Linkages Lead to Organizational and National Innovation

Organizational innovation is important for national development. Research by Arundel, et. al. (2007) analyzed how European countries learn and develop. They studied large surveys to come to conclusions about how companies foster inner innovation and how this leads to a unique path of national development. They create links between employee-centered skill development, organizational innovation, and national development. 

The ways in which businesses and people interact, openly innovate and provide feedback create the national innovation approach (Lundvall, 1998). It is the national innovation approach that helps to determine the competitive structure of the country and its ability to succeed in the global market place. Each country and culture comes with their own way of viewing the world and interacting. 

When organizations use science-based learning and experience-based learning they are able to provide higher levels of innovation and production (Jensen, et. al, 2007). It is the theory and its application that moves to higher levels of innovation that creates tangible value on the market. Employees who engage in the innovation process are part of the “learning economy”. 

Organizational and national innovations are interlinked. This innovation results from feedback loops and how agents within the same organization interact at different times to create a chain-link model of development (Kline and Rosenberg, 1986). All innovation is based in interactions that lead to knowledge diffusion whether that is through employees, suppliers, competitors, or regions.

Each organization has their own unique make-up of employees that determine how they interact. When employees are encouraged to solve-problems, work together, take ownership over issues, share their knowledge, and contribute to development the organization becomes more innovative. This innovation is incremental whereby individual knowledge is turned into collective knowledge and then applied for practical use.

The authors found that the way innovation develops is nation specific and co-evolves to create different modes of innovation. Those nations likely to be more successful focus on encouraging complex problem-solving and also place greater emphasis on inner firm development than only on external sources of innovation. Learning and interaction between internal agents is as important as learning through outside agents. Organizations should balance the soft focuses of R&D and human skill input with hard focuses such as materials input analysis. Each country develops their own unique mix in development. 

Arundel, et. al. (2007). How Europe's Economies Learn: A Comparison of Work Organization and Innovation Mode for the EU-15. Industrial and Corporate Change, 16 (6).

Jensen, et. al. (2007), Forms of knowledge, modes of innovation and innovation systems. Research Policy, 36, 680–693.

Kline, S. and Rosenberg, N. (1986). An overview of innovation,’ in R. Landau and N. Rosenberg (eds), The Positive Sum Game. National Academy Press: Washington D.C.

Lundvall, B. (1988), Innovation as an interactive process: from user-producer interaction to the National Innovation Systems, in G. Dosi, C. Freeman, R. R. Nelson, G. Silverberg and L. Soete (eds), Technology and Economic Theory. Pinter Publishers: London.

Creating National Innovation Through Information Diffusion

National innovation is an all growth proposition that seeks to make maximum market gains by exporting relevant products to excited customers. Charging forward with a barrage of new products and services creates a zeitgeist of growth that is not easy to match. The researchers Change and Cui (2013) analyzed the factors that help encourage higher levels of international competition that led to GNP growth and development. 

Countries rely on informal and formal innovation networks to turn good ideas into marketable growth. National innovation systems refer to the innovative network within a country whereby departments and agencies promote innovation through the economic, scientific, and technological organizations (Zheng, 2006). Each of these organizations uses the knowledge of other sectors to enhance their own positions. 

Often countries use more of a closed innovation system. Each company works within a silo and doesn’t share information. Even though great ideas do come forward it is often much slower than what would be realized through higher levels of mutual development. Those countries that can generate more ideas, better products, and lower lead times can dominate the market. 

National innovation can be improved by applying scientific and technical knowledge to the development processing and exportation of products (Wang and Zhang, 2002). As universities develop new methods and people with practical experience apply that knowledge in new ways product enhancement is realized. The transference and application of information is an important criterion in the creative process.

Even though in a knowledge economy the markets transfer information across borders economic hubs should be draws for such information.  Let us assume that a new process for product development is used in one country. It will not take long before that process is copied by others as its benefits become apparent to competitors. Global hubs should be drawing in this knowledge to enhance their local hubs and operations. 

The authors found that technology transfer and diffusion are important elements in growth.  All hubs must draw in, generate and then diffuse information for the greatest possible growth. This occur most often when international trade, foreign investment, and cross border R&D processes are developed. Each hub brings in resources and information and then uses this information to enhance their competitive position.   

Chang, Y. & Cui, X. (2013). The Interactive Relationship of Transnational Technology Transfer & Diffusion and National Innovation Capability. International Journal of Business and Management, 8 (21).

Wang, Z. & Zhang, W. (2002). Foreign direct investment, technology licensing and technology innovation. Economic Research, 3, 69–75.

