Types of innovation

Types of innovation
See also
Strategic marketing Types of organizational culture Specialization strategy External analysis Open innovation Importance of international business Importance of international marketing Technological innovations Business group

Innovation is described to be one of the most important factor for a company's prosperity, survival and continuous competitive advantage. The first one to describe it was the German economist Joseph Schumpeter who characterize it as "the driving force of development" (Murat Atalay 2013, p. 227). Thanks to the innovation, companies are able to boost their performance and serve value to their stakeholders (A. T. Karabulut 2015, p. 1355).In the last years innovation become much more unavoidable term in not only business strategy and politics agenda but also in academic thinking (Byron Acosta 2016, p.295).

There are several categories and types of innovation.

Main types of innovation (according to object of innovation)

The most common types of innovation (OECD 2005, p. 47-51; Sam Tavasolli 2015, p. 1889-1891):

1. Product innovation (launch of products or services which are new or slightly upgraded but with respect to its essence or destination; it is targeting at pleasing specific customers demands).
2. Process innovation (implementation of a new or very modernized production or delivery mechanism; its main goal is to cut down the unit cost of the goods produced and/or to maximize quality of products).
3. Organizational innovation (start of a fresh organisational plan in a company's business practice, workplace management or outside relations; it is often used when enterprise wants to improve efficiency, profitability, elasticity and orginality of the company by using bodyless knowledge).
4. Marketing innovation (introduction of a new marketing method which include transformation in product packaging, design, placement, promotion or pricing to improve the amount of total sales to lower exploitation of production economics).

Types of innovation according to degree

Types of innovation divided by their degree:

• Innovation within one company,
• Regional innovation,
• Country level innovation.
• Global innovation.

Other types of innovation

Types of innovation, which are less common (Byron Acosta 2016, p. 296, 297):

• Technological innovation,
• Non-technological innovation,
• Radical innovation (new goods and processes),
• Incremental innovation (if there was an innovation in already existing goods and processes),
• Disruptive innovation (it is used only in reference to creating new goods and processes like in radical innovation),
• Open innovation (it is a system of making new goods and processes as well as marketing and organizational practices).

References

• Acosta Byron (2016). Understanding innovation based on company optics: interpretation mistakes on the types of innovation developed, RAI Revista de Administração e Inovação, vol. 13
• Atalay Murat (2013). The Relationship between Innovation and Firm Performance: An Empirical Evidence from Turkish Automotive Supplier Industry, Procedia - Social and Behavioral Sciences, vol. 75
• Damanpour, F., Szabat, K. A., & Evan, W. M. (1989). The relationship between types of innovation and organizational performance. Journal of Management studies, vol. 26, no.6
• Karabulut A. T. (2015). Effects of Innovation Types on Performance of Manufacturing Firms in Turkey, Procedia - Social and Behavioral Sciences, vol. 195
• OECD (2005). Guidelines for collecting and interpreting innovation data, Oslo Manual, 3rd eddition
• Tavassoli Sam (2015). Persistence of various types of innovation analyzed and explained, Research Policy, vol. 44

Author: Olga Marmuszewska