The term innovation comes from Latin word innovare meaning "creating something new." Hence, the most common definition of innovation emphasizes that "innovation is the process of converting the existing possibilities to new ideas and putting them to practical use. J.A. Schumpeter introduced innovations to the area of economic sciences.
Leading scientists often use a definition of innovation as the process of converting the existing possibilities in new ideas and putting them to practical use.
According to David Begg innovation is "the application of new knowledge in the production process"
The Process of Innovation
The whole process of innovation consists of the following parts:
- The invention - a new technical solution, not yet patented. Typically, the invention is the result of an idea.
- Innovation - the introduction of the invention for the production process.
- The project - the creation of a new product design, which is the result of innovation.
- Diffusion - the promotion and sale of the product
Sources of Innovation
We can distinguish three sources of innovation:
- Research (R & D),
- Purchase of new knowledge in the form of patents, licenses, technical services, etc.
- Purchase of the so-called. material technology, the innovative devices and machines with improved technical parameters.
Innovations reflect the level of innovation in the economy through their number. Each developed country tries to raise the level of innovation in its economy, because this directly affects the competitiveness of the country.
Features of Innovation
- Innovation is hard, purposeful, focused work that requires knowledge, diligence, perseverance, commitment. Innovators are required to use their strongest points. They induce positive effects in the economy and society, they are cause for changing entrepreneurs and consumers behaviour.
- Innovation is able to facilitate and hinder our life, by constantly complicating the environment. In the strict sense scientist omit innovations associated with the social and organizational change, focusing on technical and technological innovations. Technological innovation occurs when new or upgraded product is introduced or when new or modified process is used in production.
- Technological innovations are the result of innovative activity involving many steps in research, technical, organizational, financial and commercial areas.
- Process-oriented innovations cover the development of new methods, instruments and approaches as well as improving existing methods of production.
- Goal-oriented innovations focus around the formulation of new objectives and approaches to identify new and promising qualifications and the creation of new opportunities of employment in the labour market.
- Context-oriented innovations relate to political and institutional structures. They address the development of the labor market.
- Baumol, W. J. (2002). Towards microeconomics of innovation: Growth engine hallmark of market economics. Atlantic Economic Journal, 30(1), 1-12.
- Romer, P. M. (1990). Capital, labor, and productivity. Brookings papers on economic activity. Microeconomics, 1990, 337-367.