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Volume I, Issue II (Autumn 2008)
Theorizing Adoption of Innovation in Organization
Mirza Jan (PhD)
ABSTRACT
This review paper discusses the approaches in conceptualizing innovation in the scholarly work. Innovation involves action which leads to new and creative ideas to ad knowledge to an area where innovations renovate minds and prepare a person for adoption in an organization. This paper confirms the time of adoption and its confirmation. Programs are to be set up for organizational change and the innovation is properly evaluated and monitors to see the achieving goals and objectives. Innovation is basically a management process that requires specific tools, rules, and discipline. This paper analyzes the innovation adoption behavior for which a situation is prepared for change.
INTRODUCTION
The theoretical framework for the creation and adoption of valuable innovation is vital in organization. Traditional research on adoption of innovations generally uses the theoretical framework of innovation, which conceptualizes change in an organization through various stages. What seems important is that awareness, interest, needs prerequisite to adoption efforts. In other words, knowledge of a problem is necessary but not sufficient condition for the adoption of innovations in organization. The “demand" side emphasizes adoption of an innovation as an outcome of an individual learning or communications process determined primarily by worker's knowledge. Innovation has been studied in a variety of contexts, including in relation to technology, commerce, social systems, economic development, and policy construction. The changes that occur to an individual or to a social system as a result of the adoption or rejection of an innovation are the consequence of an innovation. There are, therefore, naturally a wide range of approaches to conceptualizing innovation in the scholarly literature. One emerging approach is to use these other notions as the constituent elements of innovation as an action: Innovation occurs when someone uses an invention - or uses existing tools in a new way - to change how the world works, how people organize themselves, and how they conduct their lives.
This examination of the adoption of innovation is seen to spread information about the innovations, the impact of time, and the interest of the users' that is to adopt new methods. It appears that potential for full adoption within the framework of sources of information has been significant. The communication activities surrounding the innovation can incorporate both the mass media and group communication.
An innovation is an idea, practice, or object that is perceived as new by an individual or other unit of adoption. It matters little, so far as human behavior is concerned, whether or not an idea is objectively new as measured by the lapse of time since its first use or discovery. The perceived newness of the idea for the individual determines his or her reaction to it. If the idea seems new to the individual, it is an innovation. The classic definitions of innovation include:
1. The process of making improvements by introducing something new
2. The act of introducing something new: something newly introduced (The American Heritage Dictionary).
3. The introduction of something new . (Merriam-Webster Online)
4. A new idea, method or device. (Merriam-Webster Online)
5. The successful exploitation of new ideas (Dept of Trade and Industry , UK ).
6. Change that creates a new dimension of performance Peter Drucker (Hesselbein, 2002)
INNOVATION IN ORGANIZATIONS
A convenient definition of innovation from an organizational perspective is given by Luecke and Katz (2003), who wrote: "Innovation . . . is generally understood as the introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services. (p. 2)"
Innovation typically involves creativity, but is not identical to it: innovation involves acting on the creative ideas to make some specific and tangible difference in the domain in which the innovation occurs. For example, Amabile et al (1996) propose:"All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second". For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organization, or changes in the products and services provided. A further characterization of innovation is as an organizational or management process. For example, Davila et al (2006), write: "Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline."
From this point of view the emphasis is moved from the introduction of specific novel and useful ideas to the general organizational processes and procedures for generating, considering, and acting on such insights leading to significant organizational improvements in terms of improved or new business products, services, or internal processes. Through these varieties of viewpoints, creativity is typically seen as the basis for innovation, and innovation as the successful implementation of creative ideas within an organization (Amabile et al 1996). From this point of view, creativity may be displayed by individuals, but innovation occurs in the organizational context only.
It should be noted, however, that the term 'innovation' is used by many authors rather interchangeably with the term 'creativity' when discussing individual and organizational creative activity. As Davila et al (2006) comment, “Often, in common parlance, the words creativity and innovation are used interchangeably. They shouldn't be, because while creativity implies coming up with ideas, it's the "bringing ideas to life" . . . that makes innovation the distinct undertaking it is." The distinctions between creativity and innovation discussed above are by no means fixed or universal in the innovation literature. They are however observed by a considerable number of scholars in innovation studies.
