Innovation Management: Impact on Organization Performance & Tech Governance - Essay Sample

Introduction

Innovation management is an interconnected activity that involves multiple systems within an organization. Every organization that value innovation due to the overall impact on the organization performance understands that both the process and the product innovation are vital towards acquiring competitive advantage in the market (Gallego, Rubalcaba, and Hipp 2013). Governance affects all the innovation systems within an organization and the governance of the organization technology innovation at all levels is dependent on the firm size. This conceptual framework seeks to identify the systems and theories involved in the governance of innovation in business organisations taking into consideration the different points of interactions between the organisation and the technological innovation, the governance and the technology innovation processes, the firm size and the governance, the governance and the organisation and the firm size and the organisation hypothesis (Gallego et al. 2013). The hypothesis in the conceptual framework is backed and supported by theoretical underpinnings of innovation which include but not limited to the diffusion theory of innovation, the Schumpeter's theory, the disruptive innovation theory and the Drucker innovation theory.

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Organisation Innovation Impact on Product Innovation and Process Innovation

The organisation is an essential aspect in the management of the product innovation and the process innovation elements. An organization significantly depends on innovation to continuously retain a competitive advantage. The organisation is made of the processes and end products that significantly determine the overall consumer experience (Gallego et al. 2013). The separation of the individual processes and their organization makes it easy for the organization to improve on its innovation and achieve a high overall organisation outcome. The processes within an organisation are closely interrelated and have the impact of affecting their overall effectivity in adding value to the overall business practices and profitability. Process and product innovation according to Schumpeter's theory is not an isolated process but a continuous process under which there is a high need of the organisation investment and classification of business processes.

Conceptual Framework With Hypothesis

According to Schumpeter's theory on innovation, competition is the primary cause of innovation in organisations which seek to improve their processes and renew their products to enhance their overall competitive advantage (Kaya 2015). Schumpeter notes that innovation plays a significant role in business organisations, and it is initiated in the processes and products which can involve improved capacity as well as the creation of new products (Schumpeter 2000). Technological change is central to the process, and product innovation and business management have to decide on diverting resources and investing more in technology, which can instigate product and process innovation. Proper governance within an organization ensures that the product and process innovation processes have adequate resources, and they also have competent leaders. Governance as an element of innovation from an organization perspective should ensure that there is no confusion between the different processes and products that might fall in various departments (Zhang, Khan, Lee, and Salik 2019).

Governance within the organisation perspective to promote process and product innovation should be transparent, responsive and consensus-oriented. This means that an organisation's internal governance and structure can significantly affect the process and product innovations. One of the critical approaches of eliminating organisation based inefficiencies due to poor governance in the process and product mapping which increases the organisation administration understanding of the overall business products and processes (Zhang et al. 2019). Improved business understanding of the different processes and the business products improve governance oriented innovation facilitation. Schumpeter divides innovation into three major stages, which are facilitated differently by the organisation governance design (Kaya 2015). The invention stage is the initial step towards process and product innovation and involves the generation of new ideas. As such, for an organisation to realize innovation, there is the need for organisation governance to promote creativity and sharing of ideas from all levels of employees which will be vital in establishing opportunities for innovation as well as encouraging creativity (Zhang et al. 2019). Therefore, the organisation governance significantly influences how an organization in particular through its systems and processes can enhance product and process innovation.

Governance and Product Innovation

Governance within an organisation refers to the decision making processes and framework, which significantly determines how an organization is managed (Lacetera 2001). Governance in an organization depends considerably on the size of the organization and in turn, can affect the organisation innovation, technology innovation and the overall organisation performance. Innovation is a multifaceted process within an organization that has the impact of modifying all the linkages that leads to improved organisation performance. As such, the firm size is an essential consideration for the overall attainment of innovation. Before deciding on the most effective approach to organization governance that has the potential of improving innovation and the organization performance, the leadership should consider the size of the organization (Lacetera 2001). A large organisation require extensive resources and investment to retain market leadership, and innovation is integral to its future success and sustainability. In small size organizations, management and decision making are consolidated by an individual and not many people are involved in decision making (Zhang et al. 2019). As such, there is little to no innovation in the small business organisations where governance is not spread to different people, and also there is a limitation of the organisation processes. On the contrary, large organisations have multiple processes and products with more sophisticated governance structure. As such, governance at the primary organisation level can determine whether an organisation is creating a favourable environment for innovation (Lacetera 2001). In a large organisation, the management should adopt technology in the communication process, product research, market research and product distribution channels which is crucial in ensuring that there is seamless interconnectedness between different elements of the organisation. In large organisations, communication processes should be further streamlined to increase overall communication efficiency because the information is vital in the process and product innovation. All the faculties within the organisation should be interconnected by employing technological solutions such as Enterprise Resource Planning which consolidates organisation processes, improving both decision making and access to information at all levels of the firm. As such, large firms can significantly benefit from the process and product innovation by increasing the overall efficiency.

In terms of governance, large organizations should adopt a functional organization leadership approach which increases the ability of large firms to mobilize resources as well as achieve high governance of processes (Lacetera 2001). The functional management structure is known to improve the overall management and operational efficiencies within the organization by increasing the ability of the employees and leaders responsible for different functions to share information (Zhang et al. 2019). As such, the functional management structure ensures that the business functions in different areas are managed optimally, can be allocated resources depending on need and can collectively work towards achieving a single goal. As such, it is essential for large organizations to have leaders with vision who can be able to direct resources effectively.

Product Innovation and Process Innovation Impact on Performance

There is a direct correlation between organization performance and innovation at the process and product level. As postulated in Schumpeter's theory of innovation, a business performance which is measured by the accrued competitive advantage is attained through the innovation of the products and the processes (Kaya 2015). From Drucker's sources of business innovation, both process and product innovation increase the ability of a business to capitalize on the opportunities such as the as demographic changes, new knowledge adoption, changes in consumer perception as well as the change in market structure (Lacetera 2001). This means that where there are an effective product and process innovation in an organisation, there is a greater chance of business advantage over the competitors, which improves the overall business performance. The Kondratiev Wave's theory can be used to support the importance of product and process innovation in business performance by assessing the overall impact of process innovation in helping organizations expand and come out of stagnation phases as the economy changes (Tausch, 2014). Without process and product innovation business could undergo stagnation due to lack of any new product inventions as well as lack of efficiency in business processes, which could significantly undermine business performance and outcomes.

The innovation diffusion theory can be used to understand how organization performance can be affected by the process and product innovation. In the event of a new product or process innovation, business efficiency and new product advantage can increase the competitive advantage of the business (Gunday, Ulusoy, Kilic, and Alpkan 2011). This means that in the case of a new production approach, business process, and overall product in the market. The organization governance should be flexible enough to allow the business to adopt the innovation which can increase the overall production and financial performance before more companies adopt the innovation at the which the market stagnates, and the competitive advantage is lost. As such, the combination of both good business governance and innovation has far-reaching impacts on the overall business performance which is dependent on the new technology, process and product acceptability in the market as posited by E.M Rogers in the diffusion of innovation theory. As such, the process and product innovation impact on an organization performance cannot be underestimated by both small and large organizations.

Business performance is measured by the overall sales and profits that an organization accrue due to process and product innovation. The product innovation leads to the creation of new products that are more suited to meet the changing consumer needs which increase an organization sales in the short term before the idea is copied by other businesses (Gunday et al. 2011). Continuous product innovation is critical in sustainable business performance by ensuring that an organization has the necessary competitive advantage over the competitors. Without innovation, businesses are not able to achiev...