Sustainability and Social Responsibility

Innovation Sources

• internal: involves multiple organisational contributors, from employees to leadership

• external: including users, competitors, and research institutions

Resource-Based View (RBV) theory

• emphasises that to achieve sustained competitive advantage, a firm’s resources must be evaluated through the VRIO (Valuable, Rare, Inimitable and Organised) framework)

• Accordingly, capabilities and resources are examined to see if they are valuable and rare compared to the competitors’ resources and if it is a resource that cannot be imitated by others

• Finally, a firm needs to be organised to be able to benefit from such resources

• All these three pillars, workers, teams and departments, and management and leadership, combine to create a strong framework for the internal sources of innovations

Employees

• heir deep knowledge of the organisation’s operations, customer needs, and the challenges they face positions them to identify opportunities for innovation and propose meaningful solutions

• This is translated through the componential theory of creativity which highlights the role of individuals in generating novel and appropriate responses to open-ended tasks

Componential Theory of Creativity

• provides a comprehensive framework for identifying the elements required for people to generate creative work

• The theory identifies four key components necessary for creative responses: domain-relevant skills, creativity-relevant skills, intrinsic task motivation, and the social environment

• Domain-relevant skills represent knowledge, expertise, technical skills, intelligence, and specialised talent in the relevant domain.

• Creativity-relevant skills include cognitive processes (use of wide, flexible categories for combining information, ability to deviate from typical patterns of perception and behaviour) and personality processes (self-discipline and a tolerance for ambiguity)

• Intrinsic task motivation is simply the motivation coming from the intrinsic interest, personal challenge, or satisfaction derived from solving a problem, rather than being driven by competition, evaluation, or external requirements

• Social environment includes external motivations, such as competition, along with other environmental factors that can either obstruct or stimulate intrinsic motivation and creativity.

Dynamic Capability Theory (DC)

• provides a framework for understanding how organisations can adapt, learn, and innovate in response to changing environments.

• Teece’s concept of dynamic capabilities states that organisations must:

  1. sense and explore simultaneously new opportunities and threats by continuously scanning their external environment, adopting flexibility, engaging in exploratory learning, and forming strategic alliances.

  2. seize and exploit existing capabilities by efficient resource allocation, optimisation of operations, effective knowledge management, and a customer-centric approach.

  3. transform/reconfigure the business to adapt to changing environments and maintain competitiveness through strategic and organisational agility, development of dynamic capabilities, and strategic partnerships or mergers.

Absorptive Capacity Theory (AC)

• This theory emphasises an organisation’s ability to acquire and utilise external knowledge and information for innovation

• It focuses on how organisations can effectively learn from external sources, such as customers, competitors, suppliers, and research institutions, and apply that knowledge to innovate.

• The absorptive capacity consists of

  1. the capacity to recognise the advantage of new information

  2. the capacity to utilise that information effectively to generate value

• AC theory suggests that organisations with a high absorptive capacity can recognise valuable external knowledge and can effectively integrate it into their current capabilities, improving their overall performance.

Contemporary Sources of Innovation

• Crowdsourcing and Open Innovation

• Social Media and Online Communities

• Blockchain and Metaverse

• Artificial Intelligence and Data Analytics

Crowdsourcing and Open Innovation

• two innovation sources that bring together external ideas, expertise, and resources to drive innovation

• Crowdsourcing is an act of obtaining ideas or services by seeking contributions from a large group of people, often through the internet

• Open innovation is a strategic approach to innovation that emphasises collaboration and openness to external ideas and technologies

  • It pulls external partnerships, open innovation platforms, and cross-sector collaborations to combine diverse skills, resources, and ideas.

Social Media and Online Communities

Social Media and Online Communities have emerged as valuable sources of innovation, providing platforms for collaboration and idea generation among individuals and organisations across the globe.

Blockchain and Metaverse

• Blockchain technology works as a modern source of innovation by transforming the ideation process, offering new possibilities for collaboration and idea generation

  • Its decentralised nature creates a conducive environment where individuals and organisations can contribute ideas without the constraints of traditional centralised systems.

  • Blockchain’s role in facilitating real-time transactions and smart contracts modernises the execution of collaborative projects arising from ideation.

  • It enables modernising processes and verifying the authenticity of products and information.

• The Metaverse, another decentralised technology known as virtual worlds, has the potential to work as a significant source for innovation.

  • It can facilitate virtual testing and provide valuable insights into product usage, thereby leading to innovation within the organisation.

Artificial Intelligence and Data Analytics

• AI actively contributes to the generation of novel ideas, insights, and creative outputs

• generative AI can automate tasks, generate creative ideas, and even assist in software coding, transforming various aspects of business operations and creativity.

• Data analytics powers decision-making and predicts trends, leading AI through this advanced analysis.

Mechanisms Enhancing Innovation Sources

• STI (Science, Technology, and Innovation) Policies

• Innovation Culture and Leadership

• Cross Functionality

• Individual Characteristics and Mechanisms

• Knowledge Sharing Platforms

STI Policies

STI policies impose the rules, guidelines, and procedures that govern how employees interact, make decisions, and carry out their work.

