Category: Innovation

Summary

The article focuses on how innovation is beneficial during the financial crisis. Mary Sullivan asserts that smaller financial organizations stand to benefit from larger financial organizations in such crisis (Sullivan 2009, p. 30). During such occurrences, banks are required to implement innovative ideas to maintain future earnings’ growth. For instance, they should look beyond capitalizing on customer attrition from weakened competitors (Sullivan 2009, p. 31). Because innovation is paramount, banks should move with haste to embrace it. The author asserts that organizations with conservative management histories will find it hard to adopt innovation. As such, the article alleges that the measures and processes put in place by banks to enhance safety suppress innovation processes. To overcome this challenge, banks should acknowledge the significance of innovation and come up with a means of synchronizing it with controls in a bank’s culture (Sullivan 2009, p. 30). Organizations stand to benefit if they analyze how successful companies make innovation possible.

In the last part of the article, the author focuses on the most innovative organizations in the world. The organizations are Team Obama, Google, Hulu, Apple, and Cisco Systems. For instance, the author asserts that Team Obama made tremendous achievements during the year 2009 (Sullivan 2009, p. 31). The article attributes this success with the team’s ability to integrate social media into their campaigns. In this regard, the author advises bank managers to adopt social media as a marketing tool.

Key learning points

I agree with a number of key messages presented in the article. Based on the messages, it is apparent that the success of the top successful organizations is attributed to their innovations (Sullivan 2009, p. 30). During a financial crisis, organizations must implement several changes to cushion them from its adverse effects. Because changes have always affected the manner in which organizations offer their services or products, innovation will be evidenced by how they will use their knowledge to tackle the challenges. During such times, the affected companies should either choose to augment their competencies using the existing knowledge or adopt radical technologies that make the existing knowledge outdated.

By adopting innovation, organizations may acquire new market shares, come up with new services and products, gain a competitive advantage over their rivals, and gain more profits. In the article, the author has highlighted the top five innovative companies during the year 2009 (Sullivan 2009, p. 30). Notably, during the same year, the global economy was undergoing a financial crisis. The five companies managed to succeed, unlike their rivals, because they embrace innovation. The author points out that Google has been successful in the past few years due to its innovative abilities. The article alleges that the company’s lab has over 60 innovative ideas at a time (Sullivan 2009, p. 31). The other company that has thrived due to innovation is Apple. With its innovative products, the company has been able to dominate the American mobile phone market for several years.

Relevant statements to the session

I feel that the points made in the article are relevant to the Middle East and in particular the UAE. For the last few decades, socioeconomic and political developments in the UAE have made the country to be one of the most successful nations in the Gulf region (Khondker 2009, p. 45). The developments have been made possible by the boom in the oil industry. Expansion in the oil and service industries has resulted in huge infrastructure developments and attracted multinational companies in the region. Given that the country’s economy is largely depended on oil, the country will face enormous financial challenges once the resource is depleted in the near future.

Therefore, the government and the companies operating within the region must be innovative to thwart such possible challenges. The government is informed of the impending challenges and has put in place innovative measures to overcome them. As such, the UAE’s government has heavily invested the returns from the oil industry in the hospitality industry (Khondker 2009, p. 45). Once the oil resources are depleted, the tourism industry will take over to be the leading source of revenue for the country. Equally, corporations operating within the region must be ready for such times. For instance, companies that have invested in the oil industry should be innovative and invest in renewable sources of energy. Through this, they will be able to secure their future.

Just like Qatar and Oman, the country is currently faced with numerous human resource challenges (Khondker 2009, p. 45). To secure its future’s stability and solve the ever-increasing human resource challenges, I believe the country must embrace innovation. Through this, the country must enhance the skills of its citizens, promote their employment opportunities, and retain its expatriates. To ensure that the country increases its job opportunities and at the same time, retain its expatriates, innovative ideas must be put in place. Based on these illustrations, it is apparent that the points illustrated in the article have many benefits to the UAE and the Middle East.

Critical analysis

The lessons of the article are relevant in my organization. In this regard, they should be adopted. If adopted, my organization will lessen its operation cost, enhance new ideas leading to improved services, reward employees with outstanding achievements, and provide continuous training and development to staff.

Despite its effectiveness, the implementation of the lessons will experience numerous challenges. More often, innovation initiatives in my organization are viewed with suspicion. Notably, the adoption and use of new technologies without appropriate evidence to support the technologies are viewed as a problem rather than a solution. Unlike in other organizations, innovation in our organization is not fully supported. Therefore, my organization must tackle these challenges to spur innovation. As such, its stakeholders should develop a culture of innovation, focus on the culture, provide incentives, and let the managers guide innovation. The organization must advocate for innovation starting from its top positions. Department leaders must put in place appropriate and effective structures to encourage innovation among their staff members.

Practical implications

I would recommend new firms to adopt the lessons because they will be of benefit to them. When recruiting their employees, firms should give priority to innovative applicants. Equally, firms should appoint innovative leaders. Thereafter, the leaders should be provided with suitable training for them to manage their fellow employees and ensure that suitable leadership styles are implemented. Similarly, the firms should appoint chief innovation officers to supervise day-to-day tasks. By doing so, the firms will be in a position to prompt and integrate innovation (Gault 2010, p. 67).

While new firms can spur innovation through innovative leadership, they should also ensure that they develop a favourable environment for innovation to thrive. It is a fact that most people resist change, so every organization should strive to create an environment that promotes change. Contrary to the past organizational cultures that allowed workers to work under minimum supervision, the developed environment should allow employees to uphold the culture of innovation.

In addition, new firms can resort to the use of financial incentives to encourage innovation among their employees. Contrary to the common belief, these approaches will eventually encourage innovation, reduce costs, and improve on the quality of services (Roessl & Kessler 2010, p. 203). Therefore, managers should use incentives to alter the organizational environment. According to human resource experts, innovations are triggered through rewards (Barge-Gil 2013, pp. 590). Through incentives, people can be encouraged to think and come up with solutions to complex challenges in their daily tasks. In this essence, new firms and established firms should come up with appropriate compensation methods. For instance, innovative employees can be rewarded through bonuses and job promotions. Above all, all firms should acknowledge the significance of innovation.

Learning reflections

By a great extent, this exercise has been very useful. The exercise has taught me how the ability to innovate is paramount in all organizations. Through the article, I have learned how organizations can manage to be successful in times of crisis. Based on the exercise, I noted that no financial institution made it to the top 50 list of successful organizations in the year 2009. By adopting innovation, banks may acquire new market shares, come up with new services and products, gain a competitive advantage over their rivals, and gain more profits.

References

Barge-Gil, A 2013, Open Strategies and Innovation Performance. Industry & Innovation, vol. 20. No. 7. pp. 585-610.

Gault, F 2010, Innovation strategies for a global economy: development, implementation, measurement and management, Edward Elgar, Cheltenham, UK.

Khondker, H 2009. Social change in the United Arab Emirates challenges of migration and Emiratisation. Middle East Institute. Singapore.

Roessl, D., & Kessler, A 2010, The role of research and technology organizations in innovation processes of small and medium-sized enterprises. The International Journal of Entrepreneurship and Innovation, vol. 11. no. 3, pp. 199-207.

Sullivan, M 2009, Post Crisis Innovation Will Rule. ABA Banking Journal, vol.101. no. 4. pp. 30-31.

Introduction

For a long time, services innovation has been ignored as compared to manufactured product innovation (Rubalcada, 2010). The services sector contributes to a large percentage of the Gross Domestic Products (GDP) of many countries across the world. Innovation is largely embraced in the manufacturing and technology sectors with little or no emphasis on service innovation (Rubalcaba, 2010).

Traditionally, lack of service innovation is based on the perception that services have no tangible value; therefore, it is assumed that services have little or no innovation is necessary for the services.

However, with the continued integration of goods and services in the modern economies, services innovation is essential for businesses in creating customer focussed approach in the realization of superior value of their products. Service innovation is vital in the improvement of customer experience with the business products (Rubalcada, 2010).

