Practice note

Investigating innovation management practices in Iranian organizations

Changiz Valmohammadi
Faculty of Management and Accounting, Department of Industrial Management, Islamic Azad University - South Tehran Branch, Tehran, Iran

PP: 247 - 255

Abstract

The aim of this study is threefold. First to explore the extent to which innovation practices and activities are implemented in Iranian organizations. Second, given special conditions of Iran to find out what factors currently form the main drivers and barriers to innovation in Iranian organizations. Third, survey if there is any relationship between innovation practices and organizational performance of Iranian organizations, mainly based on a descriptive analysis. Based on the review of literature of innovation practices, drivers and barriers of successful implementation to innovation practices were identified. Through a self-administered questionnaire which was collected from 87 Iranian organizations the extent of innovation practices implementation and their rankings in the surveyed organizations were determined. Analysis of data and the obtained results revealed that opening of new domestic target groups is the most frequently practice of innovation .Also; increased customer centricity and organizational structure and bureaucratic and excessive administrative regulations were ranked as the main driver and barrier of innovation implementation respectively. Finally, the result of chi-square test showed that the implementation of innovation practices is positively and significantly related to organizational performance of Iranian organizations.

Keywords

Innovation management, exploratory study, drivers and barriers, organizational performance, Iran

Article Text

Innovation is considered a key to achieving sustainable competitive advantage and, by extension,  the success of businesses in the market. The main reason is that innovative firms are more flexible and have a greater capacity to adapt to changes. This means that they can protect themselves when the climate is unstable, they can respond faster to changes, create new opportunities and exploit existing ones to a greater extent than the competition (Valencia et al., 2010). Innovation is recognized to play a central role in creating value and sustaining competitive advantage (Rowely et al., 2011). If organizations want to survive they need to invest in different types of innovation, since different types of innovation influence organizations in different ways and achieve different outcomes and impacts (Siguaw et al., 2006). Innovation as an organizational phenomenon has a long tradition of research and has been studied in many different fields. Perhaps because of its long history, "the term 'innovation' is notoriously ambiguous and lacks either a single definition or measure". Part of this ambiguity stems from the complexity of the phenomenon itself, which can be conceptualized in a variety of ways: the introduction of new products or processes, the innovative activity of organizations, innovation diffusion, innovative capability or innovation involvement (Quintane et al., 2011). Inauen and Schenker-Wicki (2011) point out that based on Schumpeter's classification system there are 5 categories of innovation but most of the literature has focused on the first two areas of innovation, product and process innovations. Similarly, Schmookler argues that understanding the distinction between the related terms product technology (product innovation) and production technology (process innovation) is crucial for understanding innovations. Product innovations represent the invention and commercialization of entirely new products or services, whereas process innovations describe changing the production process of products and services through the adoption of new technology and innovations ( Inauen and Schenker-Wicki (2011). For Schumpeter, this implies not only the introduction of new products but also the successful commercialization of new combinations, based on the application of new materials and components, the introduction of new processes, the opening of new markets or the introduction of new organizational forms (Fortuin and Omta, 2009).Another type of innovation classification which is widely cited in innovation literature is; incremental innovation and radical (breakthrough) innovation. The labels radical and incremental innovation, represent the degree of change the innovation brings and, as such, they could be attributes of any of the other types of innovation such as product, process, administrative, or technical (Rowely et al., 2011).

Radical innovations are fundamental changes that represent revolutionary changes in technology. They represent clear departures from existing practice. In contrast, incremental innovations are minor improvements or simple adjustments in current technology. Compared with incremental innovation, radical innovation is more valuable, especially for firms competing to be a leader in their market. As an important driver of the growth, success, and wealth of firms and nations, radical innovation is increasingly playing an important role in enhancing a firm's competitiveness in contemporary competitive environments (Yi et al., 2011). Boer and During define innovation as "creation of a new product-market-technology-organization combination". They identified the following types of innovation: product, process, and organizational; they suggested that process innovation is concerned with manufacturing, which organizational innovation is any other change to the way the organization operates such as, say, the introduction of Total Quality Management(Rowely et al., 2011). In this study innovation practices based on the Oslo Manual (Onodera, 2008) include:

[. . .] implementation of a new or significantly improved product (good or service),or process, a new marketing method, or a new organizational method in business practices, workplace, organization or external relations.

