A recent case in the US automobile industry demonstrates the importance of
focussing on innovativeness and proactiveness. The once undisputed innovator in the
automotive industry, Toyota, is now playing catch-up against its competitors like
Ford, Honda, and Nissan in terms of drivetrain technology. Toyota has slipped behind
when it diverted engineering and financial resources to thwart the unintended
acceleration crisis and other quality issues over the last two years. To rebuild its
corporate entrepreneurship capability, Toyota must focus on its product innovations
like turbocharging and direct injection technology to counter Nissan’s continuous
variable transmissions. Toyota has also verified the significance of social capital
as measured by supplier relationship by teaming up with its key battery supplier,
Tesla, to migrate its flagship electric car, Prius, from nickel-metal hydride to lithium
battery pack.