LITERATURE REVIEW
Researchers and practitioners have defined innovation in several different ways (Burgelman and Sayles, 1986), at times applying the innovation label to phenomena that involve radically different management styles and structures (Utterback, 1994). For example, it has been shown that organizational forms that favor the adoption and implementation of new manufacturing processes may be improper for the generation of new products (Kimberly and Evanisko, 1981). Even so, a review of numerous textbooks for principles of management and strategic management showed that most offer little more than a single line devoted to the definition of innovation, often in terms that differ significantly. Another consequence of a non-differential approach to defining innovation is the tendency to suggest one organizational form accommodates all forms of innovation. In Drucker (1998), for instance, organic organizational structures generally improve innovation, where centralization is low, formalization is low, and firms are entrepreneurial in their strategy. Such generalizations are too gross for such a complex phenomenon.
The narrowest definition of the term views innovation and invention synonymously. In this context, both terms refer to creative processes involving the application of existing ideas to create a unique solution to a problem ( Duncan , 1972). In this purest sense of the word innovation occurs very infrequently and involves very few organizations. In theory this understanding of innovation could help identify firms that achieve sustained competitive advantage through radical change. In practice however inventor organizations often seek to develop new process of outputs as ends in them, choosing to refrain from commercial use of the invention for long periods (Utterback, 1973). It is also well known that many firms achieve sustained competitive advantage not by invention, but by the clever use of existing processes, products, or technologies, thus clouding the relationship between invention and strategy.
A broader interpretation of innovation specifies that the first use of an idea by a given set of organizations with a common goal constitutes innovation (Kimberly and Evanisko, 1981). This definition of innovation restricts recognition of the phenomenon to first movers within a given industry. Others contend that the definition of innovation should include success as a qualifier, arguing that use of the term should be limited to the commercial development of a new idea, process, or technology (Krasner, 1982). Although this approach to defining innovation has intuitive merit, a number of practical problems arise with this approach. Information does not diffuse throughout sets of organizations or markets simultaneously, but is influenced by spatial, economic, social and political proximity to information sources or markets. A firm may therefore be first or among the first in an industry to adopt or commercialize an innovation as a matter of luck or happenstance more than a matter of strategic choice (Midgley and Dowling, 1978). Others share the belief that innovativeness is based on when the adopter acted relative to others. Rogers (1983) proposed the first 2.5 per cent of those within a referent group to adopt a given innovation were innovators, while Midgley and Dowling (1993) proposed that as many as the first 29 per cent of actors that adopt a given innovation display the attributes of innovators. Thus, validating a contrived measure of innovativeness based on the relative time of adoption could be problematic.
So what constitutes innovation? Many recent works on the adoption of innovation separate the term from measures of absolute time since the first use or introduction of the idea, practice or process. Additionally, Bigoness and Perreault (1981) provide convincing arguments that the adoption of a single process, product, or technology by a firm does not equate to a tendency toward innovativeness. They propose that it is the firm that consistently adopts innovative processes and ideas that appropriately demonstrates innovative tendencies.
A growing number of practitioners and researchers define innovation as any idea, practice, or object that the adopting individual or organization regards as new (Damanpour and Evan, 1984; Damanpour, 1991). From this perspective, the newness attached to an innovation remains a matter of perception, so being first to adopt does not matter. This is not to say that being the first mover within a market or industry is not relevant, it certainly is. But in this approach to understanding innovation the key question for the adopting unit involves uncertainty associated with the idea, process or object. Uncertainty arises because the adopter has incomplete knowledge with which to evaluate and make judgments about the appropriateness of the innovation and the long-term consequences of adoption (Robertson and Gatignon, 1986).
TYPES OF INNOVATION
Scholars have identified at a variety of classifications for types innovations. Here is an unordered ad-hoc list of examples: Business model innovation: involves changing the way business is done in terms of capturing value. Marketing innovation: is the development of new marketing methods with improvement in product design or packaging, product promotion or pricing. Organizational innovation: involves the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation. Process innovation : involves the implementation of a new or significantly improved production or delivery method. Product innovation : involves the introduction of a new good or service that is new or substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension. Service innovation: refers to service product innovation which might be, compared to goods product innovation or process innovation, relatively less involving technological advance but more interactive and information-intensive. Supply chain innovation: where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers.
