Role Of Innovation In Business

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The Role of Innovation for the entrepreneurial start-up and/or firm growth

Introduction:
By academic history as we know it, the entrepreneur has a lot of faces and engaged in a lot of roles. Innovator is one of those roles. Innovator as an Entrepreneur in firm brings in a lot of changes both internally and externally. The economic growth is achieved through a lot of entrepreneurial start-up firms. Role of Innovation and its link to the firm performance being the given topic, this report discuss the innovation and their role on firm’s performance by studying the product, process, marketing and organizational innovation and also focussing on the several aspects of firm performance such as innovative performance, production performance, market
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As the definition states the four elements of diffusion of innovation process are innovation, communication channels, time and social system. Innovation is a new idea or a practice which is obtained by an individual or a group of people. Communication channels are the ways by which the information is sent from one person to another. Time is dependent on three other factors like decision process time, relative time, rate of adoption. Social system is a group of people who are involved within an organisation to accomplish one particular job. An S curve has been derived by Tarde (1903) to find the rate of adoption as most of the innovations use them. Few innovations have good rate of adoption and few have slow rate of adoption. Diffusion is defined as the communication of new idea from the innovator to its users or adopters whereas Adoption is defined as the mental process of an individual from initial hearing to final adoption (Rogers, 1962). The five stages of adoption are awareness, interest, evaluation, trial and adoption itself. Innovation-Decision process is a process in which an individual or a group authorizes the innovation-decision process. Accordingly there are five stages of innovation-decision process which these go through the process of innovation and then the diffusion process. There…show more content…
Single owner firms are found to be more innovative and have better firm growth (Miller et al., 2011) as they will to spend more on research and development. A studied has been conducted by Bruderl and Preisendorfer (2000), which says that innovation is only most significant aspect in foreseeing firm growth (Price et al., 2013). Family firms are less innovative due to capital constraints and closeness to the family (Allio, 2004; Carney, 2005) but they tend to innovate through other ideas and technologies (Price et al., 2013). Recent study proved these findings to be wrong and said that the family firms take bold decisions and demonstrate innovative and entrepreneurial characteristics as they are more flexible and can adopt as quickly as possible (Nooteboom, 1994). Small family firms can single out themselves by implementing product, process and market innovations through new ideas (McGrath, 2001). All these innovations happen in any family firm is due to its ownership structure and relationship of family persons with the firm. Their involvement in the business increases the firm performance (Eddleston and Kellermanns, 2007) as they understand the risks and prospects that are faced by the firm better. A link has been
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