John Kay states that the source of competitive advantage is the creation and exploitation of distinctive capabilities which are divided into three categories: corporate architecture, reputation and innovation. In an evolving economy, the business organization must innovate at a rate that meets or exceeds its environment in order to sustain a competitive advantage.
Clayton M. Christensen answers this question brillantly in his books:
The Innovator's Solution and The Innovator's Dilemma.
Several book reviews are avaiable online, but I recommend you read the original.
I do agree with Fernanda, Christensen is a good starting point. The Blue Ocean book is also interesting because innovation is not always taking the path we expect... I do think also what your question is too large, innovation is not the same according to the industries, country, etc...
I use in my dissertation IMP Interaction and Network Approach to explain the various challenges that innovation process includes. IMP approach maintains that innovation requires sufficient resources. Normally a single firm has not all the resources needed for an innovation. Therefore innovating necessitates accessing resources from other actors. This again requires formation of resource sharing or integrating relationships with other parties. This is one of the challenges in innovating. And even if the firm is able to form the relationships, the innovation process is based on trial and error behavior and gradual knowledge accumulation. The number of possible resource combinations is practically unlimited which in itself determines whether innovation takes place at all. And as all the actions taken by various parties during the innovation process as well as external events affect the innovation, managing the innovation is very challenging.
Cantù,C. - Corsaro,D. - Snehota,I. (2012) Roles of actors in combining resources into complex solutions. Journal of Business Research, Vol. 65 (2), 139-150.
Håkansson,H. - Waluszewski,A. (eds.) (2007) Knowledge and innovation in business and industry: The importance of using others. Routledge, London.
Håkansson,H. - Ford,D. (2002) How should companies interact in business net-works? Journal of Business Research, Vol. 55 (2), 133-139.
Håkansson,H. - Snehota,I. (eds.) (1995) Developing relationships in business net-works. Routledge, New York.
Håkansson,H. - Ford,D. - Gadde,L. - Snehota,I. - Waluszewski,A. (2009) Business in networks. John Wiley, Chichester, West Sussex, UK.
Konstantinos,
An entrepreneurial firm can only create competitive advantage through innovation; my presentation refers. See also (mata et al 1995)
Presentation Quantifying the Productivity Gains from Investing in Innovat...
Mata, F. J., Fuerst, W. L., & Barney, J. B. (1995). Information technology and sustained competitive advantage: A resource-based analysis. MIS quarterly, 487-505.
Many book and papers were cited but it does no seem that they respond to what Konstantinos Biginas asked. You are all talking about innovation management, but Konstantinos asked why it difficult to create competitive advantage through innovation.
I can point two problems: (1) concept (or definition) of competitive advantage is ambiguous; (2) no argument on the environment which is the arena of competition. Can someone amend this state of arguments?
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