This chapter presents the variables the researchers need to study. The contents are arranged and gathered from local and international literature reviews in order to represent the definition of studied variables and relationships of each variable previously studied by various scholars and researchers. The contents in this chapter are useful for understanding the theoretical concepts relating to this research, finally leading to the conceptual framework.
3.1 Organization Innovation
Innovation is widely recognized as the factor contributing to an organization’s success and achievement of its objectives. Innovation is generally considered to be one of the key drivers of corporate success (Cardozo, Mclaughlin, Harmon, Reynolds and Miller, 1993) and it is also important to the competitive advantages of organizations through their human capital having abilities in innovation creation Mayfield and Mayfield, (2004).
Innovation is the process of transforming novel ideas or fresh knowledge into new management or original products (Ramadani and Gerguri (2011). It can be new products, services, technologies or management approaches (Hage, 1999). Elements of initiation of the innovation process are interaction of personnel in an organization, creativity, knowledge, experience, networks, cooperation, competition, and location.
When most of these elements are in place (it is unnecessary for it to be all elements), a climate of organization innovation will take place (Goldsmith, 2001).
Currently, there are many literatures relating to innovation that have elaborated innovation in different perspectives and used various terms to describe innovation (Zaltman, Duncan and Holbeck, 1973 quoted in Meulenberg and Verhees, 2004). For example, organization innovation is the process of developing and
adopting new products. Organizational innovation refers to the generation, development, and implementation of tools, systems, programs, products or services which are new to that organization. Innovation has occurred when an organization performs some actions they have never done before and operates activities other than original forms or patterns (Kessler, 2004). When an organization learns to do something that they did not know before and they can proceed to do it in a sustainable way, a process of innovation has occurred (Shepard, 1967). Roger (1995) defined organizational innovation as an idea, practice or object that is perceived to be new by an individual and an organization that adopts such innovation. In addition, innovation was also defined as development and implementation (Andrew, 1986: quoted in Birchall and Armstrong, 2003), since innovation is accepted as a factor of efficiency of various industries’ performance (Zahra et al, 1999).
Pornpimon Tungchaisin (2013) defined innovation as a practice or new invention which has never been adopted before or the development or adaptation of existing things to be more modern and more effective. When innovations are used, work or operations will be more efficient and effective, as well as saving time and labor.
Ruethai Plengwattana (2013) said that the term innovation represents modernity, novelty of equipment and technology.
The National Innovation Agency (2006) defined innovation as the production, learning, knowledge management, and exploitation of new ideas that will be beneficial to the country's economy and society, including the creation of products, services, new production processes, technology improvement, technology diffusion, and exploitation of technology that leads to enhancement of social and economic value. In addition to the wide definition of innovation, the National Innovation Agency also defines innovation in terms of economy as the application of new ideas or exploitation of existing things in new patterns or the generation of new products from knowledge and creativity for the economic and social benefits.
Somneuk Eurjirapongpun; Phukphajong Wattanason; Atchara Chanchai and Prakob Khuparat. (2010) summarized the meaning of innovation defined by scholars as follows;
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Table 3.1 Name of Scholars and Definition of Innovation
Scholar (Year) Definition of Innovation Utterback (1971,1994,
2004)
Innovation is a new invention, developed from the old, which is accepted by the market as a new product or a new process first developed and used; it also causes economic benefits.
Drucker (1985,1993) Innovation is a specific tool of entrepreneurs for enhancing competence, business competition and wealth by means of creating new-producing resources or endowing existing resources, including developing from new knowledge.
Tushman and Nedler (1986)
Innovation is the creation of any product, service, or process, which is new.
Damanpour (1987) Innovation, in terms of organizational innovation, are new products developed to use in an organization and they are accepted by the organization’s personnel.
Rogers(1995) Innovation is an idea, practice or object that is
perceived to be new by an individual and organization that adopts such innovation.
Smits (2002) Innovation is a successful combination of apparatus and ideas for social and economic benefits.
Herkema (2003) Innovation is the adaptation of an idea or behavior that is new to the organization. The innovation can be a new product, a new service or a new technology which is related to radical or incremental change.
Schilling (2008) Innovation is the practical implementation of an idea into a new product or new process.
Source: Somneuk Eurjirapongpun; Phukphajong Wattanason; Atchara Chanchai and Prakob Khuparat, 2010.
According to the above literature review, it can be concluded that innovation refers to something new as both knowledge and creative idea, which are applied to generate or improve performances through management process, concept and new methods.
Innovation occurs through the initiation process arising from the decision- making of the organization in order to respond to internal requirements and external environment. Any initiation of such organization derives from the needs of the organization to perform new actions which have never been done or occurred before in the organization (Kessler, 2004). When the initiation process of innovation occurs, the organization will start to learn new changes. When the organization is successful in handling these new changes, it means that the innovation process completely becomes part of the internal process of the organization (Shepard, 1967).
Kamal (2006) stated that the innovation process in the organization is the innovation adoption process. The concepts of innovation process of various scholars in different point of views are shown in Table 3.2.
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Table 3.2 Innovation Adoption Models and Process