Substantial innovation : introduces a different product or service within the same line, such as the movement of a candle company into marketing the electric light bulb . Financial innovation: through which new financial services and products are developed, by combining basic financial attributes (ownership, risk-sharing, liquidity, credit) in progressive innovative ways, as well as reactive exploration of borders and strength of tax law. Through a cycle of development, directive compliance is being sharpened on opportunities, so new financial services and products are continuously shaped and progressed to be adopted. The dynamic spectrum of financial innovation, where business processes, services and products are adapted and improved so new valuable chains emerge, therefore may be seen to involve most of the above mentioned types of innovation. Incremental innovations : is a step forward along a technology trajectory , or from the known to the unknown, with little uncertainty about outcomes and success and is generally minor improvements made by those working day to day with existing methods and technology (both process and product), responding to short term goals. Most innovations are incremental innovations. A value-added business process , this involves making minor changes over time to sustain the growth of a company without making sweeping changes to product lines, services, or markets in which competition currently exists. Breakthrough, disruptive or radical innovation : involves launching an entirely novel product or service rather than providing improved products & services along the same lines as currently.
The uncertainty of breakthrough innovations means that seldom do companies achieve their breakthrough goals this way, but those times that breakthrough innovation does work, the rewards can be tremendous. Involves larger leaps of understanding, perhaps demanding a new way of seeing the whole problem, probably taking a much larger risk than many people involved are happy about. There is often considerable uncertainty about future outcomes. There may be considerable opposition to the proposal and questions about the ethics, practicality or cost of the proposal may be raised. People may question if this is, or is not, an advancement of a technology or process. Radical innovation involves considerable change in basic technologies and methods, created by those working outside mainstream industry and outside existing paradigms. Sometimes it is very hard to draw a line between both. New technological systems: that may give rise to new industrial sectors, and induce major change across several branches of the economy. Social innovation : a number of different definitions, but predominantly refers to either innovations that aim to meet a societal need or the social processes used to develop an innovation.
GOALS OF INNOVATION
Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning. For example, one driver for innovation programs in corporations is to achieve growth objectives. As Davila et al (2006) note, "Companies cannot grow through cost reduction and reengineering alone . . . Innovation is the key element in providing aggressive top-line growth and for increasing bottom-line results". It is not surprising, therefore, that companies such as General Electric and Procter & Gamble have embraced the management of innovation enthusiastically, with the primary goal of driving growth and, consequently, improving shareholder value.
In general, business organizations spend a significant amount of their turnover on innovation i.e. making changes to their established products, processes and services. The amount of investment can vary from as low as a half a percent of turnover for organizations with a low rate of change to anything over twenty percent of turnover for organizations with a high rate of change.
The average investment across all types of organizations is four percent. For an organization with a turnover of say one billion currency units, this represents an investment of forty million units. This budget will typically be spread across various functions including marketing, product design, information systems, manufacturing systems and quality assurance.
RADICAL VERSUS INCREMENTAL INNOVATION
The decisive factor in traditional distinctions between radical and incremental innovation is the degree of strategic and structural change that the firm must undergo to accommodate the innovation in question. Incremental changes "enhance and extend the underlying technology and thus reinforce the established technical order" (Tushman and Anderson, 1986, p. 441). Radical innovations, on the other hand, represent advances so significant that revolutionary alteration of the organization and its support networks must occur to accommodate and implement change. As innovations become more radical or competence destroying, they entail clear, risky departures from existing practices.
Study of innovation along the radical and incremental dimensions has been shown to be inconclusive and problematic. Scuilli's (1998) study of innovation adoption in the banking industry proposed that incremental innovations were associated with economies of scale, which would favor larger firms. Still, the results of her study showed that adopters of incremental innovations were smaller firms with lower levels of formalization. Others, however, found incremental innovations were more prominent in large, complex, decentralized organizations (Ettlie et al., 1984). What would explain such disparate findings? Ettlie and his colleagues' study of incremental innovation included changes in both product and process areas of the organization, while Scuilli's (1998) classification of incremental innovation included only a change in process aspects of the firm. This suggests the types of innovation compared to organizational structure in the two studies were not entirely representative of one another, because only one dimension of innovation was correlated with organizational structure. Scuilli also assessed the relationship between investment banking, what she termed a product innovation, and organizational structure. While investment banking is a product innovation, in the banking industry at the time of her study it was also an incremental innovation. When correlating the organizational form and incremental-product innovation in the Scuilli (1998) study, it matches well with the organizational form of the adopter of incremental-product innovation in the Ettlie et al. (1984) study. If innovation is multidimensional in nature, and as proposed here, all of the dimensions of each innovation should be considered when trying to ascertain the organizational form that facilitates innovation. Doing so helps resolve the findings of Scuilli and Ettlie et al..