Service innovation

There are fundamental differences between innovations done by manufacturing firms and innovation done by service by service firms. Technology is extremely beneficial in innovation of products by manufacturing firms. To produce superior products, manufacturing firms need to carry out intensive research about the changes to be made in the products that are essential in generation of higher revenues.

At the same time, the firms should have sound technology in order to create a superior product (De-Jong, Bruins, Dolfsma & Meijaard 2003). The product innovation process requires a large capital investment to develop a new product that has unique features that are hard to imitate. Product innovation has to deal with product characteristics during the innovation process.

Innovation has accelerated the differentiation of various products in the global markets. Many companies have developed differentiated products by applying innovative strategies. Therefore, innovation is very important in differencing products, and improving the level of customer satisfaction (De-Jong, Bruins, Dolfsma & Meijaard 2003).

Service innovation differs significantly from product innovation in that it does not require much research and development to be carried out. Services innovation is non-technological and therefore requires less money to undertake the process.

Additionally, service innovation involves minimal changes in the procedure of service delivery as compared to product innovation that require substantial changes in product characteristics (De-Jong, Bruins, Dolfsma & Meijaard 2003). Innovation in services there is little distinction between the product itself and the process whereas in manufacturing takes two forms that is goods and the process itself.

According to Bitner, Ostrom and Morgan (2008), customers are involved in firms’ service innovation and delivery. During the design of service innovation, firms should understand the outcome of the service to the customer and the long run effect on the customer behaviour towards the service. Services innovation changes should involve development of marketing, operation, and delivery of channels that are valued by the customer (Bitner, Ostrom & Morgan, 2008).

According to their analysis, Bitner, Ostrom and Morgan (2008) found out that customer involvement in service innovation and service delivery is crucial in the retention of the customers. Firm internal customer service is critical in achieving the core service delivery to the customer.

They recognize the importance human resources in services innovation more than product innovation because the intangible attributes of services. They are of the opinion that service innovation is more varied and complex hence requires the input customers for it to be successful (Bitner, Ostrom & Morgan, 2008).

The above arguments by Bitner, Ostrom and Morgan about the importance involving customer in service innovation and delivery seemed to support earlier argument by Debackere and Van Looy that customers are more involved service innovation and service delivery than product innovation.

The two argued that customers are more involved in service innovation since services changes more radically as compared to products. They claimed that product innovation is not as heterogeneous as the service sectors because customers are just external variable that need to be considered in product development but the real innovation is internally made.

The claims by the Bitner, Ostrom, Morgan, Debackere, and Van Looy (2008) that the customer is more involved in service innovation and service delivery are agreed upon. The customers need to be involved more in service innovations since service innovation is less costly than product innovation.

The services are going to be directly felt by the customer hence justifying their involvement. Services are also offered directly to customers therefore customer involvement is necessary. The intangible and distinctive natures of services necessitate the involvement of customers more than product innovation.

The blueprint techniques offered by Bitner, Ostrom and Morgan allow organizations innovate successfully. The blueprint technique offers guidelines on how organizations can go about innovating services and services delivery. It gives an organization a common point on which to discuss services innovation by focusing on customer, managers, and employees. The blueprint provides an innovation platform on which organizations can codify potential innovation roadmap for future innovations.

Furthermore, the blueprint enables organizations to realize the roles and interdependences that different components in the innovation process have to play for the success of the entire process. Bitner, Ostrom and Morgan offer organization strategies of how they can identify and rectify gaps in the innovation process and the general understanding of innovation experiences.

The blueprint gives an illustration of how different companies have dealt with service innovation and service delivery. These examples are appropriate for the Company to use as benchmarks in the process of service innovation.

The blueprint technique is seen more appropriate to derivative innovation than to the breakthrough innovation projects. The technique is ideal for any organization that is pursuing innovation since it outlines the various steps that the organization can take as innovates. The technique is adaptable and offers practical applications that can be adopted by different firms undertaking innovation.

Conclusion

The services sector has over the year positively contributed to economic development of many economies across the world. The sector rapid growth as compared to manufacturing industry serves as a wake-up call for more innovation in the sector. However, innovation in the service industry has been ignored.

This indicates that there is need to embrace innovation in the service sector to promote its growth. As presented by Bitner, Ostrom and Morgan, organizations that embrace services innovation are bound to reap enormous benefits in both short term and long term. It is dues to increased service innovation in the services sector that the modern economies are witnessing the growth and development.

Well structured innovation in all field, especially in the services sector is bound to accelerate economic growth and development of many countries in the world today. This is achieved through increased customer satisfaction, customer loyalty and variety of services for customers to select. Innovation should be encouraged in the service sector to improve the performance of other sectors of the economy.

Reference List

Bitner, M, J, Ostrom, A, L & Morgan, F, N 2008, ‘Service Blueprinting: A Practical Technique for Service Innovation’, California Management Review, vol. 50, no. 3, pp. 66-94.

De-Jong, J J P, Bruins, A, Dolfsma, W, & Meijaard J 2003, Innovation in service firms explored: what, how and why? Web.

Debackere, K & Van Looy, B 2003, ‘Managing innovation in a service environment’, in Van Looy, B, Gemmel, P & Van Dierdonck, R (eds.), Services management: An integrated approach, 2nd ed., Financial Times Prentice Hall, Harlow, England, pp. 404-426.

Rubalcaba, L 2010, “On the differences between goods and services innovation” Journal of Innovation Economics Vol. 1 no. 5, pp. 17-40

The two videos locate the centrality of innovation and creativity in facilitating the economic growth and development of the Arab world. The speakers in the videos not only underscore innovation as a vehicle for achieving sustainable economic and social development in the region, but also acknowledge that innovation remains the single most important path towards growth, progress, and a better tomorrow for individuals, business enterprises, healthcare organizations, learning institutions, and government agencies.

This paper analyzes the two videos with the view to discussing some of the most important trends for the UAE that may appear in the next five years and how these trends will provide opportunities and threats for large and small companies in the country.

Most Important Trends

From the videos, it is clear that the UAE is likely to achieve significant growth in core areas of business, education, health and environment, as well as Islamic Banking and Finance if the various proposals discussed by the speakers are implemented. In business, we are likely to see the growth of organizations that are driven by quality concerns and innovative business practices for optimal growth and competitiveness.

In the next five years, businesses are more likely to do away with traditional management approaches and adopt innovative approaches such as quality management in e-Services, intelligent quality management, and green marketing. The business agenda may change from a focus on profit realization to investing in manpower resources, developing the right skills mix, and investing in intangible organizational assets. Such innovative investments will ensure that businesses benefit in the long-term and are able to attain sustainability in the pursuit of profits.

Another important area discussed in the videos is that of public management. If the proposals are implemented, we are likely to see a shift from government bureaucracy and wastage to a focus on national competitiveness, public service excellence, and increased collaboration between the government and the private sector to drive the innovation agenda forward. The government will become the engine of innovation, playing significant part in changing the beliefs and values of its citizens toward achieving a more innovative environment.

The components of Islamic economics, finance, and banking are likely to achieve phenomenal growth in the next five years if innovative management approaches are adopted to control risk and develop new products. In health and environment, it will be possible to integrate the rapid growth of knowledge and innovative technologies to come up with world-class health facilities and ensure that the UAE leverages its position as a global healthcare provider. Lastly, the UAE will become a global hub for education excellence and research with the capacity to personalize learning experiences and provide superior quality education.

How Trends will Provide Opportunities and Threats for Large and Small Companies

The discussed trends will provide opportunities for large and small companies in terms of

1. ensuring government support in efforts aimed at expanding the economy,
2. ensuring the availability of qualified human resources to run businesses,
3. marketing the UAE as a global destination and hence increasing the profitability and competitiveness of large and small companies,
4. satisfying customer needs and expectations through the use of innovative approaches, and
5. developing new markets for products and services.

The threats include stiff competition, high investments that may be required for organizations to fit in the trends, loss of customer segments to other innovative brands, significant price reductions for products and services, and highly knowledgeable markets that may refuse to accept certain products and services. Small companies face the threat of being driven out of business by large corporations if they fail to make the investments needed to be effective in the new business environment.

