2. Chapter 2: Literature review
2.3 Innovation and Indian practices
In recent years, large scale industries have undergone many changes in their production environment by implementing various manufacturing techniques such as Just in Time, Total Quality Methods, Six Sigma, Value methods and Lean manufacturing. Odedairo & Bell [2010]
developed a toolkit such as Return on Investment, Cost modeling, Pareto analysis, Value stream mapping, Quality Function Deployment and target costing as represented in Fig. 2.2.
Large scale industries have adopted WCM such as JIT (Just in Time), TQM (Total Quality Management), BPR (Business Process Reengineering), FMS (Flexible Manufacturing System), CIM (Computer Integrated Manufacturing) and lean and agile manufacturing and many other techniques. Also, some QI (Quality Index) tools, Statistical Process Control (SPC) techniques, are discussed by Mathur, A. et al., [2012]. Bewoor & Pawar [2010] discussed about Design of Experiments (DOE approach), Taguchi and Shainin methodology and Shainin methodology found to be useful, which was confirmed by an Indian SME ISO/QMS certification.
Figure 2.2: Practices of tools aiding innovation adopted from Odedairo & Bell [2010]
Brem & Voigt, [2009] Fig. 2.5, discusses on the commonly used terms such as jugaad, frugal innovation, frugal engineering, constraint-based innovation, Gandhian innovation, catalytic innovation, grassroots innovation, indigenous innovation and reverse innovation. These innovation types are developed based on the local need and practices, and they have not followed any methodology or theories. Such innovations are not commercialized to the level of competition and marketing to fetch profits. They do fulfill a social and community need however inefficient they may be. Lee, S. et al., [2010] proposed an open innovation model shown in Fig. 2.3. Rao [2013]
proposed a frugal innovation model as represented by Fig. 2.4, but such practices are missing in the day to day workings of Indian MSMEs. The model is based on collaboration between MSMEs which increases the overall innovation levels.
Tata Nano that resulted from a collective vendor cum designer team collaborative work within MSMEs is the best example of innovative product discussed in Indian management journals.
Innovation happened, cost was drastically reduced and the whole world was stunned by seeing the result. Hence there is a case for collaborative innovation amongst MSMEs. This requires a collaborating task force on the top. However, most MSMEs in India are small enterprises and work independently and have no concept of exchange of knowledge between collaborating industries.
Even in the case of Tata Nano car, while everyone agreed it was innovation at its best, there were very few discussions or publications on the innovation embedded inside the product. And it was not possible to use an innovation index to compare it with any other car purely in terms of innovation inputs. Hence, there is need for a metric of innovation.
Figure 2.3: Open innovation model by Lee, et.
al., [2010] adopted and redrawn
Figure 2.4: Frugal innovation by Rao, [2013] adopted and redrawn
Figure 2.5: Different types of innovation as discussed by Brem and Voigt, [2009]
MSMEs practices and performance have an impact on innovation, individual interest and perception, which is discussed below.
Figure 2.6: Model by Alam and Dubey, [2014] on the innovativeness and its relations to the innovation in MSMEs adopted and redrawn
Innovation related literature describes that innovation and performance is related more or less only to big firms (MNCs) not in MSMEs. Innovation in any firm is closely correlated with the consumer/user. One of the studies showed [Audretsch, 2001; Tether, 1998; Eden, et. al., 1997]
showed that the innovation and performance of large firms is very much different from the MSMEs. The same empirical relationships, models and methods cannot be used directly in MSMEs. Jimenez-Jimenez and Sanz-Valle, 2011; Bell, 2005; Cho & Pucik, 2005 claimed in their study of introduction to innovation that for the success and sustainability of a firm, innovation
plays a key factor to be competitive in the market [Bartel & Garud, 2009; Johannessen, 2008;
Mumford & Licuanan, 2004].
Many investigations reported the relationship between capturing the market and firm’s performance. Narver, et. al., [1998], showed a positive relationship between market orientation and firms profitability in case of larger firms. Jaworski & Kohli, [1993], showed the empirical evidence of strong positive relationship between market potential and performance of big firms.
These studies on innovation performance of firms was largely confined to big firms and not to the MSMEs. It is hard to find any empirical evidence on the relationships, factors, methodology for achieving innovation in MSMEs, in published literature.
Alam & Dubey [2014], have worked on the innovativeness and its relations to the innovation in MSMEs. Their study evidence/claims that owner/manager’s innovativeness largely decides to initiate innovation activity of the firm [Verhees & Meulenberg, 2004]. Many researchers have argued that the personal innovativeness of an individual plays a vital role [Goldsmith, 1990; Alam
& Dubey, 2014], study shows evidence of the level of owner’s/managers innovativeness in product, process and strategy relationships as shown in Fig. 2.6.