Zheng, X. (2006). Research Review on National Innovation System. Scientific Management Research, 24(4), 1–5.

Innovative Companies Localized into Regional Hubs

Innovation is becoming a concept that nations hope to foster as their financial situations become more dire. Research in national innovation helps to highlight how the concepts of regional hubs can help further this development by creating hives of innovative knowledge sharing. Companies don’t work within isolation and often share knowledge, people, and ideas throughout a region. Research into the development of the pharmaceutical industry furthers this concept of demographic influence.

Innovation is a necessary component of organizational growth and development. Theoretical and empirical literature helps establish an understanding that innovation responds to consumer demand (Schmookler, 1966). In other words, that as customers have needs they desire to be fulfilled, organizations will often develop products and services to meet those needs. The stronger the feedback loop the more likely such customer to company interaction will lead to new innovative insights.

All innovation requires knowledge. This knowledge comes from past experiences, sharing information, new research, education, market needs, and communication. The knowledge that is derived from market and consumer demand and is often difficult to codify in concise terms that can be applied appropriately (Polanyi, 1966). Without strong analysis and customer research it is difficult to determine what consumers are looking for in order to develop these new products and services.

This difficulty in codifying needs into concise terms means that such understandings often are derived from multiple pathways as a result of local communication. It seeps into the organizations in an amebic fashion. Those firms that operate on a local level have a better understanding of the tacit needs of their customers (Kogut, 1993). It is through constant communication with customers and the local market that such needs and solutions finally become crystallized. 

In innovation there is also a pull and push strategy in much the same manner as there is in marketing. Demand pull from the market helps to shape innovative investments (Schmookler, 1966). As customers create needs, organizations will naturally respond to those needs. Furthermore, there is also technology push that comes from the science, learning, research, knowledge, manufacturing and production. Such inventions create a frontier by which new products and services can create markets (Griliches, 1995).

To see how this push and pull strategy, combined with local knowledge, creates innovation it is possible to look at those cities and counties that have a disproportionate amount of new market offerings. Technology organizations create a spillover influence in their regions that offers an opportunity for shared development (Feldman, 2000). In essence, the transferring of people, information, culture, and knowledge among a hub of businesses creates innovative synergy in the area. 

The research conducted by Fabrizio & Thomas (2012) helps solidify this understanding of innovative locality. The research used a panel dataset of new molecule innovation from the 56 largest pharmaceutical firms in nine different countries between 1992 and 2001. The study focused on analysis of the parent and sub-firms that reside in local markets even though they have international presence for their products. They reviewed 1,085 new market offerings from 1980 to 2001 trying to canvas innovation within the industry. They analyzed these findings with technology data and local information to come to a pattern of innovative development.

Results:

-Accumulated technical knowledge by measuring organizations patents determines innovation.

-Knowledge of the market also determines the pattern of innovations created. 

-Systems of organizations, culture, and similarity of industries in local regions impact innovation.

-The use of open innovation, networks, and knowledge sharing processes encourages innovation.

-There are no international pharmaceutical innovations only national ones that make their products available on the international markets.

-The local and national culture has an impact on the likelihood of innovation.

-It is recommended that innovative organizations establish themselves with the local market to understand consumer needs and develop new products.

The results shed light on the overall development of innovation within nations. Organizations that are innovative work best when located in a hub of like companies. The knowledge sharing among market members furthers the development of new ideas and concepts. Nations can foster this innovative process by developing such hubs similar to technology organizations in Silicon Valley or automotive manufacturing in the Detroit area. Furthermore, the national and regional culture also impacts the success of developing new innovative products for global market presence.

Fabrizio, K. & Thomas, L. (2012). The impact of local demand on innovation in a global industry. Strategic Management Journal, 33.

Feldman MP. (2000). Location and innovation: the new economic geography of innovation, spillovers, and agglomeration. In Oxford Handbook of Economic Geography, Clark G, Feldman M, Gertler M (eds). Oxford University Press: Oxford, UK; 373–394.

Griliches Z. 1995. R&D and productivity: econometric results and measurement issues. In Handbook of the Economics of Innovation and Technological Change, Stoneman P (ed). Blackwell: Oxford, UK; 52–89.

Kogut B. 1993. Country Competitiveness: Technology and the Organizing of Work . Oxford University Press: New York.

Polanyi M. 1966. The Tacit Dimension. Doubleday: Garden City, NY.

Schmookler J. 1966. Invention and Economic Growth Development. Harvard University Press: Cambridge, MA.
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