Innovation Culture and Leadership

• Innovation culture and leadership play a fundamental role in enhancing innovation sources within organisations by promoting values such as creativity and continuous improvement.

• Leadership’s commitment to innovation is demonstrated not just in words but through actions by developing innovative behaviours, allocating resources to innovation initiatives, and recognising both successes and the valuable lessons from less successful actions

Cross Functionality

• Cross-functionality refers to the practice of involving individuals from diverse departments or areas of expertise in collaborative projects or initiatives.

• This approach enhances the sources of innovation by bringing together different perspectives, skills, and knowledge to address complex challenges.

Individual Characteristics and Mechanisms

• Individual characteristics and mechanisms, such as skills and competencies acquired through education, training, and experience, play a key role in enhancing the sources of innovation. Knowledge theory (Nonaka & Takeuchi, 2007) highlights the role of knowledge as a key driver of innovation within organisations

• Common skills that enable individuals to stay ahead of emerging trends and technologies, adopting a culture of innovation within the organisation, can be summarised in three skills: collaboration and interdisciplinary skills, professional communication, adaptability and flexibility.

Knowledge Sharing Platforms

Knowledge sharing platforms facilitate the exchange of ideas and expertise across the organisation, breaking down silos and enabling collaborative problem-solving.

Level-Oriented Categories innovation classification

Incremental, Radical and Breakthrough Innovations

Incremental innovation

a small-scale improvement applied to existing products, services, processes, or methods

Radical innovation

characterised by its new and different aspects that mainly bring major changes to the product, business model, institution, or practices

breakthrough innovation

epresents significant advancements that introduce new technologies, products, or services

Component vs Architecture-Level Innovation

• Component-level innovation focuses on the component itself rather than the entire system

• Architecture-level innovation refers to the changes in the overall design of a system or the way its components interact with each other

Disruptive innovation

• refers to a process where a smaller company with fewer resources is able to successfully challenge established current businesses, by introducing innovations that are simpler, more convenient, and less expensive

  • The disrupter refers to the technology, product, or service that introduces a significant change or innovation in an industry or market.

  • The disruptee refers to the existing technologies, products, or services that are disrupted by the emergence of a disrupter.

Sustaining Innovation

• refers to improvements or enhancements made to existing products, services, or processes within an organisation

  • Unlike disruptive innovation, which introduces entirely new products or services to the market, sustaining innovation aims to refine and optimise existing offerings to maintain or slightly improve their competitive position.

Principal innovation process

• It starts with the foundational layer, which is about the basic scientific/technological innovations and infrastructure innovations

• Then, the applied layer turns foundational innovations into practical solutions, products, services, and processes that can be used to solve specific problems

• Next comes the system-level innovation.

  • This layer takes the practical solutions and integrates them into larger systems or networks.

  • Finally, the ecosystem-level innovations are where everything comes together to form a supportive and interconnected environment.

Foundational Innovations

Foundational innovations introduce entirely new concepts, principles, or technologies that have the potential to change entire industries or sectors

Types

Scientific innovation

• essentially the starting point of all innovations, grounded in basic research and the search for new knowledge.

Technological innovation

• refers to the application of scientific discoveries and knowledge to develop new tools, processes, or technologies that solve practical problems

• It’s about moving from theory to application, turning scientific insights into real-world technologies.

Infrastructure innovation

• serves as a bridge between foundational innovations and more applied forms

• It involves creating the necessary physical and digital structures based on the requirements identified in scientific and technological innovations.

Applied innovations

• applied innovations involve the utilisation of existing knowledge or tools to develop solutions for practical use. Applied innovations often result from the application of scientific research or theoretical concepts to solve specific challenges

Process innovation

• refers to the introduction of enhancements or modifications to production and delivery methods within an organisation

• It involves changing the way in which goods or services are manufactured, distributed, or marketed, with the aim of increasing efficiency, productivity, and effectiveness

Product innovation

• Product innovation refers to the introduction of changes in the physical characteristics of a product or the development of an entirely new one.

• This innovation is represented in the outputs of a firm, incorporating its goods

Functional innovation

• Functional innovation involves adding new features or enhancing the existing functionalities of products, services, or systems.

• It addresses emerging user needs or market demands, making the offerings more relevant, useful, or attractive to consumers.

Service innovation

• Service innovation refers to the introduction of novel approaches, methods, or features within a service

• Unlike product innovation, which focuses on tangible goods, service innovation is about enhancing intangible services, processes, or experiences provided to customers.

Model innovation

• Model innovation involves the creation or adaptation of novel business models that transform the way a company creates, delivers, or gains value.

• Unlike product or service innovation, which focuses on specific features, model innovation redefines the structure and logic of a business.

Convergent innovation

• Convergent innovation refers to the combination of several sectors, disciplines, and technologies in order to develop original solutions to challenging issues.

• It draws attention to how crucial multidisciplinary methods and teamwork are to adopting innovation in a globalised society.

System-level innovation

System-level innovation, referred to as integrational innovation, involves the integration of various applied innovations into interconnected systems to achieve a specific goal

Ecosystem-level innovation

This type of innovation refers to the creation of new outputs and capabilities through the collaborative efforts of multiple organisations, stakeholders, and actors within an ecosystem.