DISCUSSION & RECOMMENDA- TIONS
CHAPTER 7: DISCUSSION & RECOMMENDATIONS
7.1 Introduction
In business and economics, innovation can be a catalyst to growth. Innovation increases the likelihood of a business succeeding and having an innovation nation will de�initely drive the productivity and performance of the country. This chapter presents the discussion for this survey which was conducted in 2015 for the period of 2012-2014. It also highlights some recommendations to enable the country to reap the positive bene�its by creating an economy based on innovation.
7.1.1 Innovation Parameters
Review of literature revealed numerous types of approaches available in measuring innovation parameters. In this survey, parameters as mentioned in the Oslo Manual 2005 were used as they are widely adopted and accepted by most developed and developing countries in the world. The innovation parameters studied in this survey are as follows:
1. Product innovation;
2. Processes innovation;
3. Marketing innovation;
4. Organisational innovation;
5. Ongoing and abandoned innovation activities;
6. Innovation activities and expenditures;
7. Objectives and effects of innovations;
8. Government support for innovations;
9. Innovation funding;
10. Innovation cooperation;
11. Sources of information for innovation;
12. Patents and other IP protection methods; and 13. Factors hampering innovation activities.
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7.1.2 Status of Innovative Companies
Overall the highest response rate came from Selangor (31.57%), followed by Melaka (14.36%) and Johor (11.87%), while F.T. Putrajaya, F.T. Labuan and Perlis recorded the lowest response rate with 0.18%, 0.83% and 1.31% respectively (Chapter 4, item 4.3). Generally, the �indings also show that companies in all states carry out innovation activities. Of all the innovative companies that responded to the survey, 34.95% came from Selangor, followed by Melaka (12.53%), Johor (11.46%) and F.T. Kuala Lumpur (11.21%). Similarly, for the non-innovative companies, the highest response also came from Selangor (22.88%), followed by Melaka (19.06%) and Johor (12.92%). It should be noted that only 3 companies from F.T. Putrajaya responded to this survey, therefore, no conclusion can be drawn for companies from F.T. Putrajaya.
From this �indings (Chapter 4, item 4.4), services sector are more innovative (61.34%) compared to manufacturing (38.66%). The results also show that companies established between 2005 and 2009 are the most innovative companies in both sectors with 27.96% in the services sector and 25.59% in the manufacturing sector. The least innovative companies on the other hand, were those established between 1960 and 1964 for both sectors. In the manufacturing sector, the most innovative companies were manufacturers of food products, while in the services sector it was the wholesalers of machinery, equipment and supplies. It may due to resistance to change to adopt innovation.
7.1.3 Innovation Activities Implemented from 2012 – 2014
This study revealed the innovation activities implemented among small, medium and large companies (SMLs) in Malaysia. In general, the need to implement innovation in the business operations is irrefutable. Acknowledging this importance, companies therefore can only compete favorably when innovation is part of the whole process. In view of the above, this survey showed that several innovation activities are practiced by the companies in different forms. In relation to product innovations (Chapter 5, item 5.2), a majority of companies in the manufacturing sector produced ‘new and signi�icantly improved products’. This trend was also similar in the services sector, where a majority of the companies render ‘new and signi�icantly improved services’. In addition, the majority of the companies in both sectors focused on the introduction of new products or signi�icantly improved products that are only new to their �irm and not new to the market. Thus, the �inding shows that the majority of the companies are not introducing radical technology such as new or signi�icantly improved product to the world (see Figure 5.2).
For the process innovation activities (Chapter 5, item 5.3), most companies in the manufacturing sector introduced ‘new or signi�icantly improved methods of manufacturing’, while the majority of services companies introduced ‘new or signi�icantly improved supporting activities’. The investigation of marketing innovation activities (Chapter 5, item 5.4) revealed that a majority of the companies in the manufacturing sector introduced ‘new or improved methods of product design or packaging’, while a majority of the companies in the services sector focused on the introduction of ‘new and improved promotion or pricing’. Another type of innovation activities uncovered in this study is organisational innovation (Chapter 5, item 5.5) in which most companies in the manufacturing activities focused on ‘new or improved workplace organisation’. Meanwhile, a majority of companies in the services sector implemented ‘new or improved methods in the �irm’s business practices’.