2. Literature background of innovation and research questions

Today, innovation is increasingly seen - or at least talked of - as the engine for growth, and therefore something that must be strategically managed and securely harnessed. It is the new currency of competition. Yet, for most companies real innovation is still something that typically happens by chance, if it at all. Few have managed overcome the barriers and create pervasive and sustainable innovation processes (Strategic Direction, 2007). Kelley and Littman (2006) argue that organizations in order to be to successful in today's competitive environment need innovation at every point of the compass, in all aspects of the business and among every team member. Building an environment fully engaged in positive change, and a culture rich in creativity and renewal, means creating a company with 360 degrees of innovation.

American Society for Quality (ASQ, 2010) has offered a comprehensive and working definition of innovation and states" Innovation means instituting significant change that adds value to the organization by developing new ideas that lead to new profit streams, while simultaneously increasing the efficiency of how work gets done, increasing the effectiveness of how work gets done, and reducing costs of doing business. In essence, innovation is a change process. As such, it should be amenable to the effects of process management and change management techniques. Innovation is also a social process-it takes place within modern organizational cultures and environments. In complex organizations, it requires collaboration. It is a team sport rather than the work of a lone genius".

In turbulent environments, innovation becomes central in the field of strategic management as its vital role is gaining and maintaining competitive advantage (Zheng et al., 2011).Cheng and Tsu (2007) by literature note that good innovation practices help enhance a firm's competitive advantage. As the global forces become increasingly inevitable, many business experts are predicting that workforce creativity and innovation will be the most important factors in establishing and maintaining a competitive advantage. The social and technological changes that organizations face require creative decisions (Iqbal, 2011).

Furthermore, it is of note that previous research has shown a positive link between innovation performance and firm performance (Aelgre et al., 2006).  In the past century innovation has been widely accepted to be a major driver of business success. The importance of innovation in the success of businesses is illustrated in an innovation survey performed by the American Management Association (Jamrog, 2006) including 1,396 executives from large multinational companies. Jamrog concluded that more than 90 per cent of the respondents consider innovation to be important or extremely important for a company's long-term survival, with over 95 per cent considering that this will still be the case in ten years' time (Fortuin and Omta, 2009). On the other hand a number of factors are identified in literature as drivers and barriers to innovation success (Fortuin and Omta, 2009;STRATIC DIRECTION, 2007a;Loewe and Cheng, 2007,Valncia et al., 2010; Jamrog, 2006).For instance, Loewe and Chen (2007) point out some drivers such as globalization, the blurring of industry boundaries, the explosion in the availability and accessibility of information, the increasing dispersion of knowledge, and the growing use of alliances and partnerships have dramatically shifted the landscape of innovation. They, also, argue and refer to some important barriers regarding innovation management at the enterprise level and ask companies to rectify their obsolete thoughts about innovation. These obsolete thoughts are; Innovation is all about coming up with new products and services, Innovation is solely the job of the R&D department and Breakthrough innovation occurs only through luck or a ''stroke of genius'' from a visionary leader.

Pervaiz (1998) argues although several determinants of innovation have been identified the understanding of ideal practices for innovation remains patchy. Fortuin and Omta (2009) state the question what factors form the drivers and barriers to innovation at the company level is still largely unexplored. Developing countries around the world are diligently examining the means of growing their local and national economies. Innovation is broadly considered to be one of available means to achieve this desired growth, though it stands to be the least explored one, which is partially due to the newness of this field (Vrgovic et al., 2012). Also to the best of the author's knowledge this is the first attempt amid at studying innovation practices and also drivers and barriers to Iranian organizations at the national and this broad level. In such cases, extensive preliminary work needs to be done to gain familiarity with the phenomenon in the situation and understand what is occurring before we develop a model and set up a rigorous design for comprehensive investigation (http://www.blurtit.com).

National innovation initiatives hold many opportunities to advance and grow a nation's economic base. The importance and applicable approaches of National Innovation Systems in transition economies and developing countries should be systematically assessed (Vrgovic et al., 2012).

Based on the extant statistics during the past decades Iran has added to the national innovation capacity through establishing research institutes, universities, and nurturing of scientists and engineers. In Iran during the past couple of years and with the start of deregulation polices of the government towards privatization of industries and expanding free market, most of organizations in the country have shown interest in the development of innovation management practices which is also heavily related to rising pressure from fierce competition in the marketplace of the country, so most manufacturing and service organizations look at innovation in order to improve their competitive advantage . Given the aforementioned contextual factors of Iran this study attempts to survey the extent of innovation management practices in Iranian organizations along with drivers and barriers on an exploratory basis and the relationship of innovation management practices and activities with organizational performance. Therefore for the purpose of this study the following questions were raised:

RQ1: To what extent do Iranian organizations implement innovation practices?

RQ2: What are the main drivers and barriers for implementing innovation practices in Iranian organizations?

RQ3: What is the relationship between innovation practices and organizational performance of Iranian organizations?

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