What is the relationship between organization and innovation

what is the relationship between organization and innovation

It is noticed a lack of empirical studies on the relation between. organizational culture and innovation (Martins & Terblanche,. ; Obenchain & Johnson, ). The relationship between adoption of administrative and technical innovations over time and its impact on organizational performance was studied. Using a sample of Canadian organizations, this study examines the relationships between an organization's innovation orientation and the types of competitive.

This dynamic and competitive environment requires companies to make investments in innovation. According to Schumpeterinnovation plays a fundamental role in the economic development, where production standards are changed, providing differentiation among companies.

According to the Organization for Economic Co-operation and Development OECD,innovation comprises significant investments, including the acquisition of intangible assets with potential profitability for a period of far-off time.

Among the various means to verify the innovation, this study focuses on the records of intangible assets of companies. Santos, Silva, Gallon and De Lucap.

what is the relationship between organization and innovation

Tironi and Cruz highlight the importance of the intangible in the innovation of organizations, indicating a proportional relationship between innovation and investments in intangible assets. It is in this context that emerges the importance of organizational slack in companies.

Different organizational slack concepts are found in the literature, outstanding among them: Poynter and White point out that the organizational slack is important, as it is related to the ability to innovate and create new forms of strategy.

what is the relationship between organization and innovation

Yang, Wang and Cheng warn that excess resources in the company, from a certain point, can fail to have a positive impact on innovation and minimize performance in innovation. Among the different types of organizational slack addressed in the literature, the focus of this study is on the slack of financial resources, highlighting three specific categories: Unabsorbed slack, according to Thomson and Millarp.

Potential slack, in turn, refers to the ability of a company to obtain extra resources from the environment, i. On one hand, they can reduce additional spending on the innovation process and create a culture of experiments in the organization.

Based on the above, the research question is: What is the relationship between the types of organizational slack and the innovation of companies, measured based on intangible assets?

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This research is justified by its theoretical contribution, since there are few studies involving these variables in the national sphere. Also, it was not found studies using the intangible asset to measure innovation and their possible relationships with organizational slack measures. However, more studies on intangible assets have been conducted, especially given the scenario of convergence with the international accounting standards, supported by Law n. This study is also justified by its relevance to the organizations, since it contributes to a possible creation of competitive advantage, representing a kind of support in the strategic activities.

However, the most widely adopted definition for organizational slack is Bourgeois III'sp. According to Borgeouis III and Senderthe organizational slack process consists of antecedents, slack itself and the role of slack. Thus, it comprises the facts, attitudes and actions that enable the appearance of slack in the business environment, and are grouped in: According to Senderthe process of organizational slack itself comprises nature, types and measures.

As for nature, it is divided into human resources employeesphysical resources tangible acquired or produced by the entityand financial resources cash for immediate use.


The types of slack can be segregated regarding to availability available, recoverable and potentialabsorption by the organization absorbed, non-absorbed immediate and non-absorbed potentialand autonomy of use low autonomy and high autonomy.

In turn, the slack measures can be broken down into potential, recoverable and available slack. The last component of the organizational process proposed by Sender contemplates the role of slack in the business community, involving strategic behavior, growth of the company, coalition management, response to the environment and employee motivation.

Regarding the innovation process, organizational slack may contribute to the innovation performance, reduce additional costs with innovation and create a culture of experiments.

The authors also point out that the theme of organizational slack and innovation can be seen from an angle that, at the same time, can provide incentives for innovative opportunities, and also losses and expenses that negatively affect companies' results.

The literature suggests several ways to quantitatively measure the level of organizational slack in companies. The first major study on the operationalization of the calculation of measures was Bourgeois IIIentitled On the Measurement of Organizational Slack, that proposed the use of secondary data financial for the measurement of organizational slack.

Then, mechanisms to measure the organizational slack are presented, which, according to Senderp.

Understanding Organizational Strategies - Strategy and Structure relationship - #40

This wide acceptance possibly derives from the characteristic of "a mechanism which can be used as a first way to detect the organizational slack in an entity without requiring the cooperation of the organizations themselves for providing data, since they are inferred from the financial records" Bourgeois III,pp. Gary states that to operationalize certain measure of organizational slack, it is necessary to know and discriminate the work demands in the business context, including the level of resources to be used in meeting these demands.

Adler and Shenbar stressed that innovation capability facilitates firm to apply appropriate process technologies develop new product meet the market needs and eliminate competitive threats.

Dadfar, Dahlgaard, Brege and Alamirhoor were identified that superior innovation capability tends to implement and develop a new product variety to the existing product portfolio.

Dahlgaard-Park and Dahlgaard explained that firm must enhance the leadership, people, partnership and organizational capability before implementation of the original process of innovation and new product development.

