14311876 innovation economics presentation 1

8/2/2019 14311876 Innovation Economics Presentation 1

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Thursday, March 29, 2012 1

Economics of Innovation

Organisational Innovation

Instructor : Professor Zhao YulinPresenter : Kumara Uluwatta


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Outline Challenges in organisational innovations

conceptual considerations

Different forms of organisational innovation

Measurement of the outcomes oforganisational innovations

Barriors to organisational innovations

Some empirical studies Conclusions


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Challenges in organisationalinnovations

Organisational innovations are addressed by differentacademic disciplinesfrom different theoreticalbackgrounds (organisational science, economics,work psychology, sociology etc.)

No single commonly accepted definition and theorybase

Outcomesof organisational innovations are difficultto define and measure

Specific (new) set of performance indicatorsnecessary for the measurement of organisationalinnovations


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Invention or Innovation?

Invention an idea or model for anew product or system, not yet

entered the economic system. Innovation accomplished with

commercial transaction involving newproduct or system. It is a part of theeconomic system

-Schumpeter


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Innovation- Five types

New products

New methods of production New sources of supply

Opening of new markets

New ways of organizing businesses- Schumpeter (1934)


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Oslo Manual (2005)

1992 (1st ed.) : measuring technologicalinnovation 1997 (2nd ed.) : measuring technological

innovation + collection of non-technologicalinnovation data technological change both callsfor and results from institutional andorganisational change.

2005 (3rd ed.) : includes organisational andmarketing innovationsorganisational innovations

are not only a supporting factor for product andprocess innovation; they can also have animportant impact on firm performance on theirown


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Innovation

An innovation is the implementation of a

new or significantly improved product (goodor service), or process, a new marketingmethod, or a new organisationalmethodin business practices, workplace

organisation or external relations

- Oslo Manual (2005)


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Organisational innovation

Implementation of a new organisationalmethod in the firms business practices,

workplace organisation or external relations.

Changes in firm structure or managementmethods that are intended to improve a firmsuse of knowledge, the quality of goods andservices, or the efficiency of work flows.

-Community Innovation SurveyCIS


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A new organisational method in businesspractices: e.g. codifying knowledge;education and training schemes; supply chainmanagement; business reengineering; lean

production; quality management systems In workplace organisation: new methods for

distributing responsibility and decisionmaking among employees

In external relations: with other firms orpublic institutions or customers


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Organisational innovation onentreprsie level

Organisational structure job rotation, job enrichment, job enlargement, coaching

functions, teamwork, smaller business units, netwerking,

outsourcing, adapting technology and production process Organisational procedures

quality management, environmental management, preventivemaintenance, just-in-time, supply management, knowledgemanagement

Supporting systems: personnel policy and industrial

relations personnel, working hours, competence management, training,labour conditions (pay systems, contracts), industrial relations,workers participation, legislation...


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Organisational innovations canbe understood in different ways

Enablers for other types of innovations:implementation and use of other forms ofinnovations (e.g. material product, service ortechnical process innovations) might be linked toorganisational innovations

Distinct form of innovation- direct source ofcompetitive advantage: organisational innovationscan directly improve performance

Prerequisites for knowledge development in firms:Firms' ability to acquire, create and make the bestuse of competencies, skills and knowledge isclosely linked to organisational and managerialpractices


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Organisational innovations can be understood asthe non-technical part ofprocess innovations

Unlike product and service innovations, processinnovations are not directly implemented in themarket

While the effects of product and service

innovations can be directly measured by monetaryindicators, the effects of process innovations arenot directly visible in shares of sales and aretherefore more difficult to measure.

Schumpeter: success (economic, market, socialetc.) distinguishes an innovation from an invention,therefore organisational innovations need to bedefined and measured in relation to theiroutcomes/effects.