To be relevant in competition there should be continuous innovation in the firm. The current trends of the products are changing according to the customer/user needs and tastes, latest technologies, new materials, reduced product life cycles and increased competition. Hence, it is expected that all firms should innovate regardless of size and sector to survive in the market. Therefore, there is a need for the method/tool in achieving innovation in products especially in terms of user centered design. Our current research focusses on these issues and to develop a scale for measuring innovation. Also, the study will emphasize on the areas of improvement in the given set of/family of products.
Some more research articles are summarized in the form of Table 2.2 along with gaps in MSMEs and innovation with subjective description.
Table 2.2: Summarized description of the literature review on innovation and MSMEs
Author Subjective description Missing links/Remarks Gupta, [2009] Stimulating demand, Technology
upgradation and skills, NPD services, R&D, Grass root innovation.
How to achieve innovation or methods/techniques were not discussed.
Scozzi, et.al., [2005]
Business Modelling Techniques, Process innovation emphasized, Areas identified for improvement along with methods decision making, learning support, work flow and role active diagrams and tools for performance measure.
Focused on (BMTs) process innovation models and does not assure the success in process innovation.
Hu, [2014] Business model and technological innovation, Insights on efficiency centered business model, design, novelty centered, organizational learning, technology and innovation in Chinese firms is focused.
Focused on BMTs,
Management and managers to bring technological innovation.
Subrahmanya, [2005]
Comparative study on India and UK MSMEs, compared policy differences of both for innovation, Problems in Indian MSMEs is focused, like less invention and innovation and low R&D etc.
Study on Indian and UK
MSMEs, Problems
highlighted in case of India, Lower design thinking making lower capability of innovation.
Hogan & Coote, [2014]
Study of process support innovation, Scheins multi layered model of organization cultural process that support organizational innovation tested in service firms.
Discusses about the cultural process and organization innovation on the basis of Scheins model.
Laforet, [2008] It shows the relation between size, strategic and market orientation along with innovation.
Does not suggest any model or method to aid innovation Balasubramanya,
[2005]
Poses questions on how to promote innovation? Quality of innovation, patenting culture in Indian MSMEs
Much focus is upon policy recommendations.
Lee, et.al., [2010]
Types of innovation, various models studied in Korean MSMEs, Proposed an open innovation model.
Collaborations with in MSMEs and large firms to achieve innovation was suggested
Krishnaswamy, et. al., [2014]
Case study of Auto component manufacturer in India, Entrepreneurs encash the opportunities, in house technological capability, External assistance to achieve innovation.
Incremental innovation and constant customer feedback systems lead to the innovation.
Study was carried on 3 auto components, not developed any system or entirely new product, methods or tools for aiding innovation. Market opportunities converted to usable components terming it as innovation.
De Saa-Perez, et.
al., [2012]
Role of training to innovate in MSMEs, it integrated theoretical approaches of HRM, KM (Knowledge Management) on training can lead to innovation. Innovation as dependent variable, training and KM are explanatory variables. Descriptive study was carried.
Training increases the level of innovation and growth of firm. For Indian MSMEs it is difficult to arrange training.
Antonioli &
Della, [2015]
Adoptions of organizations and technological innovation with investment in training activities. Internal and external training and investment effects on MSMEs.
Study reveals that no significant relation with training and technological innovation.
Van de Vrande, et.al., [2009]
Open innovation practices in MSME, motives and perceived challenges when MSMEs adopt open innovation, highlights on perceived trends, managerial skills and motivation.
Implications and types of open innovation are discussed.
Hungund, [2014] Conceptual framework on open innovation practices, MSME characteristics, business eco system and sustainable growth.
Guiding tool for Government policies for innovation.
Rao, [2013] Features of frugal innovation, feasibility and optimization of basic design.
Design methodology and frugal innovation.
Brem &
Wolfram, [2014]
Jugaad, Frugal, Gandhian and other types of innovations have been discussed.
Classes of innovation were discussed.
Bala
Subrahmanya, [2013]
Internal factors in MSMEs to obtain external support from Government, MNCs, universities, R&D institutes to cater innovation. Competency level of entrepreneur and man power, an exclusive design center leads to product and process innovation.
Study was carried only for 3 contexts. It yields the firm level factors, external support and innovation performance - analytical frame work.