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The description of innovation in the literature encompasses a wide range of perspectives. A closer examination, however, reveals that the definitional writing on innovation collectively captures several aspects of a large span of innovation related, overlapping actions and outcomes. Through figure 5, a new conceptual construct, the ‘innovation-span’, is presented within which, as will be shown later, all notions and definitions of innovation can be accommodated. This concept of innovation-span is based on the premise that all innovation definitions recognise, implicitly or explicitly, that new ideas are at the core of a chain of events that culminate in innovation and deliver its consequent payoffs. It is also generally accepted that during the process of innovation ideas are refined and transformed into useful new products, processes or organisations. The process sometimes steers the business into new markets, or allows it to use new inputs. This transformation delivers potential benefits for individuals, groups, organisations and society. It provides higher profits and growth for businesses, cheaper and better goods for consumers and higher earnings and more interesting work for employees. Despite a plethora of definitions of innovation, there is no real disagreement amongst the scholars on the essential nature and consequences of innovation described above. The apparent lack of settled opinion on the definition of innovation results from scholars and organisations including in their definitions, only certain segments of the full innovation-span. For instance, as shown in figure 5, Brenner (1990) and Frenz and Oughton (2005) discuss only segments II and III, Schumpeter (1934), European Commission (1995) and Edquist (2001) focus on segments III and IV, OECD (1981) incorporates segments I, II and a part of segment III, Oslo Manual (1997) considers only segment III, West and Farr (1990) include segments III, IV and V whereas the UK Department of Trade and Industry (2003) in the widest articulation of innovation, incorporates all segments from I through VI.
The idea of innovation-span not only clarifies the apparent conflict in the meaning of innovation, it can also provide a wider and yet congruent context to all works on innovation, by identifying at the outset, the components of the innovation-span, they are concerned with.
Figure : The Innovation Span
UK Department of Trade and Industry (2003)
Oslo Manual (1997)
Brenner (1990), Frenz and Oughton (2005)
West and Farr (1990)
Schumpeter (1934), European Commission (1995), Edquist (2001)
New and useful…
Profit and growth for businesses
Interesting work, better skills and wages for workers
Quality products for consumers
Raw Materials / Inputs
The innovation-span also provides a mechanism to compare the previous research on innovation and brings into sharp relief the futility of comparison of works concerning non-common segments of the innovation span. In addition, it has the flexibility of incorporating any new segments or components emerging from future work, not included here, by linking them to the span at appropriate points.
The utility of the notion of innovation-span becomes obvious by the fact that this dissertation concerns segments I, II and III of the innovation-span as it explores the refinement and development of ideas into new and useful products and processes in the Scottish food SMEs.
Despite a seeming exclusivity of classification reflected in the taxonomy discussed in literature, there is an overlap between some of the different classes of innovation. For instance, it is generally not possible to create an absolutely new product without a concomitant, albeit sometimes marginal, change in existing processes. Similarly, a new production process usually alters, again sometimes only marginally, the existing products. As the source of competitive advantage is in the product as well as in the process, in most cases, innovative firms bring about simultaneous change in both and therefore innovation at the level of a firm has elements of product as well as process components and the separation between the two suggested by the above taxonomy is not always observed. Similarly, absolutely new products, unrelated, in any way, to the existing ones are created so rarely that almost all innovation, in a way, is incremental.
It should be noted in this context that product and process innovation have been explored more often and in-depth than organisational innovations. The reason is that data on R&D has been easily available to be used as a convenient proxy for product and process innovation. However, as will be explained in Chapter 5, the use of R&D as a proxy for innovation is problematic as R&D investment is not always a good predictor of innovation performance of businesses. Two reasons are apparently responsible for it. Not all R&D results in successful product or process development and all product and process innovations do not necessarily need R&D investments. Another significant issue in this context is that innovative performance of businesses depends on both volume and efficiency of R&D effort and data on R&D expenditure shows only its volume and not its efficiency.
Despite the arguments listed earlier on the superiority of a process-centric perspective over a determinants based view of innovation in SMEs, it would not be wise to discard completely the voluminous existing work on the determinants of innovation spanning more than three decades. Analysing SMEs innovation first from a process perspective and then linking the results of such effort to the extant literature in terms of the presence or absence of innovation determinants confirmed by the previous research is a more meaningful approach. In this thesis, such an approach is used.