Executive Summary

Mobile apps and other modern computing methods have led to a rapid shift toward the digital-driven economy. Smartphones are specifically important in this paradigm shift, and the Android platform is a critical player in the smartphone sector. This report explores the Android platform using Rogers’ Diffusion of Innovation Theory to demonstrate its success and possible drawbacks. Android platform success is mainly attributed to the open-source approach and free license adopted by Google to promote innovation and mass adoption. Android platform is most likely to continue to grow, but Google must carefully evaluate threats from its fragmented nature. Nevertheless, it remains one of the most important pieces of innovation that is driving the digital economy while disrupting traditional practices in entrepreneurship.

Introduction

Digital Economies are dynamic and, thus, invention and innovations are crucial for their sustained success. Further, the concepts of digital humanities and digital research infrastructures are exceedingly growing. This report applies the Rogers’ Diffusion of Innovation Theory on Google’s Android platform to explain its success. Android platform is a customarily used digital product that has gained popularity over a short period. Therefore, its relevance in the study of business innovation in digital economies is apparent.

The fact that android is globally used with colossal success rationalizes its selection as the subject of study in business innovation in digital economies. Since its inception in 2003 and the subsequent purchase by Google in 2006, the Android platform has made a substantive impact in the mobile device operating system industry. Before the innovation, mobile devices had basic functionality. Building applications was difficult and extremely involving. To fill this market niche, Android came with the free open-source operating system. This allows turbocharged innovation and further enhances specialization since manufactures and developers can now focus on their areas of specialty (Lockheimer 2015 ).

In writing, this report, a rigorous research procedure was carried out with a thoughtful selection of literature materials. Dependable literature materials such as journals with reputable authors, reliable texts, and reports were used.

Conceptual Framework

The use of smart mobile devices is becoming progressively prevalent and universal. Consequently, users need the best inventions and innovations that augment the functionality of smartphones and tablets among other mobile devices. Presently, Android is among the most prominently used operating systems in the world. It reaches out to touch peaks of diffusion, in some countries, with a significant percentage of the total smartphone market. Consequently, the Android platform has allowed users to keep in touch with new applications that stood unavailable in the recent past.

Some theories are used in investigating the adoption of innovations in organizational and social settings. The most prolific among the theories is the Rodgers’ Diffusion of Innovation Theory. The theory has four major elements associated with the diffusion of new ideas. They include detailed innovation aspects, communication channels, time and social context. Additionally, Rogers’ Diffusion of Innovation Theory gives definitions of crucial terms about innovation and technology while seeking to explain why, how, and at what degree inventions and innovations spread through business and social environment (Sahin 2006).

Notably, Rogers’ Diffusion of Innovation Theory puts substantial emphasis on innovation while explaining why some innovations spread faster than others. Relative advantage, compatibility to modern and imminent trends, and perceived complexity of an innovation are some of the aspects that propel adaption and diffusion rate of innovations. Thus, Rodgers’ Diffusion Theory is pertinent in the discussion of Android as an innovation that is disrupting traditional practices while advancing the digital economy. Some of the aspects of the theory were carefully selected to support this report due to their relevance and applicability in business innovation and digital economies dynamism. The most prominent elements of the theory pertinent to this study are discussed below.

Relative advantage of Android

The mobile operating system industry was revolutionized by the inception of Apple iOS and Google Android. The two control a considerable percentage of the global mobile devices market. However, Android has a relative advantage despite its late entry relative to iOS.

First, Android is a more open ecosystem source. Making improvements, adding features and adaptation of Android can be done by anyone. This is unlike most mobile operating systems, which can only be developed from a centralized authorized source.

Second, Apps are relatively cheaper on Android than most mobile operating systems. For instance, Apple devices are priced relatively exorbitantly. Therefore, affordability and use of iOS is hampered by leveraging cheaper Android.

Third, Android is not restrictive in cross-platform interactions. Mobile devices’ users would prefer hustle free cross-platform interactions. With iOS, formal applications followed by rigorous vetting are done before software is absorbed.

Fourth, Google partners with other electronic companies in building devices around its operating system. The collaboration leverages Android users with a wide range of devices. These, among others, leveraging aspects have increasingly enhanced the diffusion of Android in the digital economy globally.

Android compatibility

The rapid diffusion of Android can be linked to its aptitude to be consistent with the existing and emergent trends in mobile devices innovations. With the Android open system, varied devices can use the Android platform and, therefore, many aspects of architecture and compatibility requirements have been optimized. Android open system aims at embracing the widest possible range of mobile devices. Key Android compatible devices include handheld devices, Android television devices, Android watches, and Android automotive implementation.

Time

The ability of Android to fill a niche in the global mobile device market informed the decision-making process explaining why the idea was immensely acceptable. Further, Android attributes have amplified the rate at which it is adapted. Lastly, Android has realized a significantly fast influence on the five categories of social classification as illustrated by the theory.

Findings and Analysis

The shift toward mobile-driven apps and computing is taking place so rapidly and in several ways. For instance, over two billion people now own smartphones, and the number is expected to reach six billion by the year 2020 (Pon 2015). Android, Symbian, Windows, iOS platforms and others have created the value that many users derive from their platforms based on their abilities to gain access to the Internet and use most applications. As billions of consumers continue to gain access to smartphones, the digital economy will continue to thrive and become a critical source of revenue for developers and the global economy.

The smartphone sector is now largely controlled by the Android platform (Spreeuwenberg & Poell 2012). Android platform, as it is today, can be considered as a collection of multiple standardized technologies, individual developers, and even firms coordinated through Google to develop versions that create value to users through economies of scale and scope.

The growth of the Android platform reflects the elements captured in Roger’s Diffusion of Innovation Theory. Through innovation and entrepreneurship, the Android platform has grown specifically in the smartphone sector as most developers and users recognize the core role it plays in the digital economy. One can observe how Google has harnessed the power of developers to launch multiple versions of Android that can now support various makes and models of smartphones. Much of the interest generated by the Android platform can be attributed to specific economic characteristics specifically the availability of externalities or the network effect that emanates from various developers. In this regard, Google has focused on providing Google Play Services (GPS) to encourage open contribution and control the emerging fragmentation.

Developers notice the value of joining the Android contributing network as its usage spread rapidly globally. That is, the more users use the Android app, the more valuable the app becomes because it can support multiple devices, run the most popular Web tools and connect with millions of users due to compatibility. In this case, innovation and entrepreneurship shown in the Android platform have led to a positive reinforcement of network effects in which companies rely on the platform to increase their returns and dominate the market with their products (Pon 2015). Today, the Android platform has created a model that other companies such as Facebook, Dropbox, and Line among others have used to develop more specialized apps through open approaches to innovation.

As the Android platform depicts, the dominance nature of the platform leads to the ‘user lock-in’ and consequently creating a barrier for other apps to thrive. Innovations, communication, time from the rate of adoption perspective, and the social system of Diffusion have led to the spread and development of new ideas to support new versions of Android.

In the open-source, free license environment that Android platform is developed, it would be difficult for any organization to identify the scope of innovations and developments that the new approaches will bring, but it is clear that firms involved with Android platform must review their strategy (Hatt et al. 2014). Today, the Android platform is considered the most successful one, particularly in the smartphone market globally where it accounts for more than half of all the phones sold (Mulligan et al. n.d).

One can observe that through diffusion, the Android platform has become the largest incumbent, which is now forced to develop but must guard against further fragmentation. As the Android platform continues to grow in both developed and emerging markets globally, specifically in the last two-three years, it presents challenges because of numerous devices by versions currently available for users.

Nevertheless, it is imperative to comprehend the Android platform within the context of Google’s approach. Google generally generates more value when several users are on the Internet, as well as data generated by those users. Consequently, Google can grow its search advertising business. Based on this observation, Google has ensured that Android is adopted widely through a free license. As such, it can be widely used by various handset manufacturers globally. Android, therefore, leaves other OEMs such as Apple, Microsoft, to scramble for a small market share. Today, Samsung, the handset maker, has driven the adoption of the Android platform significantly, and it now strives to revamp Android UI.

