Renewal of Manufacturing Firms through Innovation

Renewal of manufacturing firms in the advanced economies is necessary to keep them competitive in the international field. Renewal of manufacturing is caused by internal factors and involve incremental changes, or by external forces, such as economic crisis or market changes involving radical changes. The purpose of this study is to analyse the role of innovations, types of innovations and scope of innovations in the renewal of manufacturing. The goal is increased understanding of innovations as means for manufacturing renewal, and activation of novel empirical research. We reviewed literature for innovations that are linked with manufacturing technologies and renewal, featuring keyword search, article categorization, and full text analysis for selected articles. The results indicate that research on this topic is spread across four research domains: organization science, operations management, economic geography and innovation literature. Innovation has been studied on the level of firms and regional or national manufacturing clusters. It has been seen both as a catalyst and an inhibitor of renewal on the firm level. Four modes of innovation were identified: innovation related to diversification of customer base, increased efficiency, added value to end products, and interactions in the value chain. The re-bundling perspective is suggested as an interesting opportunity for future research, indicating a shift in the location of innovation from within the firm to the network of firms.