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Summary theory session 6
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Theory session 6SOURCE: BAREGH
Innovation = the multistage process whereby organisations transform ideas into new/improved
products/ services or processes, in order to advance, compete and differentiate themselves
successfully in their marketplace.
Classification of innovations, based on:
- Nature/degree of innovation = refers to the newness or degree of novelty of an innovation.
o Radical innovation = results in something new, are associated with fundamental
change, such as a new product or process, and are often implemented through a
specific innovation project.
o Incremental innovation = results in something improved, are “add-ons” to a previous
innovation, such as changing the materials used to make a product, or improving
service operations.
- Type of innovation = are based on the outcome of the innovation process.
o Position innovation = changes in the context in which products/services are
introduced.
o Process innovation = changes in the way in which things (products/services) are
created and delivered.
o Product innovation = changes in the things (products/services) which an organisation
offers.
o Paradigm innovation = changes in the underlying mental models which frame what
the organisation does.
Innovation orientation = multidimensional knowledge structure composed of a learning philosophy,
strategic direction, and trans-functional beliefs that, in turn, guide and direct all organisational
strategies and actions, including those embedded in the formal and informal systems, behaviours,
competencies, and processes of the firm to promote innovative thinking and facilitate successful
development, evolution, and execution of innovations.
, SMEs and entrepreneurial firms are contributing to the development of an economy and therefore
UK governments initiatives focus on encouraging innovation in SMEs.
Degree of innovation
Results from this study show that incremental innovations are the focus of SMEs in general and food
SMEs. The firms show a good level of engagement with both radical and incremental innovation for
all types of innovation, but their level of engagement with incremental innovation is higher than that
for radical innovation. Focussing on incremental innovations, firms reflect their highest level of
engagement with product innovation and lowest with both packaging and paradigm innovation. So,
although the rate of firms’ engagement with incremental innovation is higher than that with radical
innovations, firms also undertake radical innovations.
Types of innovation
- Engagement in types of innovation: food sector SMEs in this study exhibit a similar level of
engagement with all of product, process, and position innovation. Levels of engagement with
paradigm innovation are lower, but still significant. So, SMEs engage in a range of different
types of innovation. This means that any previous study which restricted its analysis to one
type of innovation only achieved a very partial insight into innovation in the organisations.
- Allocation of resources: most resources were allocated to product innovation, closely
followed by process and position innovation. So, there is a lower level of resources spent on
paradigms innovation.
o Product innovation: firms are more engaged in incremental packaging innovation
than radical packaging innovations, because the latter requires significant
investments.
o Process innovation: this study indicated that food SMEs are committed to the
incremental improvement of their processes, and are moderately engaged with all
other process related activities, including the exploitation of information
technologies. It seems that scarcity of financial resources within food SMEs prevent
them from exploiting technical/technological related opportunities.
o Position innovation: high level of engagement with position innovation, and
associated engagement in marketing activities. Firms reflect a reasonably positive
commitment to the development and exploitation of branding, innovation in
marketing and promotion, and to identifying the potential of e-marketing. Firms’
lowest level of engagement is with CRM, which may be more relevant to some firms
than others.
o Paradigm innovation: engagement in paradigm innovation is lower than for other
types of innovation, this could be as the result of SME managers’ limited competency
in viewing their organisations strategically. Nevertheless, within paradigm
innovation, firms have quite a high level of engagement with incremental
innovations, in the form of ongoing improvements to strategy and plans, although
they report a rather lower level of engagement with radical paradigm innovations, or
radical changes to strategy and business model.
Although it has been noted that collaboration is important for successful
innovations, respondents seemed rather less likely to be engaging in
partnering and strategic alliances, or considering outsourcing, mergers or
acquistions. Such findings question the belief that “companies almost never
innovate in isolation”.
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