2 What is innovation?
As we noted in the introduction, Joseph Schumpeter, a seminal thinker on innovation and economics, argued that capitalism is fundamentally a system of change; capitalism is incapable of remaining static (Schumpeter, 1934). He describes the ‘perennial gales’ of ‘creative destruction’ unleashed by innovation. In 1912 Schumpeter made an early characterisation of innovation as any of five phenomena:
- the introduction of a new good
- the introduction of a new method of production
- the opening of a new market
- access to (‘conquest of’) new sources of raw materials or components
- the introduction of new forms of organisation.
The term ‘innovation’ has since been extensively debated, and used in a wide range of ways. One study (Baregheh et al., 2009) identified 60 definitions of innovation in organisations alone. In part, at least, these differences are a result of the different concerns of different academic disciplines, the perspectives of different stakeholders in the innovation process and the different contexts in which innovation is considered. Whereas an economist may be concerned with the contribution of innovation to the performance of a national economy and so be interested in the generation of entirely new products or processes, a social scientist interested in how individuals decide whether or not to adopt an innovation may be concerned simply with whether a product is new to an individual. Managers may be concerned with how to prepare their organisation to generate innovations that are new to their industries and markets or with how their organisation might most effectively adopt or configure innovations generated elsewhere for use in their own structures and practices. What the term ‘innovation’ means, then, appears to depend on who is using the term and the context in which it is used. In the next section we look in a little more detail at some of these uses.