INNOVATION ACTIVITIES
CHAPTER 5: INNOVATION ACTIVITIES
5.2 Product Innovation
Product innovation can be de�ined as the introduction of goods or services that is new or signi�icantly improved with respect to its characteristics or intended uses (Oslo Manual, 2005). Among them are signi�icant improvements in technical speci�ications, components and materials, incorporated software, user friendliness or other functional characteristics.
Product innovations can utilise new knowledge or technologies, or can be based on new uses or combinations of existing knowledge or technologies.
The quantity of product innovation is based on two criteria, which are: (i) new or signi�icantly improved product, and (ii) new or signi�icantly improved services. Table 5.1 illustrates that majority of the product innovation came from new or signi�icantly improved product for manufacturing sector with 65.61%. On the other hand, new or signi�icantly improved services contributed 52.96% for the services sector.
CHAPTER 5: INNOVATION ACTIVITIES
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CHAPTER 5: INNOVATION ACTIVITIES
5.1 Introduction
This chapter focuses on four types of innovation activities comprised of product, process, marketing and organisational structure (Oslo Manual, 2005) of Small, Medium and Large (SMLs) companies across business sectors. As noted in the Oslo Manual (2005), a level or degree of novelty is required for every innovation such as:
i. New to the �irm: An innovation is new to the �irm when the innovation is new to their
�irm only.
ii. New to the market: An innovation is new to the market when the �irm is the �irst to introduce the innovation to their market.
iii. New to the world: An innovation is new to the world when the �irm is the �irst to introduce the innovation to all markets and industries.
However, the minimum entry level for an innovation is that it must be new to the �irm.
5.2 Product Innovation
Product innovation can be de�ined as the introduction of goods or services that is new or signi�icantly improved with respect to its characteristics or intended uses (Oslo Manual, 2005). Among them are signi�icant improvements in technical speci�ications, components and materials, incorporated software, user friendliness or other functional characteristics.
Product innovations can utilise new knowledge or technologies, or can be based on new uses or combinations of existing knowledge or technologies.
The quantity of product innovation is based on two criteria, which are: (i) new or signi�icantly improved product, and (ii) new or signi�icantly improved services. Table 5.1 illustrates that majority of the product innovation came from new or signi�icantly improved product for manufacturing sector with 65.61%. On the other hand, new or signi�icantly improved services contributed 52.96% for the services sector.
CHAPTER 5: INNOVATION ACTIVITIES
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NATIONAL SURVEY OF INNOVATION 2015
Table 5.1 Product Innovation Activities Based on Business Sectors Product
Innovations Manufacturing Services
Yes % No % Total Yes % No % Total
New or significantly
improved product 311 65.61 158 33.69 469 191 25.67 553 74.33 744 New or significantly
improved services 163 34.75 306 65.25 469 394 52.96 350 47.04 744 Table 5.2 and Figure 5.1 show the development of new product or significantly improved products across sectors from 2012 to 2014. More significantly improved products (N=1,731) were produced as compared to new product (N=1,495) produced in the manufacturing sector.
In the services sector, new product (N=2,406) were higher in amount compared to significantly improved products (N=2,196). In addition, these tables and figures illustrate that more new products were produced and developed based on open innovation system with 40.07% for new product and 35.59% for significantly improved product in the manufacturing sector. In the services sector, joint innovation system has a higher rate on new product (33.87%) as compared to open innovation system on significantly improved product (38.98%).
Table 5.2 Developers of New Product or Significantly Improved Products Based on Business Sectors
Developers Manufacturing Services
ProductNew % Significantly
Improved % New
Product % Significantly Improved %
Closed
innovation* 363 24.28 519 29.98 799 33.21 514 23.41
Joint
innovation** 533 35.65 596 34.43 815 33.87 826 37.61
Open
innovation*** 599 40.07 616 35.59 792 32.92 856 38.98
Total 1,495 100 1,731 100 2,406 100 2,196 100
*Closed innovation: Innovations developed internally by the company itself or company’s group
**Joint innovation: Innovations developed jointly by the company together with other companies or institutions
***Open innovation: Innovations developed mainly by other companies or institutions (external)
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Figure 5.1 Developers of New Product or Significantly Improved Products Based on Business Sectors
The novelty of product innovation in the manufacturing and services sectors is shown in Table 5.3 and Figure 5.2. New or significantly improved product has been introduced to the market, globally or locally, by these sectors from 2012 to 2014. For both manufacturing and services sectors, more novelty of innovation is introduced as new to the company with 292 products and 396 products respectively.
Table 5.3 Novelty of New Product or Significantly Improved Products Based on Business Sectors
Novelty of Product Innovation
Number of Product Innovation
Manufacturing Services
Yes % No % Total Yes % No % Total
New to the world 4 0.85 465 99.15 469 3 0.40 741 99.60 744 New to the market 187 39.87 282 60.13 469 178 23.92 566 76.08 744 Only new to the
company 292 62.26 177 37.74 469 396 53.23 348 46.77 744 CHAPTER 5: INNOVATION ACTIVITIES
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Figure 5.1 Developers of New Product or Significantly Improved Products Based on Business Sectors
The novelty of product innovation in the manufacturing and services sectors is shown in Table 5.3 and Figure 5.2. New or significantly improved product has been introduced to the market, globally or locally, by these sectors from 2012 to 2014. For both manufacturing and services sectors, more novelty of innovation is introduced as new to the company with 292 products and 396 products respectively.
Table 5.3 Novelty of New Product or Significantly Improved Products Based on Business Sectors
Novelty of Product Innovation
Number of Product Innovation
Manufacturing Services
Yes % No % Total Yes % No % Total
New to the world 4 0.85 465 99.15 469 3 0.40 741 99.60 744 New to the market 187 39.87 282 60.13 469 178 23.92 566 76.08 744 Only new to the
company 292 62.26 177 37.74 469 396 53.23 348 46.77 744 CHAPTER 5: INNOVATION ACTIVITIES
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NATIONAL SURVEY OF INNOVATION 2015
Figure 5.2 Novelty of New Product or Significantly Improved Products Based on Business Sectors
Figures 5.3 shows the comparison of product and service innovation introduced based on sectors and company size. Companies in manufacturing and services sectors introduced both new or significantly improved products and services. In manufacturing sector, companies of all sizes, except large companies (with marginal differences), introduced more improved products.
Interestingly, small sized companies (50.43%) introduced more new or significantly improved product than medium companies (10.86%). On the other hand, companies in the services sector introduced more new and significantly improved services. Again, the same scenario can be seen where small sized companies (63.22%) have introduced more new and significantly improved services than medium and large companies (with both having the rate of 2.37%).
Figure 5.3 Comparison of Product Innovation Introduced Based on Business Sectors and Company Size
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