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Definition: innovation from QFinance: The Ultimate Resource

creation of new product or service the creation, development, and implementation of a new product, process, or service with the goal of improving efficiency, effectiveness, or competitive advantage. Innovation may apply to products, services, manufacturing processes, managerial processes, or the design of an organization. It is most often viewed at a product or process level, where product innovation satisfies a customer’s needs, and process innovation improves efficiency and effectiveness. Innovation is linked with creativity, and involves taking new ideas and turning them into reality through invention, research, and new product development

Summary Article: INNOVATION
From Encyclopedia of Industrial and Organizational Psychology

Innovation is defined as the successful implementation of a creative idea. Some suggest that although creativity needs to be truly novel, innovation can be the adaptation of ideas in the current environment (so the idea is novel in this organization, but not completely novel). Others see innovation as a more inclusive term including both idea generation and its implementation. Innovation has also been defined as only the implementation aspect, excluding the idea generation and development phase. Common to all these definitions is the focus on the implementation of an idea, process, or product. Therefore, much of the work on innovation focused on the antecedents and consequences for successful implementation.


Much of the work done to understand the factors that influence organizations in adopting innovation has focused on organizational determinants. Organizational climate in particular has received attention as a contributing factor. Support for innovation, support for risk, and trust have emerged as important climate factors. Studies investigating the role of leadership in innovation have found that transformational leaders create a climate that provides support for innovation, as well as providing the intellectual stimulation that is necessary for innovation. In addition, an important role for the leader in supporting innovation is removing obstacles—such as providing information, resources, administrative support, and clarity, as well as serving as a champion for innovation. Flexible organizational structures and jobs have been linked to innovation. Specifically, jobs that allow for more discretion and autonomy and organizational structures that are less centralized and adapt quickly have been linked to the promotion and adoption of innovation.

Team factors that emerged as contributing to innovation are group composition and group processes. To facilitate innovation, the group must possess the required skills and knowledge. Groups heterogeneous in skills and knowledge may be more likely to innovate successfully. However, diversity of background may also lead to group conflict, which would result in less innovation. It has been suggested that there is an optimal level of diversity that will facilitate innovation based on the task and group processes. Group processes that focus on participation, commitment, and managing conflict effectively are suggested to enhance innovation. With regard to conflict, it has been suggested that some degree of task conflict (focusing on the task) may facilitate innovation but personal or relational conflict (focusing on interpersonal relationships) can hinder innovation. In addition, research on minority dissent and innovation shows that minority dissent can lead to more innovation in teams if team climate is constructive and supportive of risk and participation.

Individual factors are the focus of idea generation and creativity research; however, some innovation research has looked at individual factors. Because innovation requires the successful implementation of a novel idea, one important individual characteristic contributing to innovation is perseverance. Original ideas tend to be rejected because they are new, untried, and therefore risky. For innovation implementation to occur, someone, either the idea generator or a champion, must persistently present the idea and its merits for it to be adopted.

Finally, the external environment is also seen as an important antecedent to innovation. It has been suggested that innovation occurs as a result of threat or demands from the external environment. Moreover, it has been suggested that external demands will have a negative impact on idea generation but a positive impact on innovation.


Innovation is typically considered the criterion in most studies. Although empirical research has looked at the effect of individual creativity and its effect on team creativity and innovation, only limited empirical work is available on the consequences of innovation. Much of that research has focused on the organizational and financial consequences of innovation, such as new products, increase in market share, and organizational adaptation and survival.

    See also
  • Creativity at Work

  • Howell, J. M.; Boies, K. Champions of technological innovations: The influence of contextual knowledge, role orientation, idea generation, and idea promotion on champion emergence. Leadership Quarterly, 15, 130-149. (2004).
  • Klien, K. J.; Sorra, J. S. The challenge of innovation implementation. Academy of Management Review, 21, 1055-1080. (1996).
  • West, M. A. Sparkling fountains of stagnant ponds: An integrative model of creativity and innovation implementation in work groups. Applied Psychology: An International Review, 51, 355-424. (2002).
  • Roni Reiter-Palmon

    Anne E. Herman

    Justin M. Yurkovich
    Copyright © 2007 by SAGE Publications, Inc.

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