The adoption of radical innovation has been shown to relate significantly to a number of organizational characteristics. But as with incremental innovation, the available attempts to correlate firm structure and the adoption of radical innovation fail to recognize the complexity of the construct. For example, some have argued that highly centralized organizations that have low formalization are more apt to adopt radical innovations (Ettlie et al. , 1984), while others propose that it is the firm that is low in centralization that is conducive to radical innovation adoption (Scuilli, 1998). Some suggest firm size correlates negatively with the adoption of radical innovation because of difficulty in connecting the necessary processes, resources and strategies that must accompany the event (Dougherty and Hardy, 1996). Other proponents of the small firm approach to radical innovation maintain that it is the small firm which possesses the entrepreneurial culture needed to grasp the market opportunities that lie outside the firm's boundaries (Rothwell, 1983). Different studies favor radical innovation adoption by the large firm, where organizational resources are more available (Scuilli, 1998).
TECHNOLOGICAL VERSUS ADMINISTRATIVE INNOVATION
The distinction between technological and administrative innovation involves the proximity of the change in relation to the organization's operating core. Technological innovation involves the adoption of an idea that directly influences the basic output processes, while administrative innovations include changes that affect the policies, allocation of resources, and other factors associated with the social structure of the organization (Daft, 1978). Numerous researchers have studied the correlation between organizational characteristics and the adoption of technological innovation. Still, results involving the direction and degree of correlation between organizational characteristics and technological innovation adoption vary widely. The inconsistency in many of these findings is due in large part to the fact that changes termed as technological innovation include both product innovations and process innovations (Damanpour, 1987). This is problematic since firms adopting process innovations often pursue different strategies (Porter, 1980) and consequently different organizational structures (Utterback, 1994) than those adopting product innovations. In addition, it has been shown that technological innovation can be separated according to radical and incremental dimensions (Lawless and Anderson, 1986). Thus, while recognition of the technological dimension of innovation is relevant and necessary, it is not sufficient in itself to reconcile the disparate understanding of innovation adoption in organizations.
Studying the adoption from solely an administrative or technological perspective is also complicated by the possibility of a reciprocal relationship between administrative innovation and technological innovation (Damanpour et al., 1989). There is evidence that in the organizational change process administrative innovation may lead to technological innovation in some instances, while the reverse is true in other instances. The sole use of administrative and technological dimensions in the assessment of innovation/ organizational fit therefore falls short because of the potential attachment of the two dimensions over time, as well as failure of either dimension to fully partition the concept into its contingent types.
CONCLUSION AND DISCUSSION
Tries to change the behavior of another person or social system and aligns the organization with anticipated future challenges to adopt the innovations. Analyze the innovation adoption behavior for which a situation is prepared for change. Make sure that where the people involved seeing a clear advantage in the adoption of an innovation. Keep the change as close as possible to existing values and experiences. Make the change as easy as possible to understand and use and allow people to try the change step-by-step, making adjustments as they go.
Remove the fear of the unknown not understanding what is happening or what comes next after adoption. Consider the disrupted habits feeling upset to see the end of the old ways of doing things in the adoption approach. Regain the loss of confidence feeling incapable of performing well under the new ways of doing things. Innovation succeeds from strategic structures that engage the individual to the organization's benefit. Innovation pivots on intrinsically motivated individuals, within a supportive culture, informed by a broad sense of the future. Exposure of the existence of an innovation is significantly related to the adoption. Existence of leader in organization significantly related to the adoption of innovations.
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ABOUT THE AUTHOR
Dr. Mirza Jan (PhD) is Assistant Professor, department of Mass Communication, Gomal University , D.I.Khan (NWFP) Pakistan
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