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7.1.2 Status of Innovative Companies
Overall the highest response rate came from Selangor (31.57%), followed by Melaka (14.36%) and Johor (11.87%), while F.T. Putrajaya, F.T. Labuan and Perlis recorded the lowest response rate with 0.18%, 0.83% and 1.31% respectively (Chapter 4, item 4.3). Generally, the �indings also show that companies in all states carry out innovation activities. Of all the innovative companies that responded to the survey, 34.95% came from Selangor, followed by Melaka (12.53%), Johor (11.46%) and F.T. Kuala Lumpur (11.21%). Similarly, for the non-innovative companies, the highest response also came from Selangor (22.88%), followed by Melaka (19.06%) and Johor (12.92%). It should be noted that only 3 companies from F.T. Putrajaya responded to this survey, therefore, no conclusion can be drawn for companies from F.T. Putrajaya.
From this �indings (Chapter 4, item 4.4), services sector are more innovative (61.34%) compared to manufacturing (38.66%). The results also show that companies established between 2005 and 2009 are the most innovative companies in both sectors with 27.96% in the services sector and 25.59% in the manufacturing sector. The least innovative companies on the other hand, were those established between 1960 and 1964 for both sectors. In the manufacturing sector, the most innovative companies were manufacturers of food products, while in the services sector it was the wholesalers of machinery, equipment and supplies. It may due to resistance to change to adopt innovation.
7.1.3 Innovation Activities Implemented from 2012 – 2014
This study revealed the innovation activities implemented among small, medium and large companies (SMLs) in Malaysia. In general, the need to implement innovation in the business operations is irrefutable. Acknowledging this importance, companies therefore can only compete favorably when innovation is part of the whole process. In view of the above, this survey showed that several innovation activities are practiced by the companies in different forms. In relation to product innovations (Chapter 5, item 5.2), a majority of companies in the manufacturing sector produced ‘new and signi�icantly improved products’. This trend was also similar in the services sector, where a majority of the companies render ‘new and signi�icantly improved services’. In addition, the majority of the companies in both sectors focused on the introduction of new products or signi�icantly improved products that are only new to their �irm and not new to the market. Thus, the �inding shows that the majority of the companies are not introducing radical technology such as new or signi�icantly improved product to the world (see Figure 5.2).
For the process innovation activities (Chapter 5, item 5.3), most companies in the manufacturing sector introduced ‘new or signi�icantly improved methods of manufacturing’, while the majority of services companies introduced ‘new or signi�icantly improved supporting activities’. The investigation of marketing innovation activities (Chapter 5, item 5.4) revealed that a majority of the companies in the manufacturing sector introduced ‘new or improved methods of product design or packaging’, while a majority of the companies in the services sector focused on the introduction of ‘new and improved promotion or pricing’. Another type of innovation activities uncovered in this study is organisational innovation (Chapter 5, item 5.5) in which most companies in the manufacturing activities focused on ‘new or improved workplace organisation’. Meanwhile, a majority of companies in the services sector implemented ‘new or improved methods in the �irm’s business practices’.
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Overall, the majority of companies in both sectors have executed encouraging innovation activities in all types of innovations investigated in this study. These activities were done by the companies to ensure smooth product development and high marketability, as well as to enhance R&D activities in order to improve their technological and operational performance in the industry (Chapter 5, item 5.7). Nevertheless, there were some differences between sectors with regard to the logistic activities under process innovation. The companies in the services sectors have a higher rate in closed and joint innovations compared to open innovations, whereas the manufacturing sector showed a higher open innovation in the logistic activity (See Table 5.5).
