Sustaining organization advantage in times of financial uncertainty: the context for research & development investments by academic libraries - Library Finance: New Needs, New Models

Abstract

This article will establish a managerial context for the expenditure of funds for research and development (R&D) by academic libraries. Ultimately, conclusions are drawn concerning the nature of these investments by libraries as management strategies during times of uncertainty.

Introduction

This discussion will establish a managerial context for the expenditure of funds for research and development (R&D) by academic libraries. In contrast to the volumes that have appeared sustaining the value of R&D expenditures by the for-profit sector, little has appeared in the literature of librarianship on this topic. What has appeared in this literature speaks to these investments in the broadest possible terms. Typical of this literature are statements that urge library managers to "invest in new technologies and new ways of doing the library's business..." (De Gennaro, 1987, p. 145) or to "encourage independent entrepreneurial activity" (Downes, 1987, p. 83). Other specimens of this literature are descriptive, maintaining, for example, that "technological innovation will be provide to libraries - primarily by specialty suppliers adapting innovative techniques and devices to the particular needs of the library market - rather than pioneered within libraries" (Drake & Olsen, 1979, p. 100). Each statement clearly urges the expenditure of library resources on development or purchase of innovation, but none provides a reasoned organizational context for understanding these investments.

For-Profit Research & Development

For-profit corporations use expenditures on research and development to address marketplace challenges. These expenditures are formally directed through task-oriented research and development departments. The task of such departments is to focus on undirected research in areas of corporate interest. Such research may lead to new products and services that aid the entity in serving new and existing markets or may provide assistance to operating divisions in the effort to overcome current operational problems (Ellis, 1984, pp. 40-41).

Central to the corporate theory on the value of investment in research and development is the organizational need to sustain a competitive edge in a rapidly changing marketplace environment. Economists and management theorists have emphasized the crucial role of R&D in determining the economic well being and business success of for-profit entities in such an environment (Jacobson, 1992, p. 788). Few organizations enjoy permanently stable environments, and, therefore, lack success without the development of new products or services.

Sustaining Competitive Advantage

The idea of sustaining competitive advantage during times of uncertainty has become a topic of academic investigation. Much of this research emphasizes the need for organizations to develop management strategies for marshaling firm resources. The focus of these strategies is on efforts at adapting organizations to their changing environment for the purpose of sustaining the economic viability of the firm.

At this point, a few terms are worthy of definition. The literature defines "internal environment" as "those relevant physical and social factors outside the boundaries or specific decision unit of an organization" that are taken directly into consideration "during organizational decision-making" (Duncan, 1972, p. 314). In the literature, "the term |strategy' has a wide range of related meanings." However, the use of the word here focuses on the "relationship between a whole organization and its external environment" (Rumelt, 1979, p. 197). Strategy-making then is the managerial process of determining interactions between an organization and its external environment to secure scarce resources. For the for-profit corporation, this interaction is market driven and seeks to maximize return on investment. For the not-for-profit organization, strategy-making relates both to the actions management takes with funding agencies when seeking to assure resources in support of the organizational mission and goals, as well as to interactions between the organization and constituent groups through the delivery of products and services.

Miller and Friesen (1983, p. 222) have developed a useful structure for characterizing strategy-taking activities undertaken by managers in their efforts to achieve symbiosis between organizational goals and processes and the resource purveying environment. They have labeled the first dimension of activities as analysis and the second as innovation. Strategy-making through analysis is reflected by activities that methodically and systematically take more factors into account when decision-making ensures symbiosis among decisions, plans for future contingencies, and develops new levels of organizational expertise. Strategy-making through innovation encompasses the introduction of new products and services, allows for experimentation with new production-serving technologies, and incorporates the search for, novel solutions to problems. Innovation frequently assumes a proactive interaction with operating environments and frequently embodies organization risk taking. Investment by organizations in research and development clearly falls under this second category of strategy-making activities. Research and development expenditures are one of the two dimensions of activities managers use when responding to uncertainty in their external operating environment.