Innovation is Not Possible in All Organizations or by All People: Assessment of Factors Affecting In

Innovation is Not Possible in All Organizations or by All People: Assessment of Factors Affecting Innovation and Innovativeness in Organizations

1.0. Background

This literature-review investigates as to why innovation is not a common practice. The term innovation is referred to as changing or creating more effective processes, products and ideas, and can increase the likelihood of a business succeeding (www.business.gov.au). Changes in both internal and external environments have placed organizations in competitive atmosphere and have influenced organizations to alter their strategies so as to survive in the market. In such a hyper-competitive global atmosphere, business organizations must innovate more frequently and quicker than ever where no company would survive over the long run without innovation (Hill & Jones, 1995; Samson & Daft, 2012). Innovations in terms of products, processes, management systems, corporate values etc. of an organization are the key aspects which enhance companies to grow, change and thrive (Samson & Daft, 2012). Innovations are among the major causes of competitive advantage (Zakić et al, 2008) where this advantage of a business firm heavily relies on its potential to benefit from innovational activities.

2.0.Objectives of the Study

In supporting the line of argument that “both internal and external factors in micro and macro levels possess a substantial effect on innovation and innovativeness of organizations and people”, below mentioned objectives have been set.

(1). To present evidence that regional characteristics such as national culture, uncertainty, seasonal changes as external environment factors whereas internal factors such as culture and people have an effect on innovation and innovativeness.

(2). To prove with evidence the effects of those factors on innovation and innovativeness.

3.0.Brief Description of Research

3.1. Journals and Articles

In order to prove arguments with evidences, the below listed sources have been used as major journal references.

1. Global Journal of Management and Business Research
2. Group & Organization Management
3. Journal of Management
4. Innovations and Organizations.
5. Economics and Organization.

In addition to the above mentioned journals, the following other major references that have been published recently were also reviewed.

1. Agricultural Economics Review - Chryssochoidis (2003).
2. Human Relations - Eby et al (2000)
3. European Journal of Information Systems - Zhu et al (2006).
4. Management –Samson & Daft (2012).
5. Strategic Management – Hill & Jones (1995).
6. Impact of training and development on organizational performance – Khan et al. (2011).
7. Global Postal Research and Education Network Conference –Stucki(2009).
8. Organizational Studies –Whitley(2000).
9. Organizational innovativeness – Subramanian and Nilakanta(1996).

3.2. Brief Description Traced

The review reveals that both internal and external factors in macro and micro levels have significant effects on innovativeness of people and innovations in organizations. Among the major factors, geographic and demographic factors, political, economic and features of natural environment of a country has an effect on a country’s innovativeness where degree of change management, entrepreneurship and leadership qualities of management, strategies like internal and external coordination, corporation and special functional units such as new venture teams, skunk-works have significant effects of change and innovation. Furthermore, organizational culture, management commitment and people characteristics along with processes like better human resource management, knowledge management and technology management were found to be influential factors. Conversely, politics-affected cultures, inertia, and complex hierarchical structures are found as hinders of innovation.

4.0. The Key Findings of the Review

The review focuses on examining the following key areas related to the underlying research objectives.

1. What are the major internal and external factors that affect innovations
2. How internal and external factors influence or hinder innovation.

The review embodies that both internal and external environment has significant effects on innovativeness of an organization.These factors can also be evaluated in the macro level as well in micro level.

On the macro level, innovations are vital for economic development of a country (Zakić et al, 2008). However, Whitley, R. (2000) demonstrated that the national level characteristics based on the economic performance and activity has a direct link with innovation, where six major groups were identified. As well, climatic differences, seasonality patterns and national culture were found as important regional characteristics which differentiate innovativeness among nations where increased uncertainty in the external environment influences the need for innovation (Slappendel, 1996; Subramanian, 1996; Zaltman et al., 1973).

An innovative organization engrosseseveryoneacross the organizational structure in the chore of identification, development and implementation of different means of attaining organization's goals (Gov leaders, 1995). This engagement undeniably includes everybody from the chief executive officer to workers in the frontline.

Supporting frontline workers, supporting mistakes and learning through mistakes, organizational learning, Creating an explicit mission, establishing sound performance measures, Broadening of job categories and responsibilities, Making the hierarchy as unimportant as possible are some suggestions made to increase innovativeness of organization.

Importantly, organizational culture plays a significant role in change and innovation where inflexible management, organizational inertia, inappropriate and politics-affected cultures along with uncontrolled power may hinder future innovative growth whereas risks associated with costs, time expenses, stressful environments and internal conflicts allied to changes may affect the process of innovation (Bordia et al., 2011; Hill & Jones, 1995).

As per the study, internal factors such as national culture, seasonal variations of countries, behavior of people are vital factors that have effects on innovation. Furthermore organizational culture, the extent to which human resources functions facilitates change management, entrepreneurship and leadership qualities of the management and business owners, internal and external coordination, and corporation are significant for innovations. Furthermore, commitment of the management, innovation planning and proper attention of organizational culture, diversity and knowledge management are identified as reasons of success (Eby et al., 2000; Oreg et al., 2011) whereas as Samson & Daft (2012) and Khan et al (2011) highlight, training and development would also be a vital motivator of innovation.

Furthermore, roles in managing organizational change in terms of managing inventors, champions, sponsors and critics are vital for innovative companies where functions of new-venture teams, skunk-works are of significant importance among successful companies across the world (Samson & Daft, 2012).

As well Zhu et al, 2006 suggest that cautious attention shall be paid to theeconomic and regulatory factors which would result in dissimilar innovation-diffusion among nations. Furthermore, novel concept of so called ‘Open Innovation’ was found to make organizations changeround their processes effectively in managing innovation (Stucki, 2009).