Innovation: It's meaning and benefits

Zimmerer, Scarborough, and Wilson (2008) define innovation as the specific instrument of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. As a dimension of corporate entrepreneurship, innovation is a firm’s commitment to creating and introducing products, production processes, and organisational systems (Covin and Slevin, 1991; Lumpkin and Dess, 1996; Zahra, 1996). Innovation is the process that provides added value and novelty to the firm and its suppliers and customers through the development of new procedures, solutions, products and services as well as new methods of commercialisation.


According to Knight (1997) and Kreiser, Marino and Weaver (2002) in Scheepers (2007), innovativeness refers to the capability, capacity and willingness of an enterprise to support creativity and experimentation to solve recurring customer problems. Innovativeness entails creativity and experimentation that result in new products, new services, or improved technological processes (Dess and Lumpkin, 2005). It is arguably the most essential component of corporate entrepreneurship.


Innovation is the outcome of the firm’s effective development and use of new technologies
and/or knowledge about market opportunities (Ireland, Hitt, Camp, and Sexton, 2001).

For a firm to be innovative, it needs to have a free-wheeling, “boundary less” brainstorming culture to engender creative ideas (Khandwalla and Mehta, 2004). It also requires that organisations depart from existing technologies and practices and venture beyond the current state (Dess and Lumpkin, 2005). Its attribute describes a firm’s imperative to initiate newness with added value.


Innovation can lead to competitive advantage and provide a basis for firm growth (Hitt, Hoskisson, and Kim, 1997). Innovative firms develop strong, positive market reputations. They engage in opportunity exploration which includes behaviour such as looking for ways to improve current products, services or processes, or trying to think about current work processes, products or services in alternative ways (De Jong and Wennekers, 2008). Innovative firms also adapt to market changes and exploit market or opportunity gaps. Sustained innovation moreover distances entrepreneurial firms from their industry rivals, and thus increases financial returns.