EMT 301

LECTURE 10
ENTERPRISE (BUSINESS) INNOVATION
 INNOVATION

According to OECD (2005), innovation is the

implementation of a new or significantly improved

product (good or service) or process, a new marketing

method, or a new organizational method in business

practice.
 TYPES OF INNOVATION
1. Product Innovation: Product innovation involves the
introduction of new products to the market at a particular
time which distinguishes it from other innovations to follow.
Thus, product innovation can be regarded as a salient
dimension. Example is Yam Pounder.
2. Process Innovation: Process innovation is the introduction of
new production methods and new technology that can be
used to improve production and management processes.
Process innovation is imperative in overall innovativeness of a
firm. Example is particular Software.
3. Market Innovation: Market innovation is the newness of
approaches that firms adopt to enter and exploit the targeted
market. Example is online Shopping.
• Organisation Innovation: Organisation innovation is the
overall innovative capability of introducing new products to
the market, or opening up new markets through combining
strategic orientation with innovative behaviour and process of
a firm.
• Technological Innovation: Technological innovation is the
pioneer introduction of a new technology in the form of a
product, process or service into the market. Technological
innovations include additional and specific resources needed
for the design and management of technical skills, knowledge
and experience, as well as institutional structures and links.
Technological innovation capability is the dominant source of
competitive advantage and thus underpins a firm’s
performance and economic development in the long term.
SOURCES OF TECHNOLOGICAL INNOVATION
(a)Research and Development
Research and experimental development (R&D) are creative
work undertaken on a systematic basis in order to increase the
stock of knowledge and its applications for economic benefits of
mankind. Through adequate R&D funding, more than 50% of
wealth created in developed and emerging nations is derived
from product of research, experimental development and
innovation (RDI).
R&D covers three major activities:
1. Basic Research,
2. Applied Research
3. Experimental Development
1. Basic Research is experimental or theoretical work
undertaken primarily to acquire new knowledge of the
underlying foundation of phenomena and observable
facts, without any particular use in view.
2. Applied Research is also an original investigation
undertaken to acquire new knowledge. It is, however,
directed primarily towards a specific practical aim or
objective.
3. Experimental development is systematic work, drawing
on existing knowledge gained from research and/or
practical experience, directed to producing new
materials, products or devices, to installing new
processes, systems and services, or to improving
substantially those already produced or installed.
(b)Invention

Invention means to produce or design something that has not existed before. Invention

therefore is an ability to generate new and interesting idea. It also connotes the creation of an

entirely new product or process for the first time, or the use of a new process to produce an

existing product, or the combination of existing products to give a new product. Research and

Development efforts are known to be a primary source of invention but not the only.

(c) Talent

Talent is defined as a habitual pattern of thought, feeling or behaviour that can be productively

applied. Talent is something that produces value that is meaningful for the organization that is

paying for their output; an ability to produce that value, whether as an individual or as a team,

whether geographically constrained or widely distributed and; the actual exchange of value for

the value: when a customer buys what you produce, that is talent. Thus, talent can be seen as

unusual natural ability to do something well, especially in artistic areas that can be developed by

training.
(d) Creativity

Creativity is the tendency to generate or recognise ideas, alternatives or possibilities

that may be useful in solving problems, communicating with others and entertaining

ourselves and others. For something to be creative, it is not enough for it to be novel:

it must have value, or be appropriate to the cognitive demands of the situation." In

order to be creative, you need to be able to view things in new ways or from a

different perspective.

(e) Linkages (Interactions) of the National Innovation Systems (NIS)

The National Systems of Innovation (NSI) is a conceptual framework used for

evaluating national technological innovativeness. It provides the framework on which

governments form and implement policies to influence the innovation process.

Actors of the national innovation systems

As identified by Tiffin (1997), there are 4 key

actors of the NIS, these are:
1. Education and Research Sector
2. Industrial Production Sector
3. Finance Sector
4. Public Policy and Regulation (Government)
Sector
 Education and research Sector

The education and research Sector of the NIS is comprised

of the primary, secondary and tertiary institutions –
universities and polytechnics, and other specialised
research institutes. Within these actors, universities play
prominent roles, for which attentions are paid to them.
Universities traditionally fulfil the dual roles of manpower
development and conduct research. However, an
additional demand of transferring technology to business
sector was later added to their roles (OECD, 2005).
 Industrial production Sector
The industrial production element of the NIS
includes the public and private sector firms that
develop, produce and sell goods and services with
science and technology (S&T) contents. The
primary function of the private sector within a
healthy NIS is to receive and commercialise
technologies from knowledge centres – thereby
completing the STI cycle with innovation activities.
In doing this, it is fundamental that industry
operators embrace the concept of open
innovation.
 Finance Sector
Finance that is needed for the commercialization of
inventions/research results is provided by a special fund
called Venture Capital (VC), which is often referred to as risk
capital. VC is invested in the early stage of high-technology
companies in the form of equity, quasi-equity and/or a
conditional loan. Public Venture Capital Funds can be
established by the State, Federal, or Regional government
as development agencies. Private Venture Capital
organisations can also be established as professional or
institutional investors. Individual investors called Business
Angels also provide venture capital in an informal way.
 Public policy and regulation (government) Sector

Public Policy and Regulation Element of the NIS

include ministries, agencies and other
governmental bodies at various levels that are
involved in regulating S&T researches, and their
applications in industrial production. For instance in
Nigeria, the Federal Ministry of Science and
Technology is poised to perform this function.
This element also funds and establishes the relative
priorities of S&T programmes in each country
 OTHER SOURCES OF INNOVATION
Source within the enterprise or enterprise group
• Market sources(client or customers)
• Market sources(suppliers of equipment/machineries)
• Market sources(competitors)
• Professional affiliation
• Conferences
• Scientific journals
• Consultants
• Universities
• Public research institutes
 EFFECTS OF INNOVATIONS
• Improved quality of goods and services
• Increase range of goods and services
• Increase capacity of production or service
production
• Reduce environmental impact or improved health
or safety
• Improve flexibility of production or service
provision
• Entered new market or increase market share
 OBSTACLES TO INNOVATION
1. Inadequate infrastructure e.g. electricity
2. Lack of funds within the enterprise or group of enterprise
3. Lack of finance from sources outside the enterprise
4. Consumer willingness to pay high prices for better quality
5. High cost of innovation
6. Inadequate facilities e.g. laboratories
7. Market dominate by foreign substitute
8. Market dominate by established enterprise
9. Difficulty in finding corporation partners for innovation
10.Uncertain demand for innovative goods or services
11.Lack of information on market
12.Lack of qualified personnel
13.No need dues to prior innovation
14.No need because of no demand for innovations
GOVERNMENT SUPPORT TO INNOVATION

• Infrastructural support
• Training
• Loans and grants
• Tax rebates
• Subsidies
• Technical support/advices
• R&D funding
• Improved security