The Pros And Cons Of Innovation

Innovators are organizations that commercialize a new product or process in the market first. They tend to be the market leaders and gain a new competitive advantage over the competition. No one definition can fully encompass the full scope of innovation. Multiple definitions will be need utilised to touch on the many facets of innovation. Innovation is defined by Teece (1986) as the processes by which firms master and put into practice product designs and manufacturing processes that are new to them. Catalone (2002) defines innovation as the successful implementation of creative ideas within an organization. Innovation requires the right requires strong core competencies, high-quality education and training, and stable and facilitative economic and trade policies as factors to f performance (Nelson,

There are various reasons as to why this Offshoring is seen as an innovation. For instance it is a shift from the conventional perception that manufacturing and assembly should be executed in one location. Furthermore It can be seen as a cost innovation, that allows firms to set up shop new markets that have lower taxes and lower labour costs.

One such example can be in India where in the last couple of years, the country’s low labour costs have made it attractive for electronics manufacturing. Labour costs are said to be 20 to 50 % lower than in China. Companies such as phones manufacturer Micromax who use source their phones and tablets from China are now started manufacturing handsets at its Rudraprayag facility in Uttarakhand. Moreover, India’s import duties are relatively high, which makes it logical to manufacture mobile phones for the Indian consumers