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Organisational innovation vs.organisational change

Organisational innovation involves a certain degreeofintentionality

Organisational innovation typically has a specific

aim intended outcome Organisational innovation is mostly an

organizational change, but not every organisationalchange is also an organisational innovation

The distinction between organisational change andorganisational innovation is clearly possible ex postafter the outcome can be observed (due to time-lag)


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Measuring different formsoforganisational innovation

Complexity and different aggregation levelsof organizational innovations: Organisational

innovation is not one aggregated concept,but is composed of many different aspectssuch as,

Decentralized organizations,

TQM, HRM, Lean Mgt,Innovative work systems (great varietyof specific indicators)


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Different life cycle of organisational

innovations:Organisational innovationsdo not have a 'sell-by-date' as productand service innovations tend to have(typically 3 years). Novelty does notseem to be the single main criterion

defining an organisational innovation

Interfirm vs. intrafirm diffusion oforganisational innovationsThe extent of

implementation within the firm seems tobe important. Partial implementation vs.full use of organisational concepts makesa great difference


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Measuring the outcomes oforganisational innovation

Different organisational innovations can aim at the sameoutcome (e.g. task integration and flexible workingschedules both aim at increased flexibility) Differentorganisational innovations can be conflicting in their

effects (e.g. standardisation might increase quality but atthe same time decrease flexibility) There is no "one bestindicator" to measure the effect/outcome oforganisational innovation, given that organisationalinnovation itself is a multidimensional phenomenon and

however there are two categories of outcomes.Firm level outcomesEmployee level outcomes


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Potential firm level outcomes oforganisational innovations:

Improved quality of goods or services

Reduced costs Reduced time to respond to customers

or suppliers

Increased flexibility (product, process

flexibility) Increased productivity

More product or service innovations


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Potential employee leveloutcomes of organizational

innovations:

Improved employee satisfaction

Improved work-life balance Increased autonomy at work

Increased motivation


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Barriers to sustainableOrganisational innovation

lack of senior level vision and commitment to sustainability Nervousness over taking a pioneering or leadership role on

sustainable innovation Sustainability is not seen as area of business opportunity

Sustainability issues are rarely included in the corporatestrategy, business development and/or the opportunitysearch process

Lack of awareness of sustainability/environmentalawareness amongst key business functions

Organisational systems and procedures are often inflexible

(Bureaucracy, structure, communication and risk aversion etc.) Product designers and design consultancies still have a poor

understanding of sustainability


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Some empirical studies

Massimo G. Colombo, Marco Delmastro and Larissa Rabbiosi,University of Pavia, Autorit Garante della Concorrenza e del Mercatoand Politecnico di Milano Lean organisation, High Performance workpractices and profitability: Evidence from panel data

Davide Antonioli, Massimiliano Mazzanti, Paolo Pini andErmanno Tortia, University of Ferrara Technological andorganisational innovations, industrial relations and firm performances:An analysis of the determinants of innovation activities

Michela Marchiori and Angelo Caruso, University of UrbinoPursuing success in enterprise innovation: modelling and managingits inner complexity

Fabrizio Cesaroni and Andrea Piccaluga, St.Anna School ofAdvanced Studies and University of Lecce Technology transfer fromItalian universities: is an entrepreneurial university model starting up?


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Conclusions

Organisational innovations can be understood both as

enablers for other types of innovations and as a distinctform of innovation (direct source of competitiveadvantage)

Measurement of organisational innovations and theireffects is methodologically challenging :- Complexity of

organisational innovations organisational innovation is amultidimensional phenomenon (different aggregationlevels) - Longer life cycles of organisational innovationsthan of product or service innovations (novelty lessimportant) - Significant differences regarding the intrafirmdiffusion of organisational innovations (extent ofimplementation) - Multidimensional relationship betweenorganisational innovations and their outcomes(complementarity vs. conflicting effects) - Structuralequation modelling offers the possibility to consider someof these aspects


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THANK YOU

14311876 innovation economics presentation 1

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