Although Google still attains its core objective, the company must continuously focus on how to contain the increasing fragmentation of the Android platform. One must, however, recognize that Samsung relies on a ‘certified’ Android platform as opposed to the Android Open Source Project (AOSP) version. Users can freely gain access to the AOSP version. On the other hand, device manufacturers must involve Google to get the full functionality of the Android platform, which requires registration for the Android Compatibility Programme (Hatt et al. 2014). A registration would ensure that manufacturers can get other Google services, including Google+, Gmail, Google Maps, and Google Play among others. In addition, manufactures must also meet some hardware requirements and contract conditions. That is, they should not launch another device based on the AOSP version.

On the other hand, some original equipment manufacturers mainly based in China, such as Xiaomi, have been successful using the AOSP version. Xiaomi, for instance, now claims about 2 percent of the global smartphone sales. The company relies on customized user interfaces while riding on Android to develop strong, relatively cheap smartphones for the global market. This is a direct threat to Google. That is, AOSP is growing rapidly while excluding Google’s core services and, therefore, affecting Google’s revenues from mobile advertisement.

The open-source and free license are responsible for fragmentation and multiple versions of Android run by Google at any given moment. It is imperative to recognize that most versions have a short life expectancy of about one to two years. Inconsistency in user experiences could affect the Android platform. Customized versions could be responsible for such inconsistency, but the company might be forced to provide updates for multiple versions to protect its core services delivered through the Android platform.

Google and its competitors must continue to define their strategies for apps for smartphone markets. These platforms are meant to drive digital commerce for developers. As such, Google is striving to develop AOSP to transcend various national borders and gain wider adoption while minimizing barriers. Various stakeholders understand the benefits and relevance of digital economies that enhance inclusion and participation by different segments of society. By opening the Android platform to many developers, Google aims to acquire more loyal users and grow its market share. However, the digital economy driven by various platforms such as Android requires seamless platforms that allow integration and can meet user needs. Consequently, collaborative development processes could deliver interoperability for different platforms and devices. While Android and iOS platforms tend to lock users to specific devices by different manufacturers, the gains may not be long-lasting because interoperability leads to more robust platforms deployed in multiple devices.

In the next few years, several high-level scenarios are possible for the Android platform as a dominant player in the digital economy. First, Android is most likely to grow further, introduce new versions and claim more market share, but with even more fragmentation in versions adopted by various smartphone manufacturers. Second, Google may decide to increase the market share but focus on more consolidated Android platform to counter the threat from AOSP. Finally, it is also possible that the Android platform may lose market share to its competitors such as iOS, Windows, Symbian, Blackberry, and another smartphone OS.

Conclusion and Recommendation

This report presented the Android platform as the most successful platform in the digital economy. By relying on Rogers’ Diffusion of Innovation Theory, the report shows the success of the Android platform as well as potential challenges it may encounter because of fragmentation. With the dominant market share globally, which can be attributed to open and free license approaches adopted by Google, the Android platform continues to enhance the growth of the digital economy in which developers can sell their apps.

Google continues to harness the power of developers spread across the world to revamp its Android platform. Consequently, it has realized unprecedented success since its launch, and Android now commands a significant global market share relative to competitors like iOS, Symbian and Windows among others. Nevertheless, the fragmented nature of the Android platform could also present a threat to Google as it fails to consolidate its revenues from freely exploited versions exploited by firms such as Xiaomi operating in China.

• It is recommended that Google should strive to grow the market share of the Android platform. This strategy is critical because of the fierce competition it faces from other platforms such as iOS, Windows, and Blackberry among others.
• The fragmented nature of the Android platform is a source of concern for the company. While it encourages sourcing and contribution, Google must dedicate multiple resources to evaluate various versions and only pick the best.
• Other firms specifically those operating in China where Google is banned, have been able to exploit the AOSP version to their own advantage. In this context, Xiaomi denies Google’s potential revenues from mobile advertisements. Hence, the Android platform should not be exploited by companies that strive for a global market share.

Reference List

Hatt, T, Lucini, BA., Gardner, C & Pon, B 2014, Analysis: Mobile platform wars. Web.

Lockheimer, H 2015, Android has helped create more choice and innovation on mobile than ever before. Web.

Mulligan, CE, Mortier, R, Houghton, R, Rahemtulla, H, Flintham, M & Nord, C n.d, Standardisation Strategies for the Android Platform: The Politics of the Stack. Web.

Pon, B 2015, Locating digital production: How platforms shape participation in the global app economy. Web.

Sahin, I 2006, ‘Detailed Review of Rogers’ Diffusion of Innovations Theory and Educational Technology-related Studies Based on Rogers’, The Turkish Online Journal of Educational Technology, vol. 5, no. 2, pp. 14-23.

Spreeuwenberg, K & Poell, T 2012, ‘Android and the political economy of the mobile Internet: A renewal of open source critique’, First Monday, vol. 17, no. 7. Web.

Introduction

One of the major challenges that young innovators and firms face is the lack of financial resources to implement ground-breaking ideas. There are many opportunities for sourcing funds for innovation that businesses and inventors can leverage. They only require understanding how to reach them and present their proposals. Some external sources of financing include venture capital and business angels. Moreover, numerous foundations offer support to innovators whose ideas may help to improve social life or boost the economy of developing nations. This paper will discuss some of the opportunities that innovators can exploit to guarantee the actualization of their ideas.

Venture Capital

Venture capital refers to a form of financing, which investors offer to start-up firms and enterprises that have the potential for high returns. According to Bruton, Khavul, Siegel, and Wright (2015), venture capitalists scout for innovative ideas and offer to support those dreams in exchange for partial ownership. Young businesses and pioneering ideas face insecurity; therefore, venture capitalists have devised ways to appraise them before committing their resources. One of the advantages of this source of funding is that innovators do not only profit from financial support but also expertise and mentorship (Bellavitis, Filatotchev, Kamuriwo, & Vanacker, 2017). Nevertheless, venture capital deprives inventors of the power to make independent decisions on matters that affect their innovations.

Business Angels

Today, many investors offer expertise and financial support to young businesses to facilitate their growth. Bruton et al. (2015) define business angels as “wealthy individual investors, typically with business experience, who act as a source of equity and provide start-up capital to small firms in exchange for convertible debt or equity” (p. 12). These investors have created groups, which are helpful in connecting innovators with potential investors. They identify businesses or ideas that could be profitable but lack crucial resources for their implementation. The primary advantage of this mode of funding is that young innovators benefit from mentorship and networks. However, they are denied full control of their ideas or businesses.

Crowdfunding

Crowdfunding is a new mode of resource mobilization that people can use to solicit investment and grants to fund new ventures or innovative ideas. This means of sourcing for financial support entails using social networks and online avenues to sell one’s ideas to interested audiences. Some of the renowned platforms that support crowdfunding include Indiegogo and Kickstarter. Individuals who give their money receive rewards as a token of appreciation. Bruton et al. (2015) maintain that crowdfunding gives social innovators a chance to interact with citizens.

The Global Innovation Fund

The Global Innovation Fund is meant to assist innovators to develop ingenious solutions to social challenges that affect developing countries. This mode of financing holds that anybody can invent an idea that might be helpful in addressing social challenges, therefore it is not selective. Bellavitis et al. (2017) allege that the Global Innovation Fund offers grants, loans, and equity investment to all innovators regardless of their point of investing. This type of grant targets innovators with solutions to problems that affect poor communities.

Conclusion

Young innovators have an opportunity to seek financial support from investors and different foundations. Today, venture capital and business angels serve as major sources of funds for inventors. Nevertheless, these modes of financial assistance deprive innovators of the right to implement their ideas independently. Technological advancement has made it easy for people to use crowdfunding to persuade the public to back their projects. The Global Innovation Fund may be helpful in financing innovations that are intended to benefit developing countries.

References

Bellavitis, C., Filatotchev, I., Kamuriwo, D. S., & Vanacker, T. (2017). Entrepreneurial finance: New frontiers of research and practice. An International Journal of Entrepreneurial Finance, 19(1), 1-16.

Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer-to-peer innovations. Entrepreneurship Theory and Practice, 39(1), 9-26.

Introduction

In the last couple of years, there has been increased innovation in different aspects of the financial service sector and ways not previously conceived. While many seasoned financial analysts and experts would argue that financial innovation has been around for a long time, the pace of evolution in this sector has been the greatest cause of concern for policymakers and regulators.¹ The reason for this worry is the introduction of new players in the financial sector who are more technologically oriented as opposed to financially focused. This development has had a significant impact on how financial products and services are delivered to people.²

The powerful force that is changing how people conduct business in the financial sector has been synonymously associated with new and revolutionary terms and concepts, such as, cryptocurrency, virtual currencies, and blockchain technologies (among others).³ Innovation is at the center of the evolution of these concepts.

Although many factors have led to the growth and spread of financial innovation, a key ingredient to its acceptance is regulation. Indeed, there has been a new push for regulators to adapt to these changing market dynamics by formulating new laws that would moderate the use of new financial instruments. Complicating the ability of the same players to regulate the sector effectively is a rule-based culture that has traditionally defined how financial regulators perform their roles and duties. Consequently, there has been a disconnect between financial regulation and innovation because authorities are unable to keep up with technology changes that break the norm or override conventional regulatory procedures.

There are numerous areas where financial innovation and regulation collide. This conflict has led to the growth of the term “disruptive innovation.” The emergence of Bitcoin in 2009 highlighted this technological revolution, but it is not the ultimate event in the evolution of financial innovation in the 21^st century. The Bitcoin protocol, which has demonstrated how blockchain technology could influence the financial industry has been deployed in different cases and consequently influenced how digital currencies are issued.

It has also been applied in asset tracking and financial recording.⁴ Formulating contractual agreements and managing complex data sets are also other ways that the technology has been employed with relative success. Notably, these different areas of financial innovation have different regulatory implications. More importantly, they have attracted the attention of different regulatory bodies and players.

This paper is an argumentative essay that discusses whether emerging financial technologies need robust regulatory frameworks to enjoy public trust and acceptance, or not. The arguments cited in this study are analyzed in the context of financial innovation through digital currency development as a core area of FinTech. The essay is divided into four sections. The first one examines the arguments made in support of financial regulation in FinTech and the second part investigates contrary views. The third section of the paper discusses both sides of the argument with the view of finding a common ground, while the last section of the essay summarises the main findings.

Support for a Robust Regulatory Framework

Unlike traditional currencies, which are backed by central banks, digital currencies (such as Bitcoins) do not have a robust legal framework underpinning their use. Critics of digital currencies argue that it would be difficult for such currencies to gain acceptance because they are not legal tenders.⁵ Their arguments stem from the understanding that generally accepted currencies need to be legal tenders before users can accept them as units of exchange. Digital currencies have also been criticized for their inability to be used as units of debt. In other words, people may find it difficult to accept them as instruments of debt payment because they lack the legitimacy required for creditors to use them.⁶

Therefore, unlike the dollar, which is a legal tender, digital currencies cannot be used to pay public or private debts. Critics of digital currencies also say such financial instruments lack government endorsement, which makes users hesitant to use or retain them.⁷ Consequently, they lack the demand that other currencies, such as the dollar or Euro, enjoy. Some researchers have used detailed explanations to explain this fact by saying that digital currencies lack the “comfort” people need to retain currencies. This “comfort” stems from government backing.

The above view supports the findings of some researchers who suggest that people will find it difficult to rely on digital currencies as an attractive vehicle for holding wealth because they are not backed by well-known legal instruments, are unregulated, and use complex computer algorithms, which many people do not understand.⁸

The lack of regulation in digital currency use has also prompted critics to argue that they cannot be used as acceptable currencies because people are afraid of losing all their investments based on the unprotected nature of the trade instruments.⁹ This view is partly highlighted by extreme price volatilities, which have characterized digital currencies since 2009. Bitcoin is known to suffer from this problem because an excess demand for digital currency has led to price surges. The same cannot happen for conventional currencies because there is a regulatory framework that provides governments with instruments to prevent such an occurrence.¹⁰

For example, governments are free to exercise fiscal and monetary policies, such as varying interest rates and money supply to stabilize currencies. Bitcoin and other digital currencies lack such regulatory instruments. Some critics say there is no central authority, like the Federal Reserve in America, to regulate the currency’s performance.¹¹ This issue highlights the lack of accountability that critics of digital currencies have also used to undermine them.

The risk of theft, hacking, or loss is also more profound in the digital currency platform than in other areas of financial operations. Since virtual currencies operate in the technology space, it is possible for hackers to “steal” the currencies, thereby causing significant financial losses to investors. For example, there was an incident in 2015 where hackers stole $400 million worth of Bitcoins from Initial Coin Offerings (ICOs) within three years.¹²

The funds were meant to finance different projects. The general observation is that about 10% of the money raised through this platform has been lost through hacking.¹³ This problem gives the perception that digital currencies and similar forms of financial innovation are prone to theft and pilferage. People who hold digital wallets have the greatest fear because unlike physical money, which they could hold and protect, virtual currencies are intangible. These fears further highlight the need to have proper regulation of the system to make sure that such incidences are minimized. However, there is a core constituent of researchers and observers who hold contrary views as explained in the section below.

Why It Is Possible To Operate Without a Regulatory Framework

As highlighted in earlier sections of this paper, FinTech is supported by innovation in the financial sector. Most of these technologies are gaining support around the world for their credibility and reliability. In other words, people are starting to realize that some of the technologies supporting today’s financial innovation can be trusted and relied on.¹⁴ Indeed, most of them are starting to realize that such technologies could be used in promoting transparency within the financial sector and increasing people’s access to financial services.¹⁵

Based on these developments, some financial experts suggest that, instead of opposing financial innovation, regulatory improvements should focus on using new technology in the emerging areas of financial development such as digital asset tracking and identity verification.¹⁶ Although these views are expansionary in the sense that they identify new areas of technology use, they do not explain how they would help instill market confidence in the financial system.

Proponents of deregulation also argue that the limited scope of digital currency use within the virtual space provides an opportunity for the currency to operate without a need for control, subject to the low volumes of money currently in circulation. This view has been made in comparison to the dollar and other major currencies because any sizeable effect on the monetary system is predicated on the small size of virtual currency transactions in circulation.¹⁷

For example, the issuance of physical currencies needs to be done by a central regulatory body (the government) because the volume of transactions made using the same mode of payment is high. Comparatively, there is no such need for a central authority in digital currency issuance because few transactions made using this mode of payment, relative to the volume of global business.¹⁸ This argument appears to have merit for now because the volume of digital currency transactions is low. However, it is faulty because it represents a short-term view of the power of digital currencies. Stated differently, their use is expanding and they may fail to retain their small stature in the long term when more vendors start to accept them as conventional modes of payment.

People who support deregulation also argue that financial innovation could operate without the need for a regulatory framework because some digital currencies have an inbuilt regulatory system that serves the same function as a government would do through a central bank.¹⁹

The use of blockchain technology is an example of such a framework because it acts as a regulatory agency on its own. Some observers say it offers a platform for players in the financial sector to operate more freely and efficiently than they would do in the conventional space.²⁰ However, these proposed alternative financial stabilization systems have not been tested on a large scale.

Another argument touted for the need to have a liberal regulatory framework for innovative financial products is the global nature of financial innovation. Indeed, in modern society, financial innovation is borderless and the quest by one jurisdiction to introduce new regulations may be undermined by the unwillingness of another one to implement the same laws.²¹ Legal clashes and policy conflicts may undermine such efforts in the same way as the lack of coordination between different jurisdictions would make it difficult to enforce the financial regulations of one country in another.²²

Therefore, it is difficult to conceive a situation where financial regulation applies to technology that is jurisdictionally unbound. For example, proponents of deregulation say that digital currencies could be used in exchange for goods and services all around the world. Therefore, it would not make any sense for one country to formulate a law governing the same transaction when another country cannot enforce it, or subscribes to a different set of rules. Although their views are rooted in current practice, they fail to account for ongoing legal changes in regulation where countries are collaborating in the enforcement of financial laws or support common regulatory principles.

