Fundamental of Innovation and Creation

Post-industrial enterprises today are knowledge-based organizations and their success and survival depend highly on creativity, innovation, discovery and inventiveness.

Schumpeter (1942), an economist in Austria, first introduced the term “innovation”, and indicated that innovation comes from invention. This implies that innovation as a value-added activity deals mainly with the enhancement of existing works (e.g.

product, process, service), particularly for business value. This concept has shown a consequent impact on how to deal with the innovation. Drucker (1986) indicated that innovation is a tool of value-addition for business. It is defined to be any activity that transfer changes into opportunities such as new business model or service. Souder (1987) also specified that innovation is a sort of idea, but with high risk, which may reside high potential in creating values. It embraces the formation and development of new ideas, new product development, new manufacturing processes, and new services (Urabe et al., 1988). By this, job opportunities and economy, and in consequence business profits can be enhanced accordingly.

Besides, innovation is a sort of new concept of modification or invention to fit to the current or potential needs (Frankle, 1990). By this amendment, the goal of commercialization of the product or services can be reached. West and Farr (1990) define innovation as follows: the intentional introduction and application within a role, group or organization of ideas, processes, products or procedures, new to the relevant unit of adoption, designed to significantly benefit the individual, the group, organization or wider society. Innovation is also a sort of adoption of new ideas or behavior which obviously is new to the organization, such as a system, a policy, an

approach, a device, a process, a product or service (Damanpour, 1991). Brown (1992) indicated that the only way to create a competitive strength for an organization is innovation. It is basically a new product, method, or a type of system with potential to develop a new marketplace, to threaten competitors, or to change behavior of customers.

Innovation is often associated with change (Drucker, 1986). Innovation is regarded as something new which leads to change. Moreover, innovation is about a process that bringing any new idea into uses to solve problems. It is the generation, acceptance, and implementation of new ideas, processes, products, or services (Angle et al., 1989).

However, change cannot always be regarded as innovation since it does not always involve new ideas or does not always lead to improvement in an organization (West and Farr, 1990). In other words, creativity is the production of novel and useful ideas in any domain but innovation is the successful implementation of creative ideas within an organization. Thus, no innovation is possible without the creative processes that mark the front end of the process: identifying important problems and opportunities, gathering information, generating new ideas, and exploring the validity of those ideas (Amabile, 2004).

Innovation is basically not only a change, but an integration of innovative elements (Drucker, 1993). These elements can be diverse needs of environment and manufacturing processes, changes of industries and market, changes of features of population, and changes of customers’ understanding of product and service.

Therefore, the sources of innovation come mainly from the changing environment, industry structure, changes of internal manufacturing processes, and changes of understanding of product.

Inkpen (1996) mentioned that innovation is a sort of procedure that individual knowledge is fostered and internalized to be the fundamental of organizational knowledge. In order to greatly strengthen competition and increase profits, at the early stage the business usually aims at the development of new approach and new materials (Utterback, 1994). This results in the frequent changes of products.

However, when entering to the middle stage, the manufacturing processes greatly change because of the change of customers’ needs. In the mature stage, finally, business may choose the fittest product field as their main development focus.

Webster (1994) defined the innovation as a better and continuous way that helps enhance the capability of an organization to reach the goal. Innovation is a change of a process of distributional system to enter into new market; in other words, innovation may be regarded as a product, process, or system. However, innovation is never an idea, but has to be transformed into actions to create value.

Hill and Jones (1998) defined innovation for organizations as a new way of manufacturing, including new types of product, production management systems, development of organizational structure and strategies. By integrating definitions from literatures, Hage (1999) described innovation in a more precise way to be an adoption of a new concept or a new behavior, which could be a new product, a new service, a new technology, or a new management model. By surveying literature, Lin (2001) also described innovation from four different points of view: (1) technology revolution: different manufacturing process and equipments, (2) business: newness and novelty about market, technology, and manufacturing process for new products, (3) customer: better benefits, and (4) market: new market creation, in particular the enhancement of market sharing and sales. Martins (2000) indicated that innovation

practice or material artifact (e.g. a product) which is regarded as new by the relevant unit of adoption and through which change is brought about.

By combining the concepts from Damanpour (1991) and Inkpen (1996), this research regards innovation as a part of organizational knowledge creation. It can be a process to improve and internalize individual and group knowledge which are the fundamentals of organizational knowledge. By externalizing knowledge, individual and group then apply new ideas or behavior to organizational product, process, approach, service, and system. By doing so, organizational performance and competition can be enhanced.