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Innovation in International Business

International business is the highest form of entrepreneurial activity, and innovation plays a vital role in the conceptual idea of gaining a competitive advantage. The latter is conducted through elaborate modifications in the business model, knowledge connectivity, research and development, and organizational innovation. For example, in the hospitality and tourism sectors of the economy, international businesses can gain competitive advantage through innovative business models and conceptual frameworks (Souto, 2015). It is achieved by improving both internal and external processes, which results in higher level of satisfaction of customers’ needs.

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Standard practices of modernity were innovative modifications of the past, which manifested through the knowledge connectivity of multinational enterprises. On the conceptual level, it affects value chain creation practices, which inevitably transforms the landscape of innovative business activities (Cano-Kollmann et al., 2016). Another important concept of innovation’s role in international business is research and development (R&D). The latter is the primary catalyzer or fuel for the emergence of innovation as a phenomenon that morphs global entrepreneurial practices. It is stated that the positive relationship between innovation performance and R&D internationalization can enhance a company’s overall resilience to uncertainty and complexity (Hse et al., 2015). For example, the notion of research and development can play a central role in promoting innovation among businesses operating on the international level.

Lastly, it is important to point out that there is a number of categories that differentiate various forms of innovation. It is stated that all types of innovation, especially technological innovation, is primarily enhanced by organizational innovation (Azar & Ciabuschi, 2017). For instance, the organizational structure of a firm can be a direct predictor of the technology-based innovativeness among international businesses. Therefore, the concept of organizational management is tightly interlinked with the innovative vector of the multinational enterprise.


The theoretical framework in the field of international business can be effectively utilized in conjunction with innovation and related practices. One such theory is the grounded theory, which uses extensive analysis of large data in order to make the conclusions “grounded” or backed by solid evidence. It is stated that the grounded theory can be highly useful in international business despite its minor drawbacks (Gligor et al., 2016). It is common to associate innovation with the notions of creativity and chance, but the grounded theory is primarily analytical and explicitly data-driven. For instance, the innovative practices can be transformed into a precisely measurable force that can give a major competitive advantage to multinational enterprises.

In addition, the theory of internalization can be proactively used alongside innovation. The given theoretical framework focuses on the R&D aspect of the international business as well as on the flow of materials within a business. In other words, a multinational enterprise internalizes its business processes, such as innovation, in order to gain competitive advantage through secrecy or intellectual property protection (Buckley, 2016). For example, a company can internalize its innovative research operations and outcompete its rivals by preventing them from using this innovation.

Lastly, a more recent and evolved version of internalization theory, which is called a new internalization theory, can be used as a framework for innovation. It emerged as a combination of the resource-based view and classical internalization theory (Narula & Verbeke, 2015). The basic principle revolves around focusing on internal operations through research and development, but the strategic objectives are outlined by assessing the company’s resources. For instance, a firm can shape its business model through internal R&D-derived innovative products, which can be set up through deliberate resource allocation.


Tools utilized by an international business can directly affect the innovativeness of the company. It is in a tight relationship with technological advancements, and the initial form is educational tools for immersive learning. In both student teaching and employee training, immersive and interactive tools can be used to expand their knowledge in international business (Aggarwal & Goodell, 2015). For example, a company can focus on its human resources as a primary source for innovation, and thus, the management can integrate immersive tools to execute the given process.

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Technology management tools can become a highly useful addition to the business operations of a multinational enterprise. Such a modification can greatly boost the innovativeness of the corporation. For instance, workload and resource calculating tools can be used in innovative ways, such as an effective portfolio or project management (Cetindamar et al., 2016). This can manifest itself as an innovative feature of an organization that will strengthen its competitive advantage over other inefficient firms.

Lastly, the business process reengineering can be used as an effective tool for promoting innovation by adjusting existing business processes in alignment with the current strategic interests of a company. International business is one of the largest sets of business processes, which might not be properly coordinated in a way that would ensure efficiency and innovativeness. However, business process reengineering is an instrument that also can completely reshape all processes within an international firm (Bhaskar, 2015). For example, branches of multinational enterprises with the lowest performance can innovatively implement the given tool to remodel the structure to increase the overall performance. In addition, some specific departments can reevaluate the current procedures and identify various inefficiencies in order to resolve them in the most innovative manner.


Aggarwal, R., & Goodell, J. W. (2015). Immersive tools for teaching IB. Journal of Teaching in International Business, 26(3), 161-163.

Azar, G., & Ciabuschi, F. (2017). Organizational innovation, technological innovation, and export performance: The effects of innovation radicalness and extensiveness. International Business Review, 26(2), 324-336.

Bhaskar, H. L. (2015). Business process reengineering: A process based management tool. Serbian Journal of Management, 13(1), 63-87.

Buckley, P. J. (2016). The contribution of internalisation theory to international business: New realities and unanswered questions. Journal of World Business, 51(1), 74-82.

Cano-Kollmann, M., Cantwell, J., Hannigan, T. J., Mudambi, R., & Song, J. (2016). Knowledge connectivity: An agenda for innovation research in international business. Journal of International Business Studies, 47, 255-262.

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Cetindamar, D., Phaal, R., & Probert, D. (2016). Technology management: Activities and tools. Palgrave Macmillan.

Gligor, D. M., Esmark, C. L., & Golgeci, I. (2016). Building international business theory: A grounded theory approach. Journal of International Business Studies, 47, 93-111.

Hse, C. W., Lien, Y. C., & Chen, H. (2015). R&D internationalization and innovation performance. International Business Review, 24(2), 187-195.

Narula, R., & Verbeke, A. (2015). Making internalization theory good for practice: The essence of Alan Rugman’s contributions to international business. Journal of World Business, 50(4), 612-622.

Souto, J. E. (2015). Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, 142-155.

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