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In the Brazilian Economy, telecommunication has been using the technological innovation to pursue
sustained competitive advantages very intensively. Particularly, the cellular telephone market has been very
sensitive to technological innovation; Guimarães (2005) and Pinheiro (2005) point out that firms are constantly
developing new services and offering new products, in search of better market positions. The Brazilian mobile
telephone market has showed one of the biggest growing rates of the world. in the last year. In 2006, the number of
operating terminals increased 41.5 % over 2005, whish, in turn, increased 33% over the previous year. In January
2007, the market reached over 100 million cellular accesses, although a slowdown in the market growth is expected
during the year (Cruz, 2007). Quintela & Cunha (2004), Stanton (2004) and Siqueira (2007) estimate that the
competition in the Telecommunication Industry will continue to be intense during the years ahead. Manufacturers
will invest large amount of money in new products and operators will also invest in new services. Technological
innovation strategies will be the motor to change the business models and the companies will continue to search for
sustained competitive advantage. Considering this scenario, the following question has been proposed: Are
technological innovation strategies contributing for sustained competitive advantage in emerging the
Brazilian cellular market? The main objective of this study is to identify the influence of technological innovation
on the business competition. The research was limited to the cellular market in Brazil, considering, as pointed out by
Fonseca (2005), that the product and the services provided in this market are very prone to adopting innovation
introduced by handset manufactures and operators.
TECHNOLOGICAL INNOVATION
Frequent changes in the competitive environment have introduced different forms of organizations, new
types of institutional relationships and new possibilities of customer value generation (Porter, 1985). According to
Hamel (1988), the key to customer value creation is based on innovation. The author defines innovation as the
creation of new customer values before competitors do, generating wealth to the company’s stakeholders. Drucker
(1998) contributes saying that innovation is the strategy the companies adopt to create wealth. However, Day (2003)
adds that only radical innovation can generate superior earnings to shareholders. Kandampully & Duddy (1999)
state that if a firm wants to improve its competitiveness, it is extremely important to use its core competence to
create and introduce innovation to the product. Furthermore, Tushman & Nadler (1997) assert that good companies
compete along the years managing innovation; firms do not solely innovate, but anticipate and build up very
different standards for the future of the market.
Convention