ABSTRACT
Organizations face the dilemma of balancing and achieving the correct mixture of efficiency and innovation (Lawrence and Dyer 1983). For much of the twentieth century there has been a tendency to give efficiency priority over innovation, but this trend began to change in the Western world in the 1970s. Today, innovation is surpassing efficiency as the primary principle for deciding the most appropriate form of organization (Clark and Wheelwright 1993). In a more detailed way, Bolwijn and Kumpe (1990) categorized four types of firms operating in different competitive environments in terms of market requirement and performance criteria: the efficient firm, the quality firm, the flexible firm and the innovative firm. Although cost reduction, quality improvement and increasing flexibility are all still embedded in a firm, Bolwijn and Kumpe (1990) pointed out that since the 1990s the innovative firm has been the most successful, with its capabilities of creating new demand and innovating products and processes in a short time. Innovation has become a critical factor in a companyʼs competitive advantage.
