Tema 1 Conceptual frame

Innovation Concepts

• Innovation: A new or improved product/process, significantly different from the previous one, made available to users (product) or used by a unit (process). Not the same as invention; it involves invention plus commercialization/provision diffusion.
• Technology: A subset of scientific knowledge with practical applications, arising from innovation.
• Research & Development (R&D): Systematic creative work increasing knowledge stock and deriving new applications.
• Basic Research: Aims to create new scientific knowledge, often carried out in labs or universities, resulting in scientific papers.
• Applied Research: Uses existing scientific knowledge to solve specific problems, leading to technologies and patents.
• Experimental Development: Focuses on solving technical problems for new or improved products/processes, potentially creating testable prototypes that can become innovations.

Innovation Implications

• Competitive Advantage: Crucial for business competitiveness and growth (including start-ups).
• Industry Transformation: Generic technologies can create or destroy entire industries (e.g., steam power, electricity, IT).
• Economic Growth: Contributes to national economic growth by improving productivity.
• Diversification: Facilitates economic diversification and structural change.
• Sustainability: Leads to innovations for sustainable development.
• Creative Destruction: New technologies challenge existing economic structures and organizations, renewing society and leading to higher economic development and welfare.

Types of Innovations

• Process Innovation: Changes in the production process without altering the product. Aims to increase effectiveness and efficiency (e.g., reduce defects, increase production).
• Product Innovation: Refers to changes in the product itself, often with shorter product life cycles requiring frequent replacement with improved versions or new variations.
• Radical vs. Incremental Innovation:
  • Radical: Significant changes, "doing something new" (e.g., voice recognition, hybrid cars, online share trading).
  • Incremental: Small improvements, "doing what we do better" (e.g., Windows 7, improved phone services).
• Social & Sustainable Innovation:
  • Frugal Innovation: Lower cost, reduced resource use.
  • Green/Eco-Innovation: Environmental protection and climate change solutions.
  • Inclusive Innovation: Creates opportunities for marginalized groups.
  • Pro-Poor Innovation: Innovation benefiting the poor.
  • Grassroots Innovation: Developed by lower income groups.

Innovation Models

• Linear Model (Science Push): Scientific advancements drive technological change. Emphasizes invention and public investment in basic research. Often associated with "closed" innovation strategies in large corporate labs.
• Chain-Link Model: Shows interplay between market needs, design/testing, and feedback loops throughout the innovation process. Incorporates existing knowledge and necessary research to solve problems.

Innovation Management

• Small Firms: Often major sources of innovation due to flexibility, dynamism, and less bureaucracy. Small, entrepreneurial firms are particularly adept at challenging established structures through "creative destruction".
• Large Firms: Have resources for scaling up early breakthroughs and managing risks in concentrated industries.
• Company Size Categories: Unicorns (startups valued at $1B+), Gazelles (rapidly growing small/medium-sized companies), and Dolphins (agile and adaptable, often science-based start-ups).
• Resource-Based View: Competitive advantage stems from valuable, rare, inimitable, and non-substitutable resources (capabilities). These capabilities can be strengths or weaknesses.
• Core Competencies: Differentiate a firm in a market, are difficult to imitate, and focus on what a firm does well. Can also create vulnerabilities by making firms less adaptable to radical change.
• Competence-Enhancing vs. Competence-Destroying Innovation: Innovation impact on a company's existing knowledge and if it is obsolete.