The apparent transparency of different forms of financial innovation also adds to the voices of deregulation because FinTech promotes transparency and efficiency in the financial market. Proponents of deregulation argue that the lack of these two elements of instrumentation in the mainstream financial industry has typically necessitated financial regulation because the government has had to come in as a third party (between buyers and sellers) and guarantee their transactions or provide legitimacy to them.

Consequently, they say that FinTech has eliminated the lack of trust that characterizes traditional financial transactions because it is inherently transparent.²³ However, as will be discussed in the next section of this paper, increased transparency in financial transactions does not necessarily mean there should be no regulation.

Discussion

Although most aspects of the financial revolution in digital currency development seem not to be backed by existing regulatory and legal frameworks, there are several instances where contemporary laws have been used to govern different aspects of financial innovation. For example, the American government has applied Federal laws and statutes in digital currency management to regulate the currency. In fact, because of their broad coverage, some of these statutes could be used to govern digital currency management, especially when they touch on issues relating to money laundering and terrorism financing.²⁴

For example, under Article 1 of the US constitution, the Federal government has the power to coin money and regulate the value thereof.²⁵ Although these roles are explicitly explained in the country’s laws, there appears to be no conception of the government’s power to do the same for currencies that are not issued by it.

Based on the insights highlighted in this paper, it is difficult to conceptualize a situation where financial innovation, which does not have legal or regulatory backing, could be holistically accepted or trusted. Money is a sensitive issue for many people because it carries their hopes, aspirations, and sometimes all their life’s work. It would be difficult to conceive a situation where the same people would entrust this resource in a system that does not have the guarantees that conventional currencies provide.

More importantly, it is difficult to picture a scenario where all the “chaos” that is associated with the conventional financial system would be addressed in a framework that has no accountability. Stated differently, the current global financial system is still vulnerable to shocks and volatilities that have ravaged economies and affected people’s livelihoods, even with government regulation in place. A system that does not have any regulatory framework is more vulnerable and cannot be trusted.

Although some people or companies would take the risk of using such a system, it is unrealistic to conceive a situation where it would compete with the existing one that has been perfected for more than a century. Here, it is important to also point out that no system is perfect, but current financial innovations that are changing how people use money and operate in the markets should not be viewed in isolation. Instead, they should be deemed a complementary framework that needs to improve what is already there, as opposed to fundamentally changing how the world’s global financial system works. In other words, such innovations should not be seen as an attempt to “reinvent the wheel,” but an improvement of the existing financial model.

Since national borders do not define digital currencies, solving legal and regulatory issues may require a global approach. In other words, countries, such as the US (through Congress) and the UK or Australia (through their legislative organs) cannot effectively formulate legal or regulatory frameworks that would effectively solve the legal issues underpinning the use of these currencies.²⁶ Instead, they need to seek international cooperation from other countries to provide a holistic approach to addressing the outstanding legal issues governing the same.

Conclusion

The findings of this paper show that there is a rapid push for financial regulators to keep up with innovation in the wake of disruptive technology. This push is happening globally and regulation is quickly being used as a proxy to legitimize these innovative processes and create new market segments. Nonetheless, the most consistent force emerging in this analysis is the need for countries and economies to take proactive measures and update their regulatory frameworks to keep up with the rapid change of technological innovation.

Based on the findings derived from this paper, the biggest regulatory issue emerging in this study is how authorities should monitor technological change, as opposed to how fast or far they could regulate financial innovation. Stemming from some of the arguments touted in this study in support of the use of digital currencies, it is important to point out that there is no basis for a generic regulation of financial innovation, such as digital currencies. However, such innovations need to be harmonized with existing financial policies to avoid a clash between the current legislative framework of policies and the operations of the same innovation. Collectively, this view supports the idea that regulation is important in financial innovation.

Bibliography

Secondary Resources

Books

Iain MacNeil and Justin O’Brien (eds), The Future of Financial Regulation (Hart Publishing 2010).

Zavolokina Liudmila, Dolata Mateusz, and Schwabe Gerhard, FinTech – What’s in a Name? In: Thirty Seventh International Conference on Information Systems (University of Zurich, 2016).

Websites

Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library. 2013) Web.

Europa, ‘Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on Markets in Financial Instruments and Amending Directive 2002/92/EC and Directive 2011/61/EU’ (EUR-Lex, 2015). Web.

Europa, ‘Regulation (Eu) No 600/2014 of the European Parliament and of the Council of 15 May 2014’ (EUR-Lex, 2015). Web.

Journals

Anastasia Sotiropoulou and Dominique Gue´gan, ‘Bitcoin and the Challenges for Financial Regulation’ [2017] 12 CMLJ 466.

Douglas Arner, Janos Barberis, and Ross Buckley, ‘The Evolution of FinTech: A New Post-Crisis Paradigm’ [2016] 47 GJIL 1271.

Lucy Frew, Rich Folsom, and Sophie van Wingerden, ‘Legal and Regulatory Issues Relating to Virtual Currencies’ [2015] 7 JIBFL 438.

Nathan Coombs, ‘What Is An Algorithm? Financial Regulation in the Era of High-Frequency Trading’ [2016] 45 ESL 278.

Tarun Chordia, Gideon Saar, Amit Goyal, and Bruce Lehmann, ‘High-Frequency Trading’ [2013] 16 JFM 637.

Footnotes

1. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
2. Nathan Coombs, ‘What Is An Algorithm? Financial Regulation in the Era of High-Frequency Trading’ [2016] 45 Economy and Society 278.
3. Anastasia Sotiropoulou and Dominique Gue´gan, ‘Bitcoin and the Challenges for Financial Regulation’ [2017] 12 CMLJ 466.
4. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
5. Lucy Frew, Rich Folsom, and Sophie van Wingerden, ‘Legal and Regulatory Issues Relating to Virtual Currencies’ [2015] 7 JIBFL 438.
6. Lucy Frew, Rich Folsom, and Sophie van Wingerden, ‘Legal and Regulatory Issues Relating to Virtual Currencies’ [2015] 7 JIBFL 438.
7. Anastasia Sotiropoulou and Dominique Gue´gan, ‘Bitcoin and the Challenges for Financial Regulation’ [2017] 12 CMLJ 466.
8. Anastasia Sotiropoulou and Dominique Gue´gan, ‘Bitcoin and the Challenges for Financial Regulation’ [2017] 12 CMLJ 466.
9. Lucy Frew, Rich Folsom, and Sophie van Wingerden, ‘Legal and Regulatory Issues Relating to Virtual Currencies’ [2015] 7 JIBFL 438.
10. Douglas Arner, Janos Barberis, and Ross Buckley, ‘The Evolution of FinTech: A New Post-Crisis Paradigm’ [2016] 47 GJIL 1271.
11. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
12. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
13. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
14. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
15. Zavolokina Liudmila, Dolata Mateusz, and Schwabe Gerhard, FinTech – What’s in a Name? In: Thirty-Seventh International Conference on Information Systems (ZORA 2016) 16.
16. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
17. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
18. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
19. Nathan Coombs, ‘What Is An Algorithm? Financial Regulation in the Era of High-Frequency Trading’ [2016] 45 Economy and Society 278.
20. Anastasia Sotiropoulou and Dominique Gue´gan, ‘Bitcoin and the Challenges for Financial Regulation’ [2017] 12 CMLJ 466.
21. Iain MacNeil and Justin O’Brien (eds), The Future of Financial Regulation (Hart Publishing 2010) 56.
22. Europa, ‘Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU’ (EUR-Lex, 2015). Web.
23. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
24. Tarun Chordia, Gideon Saar, Amit Goyal, and Bruce Lehmann, ‘High-Frequency Trading’ [2013] 16 JFM 637.
25. Craig Elwell, Maureen Murphy, and Michael Seitzinger, ‘Bitcoin: Questions, Answers, and Analysis of Legal Issues’ (Digital Library, 2013). Web.
26. Europa, ‘Regulation (Eu) No 600/2014 of the European Parliament and of the Council of 15 May 2014’ (EUR-Lex, 2015). Web.