Vicente, Abrantes, and Teixeira have conceptualized that innovation capability is the firm capacity to develop new product through the combination of innovation behavior, strategic capability, and internal technological process. Thus we developed hypothesis as follows,H1 Innovation capability has positive impact on innovations. H1b Innovation capability has positive impact on process innovation. H1c Innovation capability has positive impact on organizational innovation.

H1d Innovation capability has positive impact on marketing innovation. Impact of innovation type on innovation performance The impact of innovation on business performance in service firms would be more complex and different than the manufacturing sector Lin, due to the intangibility, perishable, inseparability, and variability. Researchers have used a different kind of financial and nonfinancial indicators to analyze the business performance; it may be subjective and objective indicators.

According to the Oke innovations related to radical or incremental have given an interesting contribution to firm performance. Wang and Hsu, was conducted research which related to High Tech industry in Taiwan to identify the relationship between the market orientation, service innovation, and innovation performance. Findings revealed that innovation as fully mediating effect on innovation performance. Furthermore, the study suggested that technology-based product quality which facilitates firms to generate superior innovation performance.

Mabrouk and Mamoghli have investigated innovation in banking sector. Their study indicated that product innovation improves the profitability while process innovation improves the profitability and efficiency and also revealed that first mover of innovation both product and process has great effect on profitability.

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Yavarzadeh, Salamzade, and Dashtbozorg have investigated the relationship between organizational innovation and performance in tax affair general administration of Iran. In addition to that product and process innovation play effective role on organizational performance. However, a considerable amount of business has adopted this practice without much success.

In most cases companies indicated that moderate, very little or no results at all through their innovations for instance. Few types of research have adopted organizational innovation to identify the effect on firm performance among them Damanpour and Evan explored that adoption of administrative and technological innovations are more important for the organization to improve their performance level.

Johne and Davies suggested that marketing innovation is given a decisive importance for the firms to increase their sales and enhance the profitability. Innovation activities benefited for firms to augmented firm performance in different aspect. Hence we hypothesized that,H2 Innovation has positive impact on innovation performance. H2b Process innovation has positive impact on innovation performance.

H2c Organizational innovation has positive impact on innovation performance. H2d Marketing innovation has positive impact on innovation performance. Innovation performance and market performance Market performance can be derived as the extent to which firms gain market-related outcomes than their rivals with respect to customer satisfaction, new customer acquisition, loyalty etc.

Marketing concepts basically suggested that superior Judgmental performance Quality, customer satisfaction, employee satisfaction is the perquisite for superior performance of the market and financial Subjective performance of the company.

Innovation performance can facilitate firms to generate market performance in numerous ways through helping to identify technological possibilities with improving product and service quality and superior value product to the customer can help to gain new customers.

Innovation performance is firstly affiliated with the non-financial aspects of corporate performance, for instance, customer facets, satisfaction and afterward it accelerated the higher financial performance Gunday et al.

Wei and Morgan were identified that innovation performance can lead sustainable competitive advantage through creating superior value to customer immensely which can turn greater market performance and profitability. Following prior findings and rationale, we hypothesized thatH3 Innovation performance has positive impact on the market performance.

On the other hand, Karabulut explained greater the market share, return on investment which resulted in greater the profit margin. Reichheld and Markey stressed that customer satisfaction and loyalty drive firms for the higher profitability and revenue growth.

Therefore we hypothesized that,H4 Market performance has positive impact on the financial performance. Methodology This research was conducted in the insurance industry because of the insurance industry is mature and knowledge base industry. Innovative solutions are absolutely essential for insurance players to remain in the competitive business environment Deloitte, Insurance business can be categorized as life and non-life business and insurance products highly involve with intangible risk in long term and short term.

Many insurance companies facing challenges due to highly increasing customer expectation toward personalized product and services, advanced technological improvement and macro shift of the economy Deloitte, and industry facing disruption productive and innovative competitors from both inside and outside of the industry. Therefore given to the importance of innovation in insurance industry, research was conducted in insurance industry in Sri Lanka. Therefore measurement of innovation activities should focus on the technological dimensions well as organizational dimensions.

But among other things we are trying to change the stigma.

what is the relationship between organization and innovation

As we mentioned above conceptual framework of the study was used four dimensions for measure the innovation activities in the insurance companies. These four dimensions are insurance product innovation, process innovation, marketing innovation and organizational innovation.

In the end, four indicators were generated to measure the innovation activities in insurance companies. In this research, a similar approach of Akman and Yilmaz, is followed in order to evaluate the innovation capability, adopt three questions contain main characters including organizational culture, characteristics of internal process.

Respondents were answered by using each scale 5 point scale, 1 — strongly disagree, 2 — disagree, 3 — neither agree nor disagree, 4 — agree, 5 — strongly agree. Particularly three different type of performance measures were employed to measure the organizational performance.