Literature Review - Management of Innovation

Literature Review

Introduction

According to Luecke and Katz (2003), innovation is generally referred to as the introduction of a new concept. The new concept may be a combination of the pre-existing ideas in a unique manner that overcomes the existing challenges and which is also perceived as new by the involved individuals. The introduction of a new concept might be termed as imitation of an idea that already exists elsewhere, but as long as it is perceived new by the individuals involved, it is an innovation. According to Francis and Bessant (2005), the basis for innovations is creativity in terms of ideas. In this way, there must be creative ideas as well as the ability to convert such ideas into action in order to facilitate specific and tangible changes in a business organization in terms of products and services provided.

On the other hand, management is the harmonization of activities in line with certain policies to achieve the defined aims and objectives. In business organizational settings, management of innovation entails the organization of knowledge, behavior of individuals, internal and external organizational environment, as well as other necessary factors to facilitate the introduction of new business concepts. Management of innovation is essential in a business organization as it facilitates business survival in the market through increasing its competitive ability and market refreshment with new and improved products leading to increased sales and profits which raise the value for shareholders (Adams et al., 2006).

This literature review will detail the existing literature on the management of innovations. This review focuses on the Human Resource Management (HRM) for innovation and the role of management in, creating a climate for innovation, managing knowledge towards the innovation process, and involving frontline employees in the innovation process.

Human Resource Management for Innovation

According to Verganti and Buganza, (2005), in a business organization, human resource management entails the management practices which align the employees' personal goals with the aims and objectives of the organization. The practices of human resource management can influence the attitude of the employees towards the innovation process. This implies that both the management and the employees should be motivated in a manner to ensure they act innovatively and toward the organization's innovation process significantly. As such, the role of human resource management is to explore and put to practice motivational practices which are best suited in fostering the innovative behavior among the employees in the business organization.

McMeekin and Coombs (1999) conducted a case study in four companies to explore the role of human resource management function in the motivation of technical professionals. The results indicated that technical professionals are increasingly motivated towards innovation when their work interests them. In the same vein, the role of human resource management in salary improvements as well as other incentives goes a long way in promoting increased motivation of the technical professionals. Additionally, their study established that the career structure mapped by the human resource management also has effects on the motivation of technical professionals as it affects their long term vision with the process of career development in the business organization.

To further establish the role of human resource management in promoting increased innovation among individual employees, Tsai et al. (2008) pointed out the impacts of the payment policy in promoting increased innovation among employees. The main purpose was to exam whether matching the pay policy with individual innovation strategy which really improves the company performance. The results established that combining the pay policy with the expenditure on innovation has insignificant effects on organizational performance and as such should not be used by the human resource management as a means of promoting increased performance of the business organization. There is still need for further research on the best human resource management practices which can be applied to promote increased individual innovation as a means of facilitating increased business performance and profitability.

Creating a Climate for Innovation

According to Mascitelli (2000), there prevailed the need for organizational management to facilitate an efficient organizational climate that promotes increased innovation among the employees. This is in the view that the appropriate organizational climate promotes increased creativity, idea generation as well as knowledge sharing among the employees. Moreover, Fay et al. (2006) point out that favorable organizational conditions are necessary in the exploitation of the collective as well as individual knowledge to facilitate increased innovation. Therefore, the facilitation of an excellent organizational atmosphere as a supportive climate by the management is a prerequisite for innovation to take place in a business organization.

Fay et al. (2006) noted that business managers should promote an organizational climate where the employees interact freely with the customers as a means of promoting information and intelligence sharing as an important tool for increased innovation among the employees.

According to Lievens and Moenaert (2000b), an efficient organizational climate that facilitates increased innovation among the employees is inclusive of efficient flow of information as well as effectiveness in the process of information gathering. As such, the achievement of success in the innovation process depends on the effectiveness of the organizational management in bridging the gap between the amount of information necessary to perform a particular task or activity and the actual amount of information available within the business organization to perform that particular task; this is said to

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