General Assessment of the Performance Trend of Selected Countries

The Global Innovation Index is used in analyzing different countries. What is taken to account is the output and input markers. It is essential to know their factors to develop a suitable Innovation index for a particular index. The Global Innovation Index (GII) analyses and ranks 131 countries worldwide. It is a well-known fact that Kenya is a growing hub for innovation; therefore, it comes as no surprise when the country experiences steady growth. In East and Central Africa, Kenya is the leading ICT innovator, making it one of the top technology hubs globally (Crespo and Cátia 5266). Together with India, Vietnam, and Moldova, Kenya has consistently been recognized and an innovation achiever for the past nine months. There have been many new businesses scrambling for space in the ICT market in recent years, and the key is rapid economic growth.

The Global Innovation Index (GII)in Jordan, however, is not steady, and the country keeps on dropping in terms of how it is analyzed and ranked. Previously Jordan had been doing in a well-placed position, but it kept on dropping in position due to various factors (Dutta, Lanvin, and Wunsch-Vincent). Many issues need to be worked on to ensure that Jordan goes back to a top innovation hub. Such may show some levels of unstableness in the economy. In most instances, the global innovation index grows as the country’s economy grows. The same notion applies to Ghana; it was on the rise, but there is a noticeable drop in the global Innovation index rating after a while. Many factors may lead to the decline in the country’s rating, including drop in the economy, being satisfied, and not adding anything to what is already present regarding innovation.

The Global Innovation Index of Morroco has remained unclear and not predictable because it keeps on changing every year. It may be rated highly one year, then the next year it slightly drops, then again the following year it goes back to where it was. Even though Tunisia dropped further in the ratings in recent years, it had similar characteristics in terms of its predictability (Dutta et al). Despite being a nation with lots of potential in the innovation sector, Morroco has been performing dismally in the Global Innovation Index, making it hard to predict their next position in the following year’s analysis.

The Country that has Witnessed a Surge

Kenya is a country that has steadily grown over the years with regards to innovation. It has turned into one of the leading innovation hubs and hence a steady rise. Being the second country in sub-Saharan Africa, Kenya has proved to be a force to reckon with. While countries like Mauritius, South Africa, Tanzania, and Botswana dropped positions, Kenya kept rising (Dutta et al). Kenya’s growth in innovation is mainly evident throughout the country’s high technological exports. It comes as a surprise why a country like Kenya could beat countries like South Africa, Morroco, and Tunisia, which have better economic status. Part of Kenya’s success in steady growth in the Global Innovation Index has mostly been credited to government support.

However, the Global Innovation Index’s main success steady growth has been accredited to the country’s easy access to investor and credit protection brought about by market sophistication. There are different unconventional banking methods in Kenya, which has led to easy financing for small-scale farmers to indulge in the market (Dutta et al). Some of the microfinance institutions that help propel Kenya to greater heights include; SMEO Microfinance Bank, Faulu Kenya, Kenya Women Microfinance Bank (KWFT), and many others. Many countries overlook microfinance, but the truth is they help elevate the economy in unimaginable ways (Gachanja et al. 16). They do so much when they promote local businesses, which help economical growth.

Kenya also has boasted creative outputs that are facilitated by various innovation linkages. The country’s creative outputs have grown immensely, which is quite a good sign as it is an indicator of good dealings and growth in Intellectual property. That is the reason as to why there is a rapid increase in monetising intellectual property rights and encouraging the application of ICT to various businesses (Gachanja et al. 19). The government has put its focus mainly on health coverage, food security, increase in manufacturing, and affordable housing. That is the government’s plan to ensure that everything is done to the absolute best, and growth is continuous.

To conclude, taking Kenya as a major example, the things a country should do to improve its The Global Innovation Index (GII) include offering absolute support in the necessary departments. The Kenya government has a hand in all the thriving sectors, including; economic growth, creative outputs that include intellectual property, ICT, and fintech. The moment the government comes in and plays its role in uplifting such sectors, everything is attainable. Countries like Morroco, Tunisia, SouthAfrica, and Jordan all have the potential to be the best. If their government awards them the support, then their Global innovation index will rise higher.

Works Cited

Crespo, Nuno F., and Cátia F. Crespo. “Global Innovation Index: Moving Beyond The Absolute Value Of Ranking With A Fuzzy-Set Analysis.” Journal of Business Research, vol. 69, no. 11, 2016, pp. 5265-5271.

Dutta, Soumitra, Bruno Lanvin, and Sacha Wunsch-Vincent. The Global Innovation Index 2020: Winning with Global Innovation. , Internet resource.

Gachanja, Isaac M., et al. “Influence of Organization Learning On Innovation Output In Manufacturing Firms in Kenya.” International Journal of Innovation Studies, vol. 4, no. 1, 2020, pp. 16-26.

It is essential to analyze the global progress of humanity and each country on the planet. This data allows world leaders to adjust their strategies, find the weak links in their countries’ development, or spread their success by exploring the opportunities to help other communities. The Global Innovation Index (GII) is a complex set of parameters that measure the economic performance of countries, highlight the most vital societal goals, and provide data regarding their most recent progress (Dutta et al.). This paper reviews the changes in GII of the following countries: Morocco, Tunisia, Ghana, Kenya, South Africa, and Jordan.

The countries of choice remain relatively low in the ranking list of the most innovative countries on the globe. Over the 5-year period, their positions were fluctuating without a significant increase (see Fig. 1), with the exception of Tunisia, who has achieved position #65 in 2020, compared to #77 in 2016 (“Indicator Rankings & Analysis”). Most countries were able to uphold their positions for several years. African countries are more likely to increase their rankings by giving more attention to the implementation of innovative technologies.

To examine the reasoning behind these fluctuations, it is essential to analyze what measures were taken by these countries to improve their standings. Morocco has retained its position in GII over the 5-year period due to the improvements in technology adoption and IP usage (Dutta et al.). Dutta et al. state that “Kenya ranks 3rd in Sub-Saharan Africa and scores above its income and regional peers in Institutions, Market and Business sophistication, and Knowledge and technology outputs” (22) Mukora and Syekei state that “Kenya has established itself as a regional giant in innovation, which has facilitated rapid economic growth in the country within the past two decades.” Ghana, which has the lowest rank among the countries presented in this paper, does not show any significant improvements and performs below expectations for its level of development (Dutta et al.). Outside of these three countries, other African countries are experiencing relative improvement.

South Africa continues to take a higher position in the list among other African countries. This country has made significant progress towards market sophistication, reaching #15 in this category, partially due to the internationalization of inventions (Dutta et al.). The primary pillars that are behind its expected position are human capital and research and creative outputs (Dutta et al.). The country shows a promising future for investments into innovative technologies, as its market experiences steady growth.

Jordan has improved its ranking significantly in 2020, especially in regional standings. Jordan has seen improvements in multiple parameters, such as market and business sophistication, bringing it to #81 place (Dutta et al.). These changes are linked to the government’s tax incentives to venture capitalists, improved accessibility of credits, and other market-related factors, which led to a surge of private start-ups (“Jordan Climbs 5 Places to 81 on Global Innovation Index”). This country demonstrates that innovative power can come from investments outside of strictly scientific sectors.

The success behind Tunisia’s innovation rating lies in several factors. There is definite progress in the quality, quantity, and accessibility of educational facilities in the country (“Tunisia Moves Up 5 Spots to 65th in GII 2020”). Dutta et al. write that “the typical innovation leader in Africa usually has higher expenditure on education” (xxvii). Tunisia was also able to improve its research base and assimilate the usage of intellectual property into its economy (Dutta et al.). Moreover, these statistics show that the next priority for Tunisia should be market sophistication and general infrastructure (“Tunisia Moves Up 5 Spots to 65th in GII 2020”). Among the African countries, Tunisia’s performance is above average and exceeds expectations in many fields (“Tunisia Moves Up 5 Spots to 65th in GII 2020”). These measures play a critical role in the innovational process, and Tunisia has been able to prioritize its development over this period.

