 1st rank according to the competition index followed by Saudi Arabia, Palestine, Oman, Egypt, Morocco, Iraq, Tunisia, Yemen, Bahrain, Algeria, Sudan, Mauritania, Kuwait, Qatar, UAE, Syria, Libya and Lebanon (Hardan & Shatnawi, 2013).

Innovation as core competency

Review of literature identified various studies that explored how Jordanian telecom organisations are using the innovation as a tool to enhance their competitiveness in the market and bring operational efficiencies (Zabadi, 2016).Although, studies have focused on different organisational dimensions and haven’t adopted a holistic view, almost all have contended that organisations are seeking ways to sustain the competitive advantage through innovative business practices. For example, Alamro & Rowley (2011) conducted an empirical investigation and reported that Jordanian telecom organisations are adopting innovative branding strategies to attract the customers. Although, the study specifically focused on the branding, based on semi-structured interviews with telecom senior management, the study concluded that effective branding strategy depends on the firms’ ability to adopt a holistic view, build open relationships with the stakeholders to get important knowledge and focus on multiple dimensions, such as brand architecture, brand values, brand identity, brand personality and brand positioning (Alamro & Rowley, 2011). The researchers specifically highlighted the importance of opening multiple communication channels and integrating innovation into business operations for formulation of successful branding strategies in telecom market. Opening of multiple communication channels, developing open relationships with multiple stakeholders and adopting the holistic view are among the most important principles of embedded innovation.

Another study conducted by Hajir et al., (2015) proposed that Jordanian firms’ innovation embeddedness relies on their ability to integrate the advanced technology and refine their knowledge management abilities. The researchers agreed with Alamro and Rowley (2015) by commenting that building close relationships with stakeholders is highly important for sustaining the position in the market. The study identified some factors that directly affect the firms’ ability to integrate innovation and build an innovation supportive knowledge management infrastructure, including organisational structure, workplace environment, communication with the stakeholders and technological advancement (Hajir et al., 2015).   However, Al-Hyari, Al-Weshah & Alnsour (2012) and many other studies report that Jordan has weak financial support system for the development of new business enterprises. Firms face strict financial constraints that hinder their ability to adopt innovative solutions to existing challenges. The Jordanian government must formulate effective policies to develop the financial support system for innovative ventures. Reports further suggest that financial grant for the capital-intensive firms is very limited (Sultan & Soete, 2012).

Jordanian banks are highly risk averse and conservative while making investment decisions. The ineffective current legislations resulted into underdevelopment of venture capital instrument. These factors also affect the telecom organisations and discourage them from making radical, innovative decisions (Sultan & Soete, 2012). A shift towards embedded innovation requires radical change in the thinking and decision making pattern of organisations. To make this happen, the government and overall environmental support is crucial. It is not only the problem of big market players, but have badly affected the start-up firms (Noordhoff et al. 2011).These challenges also affect the managements’ ability to incur substantial expenditure on research and development activities, which is crucial for the successful transformation towards emerging innovation 3.0 paradigm, that is, embedded innovation (Sultan & Soete, 2012).Al-Hyari, Al-Weshah & Alnsour (2012) reports that currently, the public funded programs for the corporate research and development activities are insufficient. These are among the main reasons why Jordanian telecom industry lacks the innovative practices despite highly competent human resource, increased penetration rate and integration of advanced technology (Alamro & Rowley, 2011).