Innovation and manufacturing strategies are among the major factors determining a firm's long term competitiveness. The four facets of innovation: product, process, organization, and marketing, as well as knowledge intensity of manufacturing, all contribute to increased added value and, hence, to increased productivity and competitiveness. In manufacturing firms, manufacturing can contribute to the competitiveness of a firm by employing manufacturing processes that give the firm a distinct advantage over its competitors and by supporting the marketing function to win orders in the market place. In order to accomplish these tasks effectively, the manufacturing function should be actively involved in the evolution and implementation of a business strategy. Hence, the manufacturing function must proactively develop its own strategy, in line with the firm's objectives, to ensure the overall success of the firm.

At Sabancı University, the scope of the research in this area covers innovation management at the firm level, benchmarking at the sector level, innovation clusters, collaboration process among firms. Recent research has focused on innovation in manufacturing, conducted in partnership with a consortium of eight European countries led by the Fraunhofer Institute for Systems and Innovation Research. After the completion of the first stage, the second stage was embarked upon and completed with two additional countries participating in the same consortium. Another project in progress is the Strategy Development for SMEs in Clusters (SMEexcel) project sponsored by the Leonardo da Vinci Program of the European Commission. The Project's objective is to develop a methodology and training program to support the collaboration of SMEs in clusters.

A further major project completed has been the project titled “Innovation Models and Applications in Manufacturing Industry”. This two-year project has been supported by the Scientific and Technological Research Council of Turkey (TUBITAK). The project covered the Northern Marmara Region spanning from Kirklareli in the east to Sakarya in the west. 184 manufacturing firms took part in this empirical study. An integrated innovativeness model for manufacturing firms has been proposed with the aim of determining the drivers of innovativeness and the impact of components of innovativeness on firm performance. Related publications can be reached through the websites of the associated faculty.