15 Chapter II Literature Review The second chapter of this research, focusing on the Literature Review, dives into the key theories and past studies related to the incorporation of system thinking in tackling issues as well as photovoltaic (PV) module market. This chapter lays the foundation for everything that follows in this study. It helps us understand what has already been discovered and where we can add new insights, especially for companies like PT. Indonesia Solar Global that are navigating this competitive field. The chapter start with the Theoretical Foundation section. Here, we explore how systems thinking and strategic management concepts can help us understand the PV industry better. We look at how these ideas have evolved over time and how they apply to the challenges and opportunities in renewable energy today. Next, we dig into different theories about competition and market analysis, such as Porter's Five Forces, Resource-Based View, and the Blue Ocean Strategy. While these frameworks offer valuable perspectives on the competitive landscape of the PV market, our discussion critically evaluates their limitations and explains our decision to embrace systems thinking. We argue that the interconnected and dynamic nature of the PV industry necessitates a more holistic approach, which systems thinking provides, allowing for a deeper understanding of the complexities and interdependencies that traditional competitive strategies might overlook. This Literature Review is not just about summarizing what others have written. It's about building a solid base for our research. It helps us see where there might be gaps in what we know and how our work can fill those gaps. By combining systems thinking with competitive strategy, we aim to get a clearer picture of how PV companies can succeed in a rapidly changing market. II.1 Theoretical Foundation II.1.1 Systems Thinking and Strategic Management 16 Systems thinking, as described by (Amissah et al., 2020), focuses on understanding the interconnections and relationships between various components within a system and their collective impact on overall outcomes. This perspective is crucial for strategic management within the PV industry, as it allows for a more holistic understanding of the market, including the dynamics of competition, technological innovation, sustainability, and market evolution. Another study by (Hossain et al., 2020) provides a comprehensive overview of the systems thinking domain, highlighting its interdisciplinary nature and the variety of applications across fields such as engineering, business, and social sciences. The authors emphasize the importance of systems thinking in addressing complex problems by considering the interconnectivity and dynamics within systems. Furthermore, (Reynolds & Holwell, 2020) highlights five key systems approaches, each offering unique perspectives and tools for addressing complex changes and uncertainties, which are prevalent in the PV industry. These approaches underscore the importance of adaptability and a constructivist use of systems ideas, reinforcing the argument for integrating systems thinking in strategic management to effectively navigate the complexities of the PV market and drive sustainable change. A study by (Knight et al., 2020) integrates design thinking into strategic management, emphasizing the role of customer insights in shaping strategic decisions. This fusion enhances traditional management practices by introducing a more iterative, empathetic approach to understanding and meeting customer needs, thereby enriching the strategic planning process. Such a strategy not only complements systems thinking but also provides a tangible pathway for its application in organizational contexts, particularly in industries like PV where customer-centric innovation can drive competitive advantage. On the other hand, a study by (Srivastava & D’Souza, 2021) introduces an instrumental perspective on assessing strategic thinking within organizational contexts. It emphasizes the critical role of strategic thinking in navigating complex business environments and 17 its measurable impact on organizational performance. This perspective is particularly relevant in the context of the PV industry, where rapid technological changes and market dynamics demand a strategic approach that is both adaptive and forward-looking. In the Stakeholder Theory and the Resource-Based View of the Firm study by (Freeman et al., 2021) highlights the limitations of the Resource-Based View (RBV) in strategic management, particularly its lack of consideration for stakeholders. The authors argue that integrating stakeholder theory with RBV could offer a more comprehensive framework, addressing the gaps in RBV by incorporating aspects like normativity, sustainability, a broader view of people beyond mere resources, and the importance of cooperative behavior. This integration could provide a more holistic approach to strategic management, recognizing the interdependence between a firm's resources and its stakeholders. Accordingly, (Midgley & Rajagopalan, 2021) discusses the evolution of systems thinking and the introduction of systemic intervention. This approach addresses the limitations of previous systems theories by incorporating methodological pluralism and boundary critique, offering a more inclusive and adaptable framework. This is particularly relevant for strategic management in complex industries like PV, where understanding power dynamics and stakeholder values is crucial for sustainable and effective strategies. Many studies have been highlighting the application of system thinking in the strategic decision and management. A study by (Olaleye et al., 2020) emphasizes the critical link between strategic thinking and innovation within organizations, specifically highlighting the role of absorptive capabilities as a mediator. This connection is especially pertinent in industries characterized by rapid technological evolution and intense competition, such as the photovoltaic sector. The study underlines that strategic thinking, encompassing systematic thinking, divergent thought, and reflection, enhances a firm's ability to innovate by effectively absorbing 18 and utilizing external knowledge. Another study by (Iacovidou et al., 2021) explores how systems thinking can aid in realizing transitions to a more circular economy. It emphasizes the importance of considering interconnected sub-systems within resource recovery systems to promote sustainability. This holistic approach helps in dissecting the complexity of resource management, focusing on the dynamics between processes, values, and actors within the value chain. Such a perspective is crucial for organizations aiming to integrate systems thinking into their strategic planning, as it facilitates a deeper understanding of the systemic challenges and opportunities present in transitioning towards sustainable practices. Last but not least, a study by (Hynes et al., 2020) emphasizes the potential of systems analysis to address global challenges by understanding their systemic properties such as interconnectedness and resilience. It advocates for a systems approach in policy-making to better manage complexity and uncertainty, suggesting that traditional economic and policy analysis methods need to adapt to better handle the interconnected and dynamic nature of modern global challenges. These insight are instrumental in applying systems thinking principles within organizational strategy, demonstrating how a strategic mindset contributes to fostering innovation and competitive advantage in dynamic market environments. II.1.2 Competitive Dynamics and Market Analysis Traditional competitive strategy frameworks, such as Porter's Five Forces, provide valuable insights into industry structure and competitive intensity. However, their applicability to the rapidly evolving PV market can be limited due to the sector's unique characteristics, such as the significant role of government policies and subsidies, and the rapid pace of technological innovation. A study by (Isabelle et al., 2020) discusses the relevance of Porter's Five Forces framework in the contemporary business environment, contrasting the mining and IT industries. It suggests that while Porter's framework offers foundational insights into industry competition, it may not fully capture the complexities of today's global and digital markets. 19 A study by (Hassan et al., 2022) discusses the Blue Ocean Strategy and its relevance for achieving competitive advantage by creating new market spaces, making the competition irrelevant. While this strategy emphasizes innovation and breaking away from traditional competitive market spaces, its application in the dynamic and highly regulated PV market might face limitations. The PV industry is influenced by factors such as government policies, technological advancements, and environmental considerations, which may constrain the ability to create uncontested market spaces as proposed by the Blue Ocean Strategy.