Literature review

Working paper

Organisational innovation: a review of the literature


Australia is committed to ‘closing the gap’ in disadvantage in remote Australia. The question for agencies, organisations and businesses is how to close the gaps that have grown over the past 200 years. What is required is ‘something truly different in the market that makes your customers’ lives better’ (Baum 2004). While not all innovations will result in something truly different, probability informs us that the greater the number of innovations the greater the chance of solving the complex problems of remote Australia.

The single most important factor in a company’s level of innovation competence is building an innovative culture that has total leadership commitment. In providing the right climate for innovation, leaders need to challenge and involve employees by committing to a big problem. Leaders also need to motivate, inspire and direct followers, overcome intra-organisational obstacles, and promote organisational innovation.

Management innovation, more than any other kind of innovation, has allowed companies to cross new performance thresholds. The dramatic shifts in competitive advantage have come, not as a result of technology and product innovation, but as a result of innovation in management principles and processes that create longlasting advantage.

Innovative companies have institutionalised innovation as a core value. These companies believe that ideas can come from anywhere within the company, not just R&D personnel, so innovative companies have found ways to free their innovators.

Organisations that have achieved innovation have had to alter their organisational design depending on the nature of the industry and their own goals. Companies have moved to designs that have multi-disciplinary approaches and greater flexibility and autonomy.

Innovation is characterised by greater uncertainty and variability. Consequently, innovative companies put in place human resource management policies and practices that recruit, train and keep employees who are flexible, risk-takers, tolerate uncertainty and ambiguity and who are driven by intrinsic motivation. 

Research into partnerships between research organisations and business identified a number of critical success factors, including strong leadership and a project champion, two-way licensing of technologies, improving organisational asymmetry, developing contracts that ensure intellectual property is fairly shared and developing metrics to measure success.

Innovative companies have accessed and exploited knowledge from outside their organisations through an approach known as open innovation. By broadcasting research problems to outsiders, R&D productivity can increase by as much as 60%. 

Internationally, Indigenous approaches to innovation and wealth creation differ in challenging ways from Western stereotypes of the entrepreneurial process. Consequently, Indigenous knowledge usually exists alongside western knowledge and there is a lack of linkages between the two. However, there is a view that an emerging sub-field of Indigenous entrepreneurship research will offer new insights and expand the definition of what it means to be innovative.

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