In conclusion, most of the presented countries experience growth in regard to some measurements related to innovations, and their efforts allow them to retain their positions with little change. However, the improvement rates are relatively slow, and some countries do not pay enough attention to data collecting, which results in unsatisfactory or inconclusive results. These countries do not actively promote science and technology, rely on foreign investments for R&D, do not make full use of intellectual property, and pose a challenging environment for businesses (Dutta et al.). Together, these countries show that there are various ways to achieve a sustainable society and increase the quality of life. The rates of improvement will slow down this year due to the virus lockdown and the crisis it created (Ditta et al.). Despite this fact, these countries have shown that they have the potential for innovations and have achieved some growth, albeit non-explosive and not always continuous. Findings suggest that there is an improvement that was procured before and can be completed in the future. It is vital to understand what the country can do in order to improve the life of its citizens, and GII serves as a useful tool in this task.

Works Cited

Dutta, Soumitra, et al.Global Innovation Index 2020: Who Will Finance Innovation? WIPO, Web.

“Indicator Rankings & Analysis.” Global Innovation Index, 2020, Web.

“Jordan Climbs 5 Places to 81 on Global Innovation Index.” Jordan Times, 2020, Web.

Mukora, Angela, and John Syekei. “Kenya Continues to Make Gains in the Global Innovation Index.” Bowmans, 2019, Web.

“Tunisia Moves Up 5 Spots to 65th in GII 2020.” TAP, 2020, Web.

Impact of aging on the society

Aging is a structural shift in demographics that is characteristic both for the West and for other developed countries. By 2050, the global population of older persons is expected to more than double its size in 2015, reaching nearly 2.1 billion (United Nations, 2015). Countries with a prevailing number of older people may come to a slowdown in aggregate growth GDP or even stagnation. Economists are expressing primary concern on this rapid demographic change. According to Bloom (2019), these worries relate to the prospect of workforce shortages as retirees come to outnumber new entrants to the workforce.

Bloom (2019) predicts asset market meltdowns and a drop in the savings rate as older people liquidate their assets and spend the money to support themselves in old age. Similarly, the governments will be forced to implement costly pension and retirement schemes, and provide excellent health care to support the older generation. Refusal from the taxpayers to pay for the seniors in favor of more reliable funded programs can lead to political instability. Governments may experience pressure from the societies to limit state freedom in costs and tax burden.

Different forms of innovation

The term “innovation” was first used in the nineteenth century. “Innovation” can refer to something new or to a change made to an existing product, idea, or field (Webster, 1963). Mainly there are three forms of innovation that companies use in their business.

The first form is the product innovation, which requires the entire development of certain goods, needs an improvement of how the product performs, and recommends the addition of a new feature to an already existing item. (Feldman & Florida, 1994) Another form is the process innovation, which includes the improvement of the technology or resources used in the manufacture. It combines several categories, such as tools, equipment, and delivery system. Finally, the last form is business model innovation, which requires risky and challenging measures. The business constantly has to adapt to the needs of its customers, ensure that their services are the best on the market, and adjust to the latest technological advancements.

U.S universities’ engagement in research

Universities’ engagement in a considerable share of research is associated with the commercialization of its developments. The US occupies one of the leading positions among the nations of the world in the field of transfer of knowledge and technologies from scientific and educational institutions to society and business (Weerts, 2020). A rough estimate of university income from all types of commercialization accumulates grants and custom research and development under contracts with federal agencies and private companies. At the most successful US universities, for instance, Stanford University in California, the research budget could be close to $ 1 billion a year (Research at Stanford, 2019).

Surprisingly, in this case, the US government does not prioritize profitability but values a policy of social benefit. The US helps as many new types of research and technologies as possible to break through the conditions of fierce market competition and become useful and accessible to people. It definitely is a good thing that universities conduct researches in the United States because, most of the time, the government invests money and helps researchers to carry out their studies.

Government’s role in fostering research

As previously stated, the government, along with private corporations, plays a significant role in fostering innovation and education. Federal agencies foster some researchers and their projects to their commercial use, which brings benefits not only to the researchers but to the government as well. The funding of university research in the United States, as in almost all countries of the world, is a seemingly financially unprofitable activity that spends a lot of public and private funds.

However, the US government has its own goals when funding researches: providing new jobs and workplaces, optimization of the manufacturing of goods and services, and implementation of new high-tech devices. The acceleration of scientific and technological progress, encouragement of young people to engage in science and business, and improving people’s living standards are also on the government’s agenda (Carayannis, Cherepovitsyn, Ilinova, 2016). These mentioned factors are necessary components of progress and development, and reasons why the US funds science in hopes of a brighter future.

The reason why larger corporations conduct research

It was said above that a substantial part of the budgets of American universities is the research budget, i.e., research commissioned by federal agencies and large private companies. This is determined by the fact that it is cheaper for more prominent private companies to finance the scientific research they need in a university environment than to buy their results from other private companies with the necessary capabilities, or to build their laboratories.

A striking example is Google – a spin-off company at Stanford University, which brought a lot of money to its alma mater. Such situations are infrequent, and, usually, this is a short-lived joy since the income from the profitable sale of a license for new promising technology has been received on several years only, and then the technology becomes obsolete. Most of the researches require proper funding, and many smaller companies cannot afford this luxury. The expenses go up to several millions of dollars, which is not a sustainable investment of a business that has no such amount to pay.

References

United Nations. (2015). Ageing. Web.

Bloom D. E. (Ed.). (2019). Live Long and Prosper? The Economics of Ageing Populations. Web.

Carayannis, E. G., Cherepovitsyn, A. Y., & Ilinova, A. A. (2016). Technology commercialization in entrepreneurial universities: The US and Russian experience. The Journal of Technology Transfer, 41(5), 1135–1147. Web.

Feldman, M. P., & Florida, R. (1994). The Geographic Sources of Innovation: Technological Infrastructure and Product Innovation in the United States. Annals of the Association of American Geographers, 84(2), 210–229. Web.

Webster, N. (1963). New collegiate dictionary. A Merriam-Webster. Springfield, MA: G. & C. Merriam Co.

Research at Stanford. (2019). Web.

Weerts, D. J. (2020). State Governments And Research Universities: A framework for a renewed partnership. Oxfordshire: Routledge.

Providing society with free and accessible information becomes a fundamental value during times of global crises. The primary purpose of disclosing government data is to encourage citizens to reuse it, to give them the tool to create and develop public goods so that the commercial sector can competitively offer innovative products. This is necessary to form an environment of active civic criticism. Anyone with technical skills could create a socially useful service with their hands. For several years now, the statistical departments of states and international organizations, particularly the European Union, have published statistical reports and bulletins and posted on their websites all the statistics they have accumulated in a reusable form – special formats for the so-called machine processing.

During the pandemic, sources of information and data on the spread of the new coronavirus COVID-19 have become a precious resource that is used in their activities not only by citizens but also by the media, NGOs, government agencies (Dwivedi 15). Data is collected both by official research communities and statistical services and informal groups of activists. The following requirements are imposed on the information: relevance – regular updates; correctness – data must be collected from trusted official sources or verified by activists of significant communities, such as Open Data Science.

Data on COVID-19 is classified as sensitive since the forecasting scenarios of the epidemiological situation cause a public outcry. Therefore, the analysis of these data requires accuracy. The results’ interpretation involves several assumptions since the following features are initially inherent in different types of data. First, the fragmentation of sources and data formats is essential. The lack of a single spreadsheet, which everyone fills out following a single methodology, and which would easily make it possible to compare cases of infection and death around the world. 16 Second, there is a large difference between prevention and control measures against coronavirus and their disparity across countries and cities, which affects the data and general knowledge of how many people became infected with COVID-19.

Work Cited

Dwivedi, Yogesh K., et al. “Impact of COVID-19 Pandemic on Information Management Research and Practice: Transforming Education, Work and Life.” International Journal of Information Management, vol. 55, 2020, pp. 1-25.