7.1.4 Source of Information for Innovativeness and Impact
To carry out innovation on products and services, companies in both manufacturing and services sectors need to identify, solicit and utilise various sources of information. The most important and frequently used sources of information were those identi�ied and acquired from internal sources and market sources (suppliers, clients and competitors) (Chapter 5, item 5.11). Information was also acquired from within the internal sources followed by information gathered from conferences, trade fairs and exhibitions. It should also be noted that Universities and Government Research Institutes far below average as source of information for innovation (mean score of 1.25 and 1.31 respectively). In general, the nature of information is almost similar for both sectors.
7.1.5 Government Support
Government support for innovation activities has been a long standing issue. Figure 5.24 shows that companies utilised technical support, �inancial and tax incentives from government agencies but more than half of the respondents reported that they are not aware of government support for innovations (see Figure 5.25).
This survey also showed that large and small companies have capitalised on the incentives (in the form of innovation grants or other non-monetary supports) provided by the government to pursue their innovations, while medium size companies obtained tax incentives. The major form of government incentive received by companies in the manufacturing sector is technical support and technical consultancy for the services sector. This conclusion provides the justi�ication for the critical need for the dissemination of information on government supports, incentives and funding on innovations to SMLs in Malaysia.
7.1.6 Cooperation and Collaboration
Organisations pursuing innovation activities need to cooperate and collaborate with other business partners and research organisations to succeed in bringing the innovations to mature stage. Only mature innovations would help the organisations gain competitive advantage.
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The survey indicated that the most active cooperation and collaboration partners in innovations fell under the categories of ‘suppliers of equipment, materials and components’ and ‘clients and customers’, for both manufacturing and services sectors. However for large services companies, the popular collaborators were ‘other companies within the company group’, ‘suppliers of equipment, materials and components’ and ‘universities or other higher education institutes’
(Chapter 5, Figure 5.21).
These showed that innovations started and continued to develop due to the companies’ desire to satisfy customers’ needs and requirements. This also shows that these innovative companies practice market pull strategy whereas to be more innovative, the companies should practice technology push strategy. Details of the discussions can be found in the analysis chapter of this study.
7.1.7 Intellectual Property Applications and Protection
Globally, the number of IP grants serves as an important measurement tool for innovation either in the form of patents, trademarks, industrial design, utility innovation, copyrights, and geographical indications. All types of IPs show similar trend of intellectual property applied and granted.
Based on �indings (Figure 5.33 and 5.34), the highest types of IP applied and granted for both sectors are trademarks and patents whereas the industrial design shows the lowest percentage.
The highest percentage for trademark applied and granted may be due to cheaper cost and shorter processing time. The application of industrial design should be encouraged since well- designed products create an important competitive advantage for companies.
This survey also revealed that the manufacturing sector placed higher importance on IP protection as compared to the services sector. In the manufacturing sector, the most common IP rights acquired in order of importance were trademark registration, design registration, con�identiality agreements and trade secret. On the other hand, the most popular IP for the services sector were the con�identiality agreements, followed by trade secret, trademarks, design registrations and trademarks registrations (Chapter 5, item 5.13). It was also observed that the IP applications trend increased steadily in both manufacturing and services sectors in the years surveyed, while the number of IPs granted is lower, which may be due to the longer time for processing the IP applications.
7.1.8 Innovation Barriers/ Hampering Factors
In this survey, the most signi�icant factor hampering innovation is associated with cost, followed by lack of knowledge, market and organisation factors. These problems faced by companies are further exacerbated by high cost of �inancing the innovations, resulting in them abandoning or not carrying-through the innovations, either for new products or products needing improvements.
This may be due to the increased cost of getting resources, limited sources of innovation funding as well as the uncertain economic condition of the country. These unfavorable factors affected their desire and enthusiasm to create change and to innovate new products and services in both sectors, i.e. manufacturing and services. This conclusion answers the eighth objective of this study and details of the discussions can be found in the analysis Chapter 5, item 5.14.
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